Analysis: 2012 Could Prove Even Wilder Ride than 2011

December 22, 2011 by · Leave a Comment 

By Peter Apps, Political Risk Correspondent

LONDON (Reuters) – The ancient Mayans attached special significance to 2012, possibly the end of time. That has spawned a rush of apocalyptic literature for the holiday season.

But you don’t have to believe the world is about to end to realize that next year contains perhaps the widest range of political risks to the global economy in recent history.

With elections and leadership changes in the most powerful countries, Europe in crisis, ferment in the Middle East and worsening economic hardship driving unrest and discontent everywhere, 2012 could be just as volatile as 2011 if not worse.

The current year may yet carry a sting in its tail, with worries over the euro and jitters over a possible Israeli strike on Iran likely to keep financial markets and policymakers on tenterhooks all the way to the New Year.

More than three years after the collapse of Lehman Brothers prompted the worst financial crash since the Great Depression, economic turmoil looks to be driving political upheaval in what could become a particularly disruptive feedback loop.

Economic stresses — from rising food prices to worsening economic hardship in the developed world — were at the heart of many of 2011’s political stories. As they intensify, political volatility, gridlock, confrontation and conflict — whether domestic or international — look set to worsen.

“It’s going to get worse before it gets better,” said Jonathan Wood, global issues analyst at London-based risk consultancy Control Risks. “If you look at what’s been driving events this year, none of the factors has gone away and many of the economic drivers are still growing.”

Presidential elections in the United States, France and Russia and the dual transition of power at the top of China’s Communist Party will add to the uncertainty. They may make it harder for political leaders to find compromises or push through tough policy choices.

GROWING GRIDLOCK?

That, many analysts warn, brings with it a mounting risk of political gridlock coming just as the world needs leadership most. The failure of the U.S. Congressional “super committee” to agree on how to reduce the budget deficit may be a sign of things to come domestically in many countries.

President Barack Obama faces a tough re-election bid, whomever the Republicans choose to challenge him, because of a sluggish economy, 8.6 percent unemployment and a squeeze on the middle classes due to fallen home and stock prices.

A fragile global consensus forged at a 2009 summit of leaders of the Group of 20 major economies may be gone for good, replaced by what Ian Bremmer, president of political risk consultancy Eurasia Group, calls a rudderless “G-zero” world.

Top of the list of 2012 risks for many analysts is the unresolved sovereign debt crisis in the euro zone.

If the 17-nation European single currency is to survive in its current form, its members will have to confront harsh economic adjustments and seismic political reform. Last week’s Brussels summit, the 16th since the start of the two-year-old crisis, was billed by some as the last chance to save the euro.

While euro zone leaders and some non-euro states agreed to forge a closer fiscal union with stricter budget discipline, the outcome fell short of guaranteeing the euro’s ultimate survival.

At worst, 2012 could still see a disorderly breakup bringing with it a chain of defaults, bank runs and civil unrest, not to mention a savage global economic shock worse than that of 2008.

Ultimately, however, many believe the euro will endure — although not without colossal strains as it tries to reconcile very different economies such as Germany and Greece.

“The greatest single risk is obviously the euro zone but it might also be the risk that is sorted out the quickest,” says Alastair Newton, a former British government official who is chief political analyst at Japanese bank Nomura.

“But even if that happens then you’re still going to have very low growth and a rise in social unrest in the southern euro zone in particular and across Europe in general. Even in the best case scenario, 2012 looks pretty rough.”

For others, the Middle East remains the most important area to watch for potential disruption to the global economy.

Almost a year after the beginning of the “Arab Spring” democracy movement, the region remains in political flux with untested Islamist parties winning power across north Africa and Syria’s uprising slowly turning towards outright civil war.

CONFLICT, UNREST

After the fall of several veteran Western-backed Arab rulers, the withdrawal of U.S. forces from Iraq is seen as the latest sign of the diminishing influence of Western powers in a region they dominated for some 200 years.

In the resulting vacuum, regional powers such as Turkey, Saudi Arabia and an isolated and perhaps more erratic Iran appear in increasingly open confrontation.

Western intelligence estimates that Iran is moving closer to a viable nuclear weapon have a shorter timeline, and some analysts say 2012 could be the year when Tehran’s enemies decide to go beyond covert sabotage with a military strike that could spark retaliation against oil supplies in the Gulf.

“The bigger wild card out there is an Israeli attack on Iran’s nuclear facilities and elements of regime control,” says Thomas Barnett, chief strategist of political risk consultancy Wikistrat, saying neither the Israeli nor the Iranian leadership looks inclined to back down. “The setting here is scary… something has got to give in this strategic equation.”

Even if the world avoids a devastating shock such as a Middle East war or a European breakdown, many analysts fear the business of politics and policy-making could become increasingly difficult around the world.

With economic growth slowing and unemployment creeping up, most analysts believe the risks of social unrest will continue to rise across much of the developed and developing world.

“We have all the problems you’d expect from economic hardship. At some stage we will have rising food prices which are always destabilizing and we have a question over whether China will overheat,” says Elizabeth Stephens, head of credit and political risk at London insurance brokers Jardine Lloyd Thompson.

“Even a fall of one or two percentage points of GDP (in China) could be enough to really question social stability if they can’t keep job creation going… We (also) have probable ongoing unrest in Europe and the ongoing transition in the Middle East and North Africa could be quite unstable.”

In the dying days of the year, other long held assumptions of stability have be thrown into question — not least by the rising tide of protest against Russia’s Vladimir Putin. The one certainty for 2012, many believe, is more of the unexpected.

“2011 was a nightmarish year to be a policy maker or an investment portfolio manager but it was a great one to be a political analyst,” says Newton. “I’d certainly expect the same for next year.”

(Reporting By Peter Apps)

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U.S. Military Chapter in Iraq Draws to a Close

December 15, 2011 by · Leave a Comment 

By Patrick Markey

2011-12-14T234708Z_1_BTRE7BD1U3200_RTROPTP_3_NEWS-US-IRAQ-WITHDRAWAL-WITNESS
The “Hands of Victory” memorial rises over an empty parade ground in the Green Zone of Baghdad December 14, 2011. REUTERS/Lucas Jackson

BAGHDAD (Reuters) – Nearly nine years after the U.S.-led invasion of Iraq ousted Saddam Hussein, American troops are pulling out and leaving behind a country still battling insurgents, political uncertainty and sectarian divisions.

Nearly 4,500 U.S. soldiers and tens of thousands of Iraqis lost their lives in a war that began with a “Shock and Awe” campaign of missiles and bombs pounding Baghdad, but later descended into a bloody sectarian struggle between long-oppressed majority Shi’ites and their former Sunni masters.

Saddam is dead and the violence has ebbed, but the U.S. troop withdrawal leaves Iraq with a score of challenges from a stubborn insurgency and fragile politics to an oil-reliant economy plagued by power cuts and corruption.

Iraq’s neighbors will keep a close watch on how Baghdad will confront its problems without the buffer of a U.S. military presence, while a crisis in neighboring Syria threatens to upset the region’s sectarian and ethnic balance.

U.S. President Barack Obama, who made an election promise to bring troops home, told Iraqi Prime Minister Nuri al-Maliki that Washington will remain a loyal partner after the last troops roll across the Kuwaiti border.

“The mission there was to establish an Iraq that could govern and secure itself and we’ve been able to do that,” U.S. Defense Secretary Leon Panetta told troops at a U.S. base in Djibouti this week.
“That doesn’t mean it’s going to be easy.”

Iraq’s Shi’ite leadership presents the withdrawal as a new start for the country’s sovereignty, but many Iraqis question which direction the nation will take once U.S. troops leave – sectarian strife or domination by one sect over another?

Will al Qaeda return to sow terror in the cities? Will ongoing disputes between Kurds in their northern semi-autonomous enclave spill into conflict with the Iraqi Arab central government over disputed territories.

Violence has ebbed since the bloodier days of sectarian slaughter when suicide bombers and hit squads claimed hundreds of victims a day at times as the country descended into tit-for-tat killings between the Sunni and Shi’ite communities.

In 2006 alone, 17,800 Iraqi military and civilians were killed in violence.

Iraqi security forces are generally seen as capable of containing the remaining Sunni Islamist insurgency and the rival Shi’ite militias U.S. officials say are backed by Iran.
But for those enjoying a sense of sovereignty, security is still a major worry. Attacks now target local Iraqi government offices and security forces in an attempt show that the authorities are not in control.

“I am happy they are leaving. This is my country and they should leave,” said Samer Saad, a soccer coach. “But I am worried because we need to be safe. We are worried because all the militias will start to come back.”

SECTARIAN TENSIONS

The fall of Saddam opened the way for Iraq’s Shi’ite majority community to ascend to positions of power after decades of oppression under his Sunni-run Baath party. But nine years after the invasion Iraq remains a splintered country, worrying many that the days of sectarian slaughter are not over.

Even the political power-sharing in Maliki’s Shi’ite-led government is hamstrung by sectarian divides. The government at times seems paralyzed as parties split along sect lines, squabbling over every decision.

That has hampered economic development as infrastructure projects and key laws wait for approval. Iraq needs investment in almost all areas – the power grid still provides only a few hours of electricity a day.

Sunni Iraqis fear marginalization or even a creeping Shi’ite-led authoritarian rule under Maliki. A recent crackdown on former members of the Baath party has fueled those fears.

Sectarian divisions leave Iraq still vulnerable to meddling by neighbors trying to secure more influence, especially as Sunni-controlled Arab nations view any Iranian involvement as an attempt to control Iraq’s Shi’ite parties at the cost of Sunni communities.

Iraq’s Shi’ite leadership frets the crisis in neighboring Syria could eventually bring a hardline Sunni leadership to power in Damascus, worsening Iraq’s own sectarian tensions.

U.S. troops had acted as a buffer in another dispute between Kurds in Iraq’s semi-autonomous region and the Iraqi Arabs in the central government. Some fear the two regions could clash over oil and territory rights in disputed areas.

“WAS IT WORTH IT?”

U.S. troops were supposed to stay on as part of a deal to train the Iraqi armed forces. Washington had asked Iraq for at least 3,000 troops to remain in the country. But talks over immunity from prosecution for American soldiers fell apart.

Memories of U.S. abuses, arrests and killings still haunt many Iraqis and the question of legal protection from prosecution looked too sensitive for Iraq’s political leadership to push through a splintered parliament.

At the height of the war, 170,000 American soldiers occupied more than 500 bases across the country. Now only two bases and 5,500 troops remain in the country. All will be home before the end of the year when a security pact expires.

Only around 150 U.S. soldiers will remain in Iraq after December 31 attached to the huge U.S. Embassy that sits near the Tigris River. Civilian contractors will take on the task of training Iraqi forces on U.S. military hardware.

Every day hundreds of trunks and troops trundle in convoys across the Kuwaiti border as U.S. troops end their mission.

“Was it worth it? I am sure it was. When we first came in here, the Iraqi people seemed like they were happy to see us,” said Sgt 1st Class Lon Bennish, packing up at a U.S. base and finishing the last of three deployments in Iraq.

“I hope we are leaving behind a country that says ‘Hey, we are better off now than we were before.’”

(Editing by Paul Casciato)

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Zardari Suffers Heart Attack, May Quit

December 8, 2011 by · Leave a Comment 

PAKISTAN-PRESIDENT/

Pakistan’s President Zardari in file photo taken August 2, 2010. Zardari had a minor heart attack and is undergoing treatment in a Dubai hospital, a source said Wednesday.          

REUTERS/Benoit Tessier

Washington: Pakistan President Asif Ali Zardari, who abruptly left the Pakistan capital for Dubai, has suffered a minor heart attack and some in the US government believe he may even resign on account of ‘ill-health’, a media report said.

Zardari Tuesday evening left for Dubai to visit his children and also to undergo some medical tests, Pakistan’s official news agency Associated Press of Pakistan had reported.

Though the president’s personal physician Col Salman said the proposed medical tests are of routine nature and are linked to a previously diagnosed cardiovascular condition, the Foreign Policy magazine quoted a former US official as saying that parts of the US government were informed that Zardari had a ‘minor heart attack’ Monday night. He had flown to Dubai via an air ambulance.

Zardari may have to undergo an angioplasty procedure Wednesday and may also resign on account of ‘ill health’, the media report said.

The former US government official told the website that Zardari was ‘incoherent’ when President Barack Obama spoke with him regarding Nov 26 NATO’s killing of two dozen Pakistani soldiers.

Zardari had planned to address a joint session of Pakistan’s parliament on a controversy over a memo to Washington that claimed he feared a military coup after the May 2 commando operation to kill Al Qaeda leader Osama bin Laden.

Zardari has been under tremendous pressure since the memo came to light.

‘The noose was getting tighter — it was only a matter of time,’ the former official was quoted as saying.

The ex-official noted the growing expectation inside the US government that Zardari may be on the way out, reported Foreign Policy.

In September, Zardari underwent an angiography at a hospital in Britain where doctors gave him a clean bill of health.

Two surgeons from the US too were involved in the medical check-ups along with the British doctors.

Shuja Nawaz, director of the South Asia Center at the Atlantic Council, in a Tuesday interview said a plan would see Zardari step aside.

Nawaz said: ‘Unfortunately, it means that the military may have had to use its muscle to effect change yet again.’

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How Israel Out-Foxed US Presidents

December 1, 2011 by · Leave a Comment 

By Morgan Strong

From the Archive: At the G20 summit, French President Nicolas Sarkozy commiserated with President Barack Obama about Israeli Prime Minister Benjamin Netanyahu, whom Sarkozy called a “liar,” prompting Obama to say: “You’re fed up with him? I have to deal with him every day.” But struggling with Israeli leaders is not new, Morgan Strong reported.

By Morgan Strong (Originally published on May 31, 2010)

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The USS Liberty

At the end of a news conference on April 13, 2010, President Barack Obama made the seemingly obvious point that the continuing Middle East conflict – pitting Israel against its Arab neighbors – will end up “costing us significantly in terms of both blood and treasure.”

Obama’s remark followed a similar comment by Gen. David Petraeus on March 16, 2010, linking the unresolved Israeli-Palestinian conflict to the challenges that U.S. troops face in the region.

“The conflict foments anti-American sentiment, due to a perception of U.S. favoritism for Israel,” Petraeus said. “Arab anger over the Palestinian question limits the strength and depth of U.S. partnerships with governments and peoples in the [region] and weakens the legitimacy of moderate regimes in the Arab world.

“Meanwhile, al-Qaeda and other militant groups exploit that anger to mobilize support.”

The truth behind what Obama and Petraeus said is self-evident to anyone who has spent time observing the Middle East for the past six decades. Even the staunchly pro-Israeli Bush administration made similar observations.

Three years ago in Jerusalem, Secretary of State Condoleezza Rice termed the Israeli/Palestinian peace process of “strategic interest” to the United States and expressed empathy for the beleaguered Palestinian people.

“The prolonged experience of deprivation and humiliation can radicalize even normal people,” Rice said, referring to acts of Palestinian violence.

But the recent comments by Obama and Petraeus aroused alarm among some Israeli supporters who reject any suggestion that Israel’s harsh treatment of Palestinians might be a factor in the anti-Americanism surging through the Islamic world.

After Petraeus’s comment, the pro-Israeli Anti-Defamation League said linking the Palestinian plight and Muslim anger was “dangerous and counterproductive.”

“Gen. Petraeus has simply erred in linking the challenges faced by the U.S. and coalition forces in the region to a solution of the Israeli-Arab conflict, and blaming extremist activities on the absence of peace and the perceived U.S. favoritism for Israel,” ADL national director Abraham Foxman said.

However, the U.S. government’s widespread (though often unstated) recognition of the truth behind Petraeus’s comment has colored how the Obama administration has reacted to the intransigence of Israel’s Likud government of Prime Minister Benjamin Netanyahu. (Petraeus later tried to wiggle out of his comment, noting that it was part of his prepared testimony to a congressional committee and that he did not actually speak the words.)

The U.S. government realizes how much it has done on Israel’s behalf, even to the extent of making Americans the targets of Islamic terrorism such as the 9/11 attacks (as the 9/11 Commission discovered but played down) and sacrificing the lives of thousands of U.S. troops fighting in Middle East conflicts.

That was the backdrop for President Obama’s outrage over the decision of the Netanyahu government to continue building Jewish housing in Arab East Jerusalem despite the fact that the move complicated U.S. peace initiatives and was announced as Vice President Joe Biden arrived to reaffirm American support for Israel.

However, another little-acknowledged truth about the U.S.-Israeli relationship is that Israeli leaders have frequently manipulated and misled American presidents out of a confidence that U.S. politicians deeply fear the political fallout from any public battle with Israel.

Given that history, few analysts who have followed the arc of U.S.-Israeli relations since Israel’s founding in 1948 believe that the Israeli government is likely to retreat very much in its current confrontation with President Obama.

Manipulating Eisenhower

In the 1950s, President Dwight Eisenhower was a strong supporter of the fledgling Jewish state and had supplied Israel with advanced U.S. weaponry. Yet, despite Eisenhower’s generosity and good intentions, Israel sided with the British and French in 1956 in a conspiracy against him.

Israeli leaders joined a secret arrangement that involved Israel invading Egypt’s Sinai, which then allowed France and Great Britain to introduce their own forces and reclaim control of the Suez Canal.
In reaction to the invasion, the Soviet Union threatened to intervene on the side of Egypt by sending ground troops. With Cold War tensions already stretched thin by the crises in Hungary and elsewhere, Eisenhower faced the possibility of a showdown between nuclear-armed adversaries.

Eisenhower demanded that the Israeli-spearheaded invasion of the Sinai be stopped, and he brought financial and political pressures to bear on Great Britain and France.

A ceasefire soon was declared, and the British and French departed, but the Israelis dragged their heels. Eisenhower finally presented Israeli Prime Minister David Ben-Gurion with an ultimatum, a threat to cut off all U.S. aid. Finally, in March 1957, the Israelis withdrew. [For details, see Eisenhower and Israelby Isaac Alteras]

David Ben-Gurion, Israel’s first prime minister

Secret Nukes and JFK

Even as it backed down in the Sinai, Israel was involved in another monumental deception, a plan for building its own nuclear arsenal.

In 1956, Israel had concluded an agreement with France to build a nuclear reactor in the Negev desert. Israel also signed a secret agreement with France to build an adjacent plutonium reprocessing plant.

Israel began constructing its nuclear plant in 1958. However, French President Charles de Gaulle was worried about nuclear weapons destabilizing the Middle East and insisted that Israel not develop a nuclear bomb from the plutonium processing plant. Prime Minister Ben-Gurion assured de Gaulle that the processing plant was for peaceful purposes only.

After John F. Kennedy became President, he also wrote to Ben-Gurion explicitly calling on Israel not to join the nuclear-weapons club, drawing another pledge from Ben-Gurion that Israel had no such intention.

Nevertheless, Kennedy continued to press, forcing the Israelis to let U.S. scientists inspect the nuclear reactor at Dimona. But the Israelis first built a fake control room while bricking up and otherwise disguising parts of the building that housed the plutonium processing plant.

In return for allowing inspectors into Dimona, Ben-Gurion also demanded that the United States sell Hawk surface-to-air missiles to the Israeli military. Kennedy agreed to the sale as a show of good faith. Subsequently, however, the CIA got wind of the Dimona deception and leaked to the press that Israel was secretly building a nuclear bomb.

After Kennedy’s assassination, President Lyndon Johnson also grew concerned over Israel’s acquiring nuclear weapons. He asked then-Prime Minister Levi Eshkol to sign the Nuclear Non-Proliferation Treaty.

Eshkol assured Johnson that Israel was studying the matter and would sign the treaty in due course. However, Israel has never signed the treaty and never has admitted that it developed nuclear weapons. [For details, See Israel and The Bomb by Avner Cohen.]

Trapping Johnson

As Israel grew more sophisticated – and more confident – in its dealings with U.S. presidents, it also sought to secure U.S. military assistance by exaggerating its vulnerability to Arab attacks.

One such case occurred after the Egyptians closed off the Gulf of Aqaba to Israel in May 1967, denying the country its only access to the Red Sea. Israel threatened military action against Egypt if it did not re-open the Gulf.

Israel then asked President Johnson for military assistance in the event war broke out against the Egyptians. Johnson directed Richard Helms, the newly appointed head of the CIA to evaluate Israel’s military capability in the event of war against the surrounding Arab states.

On May 26, 1967, Israeli Foreign Minister Abba Eban met with Johnson, Secretary of Defense Robert McNamara, and CIA Director Helms. Eban presented a Mossad estimate of the capability of the Arab armies, claiming that Israel was seriously outgunned by the Arab armies which had been supplied with advanced Soviet weaponry.

Israel believed that, owing to its special relationship with the United States, the Mossad intelligence assessment would be taken at face value.

However, Helms was asked to present the CIA estimate of the Arabs’ military capabilities versus the Israeli army. The CIA’s analysts concluded that Israel could “defend successfully against simultaneous Arab attacks on all fronts, or hold on any three fronts while mounting a successful major offensive on the fourth.” [See “C.I.A. Analysis of the 1967 Arab Israeli War,” Center for the Study of Intelligence.]

“We do not believe that the Israeli appreciation was a serious estimate of the sort they would submit to their own high officials,” the CIA report said. “It is probably a gambit intended to influence the U.S. to provide military supplies, make more public commitments to Israel, to approve Israeli military initiatives, and put more pressure on Egyptian President Nasser.” [See A Look Over My Shoulder by Richard Helms.]

The CIA report stated further that the Soviet Union would probably not interfere militarily on behalf of the Arab states and that Israel would defeat the combined Arab armies in a matter of days.
As a consequence, Johnson refused to airlift special military supplies to Israel, or to promise public support for Israel if Israel went to war.

The Six-Day Success

Despite Johnson’s resistance, Israel launched an attack on its Arab neighbors on June 5, 1967, claiming that the conflict was provoked when Egyptian forces opened fire. (The CIA later concluded that it was Israel that had first fired upon Egyptian forces.)

On June 8, at the height of the conflict, which would become known as the Six-Day War, Israeli fighter/bombers attacked the USS Liberty, a lightly armed communications vessel sent on a mission to relay information on the course of the war to U.S. naval intelligence.

The attack killed 34 Americans sailors, and wounded 171 others. Israeli leaders have always claimed that they had mistaken the U.S. vessel for an enemy ship, but a number of U.S. officials, including Secretary of State Dean Rusk, believed the attack was deliberate, possibly to prevent the United States from learning about Israel’s war plans. [See As I Saw It by Dean Rusk.]

However, in deference to Israel, the U.S. government did not aggressively pursue the matter of the Liberty attack and even issued misleading accounts in medal citations to crew members, leaving out the identity of the attackers.

Meanwhile, on land and in the air, Israel’s powerful military advanced, shredding the Arab defenses. Soon, the conflict escalated into another potential showdown between nuclear-armed superpowers, the Soviet Union and the United States.

On June 10, President Johnson received a “Hot Line” message from Soviet Premier Alexi Kosygin. The Kremlin warned of grave consequences if Israel continued its military campaign against Syria by entering and/or occupying that country.

Johnson dispatched the Sixth Fleet to the Mediterranean, in a move to convince the Soviets of American resolve. But a ceasefire was declared later the same day, with Israel ending up in control of Syria’s Golan Heights, Egypt’s Sinai, and Palestinian lands including Gaza and East Jerusalem.

But a wider war was averted. Johnson’s suspicions about Israel’s expansionist intent had kept the United States from making an even bigger commitment that might have led to the Soviets countering with an escalation of their own.

Nixon and Yom Kippur

Israeli occupation of those additional Arab lands set the stage for a resumption of hostilities six years later, on Oct. 6, 1973, with the Yom Kippur War, which began with a surprise attack by Egypt against Israeli forces in the Sinai.

The offensive caught Israel off guard and Arab forces were close to overrunning Israel’s outer defenses and entering the country. According to later accounts based primarily on Israeli leaks, Prime Minister Golda Meir and her “kitchen cabinet” ordered the arming of 13 nuclear weapons, which were aimed at Egyptian and Syrian targets.

Israeli Ambassador to the United States Simha Dintz warned President Richard Nixon that very serious repercussions would occur if the United States did not immediately begin an airlift of military equipment and personnel to Israel.

Fearing that the Soviet Union might intervene and that nuclear war was possible, the U.S. military raised its alert level to DEFCON-3. U.S. Airborne units in Italy were put on full alert, and military aid was rushed to Israel.

Faced with a well-supplied Israeli counteroffensive and possible nuclear annihilation, the Arab forces fell back. The war ended on Oct. 26, 1973, but the United States had again been pushed to the brink of a possible superpower confrontation due to the unresolved Israeli-Arab conflict.

Nuclear ‘Ambiguity’

On Sept. 22, 1979, after some clouds unexpectedly broke over the South Indian Ocean, a U.S. intelligence satellite detected two bright flashes of light that were quickly interpreted as evidence of a nuclear test.

The explosion was apparently one of several nuclear tests that Israel had undertaken in collaboration with the white-supremacist government of South Africa. But President Jimmy Carter – at the start of his reelection bid – didn’t want a showdown with Israel, especially on a point as sensitive as its secret nuclear work with the pariah government in Pretoria.

So, after news of the nuclear test leaked a month later, the Carter administration followed Israel’s longstanding policy of “ambiguity” about the existence of its nuclear arsenal, a charade dating back to Richard Nixon’s presidency with the United States pretending not to know for sure that Israel possessed nuclear bombs.

The Carter administration quickly claimed that there was “no confirmation” of a nuclear test, and a panel was set up to conclude that the flashes were “probably not from a nuclear explosion.”

However, as investigative reporter Seymour Hersh and various nuclear experts later concluded, the flashes were most certainly an explosion of a low-yield nuclear weapon. [For details, see Hersh’s Samson Option.]

Getting Carter

Despite Carter’s helpful cover-up of the Israeli-South African nuclear test, he was still viewed with disdain by Israel’s hard-line Likud leadership. Indeed, he arguably was the target of Israel’s most audacious intervention in U.S. politics.

Prime Minister Menachem Begin was furious at Carter over the 1978 Camp David accords in which the U.S. President pushed the Israelis into returning the Sinai to the Egyptians in exchange for a peace agreement.

The next year, Carter failed to protect the Shah of Iran, an important Israeli regional ally who was forced from power by Islamic militants. Then, when Carter acceded to demands from the Shah’s supporters to admit him to New York for cancer treatment, Iranian radicals seized the U.S. Embassy in Tehran and held 52 Americans hostage.

In 1980, as Carter focused on his reelection campaign, Begin saw both dangers and opportunities. High-ranking Israeli diplomat/spy David Kimche described Begin’s thinking in the 1991 book, The Last Option, recounting how Begin feared that Carter might force Israel to withdraw from the West Bank and accept a Palestinian state if he won a second term.

“Begin was being set up for diplomatic slaughter by the master butchers in Washington,” Kimche wrote. “They had, moreover, the apparent blessing of the two presidents, Carter and [Egyptian President Anwar] Sadat, for this bizarre and clumsy attempt at collusion designed to force Israel to abandon her refusal to withdraw from territories occupied in 1967, including Jerusalem, and to agree to the establishment of a Palestinian state.”

Begin’s alarm was driven by the prospect of Carter being freed from the pressure of having to face another election, according to Kimche.

“Unbeknownst to the Israeli negotiators, the Egyptians held an ace up their sleeves, and they were waiting to play it,” Kimche wrote. “The card was President Carter’s tacit agreement that after the American presidential elections in November 1980, when Carter expected to be re-elected for a second term, he would be free to compel Israel to accept a settlement of the Palestinian problem on his and Egyptian terms, without having to fear the backlash of the American Jewish lobby.”

So, by spring 1980, Begin had privately sided with Carter’s Republican rival, Ronald Reagan, a reality that Carter soon realized.

Questioned by congressional investigators in 1992 regarding allegations about Israel conspiring with Republicans in 1980 to help unseat him, Carter said he knew by April 1980 that “Israel cast their lot with Reagan,” according to notes found among the unpublished documents in the files of a House task force that looked into the so-called October Surprise case.

Carter traced the Israeli opposition to his reelection to a “lingering concern [among] Jewish leaders that I was too friendly with Arabs.”

Doing What Was Necessary

Begin was an Israeli leader committed to do whatever he felt necessary to advance Israeli security interests and the dream of a Greater Israel with Jews controlling the ancient Biblical lands. Before Israel’s independence in 1948, he had led a Zionist terrorist group, and he founded the right-wing Likud Party in 1973 with the goal of “changing the facts on the ground” by placing Jewish settlements in Palestinian areas.

Begin’s anger over the Sinai deal and his fear of Carter’s reelection set the stage for secret collaboration between Begin and the Republicans, according to another former Israeli intelligence official, Ari Ben-Menashe.

“Begin loathed Carter for the peace agreement forced upon him at Camp David,” Ben-Menashe wrote in his 1992 memoir, Profits of War. “As Begin saw it, the agreement took away Sinai from Israel, did not create a comprehensive peace, and left the Palestinian issue hanging on Israel’s back.”

Ben-Menashe, an Iranian-born Jew who had immigrated to Israel as a teen-ager, became part of a secret Israeli program to reestablish its Iranian intelligence network that had been decimated by the Islamic revolution. Ben-Menashe wrote that Begin authorized shipments to Iran of small arms and some military spare parts, via South Africa, as early as September 1979 and continued them despite Iran’s seizure of the U.S. hostages in November 1979.

Extensive evidence also exists that Begin’s preference for Reagan led the Israelis to join in a covert operation with Republicans to contact Iranian leaders behind Carter’s back, interfering with the President’s efforts to free the 52 American hostages before the November 1980 elections.

That evidence includes statements from senior Iranian officials, international arms dealers, intelligence operatives, and Middle East political figures (including a cryptic confirmation from Begin’s successor Yitzhak Shamir). But the truth about the October Surprise case remains in dispute to this day. [For details, see Robert Parry’s Secrecy & Privilege.]

It is clear that after Reagan defeated Carter — and the U.S. hostages were released immediately upon Reagan being sworn in on Jan. 20, 1981 — Israeli-brokered weapons shipments flowed to Iran with the secret blessing of the new Republican administration.

Dealing with Reagan

The Israel Lobby had grown exponentially since its start in the Eisenhower years. Israel’s influential supporters were now positioned to use every political device imaginable to lobby Congress and to get the White House to acquiesce to whatever Israel felt it needed.

President Reagan also credentialed into the Executive Branch a new group of pro-Israeli American officials – the likes of Elliott Abrams, Richard Perle, Michael Ledeen and Jeane Kirkpatrick – who became known as the neocons.

Yet, despite Reagan’s pro-Israel policies, the new U.S. President wasn’t immune from more Israeli deceptions and additional pressures.

Indeed, whether because of the alleged collusion with Reagan during the 1980 campaign or because Israel sensed its greater clout within his administration, Begin demonstrated a new level of audacity.

In 1981, Israel recruited Jonathan Pollard, an American Navy intelligence analyst, as a spy to acquire American intelligence satellite photos. Eventually, Pollard purloined massive amounts of intelligence information, some of which was reportedly turned over to Soviet intelligence by Israel to win favors from Moscow.

Prime Minister Begin sensed, too, that the time was ripe to gain the upper hand on other Arab enemies. He turned his attention to Lebanon, where the Palestine Liberation Organization was based.

Lebanon War

When U.S. intelligence warned Reagan that Israel was massing troops along the border with Lebanon, Reagan sent a cable to Begin urging him not to invade. But Begin ignored Reagan’s plea and invaded Lebanon the following day, on June 6, 1982. [See Time, Aug. 16, 1982.]

As the offensive progressed, Reagan sought a cessation of hostilities between Israel and the PLO, but Israel was intent on killing as many PLO fighters as possible. Periodic U.S.-brokered ceasefires failed as Israel used the slightest provocation to resume fighting, supposedly in self-defense.

“When PLO sniper fire is followed by fourteen hours of Israeli bombardment that is stretching the definition of defensive action too far,” complained Reagan, who kept the picture of a horribly burned Lebanese child on his desk in the Oval Office as a reminder of the tragedy of Lebanon.

The American public nightly witnessed the Israeli bombardment of Beirut on television news broadcasts. The pictures of dead, mutilated children caught in the Israeli artillery barrages, were particularly wrenching. Repulsed by the carnage, the U.S. public decidedly favored forcing Israel to stop.

When Reagan warned Israel of possible sanctions if its forces continued to indiscriminately attack Beirut, Israel launched a major offensive against West Beirut the next day.

In the United States, Israeli supporters demanded a meeting with Reagan to press Israel’s case. Though Reagan declined the meeting, one was set up for 40 leaders of various Jewish organizations with Vice President George H.W. Bush, Defense Secretary Caspar Weinberger and Secretary of State George Shultz.

Reagan wrote once again to Begin, reminding him that Israel was allowed to use American weapons only for defensive purposes. He appealed to Begin’s humanitarianism to stop the bombardment.
The next day, in a meeting with Israeli supporters from the United States, Begin fumed that he would not be instructed by an American president or any other U.S. official.

“Nobody is going to bring Israel to her knees. You must have forgotten that Jews do not kneel but to God,” Begin said. “Nobody is going to preach to us humanitarianism.”

Begin’s government also used the tragedy in Lebanon as an opportunity to provide special favors for its American backers.

In From Beirut to Jerusalem, New York Times correspondent Thomas L. Freidman wrote that the Israeli Army conducted tours of the battlefront for influential U.S. donors. On one occasion, women from Hadassah were taken to the hills surrounding Beirut and were invited to look down on the city as Israeli artillery put on a display for them.

The artillery began an enormous barrage, with shells landing throughout the densely populated city. The shells struck and destroyed apartments, shops, homes and shacks

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