The worst is not; So long as we can say, ‘This is the worst.’

– William Shakespeare

It is said that today is pregnant with tomorrow. What and how we have done things in the past has shaped out today and what and how we do things today determine the shape of our future. To see into the future of our economies, with some small degree of certainty, we have to pay attention to what is happening around us and what we do.

But to get an idea of how the future will be, one has to have a real picture of the present. This is important since a false picture will present us with false alternatives, on which we act which in turn will result in unexpected outcomes (i.e., future that we are not prepared for).

It is not always easy to see through all the false pictures and data that we are constantly presented with. For example, in Norway on February 18th, the real-estate association came out with the statement that the housing crisis was almost over and the bottom was reached. This was plastered all over the place. Next day on February 19, the Norwegian Centre for Statistics came out with its own forecast; stating that house prices will continue to fall for the next year and that situation will deteriorate further.

It was clear to some of us that the real-estate association was putting out false information to drum-up business for its members. But if banks, industrialists, and even politicians also send out false and misleading information, then the average person will make decisions that may be contrary to his or her best interests.

Most of us do not have the time, energy, or even the necessary knowledge to gather and sift through large amount of data. We rely on news media, and the experts to make most of our decisions. Until last year, very few people were talking about the tremendous crisis that was well under way; even though as early as 2006, there were clear signs that the economy was under tremendous pressure.

In this article I will try to provide you with a picture of the present situation and then try to extrapolate based on the current policies adopted by various governments, what the near future will look like.

The current economic situation

Let me tell you in no uncertain terms that we are facing a synchronised global economic depression and I am not the only one that is saying this. In early February, the International Monetary Fund’s chief Dominique Strauss-Kahn said the world’s advanced economies — the U.S., Western Europe and Japan — are “already in depression.” Gordon Brown, the UK’s Prime Minister also used the word “depression” to describe the global economy, although his aides quickly said it was a slip of the tongue.

The politicians and others of course avoid using the term “depression” for fear of creating a panic; instead they use terms such as “severe recession” or “one of the most serious financial crises since the great depression,” etc. But they all are saying the same thing, we are in a depression and all the available data support this. An important fact to remember is that this depression is synchronised and this synchronicity has been made possible by the globalization and accompanying deregulation; the very things that were making workers poorer and the rich, richer.

Now the chickens have come home to roost. All economies are now suffering. Such promising economies as Iceland’s saw its GDP shrink by 10%, while the success show case of Europe, Ireland, had its GDP shrink by 6%. Germany, the euro zone’s biggest economy shrank by 2.1% in the three months to December, seconded by Italy, which suffered a 1.8% drop in GDP. The French economy also contracted by 1.2% while IMF put Spain on its vulnerable list. UK’s GDP has also suffered and is forecasted to contract by 3.5% in 2009.

The misery list includes most of the Eastern European countries as well with some such as Ukraine set to experience severe contraction. According to IMF Ukraine’s GDP will shrink by 8 to 10% in 2009. The Russian economic growth is also set to fall. According to the Russian Deputy Economic Development Minister Andrei Klepach the forecast for the Russian economy has worsened to a 2.2-percent contraction in GDP.

Japan’s economy, the second largest in the world, contracted by 12.7 per cent on a seasonally adjusted annualised basis in the fourth quarter and is set to contract further. According to the Taiwanese government, Taiwan’s GDP will shrink by 3% in 2009. Another big economy in Asia is Korea. According to S&P sovereign ratings, Asia’s fourth-largest economy will contract by about 3.5 percent this year. All other South East Asian economies are reporting severe slow down or outright contraction except China.

According to National Bureau of Statistics of China, by comparing the fourth quarter 2007 to that of the fourth quarter 2008, China had achieved a 6.8 percent growth in 2008. However, many believe that this figure is misleading and that the Chinese are hiding the extent of the economic contraction of its economy. They point out that energy consumption in China has substantially been reduced. This could not have happened without a marked slowing down of the economy.

According to the article published in The Epoch Times (17 Feb 09) “Economists at the Standard Chartered Bank estimate China’s growth rate to be around 1 percent. Morgan Stanley analysts estimate it to be at 1.5 percent. This is much lower than the CCP reported 15 percent for the first quarter of 2007. According to economists at Merrill Lynch, the sequential growth rate of fourth quarter of 2008 was zero percent.”

Middle Eastern countries have also been severely affected by the financial crisis. The revenue from their major source of income, oil, has fallen at an incredible rate. Oil prices that were around 120 to 140 dollars last year have come down to around 30 to 40 dollars this year. Every country has slashed its expenditure with the accompanying slowing growth. For example recently UAE was forced to halt construction projects worth $582 billion or fully 45% of all projects. A recent report in New York Times paints a grim picture of the situation in Dubai. The report states that “with Dubai’s economy in free fall, newspapers have reported that more than 3,000 cars sit abandoned in the parking lot at the Dubai Airport, left by fleeing, debt-ridden foreigners (who could in fact be imprisoned if they failed to pay their bills).” Iranians, Saudis, Iraqis, Kuwaitis and others have also been forced to slow down or freeze many projects. One must not forget that many of these countries’ petro-dollars are re-circulated back into the US and European economies. Those funds are drying-up fast.

Turkey sitting between the Europe and Middle East is also suffering. Turkey has the largest GDP in the Islamic world. Turkey’s GDP was 750 billion in 2008, the GDP of Saudi Arabia was 600 billion dollar for the same period. A once dynamic economy is now negotiating with IMF for help.

Having surveyed most of the economic landscape of Europe and Asia, we can now look at the world’s largest economy, the US. The US economy is in a terrible shape, with all sectors going through severe depression. Housing market has completely collapsed. The auto industry is going bankrupt. The banking sector is alive only by the grace of the government handouts. The entertainment industry (TV and film industry excluded) is facing severe problems and unemployment is increasing rapidly. The Federal Reserves’ forecast for 2009 shows a contraction of 0.5 to 1.3 percent of the GDP with official unemployment rising to 8.5 or 8.8 percent. Here one should note that this official unemployment rate does not present a true picture, since all those who give-up registering with the unemployment office or are barely working (part-time workers, etc) are not counted as unemployed.

The missing engine of growth

Before we look at the future development we have to remember that there are four factors that power an economy: consumers, investors, government, and a favourable trade balance. Some economies such as China rely on favourable trade balance and Foreign Direct Investment (FDI) for their growth. For example according to the Chinese Ministry of Commerce, from 1990 to 2007, China received $748.4 billion in FDI. At the same time, since its economic liberalization, China has recorded consistent trade surpluses with the world. For example China has registered trade surpluses of $102 billion for 2005, $177.47 billion for 2006, $262.2 billion for 2007, and $295.47 billion for 2008. China currently has accumulated nearly two trillion dollars in foreign exchange reserves.

In contrast to the China, the United States has relied on consumers and the government for its growth. According to Peter G. Gosselin citing Roach of Morgan Stanley Asia, U.S. consumers constitute only about 4.5% of the global population, yet they bought more than $10 trillion worth of goods and services last year. In contrast the Chinese and Indian consumers combined which account for 40% of the global population bought only $3 trillion worth. He goes on to point out that according to government statistics, from 2001 to 2007, U.S. consumer spending shot up from a little over 73% of the economy to nearly 77%.

If we just look at the differences in consumption levels between US and China-India, we’ll see that these countries are not in a position or have the financial resources to pick-up the slack left by the US consumers. Anyway, China’s growth is based on its exports and the FDI and not its consumers. When the international market shrinks, the Chinese will see (as they do now) a sharp drop in their actual growth. If they try hard they may be able to keep their people’s standard of living at its current level (highly unlikely); but they will be unable to increase consumption. Anyway, according to the Bloomberg (19 January 09), the Chinese unemployment rate has jumped to its 30-year high and will most likely increase further.

How about Japan? Japan also started its economic miracle by export-led growth. Japan saved hard, and worked hard to become one of the largest economies in the world. However, the bursting of the housing bubble in 1990-91 started a deflationary period that Japan has never really recovered from.

If we look at the Consumer Price Indexes (CPI) for Japan, the U.S., and the Euro Area from 1999 to 2006, with 1999 being the base (100), we’ll see that by 2006, the CPI index for US was 122.8, 118.5 for EU and 97.7 for Japan. This shows that until 2006 Japan was still in the grip of deflation.

Add to this the recent financial crisis and you’ll see that Japan is once again entering another deflationary period. In deflationary periods, consumers spend less and try to save more. The fear of losing one’s job, the psychology of ever decreasing prices, and general feeling of doom act against free spending by the consumers. One should also understand that Japanese consumers are reluctant to spend like their American counterparts. According to the available figures (2005), the Japanese consumption was only 55% of the GDP. Compare this to the American consumption of 77%. So the Japanese consumers cannot help either.

What about the EU? Euro zone consumers have a slightly better consumption rate than the Japanese. The consumption rate for Euro zone (2005) was 57% of the GDP. In addition the Euro zone is facing severe financial problems with many countries such as Spain, Ireland, Italy and others facing mounting debt and shrinking export market. Consumers already hit by the housing crisis, financial crisis and now the imminent unemployment crisis cannot be expected to start spending wildly.

So who is going to take the position left vacant by the US and act as the world’s economic locomotive and pull the world out of the depression? The answer is no-one and everyone. The US is clearly not able to do that much. As a matter of fact the US consumers have to get used to lower spending levels for at least a decade, if not for good.

According to Howard Davidowitz, chairman of Davidowitz & Associates, as quoted by Aaron Task in Yahoo Finance, American’s standard of living is undergoing a “permanent change” — and not for the better as a result of:

• An $8 trillion negative wealth effect from declining home values.

• A $10 trillion negative wealth effect from weakened capital markets.

• A $14 trillion consumer debt load amid “exploding unemployment,” leading to “exploding bankruptcies.”

“The average American used to be able to borrow to buy a home, send their kids to a good school [and] buy a car,” Davidowitz says. “A lot of that is gone.

Diminishing wealth

Last year when the depth of financial crisis became apparent the US Feds started to aggressively cut interest rates, in the hope of reducing the severity of the crisis. Other countries specially the Europeans soon followed the Americans in cutting their interest rates. As the crisis spread to Asia and the Middle East, they also began to cut their interest rates. But soon it became apparent that this crisis was not like any they had seen since the great depression and simply cutting interest rates was not going to solve the problem.

To start with the housing market had collapsed completely leaving many banks holding worthless pieces of paper. In addition, these papers were (partly) insured by many insurance and financial institutions that weren’t banks, but because of financial deregulations, had acted as banks. They were also hit by the bad mortgage problems. In short, all the financial institutions, banks, insurance companies and others were suddenly in trouble.

This hit the stock markets, with the shares of these institutions taking a nose dive. These institutions are extremely important for the economy. They provide the logistics for financial transactions. Any problem here affects all parts of the economy. So it was not a surprise to see that all normal financial transactions suddenly came to a halt, hitting other sectors of the economy. Share prices of all the affected sectors began to go down and with it the fortune of the share holders. To see the extent of the damage done one just has to look at how much various stock markets have fallen.

The following stock markets data was published by The Economist (21 Feb. 2009) which shows the extent of the fall since Dec 31st 2007:

US (NAScomp) – 44.7%, US (DJIA) -43%, US (S&P 500), Japan (Nikkei 225) -41.3%, China (SSEA) -55.1%, Hong Kong (Hang Seng) -52.9%, Canada (S&P TSX) -53%, Australia (All Ord.) -61%, Britain (FTSE 100) -55.8%, Euro area (FTSE 100) – 59.5%, Euro area (DJ STQxx 50) – 58.7%, France (CAC 40) -56.1%, Germany (DAX) -55.3%, Greece (Athex comp) -73.7%, Italy (S&P/MIB) -63.1%, Netherlands (AEX) -60.4%, Norway (OSEAX) -64%, Denmark (OMXCB) -55.2%, Sweden (Aff.Gen) -57.7%, Russia (RTS, $ terms) -77.1%, Turkey (ISE) -70.3%, India (BSE) -64.9%, South Korea (KOSPI) -62.6%, Taiwan (TWI) -50.5%, Brazil (BVSP) -53%, Argentina (MERV) -56%, Mexico (IPC) -52.9%, Venezuela (IBC) – 55.6%, Saudi Arabia (Tadawul) -56.8%, South Africa (JSE AS) – 54.1%…. WORLD all (MSCI) -51.2%.

For people in general, shares act both as saving and investment. The average person buys share in hope of getting a better return than from the banks. It is also easy to get in and out of the market. The advancements in information and communication technologies, the costs of buying and selling have fallen steadily in the last decade. So now anyone with a computer can buy and sell shares. This ease of entry enticed an ever increasing number of ordinary people to enter the stock markets.

Now the people have been hit by three disasters. First they lost a lot of money in the housing market. This was both real and illusory. First they were hit with the housing crisis. Many have lost their homes or have seen the value of their homes depreciate heavily. Then they were hit with the collapse of the stock markets. Trillions of Dollars, Yens, Euros and Yuans have been wiped-out in a relatively a short time. Then many have lost their jobs and many are uncertain about the future job security. All these have had a tremendous impact on the consumers, forcing many to heavily reduce their consumption, which in turn have begun to affect businesses which in-turn are shedding workers to compensate for the loss of sales and revenues. This is a classical deflationary circle that feed on itself.

The governments’ response to this threat has been to stimulate the economy by pumping large sums of money into the economy. A decade ago, a hundred billion dollar was an astronomical sum. Today we don’t even bother to look at it twice. Today we talk of Trillions. A few hundred billions here and a few hundred billions there soon add up to a few nice trillions; especially the trillions that we don’t have.

Now we face a classical problem: the increasing budget deficits. Exactly when the economy is contracting and tax receipts are falling, the government expenditure is rising rapidly. In addition, the governments are buying bad debts (US, UK, etc) and trying to spend more on whatever they can in order to arrest the increasing unemployment and stimulate the economy. These large sums have to come from somewhere. They can be borrowed or money can simply be printed. The problem is that some governments are opting for both.

The most important economy is of course the US economy. The US government under Bush spent close to one trillion dollars, and now the Obama administration is promising to spend trillions in the years to come to stimulate the economy. With official US debt now close to 11 trillion dollars and climbing fast, the situation is becoming untenable. According to treasurydirect.gov, last year (2008) US government paid $451 billion dollars interest on its debt. Add to this the Medicare and social security obligations and suddenly things look a lot worse than they appear.

So how can the US continue its deficit spending? By issuing treasury bonds and other security certificates of course. Both public and foreign governments buy these securities which are guaranteed by the US government. According to Reuters (18 February 2009), foreign central banks alone held $1.76 trillion dollars in US treasuries. According to the same report: “The combined holdings of Treasuries and agency securities by foreign central banks at the Fed totalled $2.573 trillion, up $11.223 billion.”

The coming inflation

So far the foreign governments and businesses have been willing to buy US debt, but with the current economic downturn things are beginning to change. According to the New York Times, in the last 5 years China has spent as much as one-seventh of its entire economic output buying mostly American debt. However, with the sharp slowdown in its economy, China is finding it difficult to keep buying. China has also come up with its own $600 billion stimulus plan. This along with the falling trade surplus and the falling tax receipt will make it exceedingly unlikely that China can keep financing part of the US government’s deficit spending. The same applies to other countries as well.

So as the economic downturn continues we can expect to see two things: the interest on US treasuries increase substantially to make it attractive and/or the increased printing of money. Printing money is not so farfetched as many would like to believe. Already countries that cannot find willing lenders are resorting to this. A good example of this is UK. With the current plans to nationalise a few more banks (Lloyds and Royal Bank of Scotland), the UK national debt is set to surpass the £2.2 trillion pound mark. This is 150% of UK’s GDP. It is not then surprising to see that the Bank of England voted unanimously earlier this month to seek consent from the government to start the process of quantitative easing by buying gilts and other securities. Quantitative easing means printing money. With interest rates at 1%, printing money is likely to increase inflation.

Already many governments find it difficult to cover their deficits. It is only a matter of time before they also begin to print money. It is especially appealing for the US government to do this since inflation means a real value reduction in debts. With mounting trade and budget deficit and decreasing tax receipts and the shrinking of the number of willing lenders, US government may not have any choice but to print money.

So far, all governments are reducing their interest rates to historic lows and at the same time spending a lot of money that they don’t have. It will take at least two more years for the economy to stabilise. By stabilise, I mean an arrest in decline rather than outright growth. Once that point is reached we will begin to see the effects of the loose monetary policy: a tremendous rise in inflation which can be accompanied by low economic growth or in other words stagflation.

The fear of stagflation arises from the fact that from all indications, growth will not strengthen anytime soon. It is quite clear now that the US and, to a large extent, the European consumers have been hit hard by the current crisis. There is also the possibility that another banking crisis may still ensue such as the commercial real-estate mortgage defaults and above all the repetition of currency crisis (1997 Asian Financial Crisis). Already we see that China, Japan, Korea and others are setting up a $120 billion currency defence fund to protect Asian currencies against speculative attacks.

The current economic crises have left many countries’ local banks with foreign currency loans that they find difficult to repay in that currency. This and the possibility of defaults have made these countries a good target for speculators. If such an attack starts, many countries will automatically have to devalue their currencies (even more than they already have) or try to defend their currencies. In either case this may trigger yet another crisis that may actually destroy a good portion of many economies around the world.

Even if we assume that no more nasty surprises will appear in the next two years and the economies stabilise, we are left with the reduced levels of consumption around the world, especially in major economies. As I have mentioned above, it is very clear that at least in US, the consumers are not going to recover anytime soon. I have also shown that the Chinese and Indian consumers cannot replace the US and European consumers. So there will be a dearth of market for the goods and services produced by others. In absence of the US, the question will be: which country or countries are able to increase demand to such a degree as to trigger a recovery; a recovery that most likely will be accompanied with high inflation.

In 2006, in the article “The Coming Financial Crises?,” I stated the following:

At the end of the WWII, 45 nations gathered at a United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire, to address the problems of reconstruction, monetary stability and exchange rates.

The delegates agreed to establish an international monetary system of convertible currencies, fixed exchange rates and free trade. To facilitate these objectives the delegates agreed to create two international institutes: the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (the World Bank). An initial loan of $250 million to France in 1947 was the World Bank’s first act.

Since then there has already been considerable criticism of the roles of IMF and the World Bank. The above mentioned problems and the ongoing trade imbalance in the world have to be addressed by a similar gathering. Sooner or later, both the United States and the rest of the world have to address the existing problems. These problems are not the United States’ alone. We cannot ignore the largest economy on earth. It is said that if United States sneezes, the world catches cold. We have to either make sure that the United States doesn’t catch cold or vaccinate ourselves against it.

I restate my earlier arguments: we need a new Bretton Woods agreement where we can address the existing problems and restructure the world’s economic system. If we don’t do this, and soon, we will face protectionism, low economic growth, and even trade wars. We have ignored this problem for a long time and are now paying the price. What would the price be if we continue to ignore the existing systemic problems?

Betrayal is the only truth that sticks.

– Arthur Miller

It is now over two weeks since Israel started its vicious assault on Gaza resulting, so far, in close to 600 dead and thousands of injuries mostly civilians. Israel true to its nature is once again ignoring all international laws and conventions. With its usual thirst for blood of the civilians, Israel is continuing its bombing of workshops, administrative buildings, roads, bridges, fuel depots, prisons, schools and mosques; killing and injuring large number of civilians in one of the world’s most impoverished and densely populated areas of the world. The Israelis are following their old method of destroying everything that makes a society a society, the infrastructure. The collective punishment of the Palestinians for what Hamas or Islamic Jihad is supposed to be doing or has done, reminds one of the collective punishments that Nazis meted out in the occupied areas in Eastern Europe during the WWII.

International Red Cross just issued a statement condemning Israel for its brutality against civilians. ¹

There are several things that seem to have shocked the Red Cross. In one episode after several days of heavy pressure from the Red Cross, several ambulances were allowed to enter a neighbourhood to evacuate the injured civilians. In one house they found 12 bodies all civilians and mostly women and children. They also found four very young children still alive next to their dead mothers, too weak to stand. They have been holed-up in the same house for close to 4 days.

Apparently the whole neighbourhood was full of dead and injured civilians with Israeli forces only 80 meters away. According to the Red Cross the Israeli forces knew of the situation and not only didn’t do anything to help the civilians, but also were stopping Red Cross from providing assistance. Representative of the Norwegian Red Cross’ People’s Action calls this a war crime.

But this is only the tip of the ice berg. The Israeli forces have begun to use civilians as human shields. According to Amnesty International Israeli forces occupy civilian houses and keep the civilians as hostages on the first floor, while they position their soldiers on the second floor; ensuring that any fire on the house (especially with anti-tank or RPG missiles) kills the civilians as well.

In yet another report, the United Nations condemned Israel for targeting civilians. The head of the UN agency in Gaza running the school that was attacked by Israel forces categorically rejected the claim by Israel that Hamas fighters were in or even near the school. Israel bombed the UN run school, killing 43 children and injuring 100.²

Israel also targets ambulances and humanitarian relief convoys in Gaza. According to UN, at least one Palestinian was killed when UN relief convoy came under fire from Israeli forces. “The attack took place on Thursday as the lorries travelled to the Erez crossing to pick up supplies that were to have been allowed in during a three-hour ceasefire.”³

The atrocities committed by Israel is a genocide of a conquered people. Gaza is a concentration camp, and no amount of PR can reduce the magnitude of this horrible crime against humanity and decency.

But Israel is Israel. She has shown that cruelty is in her nature. Here I am talking about the successive Israeli governments and not Israeli people in general. I am sure there are many in Israel that if became aware of what really is happening would not approve of it. This of course excludes the settlers and the Zionist movement. These groups like the South African white supremacists consider others to be inferior to them; or that they have the god given right to do as they please.

But states seldom are representative of their people. It is the elite and / or the governing class that makes the decisions. The state of Israel is determined to never allow the Palestinians to have a viable state. The maximum that they are willing to allow is some form of Bantustan (South African) or North American reservation (for Native Americans). With carte blanche from US and most of the European powers, Israel has been implementing this policy. Setting-up such a system takes many years. People’s spirit has to be crushed through collective punishment, economic strangulation and above all excessive and continuing violence. This has to continue for many years so the people lose hope of ever achieving anything more than what is on offer.

This of course cannot be done without the approval of other countries. Israel has the approval of the world’s most powerful nation, the United States. In addition, because of her US connections, she has managed to get a nod and a wink from the Europeans as well. So with this carte blanche in hand she has set forth to change the “reality” on the ground in her favour. By systematically settling extremists in the middle of populated Palestinian areas, she has made the creation of a viable Palestinian state almost impossible. A simple look at the map of the Palestinian territories resembles a Swiss cheese, with pockets of densely populated Palestinian areas surrounded by settlements and their protective military garrisons.

The violence both official (state sponsored) and unofficial (settlers) has been incessant. Couple this violence with economic strangulation and you will see the reasons behind the Palestinians’ anger and frustration. Any resistance is automatically branded as an act of terrorism and punished with even more violence, with US and Europeans cheering the Israelis on the side lines.

If you recall, when Georgia invaded the Russian-protected enclave of Abkhazia, and met Russian counter attack, the whole Western world, with the US at its head, condemned Russia. Pushing for UN action and even sending warships with “humanitarian” supplies. Russians did not commit one thousandth of the Israeli atrocities and we had the Georgian president and other politicians talking day and night about the horrible things the Russians were doing. Yet today, we have US and European governments sitting silently watching this genocide taking place without doing anything. US even vetoes resolutions condemning Israeli actions, forgetting that no peace is ever made possible by killing so many innocent women and children.

But whenever a power tries to relocate a group of people by force, the Newton’s Third Law of Motion comes into effect. Newton’s Third Law states that for every action there is an equal and opposite reaction. This means that if you try to imprison a person that person will try to break out. If you try to subjugate a people they will resist. This is the underlying causes of most liberation movements. The same applies to the Palestinians. They are resisting. We can agree or disagree with their methods, but theirs is a reaction to actions taken against them; we call this self-defence.

Israel is trying to push Palestinians into submission and in the process forcing many to leave the occupied territories. They are trying to show the Palestinians that they are alone and resistance in the face of an overwhelming force is suicide. Israel has tried this tactics before and has failed. The children that had to stay with their dead mothers for four days will not forget. The starved people of Gaza are not going to forget this barbarity; and neither shall the people of honour and conscious, regardless of their nationality, Israelis included.

But as for one of those who have followed the Israel’s actions for the past 30 years, I can say that I didn’t expect anything different from Israel. The lies and deceits are all too familiar to fall for again. The current Israeli action in Gaza was not a reaction to the recent event, but planned a year ago. Just read the New York Times article in which among others they interview a senior Israeli military officer.⁴

Israel is now trying to portray herself as a nation that is defending itself, while the truth is that Israel is a cruel occupying power trying to force a people out of their land. And this is being done with the help of some Arab nations; the very same nations that constantly talk about Arab and Muslim solidarity. These nations are: Egypt, Saudi Arabia and Jordan.

The Arab Collaborators

The often asked question, when it comes to the Palestinians, is about the role of Arab countries in the Palestinian struggle for freedom. The people not familiar with the political landscape of the area often see the Middle East as two camps, Arab countries on one side and Israel on the other. The reality is totally different. Israel has seldom been alone. Beside its usual American, French, British and other staunch allies, she has had the hidden backing of several Arab countries.

For close to 30 years now, many Arab countries have been collaborating with Israel; some like Egypt (gained independence: 1922) and Jordan (gained independence: 1946) openly, while others like Saudi Arabia (founded: 1932), UAE (founded: 1972) and Kuwait (founded: 1961) from behind the scenes. The reasons for this collaboration vary from country to country but they all have one thing in common: the rulers of these countries are all dictators and need foreign protection from their own people. Some such as Saudi Arabia, Jordan, Kuwait and UAE were put in power by the British. The founder of Saudi Arabia, Abdul-Aziz bin Saud (the kingdom is name after him) was put in power by the British. The same goes for the others, except Egypt which experienced a coup by the army officers in 1952, resulting in the ousting of the monarchy and the accompanying British influence. But the Western influence returned with Anwar Sadat. All these countries are dictatorships and all are under pressure from their people. What they cannot accept is any democratically elected form of government in their mist. They fear that if an Arab government becomes democratic they may have to become one themselves, hence losing power. One of the things that they love about Mahmoud Abbas, the Palestinian president, is that he won the election not by popular vote but by popular method of rigging the election; something that these Arab leaders understand and respect.

In contrast, Hamas really represented the aspiration of the people. As soon as Mahmood Abbas’ term as president is over and he had to stand for re-election, he would surely lose. In contrast, Hamas really won the municipal elections in 2005 and the Parliamentary election in 2006. The elections were supervised by international observers, many from Europe, and US.

Palestinians were fed-up with the corrupt regime of Mahmoud Abbas and Fatah. They wanted to clean house. But as soon as Hamas took over, the US and the Europeans put an embargo on Hamas, calling it a terrorist organisation and not a peace partner. Israel closed the borders and refused to let anything into Gaza. Egypt also did the same.

What is not mentioned much in the media is that this was done with the complete approval of the Saudi Arabia, Egypt and Jordan. After all, Egypt could have opened its border for transfer of food and fuel. The reasons behind this hostility were and are that Hamas is a truly elected government and worst of all, Hamas is a branch or an off-shoot of Muslim Brotherhood of Egypt.

Muslim Brotherhood has a branch or related organisation in Jordan as well. Egypt and Jordan are worried that should Hamas survive and show its resistance, their people may get the idea that they can also resist the tyrannical rule of these despots. One must not forget that Muslim Brotherhood represents the only serious challenge to the Mubarak’s rule in Egypt.

Egypt

The 81 year old Hosni Mubarak of Egypt has been “president” since 1981 (28 years). He has won every election with a comfortable majority. He is much loved by his secret services. Prior to every election he arrests and imprisons all the opposition, ensuring a “clean” election. Torture is so widely used and accepted in Egypt that US outsources torturing of some its prisoners to Egypt. This alone should tell you volumes about the nature of Mubarak’s rule. He is now trying hard to crown his playboy son as his successor. But the Americans are not so sure if the son is capable of keeping the 80 million Egyptians in line and are therefore looking for alternative candidates. The head of the feared main secret service is one of the prime candidates along with some of the top generals. Challenging him is the Muslim Brotherhood organisation, enjoying grass root support from all sections of the Egyptian society including Lawyers, doctors, judges and student associations. Not surprisingly, US and Israel call Muslim Brotherhood a terrorist organisation.

By all accounts, the Muslim Brotherhood be it in Jordan, Egypt or the occupied territories such as Gaza runs a clean operation, running many charity organisations and providing services to the poor and the needy. As such wherever they are, they pose a threat to the corrupt regimes, since they provide an alternative to the people of that area.

Jordan

King Abdullah II of Jordan, born of a British mother, educated in the West, including the Jesuit Center of Georgetown University, was brought to power by the CIA. His Uncle was a long time crown price, yet after his father died in a US hospital, Madeline Albright, Clinton’s Secretary of Estate flew to Jordan to inform the Jordanians that the King on his death bed had changed his will and named his son Abdullah as his successor. The new king Abdullah II is married to the Queen Rania, a Palestinian.

The majority of this Kingdom of 5 million people are Palestinians who are not very friendly to this King. In 1967 there was a Palestinian uprising (led by the PLO) against King Hussein (ruled: 1952-1999, the father of the current king), which resulted in heavy casualties among Palestinians. In addition, the Kingdom is currently full of Iraqi refugees who resent the King’s help to the Americans in invasion of their country. On top of all this, we have the Muslim Brotherhood which tries hard to abolish the monarchy. King Abdullah relies heavily on the US support and backing for staying in power. King Abdullah also sees a natural ally in Israel, a country that can come to its aid in case of another uprising.

Saudi Arabia (House of Saud)

I don’t have to tell you much about Saudi Arabia. The Kingdom is run by the 84 year old, ailing Abdullah bin Abdul Aziz Al Saud. His personal wealth is estimated at $21 billion USD. He rules a clan of 8000 princes who in turn rule the country. Saudi Arabia is the centre of corruption in the Arab world. The Saudi rulers corrupt everything with their money. Lacking the necessary mental power or physical courage, they try to stay in power by subterfuge, lies, and deception. They fund the real extremists on the one hand while portraying themselves as the protectors of the Western interest on the other. They preach intolerance and xenophobia to their people decrying the Western decadence, while spending a lot of time enjoying the life in the West. They pay the West for protection against their own people and they pay the extremists to do their fighting elsewhere. Saudi rulers are indeed the worst of them all.

House of Saud is also the financier of the so called Arab Moderates and the extremism that they cause. House of Saud financed the Mujahedeen in Afghanistan to fight the Soviets. They later financed the Taliban. They also paid Saddam Hussein to fight Iran. Then they paid the Americans and Egyptians to fight Saddam Hussein. They are the financiers of death and misery. They finance anything, anywhere, as long as this reduces the threat to their illegitimate rule. They are currently financing the civil war in Somalia, bandits in Baluchistan (Pakistan and Iran) and god knows what else. They are detested by their own people and neighbours yet loved by Bush, Cheney and the oil companies. As long as they provide the money and oil the US is willing to tolerate them. And guess what? The Muslim Brotherhood hates the House of Saud too. This makes them a threat and hence they have to be dealt with.

The Collaboration

As can be seen, each country has a selfish reason to eliminate Hamas, but each is restrained by its population. Israel has no such a restraint imposed on it. She not only can wage a terrible war, but she also gets assistance from Arab countries. Indeed it is the second time (the first was the invasion of Lebanon in 2006) that Israel is getting open and solid support from these Arab countries. The invasion of Gaza was discussed in Egypt before its implementation. Egypt, Jordan, and Saudi Arabia are Israel’s active partners.

Egypt is actively involved in stopping all aids from getting to Palestinians in Gaza save a token few trucks. These few trucks are allowed to go through so they can be filmed and shown to Egyptian people. All demonstrations are banned, and all Egyptian volunteers for Gaza are either arrested or sent back.

There are hundreds of thousands of volunteers across the Muslim world that are willing to go to the aid of the Palestinians, but the Egyptian authorities don’t allow them passage. Egyptians even stop medical aid from passing through their territory. This is part of a report from Associated Press:

RAFAH, Egypt: Frustration is mounting at Egypt’s border with the Gaza Strip, where many local and foreign doctors are stuck after Egyptian authorities denied them entry into the coastal area now under an Israeli ground invasion.

Anesthesiologist Dimitrios Mognie from Greece idles his time at a cafe near the border, drinking tea and chatting with other doctors, aid workers and curious Egyptians.

“This is a shame,” said Mognie, who decided to use his vacation time to try help Gazans. He thought entering through Egypt, which has a narrow border with the Hamas-ruled strip, was his best bet.

“That in 2009 they have people in need of help from a doctor and we can go to help and they won’t let us. This is crazy,” he added.⁵

In addition there are many Iranian cargo planes full of food and medicine which have been sitting on the tarmacs in Egypt for days waiting for permission to deliver their cargo. Egyptians even denied the medical aid sent by the son of the Libyan President Qaddafi to land in Egypt.⁶

One thing is clear: these three countries do not want the Israelis to fail in their mission of totally destroying Gaza. Hosni Mubarak said so himself. The daily Haaretz reported that Hosni Mubarak had told European ministers on a peace mission that Hamas must not be allowed to win the ongoing war in Gaza.

As Egypt physically aids the Israeli military by denying food, fuel and medicine to the civilians, the House of Saud helps Israel by giving her time and diplomatic cover. When Israel started its invasion there was an immediate call for an Arab summit. Saudi Arabia and Jordan (along with Egypt of course) delayed the summit. The Saudis along with the UAE said that they had another meeting to attend to and therefore Palestinian issue had to wait. After a few days when the summit was eventually held, they issued the same old statements. Yet this time same as the Israel’s invasion of Lebanon in 2006, they blamed the victims. In a statement, Saudi Arabia blamed Hamas for Israel’s continuing offensive in the Gaza Strip. Saudi Arabia, after blaming Hamas, declared that it will not even consider an oil embargo on Israel’s supporters. She then again blamed Hamas.

By this time, the three Arab countries along with Kuwait and UAE began singing the old song: international community is not doing anything about the catastrophe that is taking place in Gaza. It seems that these Arab tyrants have no shame at all. This reminds me of a quote from Marquis De Sade (1740-1814): “One is never so dangerous when one has no shame, than when one has grown too old to blush.”

These Arab leaders (many are indeed too old to blush) are complicit in the murder of so many civilians, especially young children. According to Agence France-Presse, quoting the medics on the ground, fully one third of all people killed have been children.⁷ How can these Arab leaders justify this to their people?

The answer is that they cannot. Israel knows this and for the second time can show the Arab street that their leaders are nothing but a bunch of old hypocrites. These Arab leaders are now exposed and can do nothing but to cooperate fully with Israel and US. What stand between them and their people’s rage is their army and secret services; which in turn are supported by US.

Israel has cleverly exposed these leaders for what they are: collaborators of the worst kind. These Arab leaders have brought an unimaginable shame to their people. To quote Lucien Bouchard: I have never known a more vulgar expression of betrayal and deceit. Our hope is now with the people of these countries to clean this stain from their honour.

1. ABC News Norway. “Røde Kors sjokkert over Israel,” (Red Cross Shocked by Israel), 8 January 2009.
2. Aljazeera.net. “UN: No fighters in targeted school,” 8 January 2009.
3. Aljazeera.net. “Israel fires on UN Gaza convoy,” 8 January 2009.
4. nytimes.com. “For Israel, 2006 Lessons but Old Pitfalls,” 7 January 2009.
5. The Associated Press. “Doctors stuck at bottleneck on Egypt-Gaza border,” 6 January 2009.
6. google.com: hosted news. “Egypt denies Kadhafi’s son permission to land at airport,” 6 January 2009.
7. Agence France-Presse. “Children make up third of Gaza dead,” 7 January 2009.

Since then the U.S. economic pressure on Iran has been increasing steadily. The U.S. to a large degree has been successful in cutting Iran from normal international financial institutions. Many European and Asian banks have been forced to reduce or cut their financial ties to Iran. Even some Chinese banks have come under pressure to restrict their dealings with Iran, not to mention UAE and Bahraini banks. This coupled with two successive UN sanctions have been hurting the Iranian economy much more than the government has been willing to admit.

Today, many Iranian businessmen find it increasingly difficult to do business with their foreign counterparts, simply because international business payments are mostly done through letters of credits which are issued by banks. In absence of a letter of credit, an importer has to pay cash; something that is risky and difficult. There are of course various ways to side-step these problems, but they all add to the cost of doing business, something that hurts the economy. In addition, many companies are being scared from investing in Iran. The threat of being cut-off from US and many major European markets has effectively limited the foreign investment to only some oil related projects. Even in this sector, many companies (even governments) are under tremendous pressure not to invest.

All this has affected the Iranian economy in a negative way. But Iran can withstand this pressure for many years without being seriously hurt; provided the government acts wisely. Unfortunately, wisdom is currently in short supply. The government’s economic policies are doing what all the decades of U.S. pressure had not been able to do: seriously destabilise the economy.

Iranian economy suffers from some serious systemic problems, some of which (such as the role of Bonyads (charity organisations), corruption, excessive bureaucracy, etc.) I have already explained in one of my previous articles (Ahmadinejad’s Achilles Heel: The Iranian Economy), so I will not mention them here again. Suffice to say that no Iranian President can fix the economy without addressing these fundamental problems.

Inflation

Dr. Ahmadinejad came to power because of his economic promises to improve the lives of the unemployed poor, the working poor and the middle classes. People also hoped that he would clean-up some of the endemic corruption in Iran. He had promised to increase the salaries of pensioners and the low-paid government employees, to provide affordable housing for the young and the needy and many other commendable welfare programs.

However, in an economic system where large segments of the economy resemble the fiefdoms of the Middle Ages, there is very little room to manoeuvre. Upon winning the elections, Dr. Ahmadinejad increased the salaries, which should have alleviated some of the pensioners’ and low-income government employees’ economic problems. But it only increased their problems. Many economists blame this increase in salaries as one of the major contributing factors to the increasing inflation. However, this is only part of the problem. Other problems are: external factors affecting the prices of imports, excessive middle-men profits (usually because of existence of hidden monopolies), smuggling or exporting of subsided imported goods to neighbouring countries, excessive regulations, and excessive liquidity.

1. I have already mentioned the extra cost associated with importing goods for Iranian businessmen. The international sanctions, U.S. and European banks’ refusal to do business with Iranian banks have all added to the extra costs of doing business; all of which are transferred to the customer. The U.S. blockades of Iranian financial institution and businesses have been very effective; although the government denies this. Iranian financial institutions are under U.S. siege. Iran is fighting an economic war with a financial Goliath and if Iran is not careful it will lose.

While the U.S. is blockading Iranian banks and businesses, it is trying to drag Iran into an expensive regional arms race. The U.S. strategy is the same one that Ronald Reagan used against the Soviet Union. This time, the U.S., while blocking Iran’s access to international financial institutions and banking facilities, is arming the neighbouring Arab states and Israel. It is hoped that Iran will be dragged into an arms-race which it cannot afford; diverting the needed civilian resources to its military. In this way, over time, the current system will be unable to compete and will eventually collapse, just like the Soviet Union.

2. Lack of competition (large monopolies), an excessive number of middle-men, and the endemic corruption also adds to the problem. When these people see the opportunity to double their profit and they have the ability to control large parts of the market, they simply do so. If you are in a position to suddenly import a few hundred thousand mobile phones without any difficulty while others have to jump through hoops to import a 1000, you can effectively control the market for mobile phones and hence prices.

3. Another factor that affects the prices of goods is the legal or illegal export of subsidised imported goods. Imagine you are a businessman who can import sugar. You import 10,000 tons of sugar at $100 a ton. The government pays you a subsidy of 20%. That is you get paid $200,000 in subsidy. Now as soon as you import the goods into Iran, instead of sending it to the local market, you export it (legally or illegally) to Iraq or Afghanistan. Even if you sell your product for the original sum, you are still ahead by $200,000. That is, you pocket the subsidy and government thinks that it has supplied the market with cheap and affordable necessities. This has been happening with subsidised fuel and is now happening with other products. During the last year of former president Khatami’s government, Iran imported $28 billion worth of imports of which 75% was investment and intermediate commodities. Last year this figure increased to $49.3 billion and it is expected that at the end of this Iranian year (ends 21 March 2008) this figure will reach $53 billion.Tabnak.¹ One must note that a large part of these imports is consumer goods and food stuff. Officially the inflation rate is stated at 19%, however the independent economists and experts put the figure closer to 25% to 30%. So something must be happening to these imports, beside normal consumption.

4. Iran suffers from excessive regulations in some areas and lack regulations in others. For example, registering companies, getting an import permit, clearing goods from customs etc, are all heavily regulated, while there are no laws regarding monopolies. Some of the largest businesses in Iran (Bonyads) resemble black boxes. They do not pay tax, and no-one knows the extent of their business activities. The tax system in itself is very complex and large parts of the economy don’t pay any tax at all.

5. Finally, the excessive liquidity. Money supply should be managed in such a way as to accommodate the normal and needed economic transactions. When you have a million dollars you can do several things: purchase goods, invest the money in some business, or keep it in the bank or under your mattress.

If you are uncertain about the economic outlook, you will not invest in stock market or in businesses. You put your money in the bank. But if the bank pays you less than the actual inflation, you don’t do that. If the government forces banks to lend money at uneconomical rates, the same banks cannot pay the necessary interest to their customers to cover even the inflation. Who would like to get 10% or 20% interest on his/her money when there is 30% inflation?

Then there is allure of the real-state. If there is a natural pressure on the housing market and prices are rising, you put your money there; hoping that even if you don’t make much profit, at least your money would be safe from inflation.

The point here is that in Iran excessive liquidity isn’t absorbed in productive long-term projects such as building factories, roads, etc. It is simply used for speculation in real-estate or other short term projects. The middle-classes are not the reservoir of this excess liquidity. They spend all their money on consumption. The excess liquidity is in the hands of the top 10% of the population who are earning unbelievable profits from speculating on anything from real-state to import and export of goods.

The Housing Bubble

When Dr. Ahmadinejad came to power he provided low-interest loans to the first time home-owners, especially the young and the poor. However, since new houses weren’t being built as fast as the increase in the liquidity, the pressure on the housing market just increased exponentially. To address this problem, the government tried to increase the building of new homes by subsidising raw materials such as cement and steel. But as I explained above, most of these subsidies were probably simply pocketed by the importers and the middle-men.

But this alone cannot explain the creation of the housing bubble. Speculation, excess liquidity and lack of safe venues for investment have all contributed to create a housing bubble that is threatening the economy of the country. For example, a small apartment (70 sq m) in Tehran’s lower-middle class neighbourhood today goes for 400 million toomans or $400,000. This is an astronomical sum for majority of the population, first-time buyer or not. This simply cannot continue without creating serious social problems, especially when one takes into consideration that 35% of Tehranis are tenants;² that is at least 4.2 million people in Tehran alone.

The increase in house prices lead to the higher rents, making life increasingly difficult for these people. In addition, it forces the young people to stay with their parents even when they are in their late 20s or early 30s. Some even marry and still continue to live with their parents simply because they cannot afford to even rent a small apartment, and most of these people have work.

The official “Statistical Center of Iran” puts the unemployment rate (March 2007) among “youth” aged 15-29 at 22.4%. Unemployment for the same group in the urban areas the unemployment rate is stated as 25.6%. The underemployment for the total workforce is stated as 8.4%. So if we take the “official” underemployed and unemployed “young” people, we get 34% of the working-age young population that have no chance of even renting a room, let alone a small apartment.

Poverty: Gini Coefficient and Government Policies

the Gini coefficient is used as a measure of inequality of income distribution or inequality of wealth distribution. It is defined as a ratio with values between 0 and 1, where 0 corresponds to perfect equality (everyone having exactly the same income) and 1 corresponds to perfect inequality (where one person has all the income, while everyone else has zero income). A Gini coefficient of 0.3 or less indicates substantial equality. A coefficient of 0.3 to 0.4 is generally considered an acceptable normality and 0.4 or higher is considered too large. A value of 0.6 or higher is predictive of social unrest.³ According to UN, the Iranian Gini coefficient is 0.44 and increasing.⁴ This coefficient most likely is not correct since the Iranian economy is opaque and finding who has what is extremely difficult. At the same time the very existence of Bonyads (charity organisations) and the informal economy distorts the figures. In 2006, Iran had the unenviable ranking of 105th place out of 163 countries on Transparency International’s Corruption Perceptions Index. In 2007, its position worsened and jumped to 179th place among the 179 countries surveyed. With such a high level of corruption and lack of reliable statistics, even though this figure is very high, it is difficult to believe a Gini coefficient of 0.44. What is clear, however, is that there are a lot of poor people in Iran that are getting poorer by the minute; after all inflation hurts the unemployed, the working poor and the middle classes much more than the wealthy and rich.

To understand the problem facing the people one has to look at the social security. According to the minister of social security and welfare Mr. Abdolreza Mesri, the minimum payment to those under its ministry’s cover is 25,000 to 50,000 toomans or between 25 to 50 dollars per month.⁵

This figure, according to him, is only from his ministry, while charity organisations and others also help. One must note that the 50 dollars is for a family and not a single person. Now the rent for “a single room” in Shiraz (Shiraz is much smaller than the country’s capital Tehran) is about 100,000 toomans or $100.

Add to this the price of a kilo of mutton which is 7500 toomans or 7.5 dollars per kilo (which incidentally was 1800 toomans or 1.8 dollars in the beginning of 2006⁶) or a kilogram of chicken that costs 4500 toomans or 4.5 dollars and you’ll get the picture. Prices for vegetables also follow the same pattern. (It should be noted that last year 200,000 lambs were sent to Saudi Arabia for Hajj sacrificing ceremonies by the Iranian pilgrims.⁷)

According to the minister, there are currently 9 million people in Iran receiving assistance from his ministry, and he is proud of stating that no-one under his ministry’s cover gets paid anything under the UN minimum poverty line, which is between 1 and 2 dollars. The 9 million people that the minister speaks of receive a coupon worth 32,000 toomans or 32 dollars per month for purchasing of food and other necessities.

The minister admits that there is no way for him or others to gauge the real need of the people. He uses the example of the healthcare costs, in which he mentions that in the past 6 months private health care prices have risen by 1,000% (10 times the original). One must note that Iran lacks universal healthcare system, leaving millions to rely on private sector for their needs. How this 1,000% increase in healthcare costs has affected the people is anyone’s guess.

The Need for a War Economy

By now, it should be clear to all that the Iranian economy is in serious trouble. Iran is fighting an economic war with the U.S. and Europe, while at the same time suffering from systemic problems and bad economic management which has resulted in stagflation, which means high inflation and unemployment. The government’s free-spending policies, no matter how well intentioned, has only worsened the problem. But as I mentioned, the economy suffers from systemic problems that cannot be solved by this or that president. The right policies can only limit the damage, not solve the problems.

Now that Iran is caught-up in the sand-storm of stagflation and fighting an economic war, it has to tighten its belt and enact drastic economic measures. It cannot simply check inflation by importing more goods, without making sure that those goods are actually delivered to the people at subsidised prices. It is evident that simply increasing the imports doesn’t help.

It cannot reduce its payroll either, because if it does, it simply increases the unemployment rate and hence social dissatisfaction. It cannot reduce liquidity by increasing the interest rates either since this will mean a large scale defaults by the middle classes and small businesses, not to mention a proper recession. It cannot increase taxes much either, since large segments of the economy are tax-exempt, leaving the burden on the shoulder of government employees (who have to pay taxes) and again small businessmen.

So far the government has been dipping into the oil-reserve fund to finance its increasing imports and social programs. But that has only fuelled the inflation. So what can this government do?

Well, to start with it has to get serious about fighting corruption and cronyism. Corruption is one of the major problems facing Iran and government ignores it at its own peril. Government should also inform people that it is in a state of economic war and everything is not so rosy. The government should know that people already know this.

The government has to implement a war economy; that is to say, it has to reinstate the coupon system that it used in Iran-Iraq war. The introduction of the coupon system will also relieve some of the poverty while reducing inflation. The government should drastically reduce the import of luxury goods. It has to encourage the local industries and food manufacturers, something that generous imports tend to undermine. In addition, the government has to start a large scale house building program to reduce the pressure on the housing market. Leaving it to the market to address this issue, in the current inefficient system, doesn’t produce any results except inflation.

I am against a command economy, but under the current system with all its inefficiencies and endemic corruption, nothing else will do the job. Instituting a war economy will be a drastic measure, but a welcomed one by the majority of the people. Those who are sleeping hungry at night (and there are many) will thank the government, while those that live in luxury villas will curse the government. It is up to this government to decide whose praise it is after. The poor and the middle classes find themselves between the hammer of the inflation and the anvil of the unemployment. How long will they continue to accept the blows is anyone’s guess, but if it continues, it will end badly not only for Dr. Ahmadinejad’s government but also for the Islamic Republic of Iran.

1. “Tremendous increase in imports” (گزارش تأمل‌برانگيز گمرك از واردات بي‌رويه ) January 17, 2008.
2. Tabnak. “35% of Tehranis are tenants”, January 24, 2008.
3. Liu Binyan, Perry Link, “A Great Leap Backward?“
4. United Nations. “UNDP Country Programme for the Islamic Republic of Iran (2005-2009)”
5. Tabnak. “Minister of Social Security & Welfare: What is the purpose of Determining the poverty line”, 19 January 2007.
6. Aftab.ir. “Mutton prices increased by 18%”, 1 January 2006 (قیمت گوشت گوسفندی طی دو هفته گذشته ۱۸ درصد افزایش یافت)
7. Aftab.ir. “Meat prices will not go down until next year” (قیمت گوشت تا پایان سال كاهش نمی‌یابد )

Nothing in the entire world is more dangerous than sincere ignorance and conscientious stupidity.
– Martin Luther King Jr. (1929-1968)

Every now and then when some poor country is about to receive some American military attention, the American people are prepared by an intense and unceasing propaganda. They are bombarded day in and day out by what a threat the leader of that country is to the peace loving, civilized and democratic people of the United States. Newspapers, TVs, radios, blogs and anything else that can in anyway convey a message to the people are employed to present this person as the worst of the worst.

With the invasion of Panama in 1989, it was just the same then as it is now. Manuel Noriega the president of Panama, who incidentally for many years had worked for the CIA (for Bush Senior), was no longer following the orders from Washington. The US decided to replace him.

Overnight Mr. Noriega became the evilest man on the planet. He was the dictator and a drug lord that had to be dealt with. He was made responsible for the entire drug trafficking in the US. He was made the most dangerous man in the world. He was the cruellest dictator that ever existed. In addition we were told that people of Panama deserved “democracy.”

After a short while the American people started thinking that if Mr. Noriega was removed then the drug problem in the US would vanish as well. So in December 1989, 27,000 American soldiers invaded Panama. However, in order to keep the democratic tradition alive in Panama, a few hours prior to the invasion, the US military appointed Mr. Guillermo Endara as the new President of Panama. The ceremony took place inside a US military base in the Panama Canal Zone.

Well, the drug problem is still there. Mr. Noriega turned-out to be nothing but a CIA agent that wasn’t following the orders. After a few months people forgot all about it. Later it was Saddam Hussein that became the most evil person in the world. Once again the media started the same old song and dance routine. The Gulf War ensued and thousands of people were killed.

Now it is Iran’s turn; and the evil de jour is Mr. Ahmadinejad. He is described as anything from Hitler reincarnate to the most dangerous man on earth. Never mind that he is not the head of an army, or that he has no real power; the main thing is that he is EVIL. Never mind that there are no Iranian troops in Canada or Mexico; never mind that he does not possess thousands of nuclear missiles; he is still the most dangerous man alive and we have to do something about him.

It always amazes me to see that people, time and again, fall for the same old song and dance routine. Don’t you ever get a sense of déjà vu? Can’t people see that they are being, so openly, manipulated? Apparently not.

The very people who are preparing us for another war are the only ones that are going to benefit from it. The majority always loses and most likely you and I will be among the losers. We are the ones who have to pay for it, and we will. We are already doing it by having to work more just to make ends meet. But no amount of money can give one that joy of seeing “our boys” smashing those evil, backward people, right?

We may feel great for a while seeing all those smart bombs killing thousands of people, but the feeling of the superiority along with the entertainment that war footage provides will be fleeting. After a few months of the bloodshed and after a few leaks, one begins to question the wisdom of it all. But by then most people will have forgotten that they were also one of those that supported the war.

As you shake your head and hope for it all to end soon, you are presented with a surge. You hope that if more troops are poured in, things will cool down. But as soon as you begin to realise that this was a bad idea, another EVIL man is identified, and you begin to think that something has to be done about him otherwise the world as we know it will come to an end. And so things will just continue to deteriorate and, before you know it, the country is involved in a war that it no longer can extricate itself from.

Meanwhile, all these wars and threats of war are frightening people around the world. People are asking themselves who is going to be next? There is already a joke going around in the Muslim world about this huge bald eagle and the fox. It goes something like this: once a zebra saw a fox distraught and running wild in the jungle. The zebra stopped the fox and asked him what was wrong. The fox answered: “You know about the huge eagle don’t you?” The zebra answered, “Yes.” The fox said: “Well, she’s gone crazy. The eagle says that she has dreamt that there is an animal with three testicles that is going to destroy the jungle.” The zebra smiled and said: “Well none of us has three testicles, so why are you running?” The fox said: “Because the eagle first pulls out the testicles and then she counts them.” After hearing this, the zebra started running as well.

Well one might find this joke funny, but it depicts the feeling of the people other than the US and its allies. Fear breeds hatred and hatred leads to war. It is always easy to start a war, but extremely difficult to end one. As the journalists go around and pat themselves on the shoulder for coming-up with the best “evil…” title of the day, they should realise that they are unwittingly paving the road to another war.

Give me the money that has been spent in war and I will clothe every man, woman, and child in an attire of which kings and queens will be proud. I will build a schoolhouse in every valley over the whole earth. I will crown every hillside with a place of worship consecrated to peace.

– Charles Sumner

In each war there are always winners and losers. The winners are those who make money and gather more power to themselves while all the others are the losers. It doesn’t matter if one has been on this side or that side; chances are that in the end the majority end up losing far more than they thought they will gain. Ask any parent that has lost a child in a war if he or she can in any way be compensated for that loss and you’ll have the answer.

One can expect the push for war from those who will gain from it, but not from those who lose. But the sad fact is that those who gain from war use all the communication means at their disposal to persuade the losers to support and even participate in the war. The American people were thus persuaded to participate in the war against Iraq. Those who were against it were labelled as unpatriotic fools who were working against their country’s interests.

But it wasn’t only the foreigners that wanted a war in Iraq. Some Iraqi exiles played an important role in this as well. They gave the Neocons the excuse to claim that they were not invading Iraq only to secure America, but also to “FREE” the Iraqi people. People such as Chalabi and Iyad Allawi, supported and funded by CIA and others, gave credence to the allegations against Iraq. Did these people do it on purpose or were they fooled? Did they sit and consider the consequences for the rest of the Iraqis, or were they thinking only of what was in it for them?

As the Neocons and their allies continue to push for a devastating war against Iran, they are joined by some Iranian exiles who profess that they cannot wait a minute longer for the war to start. They are claiming, as their Iraqi counterparts did, that they are supporting the Neocons because they want to free the long suppressed Iranian People. Here I am not going to question their motives, but their wisdom. Have these people considered the consequences of such an action? Do they know what it means to create chaos in Iran and what the consequences will be for Iranians and Iran? In case they don’t know, I would like to provide them with some information.

We all have heard of the Neocons’ plan for a new Middle East but had never seen a map of it until it was published in the Armed Forces Journal in June 2006, which as can be expected was greeted by protests from Turkey and other countries. The map resurfaced again in September 15, 2006 when it was presented at the NATO’s Defence College in Rome.¹

This map showed how future Iraq, Iran, Turkey and Afghanistan would look like. With regards to Iran, one can see that in the south west, the oilfields are taken out and merged with oil rich regions of Iraq to make a country called “Arab Shia State”. In the north, parts of Iran is merged with the Iraqi and Turkish Kurdish area to create the “Free Kurdistan”. The Iranian Azerbaijan is merged with Azerbaijan. In the west the Sistan and Baluchistan is merged with the Pakistani Baluchistan to create the “Free Baluchistan”. On the other hand Kuwait is kept in place, while Saudi Arabia is divided into its oil and non oil regions. This was not a political map, but an “oil” map. Those places that had oil or gas were put into mini-states, vulnerable and needing protection; the protection that US and its allies could then provide.

Now, if you look at the events as they are unfolding, at least as far as Iran is concerned, you’ll see how this fictional map is slowly being turned into reality. To start with Israel has admitted that it is shipping weapons and helping Iranian Kurdish rebels to fight the central government. On August 27, Avigdor Lieberman said Israel is extending aid to those opposition organizations which are proving effective. He was the first member of the Israeli government to expose the clandestine war against Iran.²

The Kurdish group is not the only one enjoying Israeli or Western help. We have the Azeri group in the north and Ahwazi group in the south. We also have the Baluchi group in the south east enjoying funding and support from the UK, US, Israel, etc.

As you are reading this article, the roots of major internal conflicts are being sown. No one can guess how many people are going to die because of this, but one thing is certain; none of those that are going to suffer are in LA or New York or London. They are all in Iran.

Even if we dismiss these as only conspiracy theories, we cannot dismiss the fact that an invasion or occupation of a country as populous and as vast as Iran is going to be extremely difficult and bloody.

One must not forget that if only 10% of over one million Basiij and the revolutionary guards decide to mount a guerrilla war against an occupying army or a puppet regime, it will take many many years to bring stability to the country. We will see many Abou Gharibs and many more atrocities committed in the name of Democracy and Freedom.

Who would like to see foreign boots kicking down doors in the middle of the night? Who would like to see women and children crying in terror as their houses are searched and their men-folk blindfolded, manhandled and taken to prisons? Who would like to see picture of rapes of his or her fellow citizens by foreign troops? Please stand-up and be counted. Don’t hide behind slogans.

Before shouting slogans and jumping on the Neocon’s bandwagon, one should consider all the consequences. Some claim that those who are against war with Iran are in the pay of the Iranian government or are its apologists. They are mistaken. No one but a fool will support a “preventive” or an expansionist war. After seeing Iraq and Afghanistan, only a fool will support more of the same. But again some may see this as an opportunity to make a quick buck. To these I have to say that no amount of money in the world is going to wash the blood of the innocent people from your hands.

Please remember that as the German proverb says: A great war leaves the country with three armies: an army of cripples, an army of mourners, and an army of thieves.

See also the related article: “A Bloody Border Project: Zionist-Imperialist Dogma from the Armed Forces Journal.”

1. Zaman.com, “Carved-up Map of Turkey at NATO Prompts US Apology”, September 29, 2006.
2. Debka File, “Israel is aiding Iranian opposition groups, says Strategic Threats Minister Lieberman”, August 28, 2007.

From the other side of the Atlantic we hear the same cries for more war, death, and destruction. As though the deaths of 650,000 Iraqis were not enough, we are urged to prepare ourselves for another war. We are told that by killing more civilians, creating more refugees, destroying more bridges, power plants, schools, hospitals and factories we are going to be safer and live better lives.

Recently Mr. Greenspan told us what we already knew: namely that Iraq was invaded because of its oil. This of course was not the first time that we heard this and it certainly will not be the last either. But who cares? Here we see President Bush and his allies illegally attacking and destroying a country, making millions homeless and starting a civil war without a slightest sign of remorse. They went to steal the natural resources of Iraq, and they did it and are doing it. And now they want more. Yesterday it was Iraq; tomorrow it will be Iran, and the day after it will be Venezuela. When the president of the world’s only superpower acts like a thief, what protection is there for the rest of the world? The very same people that brought us the Iraq tragedy are using the same excuses to repeat their misdeeds again.

In late August, “Iran and the Vienna-based International Atomic Energy Agency released a plan laying out a step-by-step timetable of cooperation with the goal of resolving by December issues that have been under investigation for four years. Agency officials have praised the timetable as a breakthrough and Iran’s president, Mahmoud Ahmadinejad, on Tuesday said the investigation into his country’s nuclear activities was now closed.”¹

This agreement was hailed as a success by the IAEA and UN. The problem with this agreement is that it takes away the excuse needed by Bush and Co to implement their strategy of strangling Iran and get their hands on Iran’s oil and gas. Naturally, just like the case in Iraq, they have dismissed the agreement saying that it was not enough. Then the talk of war intensified, with US, Israel and then France talking loudly about an eventual attack on Iran. The main aim of these shrill voices is to take the people’s attention away from the IAEA-Iran agreement and back to some illogical talk of Iran’s threat to the world.

It is said that if you tell a lie big enough and often enough, people will eventually come to believe you. Having used this tactics in Iraq with some success, they believe they can do it again. They believe that people will eventually come to believe that Iran is a serious threat to the world and grudgingly accept another war. And the good thing about this is, so they believe, that this time they don’t even have to produce any evidence of wrongdoing by Iran. They just have to say that they have prevented Iran from acquiring nuclear weapons in the “future”. Very logical, isn’t it?

The fact that these same countries posses lots of nuclear weapons is irrelevant, so we are told. We are to believe that Israel, Pakistan, India, US, UK, France, China and Russia are all exceptions to the rules. Other countries that enrich uranium are also exceptions. It is only Iran with its vast natural resources that is a danger to the world peace and prosperity.

Israel has over 200 nuclear weapons and last year was involved in one of the most savage attacks on Lebanon. She also recently bombed Syria. Yet we hear no protest from the so called “civilized world”. Pakistan, a dictatorship, with its tremendous security problems (Taliban, Al Qaeda, etc.) has nuclear weapons and is awarded F16s. India tested nuclear weapons and was awarded trade and nuclear technology transfer agreements.

What is the moral lesson from all this? There is none; the law of the jungle rules. Those who can steal will steal. Those who can rape will do so with impunity. There is no punishment for the strong; it is the weak that has to pay. Meanwhile we pretend to believe all their lies and keep hoping for cheaper oil and higher share prices; otherwise we have to face our own complicity in their crimes. After all who elected them and who re-elected them? Our very silence makes us an accomplice.

As you read this you should think about all those Iraqis that have been killed, the 2.5 million Iraqis that had to flee the carnage in their country and a similar number of internal Iraqi refugees. You should think about all the lies that you have been told and ask yourself these questions: do I want another incident like Iraq? Can I stay silent and accept more killings and destruction? Is it OK for the powerful to commit armed robbery?

If one finds it difficult to answer these questions, then perhaps one should follow what Bertrand Russell said: “We have, in fact, two kinds of morality side by side: one which we preach but do not practice, and another which we practice but seldom preach”.

1. New York Times, “Plan Released by Iran and U.N. Atomic Agency Is Faulted”, 19 August 2007.

Now my friends, I am opposed to the system of society in which we live today, not because I lack the natural equipment to do for myself but because I am not satisfied to make myself comfortable knowing that there are thousands of my fellow men who suffer for the barest necessities of life. We were taught under the old ethic that man’s business on this earth was to look out for himself. That was the ethic of the jungle; the ethic of the wild beast. Take care of yourself, no matter what may become of your fellow man. Thousands of years ago the question was asked; ”Am I my brother’s keeper?” That question has never yet been answered in a way that is satisfactory to civilized society.

Yes, I am my brother’s keeper. I am under a moral obligation to him that is inspired, not by any maudlin sentimentality but by the higher duty I owe myself. What would you think me if I were capable of seating myself at a table and gorging myself with food and saw about me the children of my fellow beings starving to death. (Eugene V. Debs: 1908 speech)

For close to half a century, Afghanistan has been a battleground for foreign armies and local warlords. The country survives on international aids and opium cultivation. The central government controls only Kabul. There is heavy fighting in the south and east of the country. The northern and some western parts of Afghanistan are relatively quite but are ruled by warlords. On the western side, only Herat seems to have any stability and economic growth.

Afghanistan with a population of 35 million people consumes only 782.9 million kWh of electricity. Compare this to Iraq’s 33.3 billion kWh (Population: 27 million, 2007). Afghanistan has only 280000 (land-lines, 2005) telephones, and only 8229 km of paved roads. Close to 50% of the workforce is unemployed, and the rest, if not serving in national army or warlords’ private armies, are working in the fields (agriculture). The life expectancy of an Afghan is only 43.6 years, one of the lowest in the world. Similarly Afghanistan has one of the world’s highest (10th place) infant mortality rates (19.6/1000). In other words, Afghanistan is a failed state, poor and chaotic. The government can not provide the most basic services to its people, let alone accommodate a few million returning refugees.

The arrival

In 1973, a military coup headed by Daoud Khan and PDPA (Afghan Communist Party) ousted the Afghan king Zahir Shah. Daoud Khan abolished the monarchy and declared himself the President of the Republic of Afghanistan. In 1978, the communist party of Afghanistan staged a coup and took over the government. It also signed a friendship treaty with the Soviet Union. Shortly after, with the help of United States, Saudi Arabia and Pakistan, the Mujahedin (guerrilla) movement was born. The internal fighting and subsequent arrival of Soviet forces started a mass exodus of people to neighbouring countries such as Iran and Pakistan.

At that time Iran was in the middle of a war with Iraq and under sanctions. Nevertheless, it accepted the arriving refugees, first housing them in camps and later giving them work permits, allowing them to move to towns and cities. Later fighting between Taliban and the Northern alliance simply increased the number of refugees seeking safety or a better life in the neighbouring countries such as Iran and Pakistan. By the end of 1980s Iran and Pakistan hosted 3 million refugees each. In addition to refugees, there were a large number of people entering Iran illegally seeking work. Iran’s GDP is over 11 times that of Afghanistan and hence a magnet for those seeking a better standard of living.

As the numbers kept rising, Iran requested help from UN. However, the UN help when it arrived was not only insufficient, but also nearly always late. As time passed, the refugee numbers kept increasing. The government began to restrict its liberal refugee policies; work-permits became harder to obtain. But lack of documentation did not restrict the movement of the unregistered immigrants/refugees within the country. Many simply moved to large cities and became illegal aliens. There was some hope that the American invasion and subsequent occupation would lead to some improvements in Afghanistan, thereby facilitating the return of some of the refugees. However, things did not improve and the continuing fighting between NATO forces and Taliban has worsened the situation even further. War, draught and lack of investment have only increased the number of people seeking a better life abroad.

Image problem

Afghanistan has an unemployment rate of close to 50%. Add war, draught, lack of basic services such as healthcare and education and one can see the pressure on the population to emigrate. Iran has a GDP that is 11 times higher than Afghanistan’s and is close by. To complete the picture, many Afghans understand and speak Farsi (Dari is close to Farsi). Iran is a natural magnet for Afghans. It is not therefore surprising to see that millions of Afghans have immigrated to Iran. In addition, some families that stayed in Afghanistan have established a security net by sending out one family member to work in Iran, and numerous families are completely dependent on remittances from family members working in the neighbouring countries.

As is the case with many illegal aliens or refugees elsewhere in the world, Afghan immigrants / refugees were and are willing to work for much lower wages than the natives. This has greatly benefited industries such as farming and construction. Service industry has also been a beneficiary of cheap Afghan labour as well. They build roads, buildings, work as janitors etc. Yet again as is the case with the immigrant population elsewhere, few seem to speak of the benefits that these people bring to the country.

Iran is suffering from double digit inflation and unemployment. Iranians see the Afghans as competitors for jobs and more importantly as a barrier to higher wages for themselves. But the fact is that few Iranians are willing to work as hard as Afghans. And it is highly improbable that they will work for similar wages. So they see these immigrants as a threat to their living standard.

Afghanistan is one of the world’s biggest opium producers. Much of its products are smuggled to Europe and elsewhere through neighbouring countries, where it is also distributed. This has created a huge drug problem in Iran. Security forces regularly clash with well-armed Afghan smugglers, resulting in deaths of thousands of Iranian security personnel. Another problem is the general insecurity along the borders. For a while some Afghan criminal elements were raiding Iranian villages in the border area, kidnapping people for ransom. Iranian government had to station troops around these areas to protect the population.

All these problems have changed the general sentiment towards the refugees and immigrants. Iranians in general see the Afghans as a burden and think it is about time for them to return to Afghanistan.

My brother’s keeper

“In Iran today, there is both subtle and overt discrimination, and at times harassment. Opportunities for higher education were closed in 2003. Little or no compensation is

paid when workers in the construction sector are killed or disabled in accidents. Informed reports have suggested increased use of drugs to sustain long and hard working days. Iranian women who marry Afghan men lose their Iranian citizenship. If involuntary returns are instituted, such families risk being sent to Afghanistan. Estimates of the number of persons who may be affected vary markedly, but a reasonable figure suggests 30,000.

…By mid-2003, all Afghans residing in Iran were asked to re-register with the authorities. Those with refugee documents were obliged to hand in their refugee cards and received in return only temporary residence permits, with no time for staying or leaving specified. The number of registered Afghans at that time totalled 2.3 million. Of these, UNHCR considers 1.1 million to be refugees or otherwise ‘of concern’ to its mandate”. This left over 1 million “registered” Afghans without any protection from deportation. Add the unregistered Afghan immigrants and one gets close to two million or more people who have no legal status in the country (illegal aliens).

When confronted with the allegation of maltreatment of Afghan refugees in Iran, Iranian government claims that it has born a very large burden for a long-time without much international assistance. It claims that it has done more than its share for the country and it can no longer curry this burden alone.

As far as the international assistance is concerned the government is right. It has not received the assistance that it needs. It is also fair to say that it has kept its doors open to refugees from both Iraq and Afghanistan. With regards to helping Afghanistan, Iran has done more than any other country in the region. Since 2001, Afghanistan has received over $4.5 billion in aid from Iran, which it has spent constructing more than 1000 schools, government buildings and clinics and paved some 1,200 kilometres (more than 730 miles) of roads.

The biggest problem with the Iranian government refugee/immigration policy has been that of not having one. It is quite clear that Iran is and will continue to be a magnet for Afghans. The government knows that refugees or immigrants will not voluntarily return to a country where there is no infrastructure, housing, education, healthcare or jobs for them.

The successive Iranian governments have done very little in planning for integration of these refugees into the Iranian society. The government can not deny that the country has benefited greatly from this cheap labour pool. It also can not deny that the majority of Afghans in Iran are law abiding, hardworking people. The government has done very little in changing the negative image of these people. At times it has even contributed to it.

A large number of these immigrants have been in Iran for a long time, and their children have been borne in Iran. These children know nothing about Afghanistan. They rightfully consider themselves as Iranians. It is inhumane to just deport these people. And where and what are they going to?

To solve some of the existing problems, the government should declare an amnesty for the illegal aliens that have been in the country for the past seven years. In this way, the possibility of these people engaging in illegal activities will be greatly reduced. It should also offer citizenship to those who have been legally in the country for the past seven years. How long should a person live in the country before it can become a citizen? Under the current arrangement the Afghans will never become eligible for citizenship. It is reprehensible to keep such a large number of people in legal limbo for such a long time.

It should force the labour unions to enforce the minimum wage laws for all workers, especially the Afghans. In this way, the native Iranians will not see the Afghans as undercutting their wages. It should also vigorously persecute those that are (so openly) abusing these people. Iranian government should not forget that there are a few million Iranians living in Europe and America. I am sure that it would not appreciate similar treatments for its own emigrants.

The recent reports of large scale deportation, heavy handed and at times brutal treatment of deportees is highly troubling. Iranian government should know that deporting one million people without proper planning is going to cause great hardship for these people. Afghan government can not handle such large number of returnees. It even can not care for its internally displaced population, let alone one million more returning from Iran.

Iran has done a lot for Afghanistan and should do more. If it deports such a large number of people without providing adequate provisions for them in Afghanistan, it will create a humanitarian catastrophe that will (rightly) bring shame to Iran. It is not that long ago that Afghanistan was part of Iran. Afghans are Iranians’ brothers and as such should be respected and treated with respect and compassion. I urge the Iranian government to immediately stop the deportations and reconsider its immigration policies. I also hope that this message is taken-up by Iranians abroad. I hope that they also write to Iranian government and urge them to reconsider their actions. In conclusion I would like to cite sura 002.177 from the Holy Quran:

It is not righteousness that you turn your faces towards the East and the West, but righteousness is this that one should believe in God and the last day and the angels and the Book and the prophets, and give away wealth out of love for Him to the near of kin and the orphans and the needy and the wayfarer and the beggars and for (the emancipation of) the captives, and keep up prayer and pay the poor-rate; and the performers of their promise when they make a promise, and the patient in distress and affliction and in time of conflicts– these are they who are true (to themselves) and these are they who guard (against evil).