The announcement last week by the United
States of the largest military aid
package in its history – to Israel – was
a win for both sides.
minister Benjamin Netanyahu could boast
that his lobbying had boosted aid from
$3.1 billion a year to $3.8bn – a 22 per
cent increase – for a decade starting in
Mr Netanyahu has presented this as a
rebuff to those who accuse him of
jeopardising Israeli security interests
with his government’s repeated affronts
to the White House.
In the past weeks alone, defence
minister Avigdor Lieberman has compared
last year’s nuclear deal between
Washington and Iran with the 1938 Munich
pact, which bolstered Hitler; and Mr
Netanyahu has implied that US opposition
to settlement expansion is the same as
support for the “ethnic cleansing” of
American president Barack Obama,
meanwhile, hopes to stifle his own
critics who insinuate that he is
anti-Israel. The deal should serve as a
fillip too for Hillary Clinton, the
Democratic party’s candidate to succeed
Mr Obama in November’s election.
In reality, however, the Obama
administration has quietly punished Mr
Netanyahu for his misbehaviour. Israeli
expectations of a $4.5bn-a-year deal
were whittled down after Mr Netanyahu
stalled negotiations last year as he
sought to recruit Congress to his battle
against the Iran deal.
In fact, Israel already receives
roughly $3.8bn – if Congress’s
assistance on developing missile defence
programmes is factored in. Notably,
Israel has been forced to promise not to
approach Congress for extra funds.
The deal takes into account neither
inflation nor the dollar’s depreciation
against the shekel.
A bigger blow still is the White
House’s demand to phase out a special
exemption that allowed Israel to spend
nearly 40 per cent of aid locally on
weapon and fuel purchases. Israel will
soon have to buy all its armaments from
the US, ending what amounted to a
subsidy to its own arms industry.
Nonetheless, Washington’s renewed
military largesse – in the face of
almost continual insults – inevitably
fuels claims that the Israeli tail is
wagging the US dog. Even The New York
Times has described the aid package as
Since the 1973 war, Israel has
received at least $100bn in military
aid, with more assistance hidden from
view. Back in the 1970s, Washington paid
half of Israel’s military budget. Today
it still foots a fifth of the bill,
despite Israel’s economic success.
But the US expects a return on its
massive investment. As the late Israeli
politician-general Ariel Sharon once
observed, Israel has been a US
“aircraft carrier” in the Middle East,
acting as the regional bully and
carrying out operations that benefit
Almost no one blames the US for
Israeli attacks that wiped out Iraq’s
and Syria’s nuclear programmes. A
nuclear-armed Iraq or Syria would have
deterred later US-backed moves at regime
overthrow, as well as countering the
strategic advantage Israel derives from
its own nuclear arsenal.
In addition, Israel’s US-sponsored
military prowess is a triple boon to the
US weapons industry, the country’s most
powerful lobby. Public funds are
siphoned off to let Israel buy goodies
from American arms makers. That, in
turn, serves as a shop window for other
customers and spurs an endless and
lucrative game of catch-up in the rest
of the Middle East.
The first F-35 fighter jets to arrive
in Israel in December – their various
components produced in 46 US states –
will increase the clamour for the
Israel is also a “front-line
laboratory”, as former Israeli army
negotiator Eival Gilady admitted at the
weekend, that develops and field-tests
new technology Washington can later use
The US is planning to buy back the
missile interception system Iron Dome –
which neutralises battlefield threats of
retaliation – it largely paid for.
Israel works closely too with the US in
developing cyberwarfare, such as the
Stuxnet worm that damaged Iran’s
civilian nuclear programme.
But the clearest message from
Israel’s new aid package is one
delivered to the Palestinians:
Washington sees no pressing strategic
interest in ending the occupation. It
stood up to Mr Netanyahu over the Iran
deal but will not risk a damaging clash
over Palestinian statehood.
Some believe that Mr Obama signed the
aid package to win the credibility
necessary to overcome his domestic
Israel lobby and pull a rabbit from the
hat: an initiative, unveiled shortly
before he leaves office, that corners Mr
Netanyahu into making peace.
Hopes have been raised by an expected
meeting at the United Nations in New
York on Wednesday. But their first talks
in 10 months are planned only to
demonstrate unity to confound critics of
the aid deal.
If Mr Obama really wanted to pressure
Mr Netanyahu, he would have used the aid
agreement as leverage. Now Mr Netanyahu
need not fear US financial retaliation,
even as he intensifies effective
annexation of the West Bank.
Mr Netanyahu has drawn the right
lesson from the aid deal – he can act
against the Palestinians with continuing
- See more at: http://www.jonathan-cook.net/2016-09-19/palestinians-lose-in-us-military-aid-deal-with-israel/#sthash.fL4Eq28N.dpuf
The War for the Dollar
By David Hungerford
October 14, 2016 "Information
- The presidential campaign of 2016 is the
most divisive in living memory. The
spectacle is riveting. People all over the
world tune into it as if it were their own
election. Well they might.
campaign is different because it is driven
by a deep and bitter divide among the
capitalist class: whether to risk war with
Russia, or not. There is also a real danger
of war with China. Not since 1860 has a
presidential election been affected by a
basic divide among the propertied classes.
There is a War Party that is tremendously
strong. Its candidate is Hillary Clinton.
Wall Street and Big Oil are among its
constituents. The New York Times runs one
Clinton campaign piece after another in the
guise of “news articles.” The rest of the
mainstream media do the same.
Speaking to the American Legion on August 31
in Cincinnati, Hillary Clinton said, “As
President, I will make it clear that the
United States will treat cyberattacks just
like any other attack. We will be ready with
serious political, economic, and military
responses . . . You’ve read reports.
Russia’s hacked into a lot of things, China
has hacked into a lot of things.” (1)
there is no evidence against Russia or
China. What Hillary Clinton says is that she
will militarily go after whomever she wants
based on nothing other than her say-so. The
mainstream media gave no coverage to her
recklessly provocative remarks.
Donald Trump, for his part, told the
“Commander in Chief” forum that, “I think I
would have a very, very good relationship
with Putin, and I think I would have a very,
very good relationship with Russia.” (2) He
speaks for a faction of the capitalist class
that sees the risk of war with Russia and
China as just too dangerous.
Both candidates speak for opposed factions
of the ruling class. In no way can these
statements be treated as “personal
is the War Party bent on a hideously
dangerous course? The political reasons are
easy to see.
After the dismemberment of the Soviet Union
in 1991 the United States emerged as an
unrivaled “superpower.” But now, the key
element of U.S. dominance in the Middle East
and the Persian Gulf is slipping. The
decline of U.S. power in the Middle East is
primarily due to the long, dogged resistance
of the peoples. Added to that, Russia’s part
in resisting regime change in Syria is taken
by U.S. imperialism as an acute challenge.
Russia also has close relations with Iran.
Threats against Russia and China but won’t
change that. So far the U.S. has worked
things out with Germany. It works things out
with Japan. Why not work things out with
Russia and China?
It is because other things are at work.
There are economic developments that
contribute to the growth of tensions. They
are not always so easy to see. The care and
feeding of the Almighty Buck, the United
States dollar itself, is of foremost and
fundamental importance. For decades the U.S.
dollar has been unrivaled as the world’s
main reserve currency. U.S. financial
institutions swing enormous power and
profits from it.
This is capitalistic stuff par excellence.
Most of us aren’t capitalists. Hence the
issue is not obvious to us. Let’s have a
Countries keep foreign currencies in reserve
for use in international trade. By far the
largest reserves are in U.S. dollars. There
are a number of reasons. Some countries have
large trade surpluses with the United
States. If they exchange the dollars for
their own currency their goods will become
more expensive in the United States Instead
they keep the money in reserve. Or, they can
use their dollars on international markets.
Dollars can always be used to buy oil, for
instance. It may be advantageous in
multilateral trade involving more than two
countries to use dollars rather than the
countries’ own currencies.
the end of 2014 the US dollar comprised
63.1% of world foreign reserves. The euro
was a distant second at 22.1%. (3) At the
end of 2015 world reserves stood at around
$13.1 trillion in dollar equivalents. China
and Japan held $3.3 trillion and $1.26,
respectively. The Euro Zone came in at
2014 the U.S. trade deficit came in at $760
billion. U.S. trade deficits have been the
case since the 1970s. What is supposed to
happen is goods imported to the U.S. become
more expensive, U.S. goods sold abroad get
cheaper, and trade comes back into balance.
But it doesn’t happen that way! It isn’t
just a matter of how the United States can
manage such a thing. It is a question of how
it can be handled on all sides. It’s mainly
possible because other countries hang on to
upwards of $8 trillion in reserves, of which
over $6 trillion is in U.S. Treasury bills.
advantage to the United States is that we
can go on buying huge amounts of goods from
other countries without the prices rising.
But if import prices rose we’d make more
stuff here. There would be more jobs,
employers would make more money. Why don’t
we do that?
big part of the answer is that the dollar’s
unchallenged status as a reserve currency
enables the big banks and financial
companies to make much a great deal more
money than they otherwise could.
International trade must be brokered, i.e.,
managed with the help of financial
intermediaries. Brokerage is commonly needed
in domestic commerce, and is a necessity for
Suppose Alice in Iowa contracts with Bob in
Paris to buy 1000 boxes of French chocolates
for $10,000 American. She sends a check. Bob
takes the check to the bank and cashes it
for the equivalent in French francs. No
But: Bob never sends the chocolates. Paris
is a long way to go for Alice. She doesn’t
speak the language. She must find an
attorney. Repayment of her money will take a
long time and little will be left after
expenses. She’s stuck.
Sam knows the pitfalls of foreign trade. He
makes the same deal with Bob. Before he
sends any money, he goes to the local branch
of Citigroup and pays the bank to post a
performance bond on the deal.
If Bob doesn’t send the chocolates, the bank
reimburses Sam. Bob is now messing with
Citigroup. He’s toast. The next time, if
there is a next time, he sends the
Sellers can also purchase performance bonds
or other financial instruments to secure
their interests. As well, brokerages offer
many other services. They are absolutely
necessary to the world market. Bank of
America describes its services as follows:
“Leverage our comprehensive platform to
connect with institutions or individuals in
more than 140 currencies and 200 countries
while increasing your speed, efficiency and
visibility. With our on-the-ground presence
in 44 countries, direct membership in
multiple clearing systems around the world,
and a multi-year commitment to expanding our
banking platform, we are uniquely positioned
to enable local access and direct
connectivity wherever you do business. In
addition, we offer leading-edge solutions to
help you collect, process, apply and report
on your global receivables and migrate from
paper to electronic processing with guidance
at every step.” (5)
Citigroup describes its operations
similarly, and adds: “Citi Transaction
Services is the trusted custodian of over
U.S. $12.8 trillion in assets, resulting
from our full range of world-class domestic
and global custody services.” (6)
Profits of .1% against total assets under
management would come to $12.8 billion. Not
The other U.S. bank holding companies of
similar in size are Wells Fargo and JP
Morgan Chase. All four offer the same
services for international trade.
International trade and brokerage are glued
together by financial electronic messaging
networks. The largest is the Society for
Worldwide Interbank Financial
Telecommunications system, or SWIFT. It was
started in 1974. Previous communication
systems were slow, insecure, and subject to
human error. SWIFT assigns each bank or
other institution with a unique
eight-character identification code to
ensure accuracy. Message encryption and
authentication are offered.
Financial messaging networks handle not only
bank, but also securities and treasury
transactions. SWIFT transmits payments,
transfers, and instructions to nearly 10,000
institutions around the world. Volume is
around 24,000,000 messages per day. Total
world export trade has increased by more
than 45 times in constant prices since 1974.
(7) That degree of growth would not have
been possible without the networks.
At times, however, it appears that the
messaging networks are not so secure. It is
by means of surveillance of messaging
networks that the U.S. government, the
hitman and enforcer of the big banks, can
unilaterally impose sanctions on whatever
country or individual that it sweet pleases.
In 2015 the French bank BNP Paribas, the
fourth largest bank in the world, was
penalized $9 billion by action brought
against it in the U.S. District Court of the
Southern District of New York, the court
having jurisdiction over Wall Street.
A Reuters report said, “Prosecutors said BNP
also evaded sanctions against entities in
Iran and Cuba, in part by stripping
information from wire transfers so they
could pass through the U.S. system without
raising red flags.” (8)
Oh. That’s interesting. The messaging
networks are supposed to be secure. How did
the U.S. Department of Justice find that
out? Is the financial integrity of the
networks compromised? Do the institutions
served by the network know the U.S.
Department of Justice surveils their
messages? Maybe BNP did not.
That’s only the start. BNP was convicted of
“conspiring to violate the International
Emergency Economic Powers Act (IEEPA) and
the Trading with the Enemy Act (TWEA) by
processing billions of dollars of
transactions through the U.S. financial
system on behalf of Sudanese, Iranian and
Cuban entities subject to U.S. economic
These are United States laws. BNP broke no
French laws. (During WW II U.S. corporations
flouted the TWEA at will. New Jersey
Standard Oil, IBM, Ford, and GM and many
others traded with the Nazis all during the
war.) The prosecution accused BNP of
“falsifying” transactions with Iran and
Cuba. How could BNP “falsify” business that
was legal in France? And if it concealed its
business from U.S. scrutiny, so what, the
U.S. has no legitimate interest in the
matter. Nonetheless BNP was forced to eat
humble pie and play along with the farce.
Not even France, a NATO “ally” of the United
States and the sixth largest country in the
world economically, was immune to this
shocking violation of its sovereignty.
Even worse, the so-called “violations”
involved transactions with Cuba, Iran and
Sudan. The harm done the first two countries
by U.S. imperialism need not be repeated
here. Sudan has been wracked for decades by
civil and ethnic conflicts. Millions have
died or been displaced Sudan is rich in oil,
natural gas, copper and uranium ores. The
United States has long been deeply entangled
in the carnage. Sara Flounders wrote in 2006
“U.S. policy revolves around shutting down
the export of oil through sanctions and
inflaming national and regional antagonisms.
For over two decades U.S. imperialism
supported a separatist movement in the south
of Sudan, where oil was originally found.
This long civil war drained the central
government’s resources. When a peace
agreement was finally negotiated, U.S.
attention immediately switched to Darfur in
western Sudan.” (10)
Even so, the Justice Department charged BNP
with harming people in Sudan by doing
business that U.S. imperialism does not
like. The hypocrisy and lawbreaking are
interlock of U.S. brokerages and messaging
networks allows the United States to impose
sanctions worldwide, unilaterally, and in
Department of the Treasury maintains a
Specially Designated Nationals (SDN) list.
It is “a list of individuals and companies
owned or controlled by, or acting for or on
behalf of, targeted countries. It also lists
individuals, groups, and entities, such as
terrorists and narcotics traffickers
designated under programs that are not
country-specific.” (11) The SDNs have their
assets blocked, and “U.S. persons are
generally prohibited from dealing with
them.” There are so many SDN entries that
Treasury maintains a search tool on them
that uses “fuzzy logic” to match inexact
A list of SDNs in Russia and Ukraine was
published on Sep. 1, 2016. It included 17
individuals including Eduard Basurin,
Defense Minister of the Donetsk People’s
Republic, an insurgent region that rebelled
against the fascist regime in Ukraine
imposed by the United States in 2014.
list also includes an engineering company in
St. Petersburg, shipyards, the Salvation
Committee of Ukraine, which calls for
elections to replace the U.S.-installed
government, and many other entities. It
would be cumbersome have to enforce so many
sanctions, but the treatment of BNP stands
as a warning.
Opposition is rising, however. In 2015 the
United States imposed penalties on
Volkswagen for violations of emissions
requirements. The scandal was a great
setback to the manufacturer. The settlement
may cost Volkswagen more than $13 billion.
The European Union—read Germany—then imposed
a $14.5 fine on Apple for taxes not paid in
Ireland. Going back to the mortgage bubble
in the U.S. that burst in 2006, the U.S.
Justice department is now seeking penalties
as high as $14 billion against Deutsche Bank
for its practices in the bubble. Political
consequences are part of the picture, as
Germany has become increasingly critical of
cold war-style U.S. actions against Russia.
Also, China’s rise poses an emergent
challenge to dollar dominance. In January of
this year China launched a new international
development bank called the Asian
Infrastructure Investment Bank (AIIB) at a
ceremony led by Chinese President Xi Jinping.
It would fund projects like roads,
hydropower and urban development. It is
expected to lend $10 billion-$15 billion a
year for the first five or six years. While
loans at first would be made in U.S.
dollars, the bank may raise capital in other
currencies including the euro and yuan.
China has stated that it opposes a global
financial order that it says is dominated by
the United States and does not adequately
represent developing nations. Its success
would be as much a political as an economic
achievement, a sign that U.S. financial
domination of the world is coming to an end.
new bank is generally recognized as a
challenge to U.S.-dominated International
Monetary Fund (IMF) and World Bank (WB.)
U.S. allies including Australia, Britain,
German, Italy, the Philippines and South
Korea have agreed to join. So far thirty
founding countries have ratified the AIIB
agreement. Other countries have until the
end of the year to join.
U.S. imperialism is not sitting by. In June
of this year, the United States sent a
carrier task force into the South China Sea
in defiance of China’s claims to sovereignty
in those waters. Admiral John Richardson,
U.S. Chief of Naval Operations, was aboard
the carrier John C. Stennis. (12)
Richardson told the media that the task
force was surrounded by Chinese naval
vessels, some passing by on regular business
but others specifically shadowing the US
task force. He said “there were dozens of
encounters” between the two fleets that were
“by and large, performed according to a
ruleset that had been established” between
US and China called the Code for Unplanned
Encounters at Sea (CUES). That the CNO was
on hand shows that Washington well
understood the challenge it was giving to
about the same time an international
tribunal in The Hague was convened on
charges brought against China concerning the
South China Sea. Issues included China’s
construction of artificial islands, and
claims to sovereignty in the sea. China’s
construction of a large artificial island on
an atoll known as Mischief Reef was cited.
China built a military airstrip, naval
berths and sports fields on the island.
July 12 the tribunal found that China’s
claims of historic rights over most of the
South China Sea and sovereignty over the
region had no legal basis. The decision is
considered legally binding but there is no
mechanism for enforcing it. China did not
bow down. It had refused to participate in
the tribunal, and it said it would not abide
by the decision.
economic prospects of loss of empire added
to the political ones explain the full scope
of the rise in tensions with Russia and
China. The War Party arises, driven mad.
Another faction of the capitalist ruling
class reacts, seeing a retrenchment to
America First as preferable to war with
Russia and China. The latter are right, but
the crazed don’t care. The issue invades the
Even if the America Firsters win, there is
no guarantee the War Party will concede
anything; and vice-versa. We must be
prepared for anything.
David Hungerford is a political activist who
lives in New Jersey. His concerns include
civil and human rights, problems of war and
peace, and political economy.