the VENDORS
http://www.theregister.co.uk/2010/11/15/stuxnet_jigsaw_completed/
Malware targets frequency converter drives from two specific vendors
by John Leyden / November 15th 2010

Security researchers have found an important missing piece in the Stuxnet jigsaw that provides evidence that the malware was targeted at the types of control systems more commonly found in nuclear plants and other specialised operations than in mainstream factory controls.

It was already known that the highly sophisticated Stuxnet worm targets industrial plant control (SCADA) systems from Siemens, spreading using either unpatched Windows vulnerabilities or from infected USB sticks. The malware only uses infected PCs as a conduit onto connected industrial control systems. The malware is capable of reprogramming or even sabotaging targeted systems while hiding its presence using rootkit-style functionality. New research, published late last week, has established that Stuxnet searches for frequency converter drives made by Fararo Paya of Iran and Vacon of Finland. In addition, Stuxnet is only interested in frequency converter drives that operate at very high speeds, between 807 Hz and 1210 Hz.

The malware is designed to change the output frequencies of drives, and therefore the speed of associated motors, for short intervals over periods of months. This would effectively sabotage the operation of infected devices while creating intermittent problems that are that much harder to diagnose. Low-harmonic frequency converter drives that operate at over 600 Hz are regulated for export in the US by the Nuclear Regulatory Commission as they can be used for uranium enrichment. They may have other applications but would certainly not be needed to run a conveyor belt at a factory, for example.

Symantec – which has an informative write-up piece here – describes the new research as a “critical piece of the puzzle”. Eric Chien, a senior researcher at Symantec, writes. “With this discovery, we now understand the purpose of all of Stuxnet’s code”. Although we know what Stuxnet does, we still can’t be sure who created it or its exact purpose, although we can make an educated guess. Stuxnet infections first surfaced in Malaysia in June, but the appearance of the malware in Iran has long been the major point of interest in the story. Plant officials at the controversial Bushehr nuclear plant in Iran admitted the malware had infected its network in September. This had nothing to do with a recently announced two-month delay in bringing the reactor online, government ministers subsequently claimed.

One theory is that Russian contractors at the site of Bushehr power plant introduced the malware, either accidentally or (more likely) deliberately. Stuxnet used four Windows zero-day vulnerabilities to spread and must have been developed by a team with expertise in and access to industrial control systems over several weeks, at a minimum. Altogether an expensive and tricky project with no obvious financial return, factors suggest the malware was developed with either the direct involvement of support of intelligence agencies or nation-states and designed for sabotage.

The appearance of the malware has provoked talk of cyberwar in some quarters and certainly done a great deal to raise the profile of potential attacks on power grid and utility systems in the minds of politicians. This is regardless of the potential likelihood of such an attack actually being successful, which remains unclear even after the arrival of Stuxnet.

BUSHEHR
http://www.csmonitor.com/USA/2010/0921/Stuxnet-malware-is-weapon-out-to-destroy-Iran-s-Bushehr-nuclear-plant
Stuxnet malware is ‘weapon’ out to destroy … Iran’s Bushehr nuclear plant?
by Mark Clayton / September 21, 2010

Cyber security experts say they have identified the world’s first known cyber super weapon designed specifically to destroy a real-world target – a factory, a refinery, or just maybe a nuclear power plant. The cyber worm, called Stuxnet, has been the object of intense study since its detection in June. As more has become known about it, alarm about its capabilities and purpose have grown. Some top cyber security experts now say Stuxnet’s arrival heralds something blindingly new: a cyber weapon created to cross from the digital realm to the physical world – to destroy something. At least one expert who has extensively studied the malicious software, or malware, suggests Stuxnet may have already attacked its target – and that it may have been Iran’s Bushehr nuclear power plant, which much of the world condemns as a nuclear weapons threat.

The appearance of Stuxnet created a ripple of amazement among computer security experts. Too large, too encrypted, too complex to be immediately understood, it employed amazing new tricks, like taking control of a computer system without the user taking any action or clicking any button other than inserting an infected memory stick. Experts say it took a massive expenditure of time, money, and software engineering talent to identify and exploit such vulnerabilities in industrial control software systems.

Unlike most malware, Stuxnet is not intended to help someone make money or steal proprietary data. Industrial control systems experts now have concluded, after nearly four months spent reverse engineering Stuxnet, that the world faces a new breed of malware that could become a template for attackers wishing to launch digital strikes at physical targets worldwide. Internet link not required. “Until a few days ago, people did not believe a directed attack like this was possible,” Ralph Langner, a German cyber-security researcher, told the Monitor in an interview. He was slated to present his findings at a conference of industrial control system security experts Tuesday in Rockville, Md. “What Stuxnet represents is a future in which people with the funds will be able to buy an attack like this on the black market. This is now a valid concern.”

A gradual dawning of Stuxnet’s purpose
It is a realization that has emerged only gradually. Stuxnet surfaced in June and, by July, was identified as a hypersophisticated piece of malware probably created by a team working for a nation state, say cyber security experts. Its name is derived from some of the filenames in the malware. It is the first malware known to target and infiltrate industrial supervisory control and data acquisition (SCADA) software used to run chemical plants and factories as well as electric power plants and transmission systems worldwide. That much the experts discovered right away.

But what was the motive of the people who created it? Was Stuxnet intended to steal industrial secrets – pressure, temperature, valve, or other settings –and communicate that proprietary data over the Internet to cyber thieves? By August, researchers had found something more disturbing: Stuxnet appeared to be able to take control of the automated factory control systems it had infected – and do whatever it was programmed to do with them. That was mischievous and dangerous.

But it gets worse. Since reverse engineering chunks of Stuxnet’s massive code, senior US cyber security experts confirm what Mr. Langner, the German researcher, told the Monitor: Stuxnet is essentially a precision, military-grade cyber missile deployed early last year to seek out and destroy one real-world target of high importance – a target still unknown. “Stuxnet is a 100-percent-directed cyber attack aimed at destroying an industrial process in the physical world,” says Langner, who last week became the first to publicly detail Stuxnet’s destructive purpose and its authors’ malicious intent. “This is not about espionage, as some have said. This is a 100 percent sabotage attack.”

A guided cyber missile
On his website, Langner lays out the Stuxnet code he has dissected. He shows step by step how Stuxnet operates as a guided cyber missile. Three top US industrial control system security experts, each of whom has also independently reverse-engineered portions of Stuxnet, confirmed his findings to the Monitor. “His technical analysis is good,” says a senior US researcher who has analyzed Stuxnet, who asked for anonymity because he is not allowed to speak to the press. “We’re also tearing [Stuxnet] apart and are seeing some of the same things.”

Other experts who have not themselves reverse-engineered Stuxnet but are familiar with the findings of those who have concur with Langner’s analysis. “What we’re seeing with Stuxnet is the first view of something new that doesn’t need outside guidance by a human – but can still take control of your infrastructure,” says Michael Assante, former chief of industrial control systems cyber security research at the US Department of Energy’s Idaho National Laboratory. “This is the first direct example of weaponized software, highly customized and designed to find a particular target.” “I’d agree with the classification of this as a weapon,” Jonathan Pollet, CEO of Red Tiger Security and an industrial control system security expert, says in an e-mail.

One researcher’s findings
Langner’s research, outlined on his website Monday, reveals a key step in the Stuxnet attack that other researchers agree illustrates its destructive purpose. That step, which Langner calls “fingerprinting,” qualifies Stuxnet as a targeted weapon, he says. Langner zeroes in on Stuxnet’s ability to “fingerprint” the computer system it infiltrates to determine whether it is the precise machine the attack-ware is looking to destroy. If not, it leaves the industrial computer alone. It is this digital fingerprinting of the control systems that shows Stuxnet to be not spyware, but rather attackware meant to destroy, Langner says.

Stuxnet’s ability to autonomously and without human assistance discriminate among industrial computer systems is telling. It means, says Langner, that it is looking for one specific place and time to attack one specific factory or power plant in the entire world. “Stuxnet is the key for a very specific lock – in fact, there is only one lock in the world that it will open,” Langner says in an interview. “The whole attack is not at all about stealing data but about manipulation of a specific industrial process at a specific moment in time. This is not generic. It is about destroying that process.”

So far, Stuxnet has infected at least 45,000 computers worldwide, Microsoft reported last month. Only a few are industrial control systems. Siemens this month reported 14 affected control systems, mostly in processing plants and none in critical infrastructure. Some victims in North America have experienced some serious computer problems, Eric Byres, an expert in Canada, told the Monitor. Most of the victim computers, however, are in Iran, Pakistan, India, and Indonesia. Some systems have been hit in Germany, Canada, and the US, too. Once a system is infected, Stuxnet simply sits and waits – checking every five seconds to see if its exact parameters are met on the system. When they are, Stuxnet is programmed to activate a sequence that will cause the industrial process to self-destruct, Langner says.

Langner’s analysis also shows, step by step, what happens after Stuxnet finds its target. Once Stuxnet identifies the critical function running on a programmable logic controller, or PLC, made by Siemens, the giant industrial controls company, the malware takes control. One of the last codes Stuxnet sends is an enigmatic “DEADF007.” Then the fireworks begin, although the precise function being overridden is not known, Langner says. It may be that the maximum safety setting for RPMs on a turbine is overridden, or that lubrication is shut off, or some other vital function shut down. Whatever it is, Stuxnet overrides it, Langner’s analysis shows. “After the original code [on the PLC] is no longer executed, we can expect that something will blow up soon,” Langner writes in his analysis. “Something big.”

For those worried about a future cyber attack that takes control of critical computerized infrastructure – in a nuclear power plant, for instance – Stuxnet is a big, loud warning shot across the bow, especially for the utility industry and government overseers of the US power grid. “The implications of Stuxnet are very large, a lot larger than some thought at first,” says Mr. Assante, who until recently was security chief for the North American Electric Reliability Corp. “Stuxnet is a directed attack. It’s the type of threat we’ve been worried about for a long time. It means we have to move more quickly with our defenses – much more quickly.”

Has Stuxnet already hit its target?
It might be too late for Stuxnet’s target, Langner says. He suggests it has already been hit – and destroyed or heavily damaged. But Stuxnet reveals no overt clues within its code to what it is after. A geographical distribution of computers hit by Stuxnet, which Microsoft produced in July, found Iran to be the apparent epicenter of the Stuxnet infections. That suggests that any enemy of Iran with advanced cyber war capability might be involved, Langner says. The US is acknowledged to have that ability, and Israel is also reported to have a formidable offensive cyber-war-fighting capability.

Could Stuxnet’s target be Iran’s Bushehr nuclear power plant, a facility much of the world condemns as a nuclear weapons threat? Langner is quick to note that his views on Stuxnet’s target is speculation based on suggestive threads he has seen in the media. Still, he suspects that the Bushehr plant may already have been wrecked by Stuxnet. Bushehr’s expected startup in late August has been delayed, he notes, for unknown reasons. (One Iranian official blamed the delay on hot weather.)

But if Stuxnet is so targeted, why did it spread to all those countries? Stuxnet might have been spread by the USB memory sticks used by a Russian contractor while building the Bushehr nuclear plant, Langner offers. The same contractor has jobs in several countries where the attackware has been uncovered. “This will all eventually come out and Stuxnet’s target will be known,” Langner says. “If Bushehr wasn’t the target and it starts up in a few months, well, I was wrong. But somewhere out there, Stuxnet has found its target. We can be fairly certain of that.”

HOW IT WORKS
http://www.symantec.com/content/en/us/enterprise/media/security_response/whitepapers/w32_stuxnet_dossier.pdf
http://www.symantec.com/connect/blogs/stuxnet-print-spooler-zero-day-vulnerability-not-zero-day-all
http://www.schneier.com/blog/archives/2010/10/stuxnet.html

Computer security experts are often surprised at which stories get picked up by the mainstream media. Sometimes it makes no sense. Why this particular data breach, vulnerability, or worm and not others? Sometimes it’s obvious. In the case of Stuxnet, there’s a great story.

As the story goes, the Stuxnet worm was designed and released by a government–the U.S. and Israel are the most common suspects–specifically to attack the Bushehr nuclear power plant in Iran. How could anyone not report that? It combines computer attacks, nuclear power, spy agencies and a country that’s a pariah to much of the world. The only problem with the story is that it’s almost entirely speculation.

Here’s what we do know: Stuxnet is an Internet worm that infects Windows computers. It primarily spreads via USB sticks, which allows it to get into computers and networks not normally connected to the Internet. Once inside a network, it uses a variety of mechanisms to propagate to other machines within that network and gain privilege once it has infected those machines. These mechanisms include both known and patched vulnerabilities, and four “zero-day exploits”: vulnerabilities that were unknown and unpatched when the worm was released. (All the infection vulnerabilities have since been patched.)

Stuxnet doesn’t actually do anything on those infected Windows computers, because they’re not the real target. What Stuxnet looks for is a particular model of Programmable Logic Controller (PLC) made by Siemens (the press often refers to these as SCADA systems, which is technically incorrect). These are small embedded industrial control systems that run all sorts of automated processes: on factory floors, in chemical plants, in oil refineries, at pipelines–and, yes, in nuclear power plants. These PLCs are often controlled by computers, and Stuxnet looks for Siemens SIMATIC WinCC/Step 7 controller software.

If it doesn’t find one, it does nothing. If it does, it infects it using yet another unknown and unpatched vulnerability, this one in the controller software. Then it reads and changes particular bits of data in the controlled PLCs. It’s impossible to predict the effects of this without knowing what the PLC is doing and how it is programmed, and that programming can be unique based on the application. But the changes are very specific, leading many to believe that Stuxnet is targeting a specific PLC, or a specific group of PLCs, performing a specific function in a specific location–and that Stuxnet’s authors knew exactly what they were targeting.

It’s already infected more than 50,000 Windows computers, and Siemens has reported 14 infected control systems, many in Germany. (These numbers were certainly out of date as soon as I typed them.) We don’t know of any physical damage Stuxnet has caused, although there are rumors that it was responsible for the failure of India’s INSAT-4B satellite in July. We believe that it did infect the Bushehr plant.

All the anti-virus programs detect and remove Stuxnet from Windows systems.

Stuxnet was first discovered in late June, although there’s speculation that it was released a year earlier. As worms go, it’s very complex and got more complex over time. In addition to the multiple vulnerabilities that it exploits, it installs its own driver into Windows. These have to be signed, of course, but Stuxnet used a stolen legitimate certificate. Interestingly, the stolen certificate was revoked on July 16, and a Stuxnet variant with a different stolen certificate was discovered on July 17.

Over time the attackers swapped out modules that didn’t work and replaced them with new ones–perhaps as Stuxnet made its way to its intended target. Those certificates first appeared in January. USB propagation, in March.

Stuxnet has two ways to update itself. It checks back to two control servers, one in Malaysia and the other in Denmark, but also uses a peer-to-peer update system: When two Stuxnet infections encounter each other, they compare versions and make sure they both have the most recent one. It also has a kill date of June 24, 2012. On that date, the worm will stop spreading and delete itself.

We don’t know who wrote Stuxnet. We don’t know why. We don’t know what the target is, or if Stuxnet reached it. But you can see why there is so much speculation that it was created by a government.

Stuxnet doesn’t act like a criminal worm. It doesn’t spread indiscriminately. It doesn’t steal credit card information or account login credentials. It doesn’t herd infected computers into a botnet. It uses multiple zero-day vulnerabilities. A criminal group would be smarter to create different worm variants and use one in each. Stuxnet performs sabotage. It doesn’t threaten sabotage, like a criminal organization intent on extortion might.

Stuxnet was expensive to create. Estimates are that it took 8 to 10 people six months to write. There’s also the lab setup–surely any organization that goes to all this trouble would test the thing before releasing it–and the intelligence gathering to know exactly how to target it. Additionally, zero-day exploits are valuable. They’re hard to find, and they can only be used once. Whoever wrote Stuxnet was willing to spend a lot of money to ensure that whatever job it was intended to do would be done.

None of this points to the Bushehr nuclear power plant in Iran, though. Best I can tell, this rumor was started by Ralph Langner, a security researcher from Germany. He labeled his theory “highly speculative,” and based it primarily on the facts that Iran had an unusually high number of infections (the rumor that it had the most infections of any country seems not to be true), that the Bushehr nuclear plant is a juicy target, and that some of the other countries with high infection rates–India, Indonesia, and Pakistan–are countries where the same Russian contractor involved in Bushehr is also involved. This rumor moved into the computer press and then into the mainstream press, where it became the accepted story, without any of the original caveats.

Once a theory takes hold, though, it’s easy to find more evidence. The word “myrtus” appears in the worm: an artifact that the compiler left, possibly by accident. That’s the myrtle plant. Of course, that doesn’t mean that druids wrote Stuxnet. According to the story, it refers to Queen Esther, also known as Hadassah; she saved the Persian Jews from genocide in the 4th century B.C. “Hadassah” means “myrtle” in Hebrew.

Stuxnet also sets a registry value of “19790509” to alert new copies of Stuxnet that the computer has already been infected. It’s rather obviously a date, but instead of looking at the gazillion things–large and small–that happened on that the date, the story insists it refers to the date Persian Jew Habib Elghanain was executed in Tehran for spying for Israel.

Sure, these markers could point to Israel as the author. On the other hand, Stuxnet’s authors were uncommonly thorough about not leaving clues in their code; the markers could have been deliberately planted by someone who wanted to frame Israel. Or they could have been deliberately planted by Israel, who wanted us to think they were planted by someone who wanted to frame Israel. Once you start walking down this road, it’s impossible to know when to stop.

Another number found in Stuxnet is 0xDEADF007. Perhaps that means “Dead Fool” or “Dead Foot,” a term that refers to an airplane engine failure. Perhaps this means Stuxnet is trying to cause the targeted system to fail. Or perhaps not. Still, a targeted worm designed to cause a specific sabotage seems to be the most likely explanation.

If that’s the case, why is Stuxnet so sloppily targeted? Why doesn’t Stuxnet erase itself when it realizes it’s not in the targeted network? When it infects a network via USB stick, it’s supposed to only spread to three additional computers and to erase itself after 21 days–but it doesn’t do that. A mistake in programming, or a feature in the code not enabled? Maybe we’re not supposed to reverse engineer the target. By allowing Stuxnet to spread globally, its authors committed collateral damage worldwide. From a foreign policy perspective, that seems dumb. But maybe Stuxnet’s authors didn’t care.

My guess is that Stuxnet’s authors, and its target, will forever remain a mystery.

This essay originally appeared on Forbes.com.

My alternate explanations for Stuxnet were cut from the essay. Here they are:

  • A research project that got out of control. Researchers have accidentally released worms before. But given the press, and the fact that any researcher working on something like this would be talking to friends, colleagues, and his advisor, I would expect someone to have outed him by now, especially if it was done by a team.
  • A criminal worm designed to demonstrate a capability. Sure, that’s possible. Stuxnet could be a prelude to extortion. But I think a cheaper demonstration would be just as effective. Then again, maybe not.
  • A message. It’s hard to speculate any further, because we don’t know who the message is for, or its context. Presumably the intended recipient would know. Maybe it’s a “look what we can do” message. Or an “if you don’t listen to us, we’ll do worse next time” message. Again, it’s a very expensive message, but maybe one of the pieces of the message is “we have so many resources that we can burn four or five man-years of effort and four zero-day vulnerabilities just for the fun of it.” If that message were for me, I’d be impressed.
  • A worm released by the U.S. military to scare the government into giving it more budget and power over cybersecurity. Nah, that sort of conspiracy is much more common in fiction than in real life.

Note that some of these alternate explanations overlap.

EDITED TO ADD (10/7): Symantec published a very detailed analysis. It seems like one of the zero-day vulnerabilities wasn’t a zero-day after all. Good CNet articleMore speculation, without any evidence. Decent debunking. Alternate theory, that the target was the uranium centrifuges in Natanz, Iran.

NATANZ
http://www.faz.net/s/RubCEB3712D41B64C3094E31BDC1446D18E/Doc~E8A0D43832567452FBDEE07AF579E893C~ATpl~Ecommon~Scontent.html
http://frank.geekheim.de/?p=1189
Targeting the iranian enrichment centrifuges in Natanz? / 22.9.2010

I did a writeup of the stuxnet story so far for the large german newspaper Frankfurter Allgemeine Zeitung (FAZ), out in print today (now also online here ). Unfortunatelly the page-one teaser image chosen by the frontpage editor is outright silly, and the picture chosen by the FAZ for the main piece is the reactor in Bushehr, as the facility in Natanz is optically less attractive. But, hey, the story is what counts. I want to comment on some of the more detailed aspects here, that were not fit for the more general audience of the FAZ, and also outline my reasoning, why I think stuxnet might have been targeted at the uranium centrifuges in Natanz, instead of Bushehr as guessed by others.

stuxnet is a so far not seen publicly class of nation-state weapons-grade attack software. It is using four different zero-day exploits, two stolen certificates to get proper insertion into the operating system and a really clever multi-stage propagation mechanism, starting with infected USB-sticks, ending with code insertion into Siemens S7 SPS industrial control systems. One of the Zero-Days is a USB-stick exploit named LNK that works seamlessly to infect the computer the stick is put into, regardless of the Windows operating system version – from the fossile Windows 2000 to the most modern and supposedly secure Windows 7.

The stuxnet software is exceptionally well written, it makes very very sure that nothing crashes, no outward signs of the infection can be seen and, above all, it makes pretty sure that its final payload, which manipulates parameters and code in the SPS computer is only executed if it is very certain to be on the right system. In other words: it is extremly targeted and constructed and build to be as side-effect free as humanly possible. Words used by reverse engineers working on the the thing are “After 10 years of reverse-engineering malware daily, I have never ever seen anything that comes even close to this”, and from another “This is what nation states build, if their only other option would be to go to war”.

Industrial control systems, also called SCADA, are very specific for each factory. They consist of many little nodes, measuring temperature, pressure, flow of fluids or gas, they control valves, motors, whatever is needed to keep the often dangerous industrial processes within their safety and effectiveness limits. So both the hardware module configuration and the software are custom made for each factory. For stuxnet they look like an fingerprint. Only if the right configuration is identified, it does more then just spreading itself. This tells us one crucial thing: the attacker knew very precisely the target configuration. He must have had insider support or otherwise access to the software and configuration of the targeted facility.

I will not dive very much into who may be the author of stuxnet. It is clear that it has been a team effort, that a very well trained and financed team with lots of experience was needed, and that the ressources needed to be alocated to buy or find the vulnerabilities and develop them into the kind of exceptional zero-days used in the exploit. This is a game for nation state-sized entities, only two handful of governments and maybe as many very large corporate entities could manage and sustain such an effort to the achievment level needed to build stuxnet. As to whom of the capable candidates if could be: this is a trip into the Wilderness of Mirrors. False hints are most likely placed all over the place, so it does not make much sense to put much time into this exercise for me.

Regarding the target, things are more interesting. There is currently a lot of speculation that the Iranian reactor at Bushehr may have been the target. I seriouly doubt that, as the reactor will for political reasons only go on-line when Russia wants it to go on-line, which they drag on for many years now, to the frustration of Iran. The political calculations behind this game are complex and involve many things like the situation in Iraq, the US withdrawal plans and Russias unwillingness to let the US actually have free military and political bandwith to cause them trouble in their near abroad.

But there is another theory that fits the available date much better: stuxnet may have been targeted at the centrifuges at the uranium enrichment plant in Natanz. The chain of published indications supporting the theory starts with stuxnet itself. According to people working on the stuxnet-analysis, it was meant to stop spreading in January 2009. Given the multi-stage nature of stuxnet, the attacker must have assumed that it has reached its target by then, ready to strike.

On July 17, 2009 WikiLeaks posted a cryptic notice:

Two weeks ago, a source associated with Iran’s nuclear program confidentially told WikiLeaks of a serious, recent, nuclear accident at Natanz. Natanz is the primary location of Iran’s nuclear enrichment program. WikiLeaks had reason to believe the source was credible however contact with this source was lost. WikiLeaks would not normally mention such an incident without additional confirmation, however according to Iranian media and the BBC, today the head of Iran’s Atomic Energy Organization, Gholam Reza Aghazadeh, has resigned under mysterious circumstances. According to these reports, the resignation was tendered around 20 days ago.

A cross-check with the official Iran Students News Agency archives confirmed the resignation of the head of Iran’s Atomic Energy Organization.

According to official IAEA data, the number of actually operating centrifuges in Natanz shrank around the time of the accident Wikileaks wrote about was reduced substantially .

On 07. July 2009 the israeli news-site ynet-news.com posted a lengthy piece on possibly cyberwar against the Iran nuclear programm. Intriguingly, even contaminated USB-Sticks were mentioned. In retrospect, the piece sounds like an indirect announcement of a covert victory to allies and enemies.

That there are serious anti-proliferation efforts by all available means undertaken by western intelligence is not in doubt. .

There is further indication in the way stuxnet is actually working on the SPS-level. The current state of analysis seems to support the assumption, that the attack was meant to work synchronized and spread over many identical nodes. In a nuclear power plant, there are not many identical SPS-nodes, as there is a wide variety of subsystems of different kind. Compared to this, an enrichment centrifuge plant consists of thousands of identical units, arranged in serial patterns called cascades. Each of them is by necessity the same, as enrichment centrifuges are massively scaled by numbers. stuxnet would have infected each and every one, then triggering subtle of massive failures, depending on the choice of the attacker. To get an impression how the Natanz facility looks from the inside, Iranian President Ahamadinendjad has visited the place in April 2008.

So in summary, my guess is that stuxnet has been targeted at Natanz and that it achieved sucess in reducing the operational enrichment capability sucessfully. We will probably never be able to find out what really happened for sure, unless Iran comes forward with a post-mortem. Stuxnet will go down in history as the first example of a news class of malware, that has been engineered to weapons-grade performance with nearly no side-effects and pinpoint accuracy in delivering its sabotage payload.


Centrifuges acquired by Libya via the AQ Khan network

URANIUM PRODUCING STATES
http://en.wikipedia.org/wiki/Abdul_Qadeer_Khan
http://taiaglobal.com/?attachment_id=81
http://blogs.forbes.com/firewall/2010/11/22/dragons-tigers-pearls-and-yellowcake-4-stuxnet-targeting-scenarios/
Dragons, Tigers, Pearls, and Yellowcake: 4 Stuxnet Targeting Scenarios
by Jeffrey Carr / Nov. 22 2010

In all of the thousands of words that have been printed about Stuxnet, and the many interviews given, there’s been almost no discussion of alternative targeting scenarios for the Stuxnet worm. In fact, apart from my own work in this area, there’s been essentially two options discussed: 1 – the target was Natanz and/or Bushehr, or 2 – there’s no way to tell who the target was. That fact has greatly diminished the value of the discussion because by limiting it to one scenario, you cannot adequately engage in risk management – anticipating and defending against the threats yet to come – which is supposed to be your job if you’re in any type of security business.

To that end I’ve written a white paper ”Dragons, Tigers, Pearls, and Yellowcake: 4 Stuxnet Targeting Scenarios“, in which I describe four possible Stuxnet scenarios by examining the relationships that connect the “victim” states – a kind of cyber victomology. The title comes, in part, from the traditional animal symbolism of China and India – the dragon and the tiger.

The four scenarios are:
Rare-Earth Metals Producing States
Uranium-Producing States
Corporate Sabotage To Discredit Siemens AG
Protecting The Malacca Straits (the String of Pearls)

Due to the space and content limitations of this blog, I’m not able to reproduce the entire white paper here so what follows is a condensed version of the second scenario – an attack against uranium-producing states.

Attack Scenario #2: Uranium Producing States (Asia)

The list of states in Asia who are engaged in mining Uranium as well Uranium enrichment and fuel fabrication closely aligns with the list of states reporting Stuxnet infections.

Iran’s Natanz nuclear reactor has been mentioned in the press as a potential target however according to the IAEA, 2008 was the year that the Fuel Enrichment Plant at Natanz suffered a significant drop in performance. The cause for that drop is not known but there is a lot of speculation ranging from incompetence to sabotage. Whatever the reason, it happened before the earliest Stuxnet sample was discovered (June, 2009).

Stuxnet has frequently been classified as a state or state-sponsored attack however starting in 2009 there’s been a marked increase of anti-nuclear power protests in Germany, Russia, Finland, and France by activist organizations like Ecodefense, ECOperestroika, Greenpeace, the Green League, and Ydinverkosto, a movement in northern Finland which opposes uranium mining and nuclear power. Finland is of particular interest since one of the two frequency convertor drives that Stuxnet issues commands to is made by a Finnish company, Vacon PLC. Some of the above-mentioned groups self-identify as anarchists and are on various law enforcement watchlists for engaging in acts of ecoterorism

Whether members of these groups have the requisite technical skill or the funds to create Stuxnet or similar malware is a matter for the respective state agencies to investigate.

Opportunity: Greenpeace is well-funded and has frequently conducted actions against nuclear facilities of the type that Stuxnet may be targeting. It is not known whether any members of Ydinverkosto are employed by Vacon or have contacts there.

Motive: Nuclear power plants, uranium mines, and Fuel Enrichment facilities are popular targets for environmental activists as well as eco-terrorists. The use of a virus like Stuxnet provides these groups with the ability to disrupt operations at targeted facilities with little to no risk to their members.

Means: Whether any of these groups have the resources or skill sets to develop, test, and launch this level of malware is unknown to the author at this time however Greenpeace France has been the victim of a cyber attack allegedly sponsored by French energy company EDF (see Attack Scenario #3 in the full report).

Assessment: More information is needed about the financial assets and technical capabilities of these environmental action groups before an accurate assessment can be made however these actors may pose a credible threat to this sector in the next few years.

FOR SALE?
http://www.debka.com/article/9169/
Brits declare war on Stuxnet. Americans say: Use it on North Korea / November 25, 2010

The Stuxnet virus which has crippled Iran’s nuclear program has suddenly become the object of a British MI6 Secret Service campaign to convince the British and American public that it is the enemy of the West and sold on the black market to terrorists, DEBKAfile’s intelligence sources report. Thursday morning, Nov. 25, Sky TV news led with a story claiming Stuxnet could attack any physical target dependent on computers. An unnamed Information Technology expert was quoted as saying enigmatically: “We have hard evidence that the virus is in the hands of bad guys – we can’t say any more than that but these people are highly motivated and highly skilled with a lot of money behind them.”

No one in the broadcast identified the “bad guys,” disclosed where they operated or when they sold the virus to terrorists. Neither were their targets specified, even by a row of computer and cyber-terrorism experts who appeared later on British television, all emphasizing how dangerous the virus was.

Our intelligence sources note that none of the British reporters and experts found it necessary to mention that wherever Stuxnet was discovered outside Iran, such as India, China and Indonesia, it was dormant. Computer experts in those countries recommended leaving it in place as it was harmless for computer programs and did not interfere with their operations. The fact is that the only place Stuxnet is alive and harmful is Iran – a fact ignored in the British reports.

Indeed, for the first time in the six months since Stuxnet partially disabled Iran’s nuclear reactor at Bushehr, Iran has found its first Western sympathizer, one who is willing to help defeat the malignant virus.

DEBKAfile’s sources note that the British campaign against Stuxnet was launched two days after Yukiya Amano, Director of the International Atomic Energy Agency, the IAEA, reported that Iran had briefly shut down its uranium enrichment plant in Natanz, apparently because of a Stuxnet assault on thousands of centrifuges. According to our Iranian sources, the plant had to be closed for six days, from November 16-22.

Our sources also reported that the virus raided Iranian military computer systems, forcing the cancellation of parts of its large-scale air defense drill in the second week of November. Some of the systems used in the exercise started emitting wildly inaccurate data.

The Hate Stuxnet campaign London launched Thursday carried three messages to Tehran:
1. We were not complicit in the malworm’s invasion of your systems.
2. We share your view that Stuxnet is very dangerous and must be fought and are prepared to cooperate in a joint program to destroy it.
3. Britain will not line up behind the United States’ position in the nuclear talks to be resumed on Dec. 5 between Iran and the Six Powers (the five Permanent UN Security Council members + Germany). It will take a different position.
In the United States, meanwhile, DEBKAfile’s Washington sources report that Stuxnet’s reappearance against Iran’s nuclear program is hailed. A number of American IT experts and journals specializing in cyber war have maintained of late that if the malworm is so successful against Iran, why not use it to disable North Korea’s nuclear program, especially the 2,000 centrifuges revealed on Nov. 20 to be operating at a new enrichment facility?

The popular American publication WIRED carried a headline on Monday, November 22, asking, “Could Stuxnet Mess With North Korea’s New Uranium Plant?” The article noted that some of the equipment North Korea was using for uranium enrichment was identical to Iranian apparatus and therefore perfect targets for the use of Stuxnet by American cyber experts.

NORTH KOREA
http://www.wired.com/dangerroom/2010/11/could-stuxnet-mess-with-north-koreas-new-uranium-plant/
Could Stuxnet Mess With North Korea’s New Uranium Plant?
Kim Zetter and Spencer Ackerman / November 22, 2010

The Stuxnet worm may have a new target. While security analysts try to figure out whether the now-infamous malware was built to sabotage Iran’s nuclear program, North Korea has unveiled a new uranium enrichment plant that appears to share components with Iran’s facilities. Could Pyongyang’s centrifuges be vulnerable to Stuxnet?

While U.S. officials are trying to figure out how to respond to North Korea’s unveiling of a new uranium enrichment plant, there are clues that a piece of malware believed to have hit Iran’s nuclear efforts could also target the centrifuges Pyongyang’s preparing to spin.

Some of the equipment used by the North Koreans to control their centrifuges — necessary for turning uranium into nuclear-bomb-ready fuel — appear to have come from the same firms that outfitted the Iranian nuclear program, according to David Albright, the president of the Institute for Science and International Security and a long-time watcher of both nuclear programs. “The computer-control equipment North Korea got was the same Iran got,” Albright told Danger Room.

Nearly two months before the Yongbyon revelation, Albright published a study covering the little that’s publicly known about the North’s longstanding and seemingly stalled efforts at enriching its own uranium. (.pdf) Citing unnamed European intelligence officials, Albright wrote that the North Korean control system “is dual use, also used by the petrochemical industry, but was the same as those acquired by Iran to run its centrifuges.”

Albright doesn’t know for sure that the North Koreans’ control system is exactly like the one the Iranians use. Siegfried Hecker, the U.S. nuclear scientist invited by Pyongyang to view the Yongbyon facility,wasn’t allowed to check out the control room thoroughly, and his report about what he saw merely says that the control room is “ultra-modern,” decked out with flat-screen computer panels.

Nor is Albright to specify which company manufactured the control system — something that determines whether Stuxnet would have any potency. “But that’s really what the Stuxnet virus is taking over,” Albright says, “the control equipment, giving directions to the frequency converters.”

That suggests the vulnerabilities to Stuxnet suspected within Iran’s centrifuge-command systems might be contained within North Korea’s new uranium facility. Even if they’re not identical computer systems, Stuxnet demonstrated that the type of command systems employed in centrifuge-based enrichment is vulnerable to malware attack.

That’s not to say that Stuxnet is making its way inside the North Korean facility: Someone would have to infiltrate the Hermit Kingdom’s most sensitive sites and introduce the worm into the command systems, a hard bargain to say the least. In other words, don’t go thinking the United States or an ally could magically infect North Korea with Stuxnet. But if more information emerges about the North’s command systems, that might provide fodder for a copycat worm — provided someone could introduce it into Yongbyon.

Stuxnet was discovered last June by a Belorussian security firm, which found it on the computers of one of its unnamed clients in Iran. The sophisticated code is the first known malware designed to effectively target industrial control systems, also known as Supervisory Control and Data Acquisition (SCADA) systems. SCADA systems control various parts — such as automated assembly lines, pressure valves — at a wide variety of facilities, such as manufacturing plants, utilities and nuclear-enrichment plants.

Stuxnet targeted only a specific system made by Siemens — Simatic WinCC SCADA system — and only a specific configuration of the system. According to the latest findings uncovered by security firm Symantec, Stuxnet first looks for Simatic systems that are controlling two particular types of frequency converter drives made by Fararo Paya in Teheran, Iran, or by Vacon, which is based in Finland.

Frequency converter drives are power supplies that control things such as the speed of a motor. Stuxnet only initiates its malicious activity, however, if there are at least 33 of these converter drives in place at the facility and if they are operating at a high speed between 807 Hz and 1210 Hz.

Such high speeds are used only for select applications, such as might be found at nuclear facilities. Speculation on Stuxnet’s likely target has focused on Iran’s nuclear facilities at Bushehr or Natanz. Symantec has been careful not to say definitively that Stuxnet was targeting a nuclear facility, but has noted that “frequency converter drives that output over 600 Hz are regulated for export in the United States by the Nuclear Regulatory Commission as they can be used for uranium enrichment.”

But according to a Department of Homeland Security official who spoke on background, frequency converter drives operate at this and similar high speeds in many facilities, not just nuclear plants.

“[They] are used anywhere you try to control a very precise process,” he says. They’re used extensively in the petro-chemical industry and in balancing machines that are used to build fan blades for jet engines. They’re also used for mining and metal manufacturing and in environments that require precise heating, cooling and ventilation. And they’re used in food processing for big mixers, conveyors and high-speed bottling lines.

As for the export limitation on high-speed drives that run above 600 Hz, the DHS official said this isn’t the only restriction on frequency converters. He notes that the Finnish manufacturer whose drives are targeted by Stuxnet requires buyers to have a special license to operate at frequencies exceeding 320 Hz — not out of concern that they would be used in a nuclear enrichment facility, but out of concern that they’re used properly.

“Because a lot of times you use them in very complex processes to develop exotic materials,” he says. “If you’re blending chemicals to create rocket fuel, you want to have this type of equipment be controlled so you need to have a license to purchase them, like you need a license to purchase bulk volumes of nitroglycerin.”

Albright was quick to add that the fact that “we don’t know much at all” about North Korea’s uranium enrichment means that “we can’t make judgments” about how vulnerable Pyongyang is to Stuxnet. It’s also possible that different command systems exist in facilities the United States doesn’t know about. “This could be a Potemkin centrifuge plant,” he says. “It’s so weird to put it at Yongbyon,” the center of North Korea’s plutonium production. “They obviously want to show it off,” Albright continues, perhaps “to distract us from their real centrifuge program.”

RUMORS
http://news.cnet.com/8301-27080_3-20018530-245.html
Stuxnet: Fact vs. Theory
by Elinor Mills / October 5, 2010

The Stuxnet worm has taken the computer security world by storm, inspiring talk of a top secret, government-sponsored cyberwar, and of a software program laden with obscure biblical references that call to mind not computer code, but “The Da Vinci Code.” Stuxnet, which first made headlines in July, (CNET FAQ here) is believed to be the first known malware that targets the controls at industrial facilities such as power plants. At the time of its discovery, the assumption was that espionage lay behind the effort, but subsequent analysis by Symantec uncovered the ability of the malware to control plant operations outright, as CNET first reported back in mid-August.

What’s the real story on Stuxnet?
A German security researcher specializing in industrial-control systems suggested in mid-September that Stuxnet may have been created to sabotage a nuclear power plant in Iran. The hype and speculation have only grown from there. Here’s a breakdown of fact versus theory regarding this intriguing worm.

Theory: The malware was distributed by Israel or the United States in an attempt to interfere with Iran’s nuclear program.
Fact: There’s no hard evidence as to who is behind the malware or even what country or operation was the intended target, though it’s clear most of the infections have been in Iran (about 60 percent, followed by Indonesia at about 18 percent and India at close to 10 percent, according to Symantec). Rather than establishing the target for Stuxnet, that statistic could merely indicate that Iran was less diligent about using security software to protect its systems, said Eric Chien, technical director of Symantec Security Response.

German researcher Ralph Langner speculates that the Bushehr nuclear plant in Iran could be a target because it is believed to run the Siemens software Stuxnet was written to target. Others suspect the target was actually the uranium centrifuges in Natanz, a theory that seems more plausible to Gary McGraw, chief technology officer of Cigital. “Everyone seems to agree that Iran is the target, and data regarding the geography of the infection lends credence to that notion,” he writes.

In July 2009, Wikileaks posted a notice (formerly here, but unavailable at publication time) that said:

Two weeks ago, a source associated with Iran’s nuclear program confidentially told WikiLeaks of a serious, recent, nuclear accident at Natanz. Natanz is the primary location of Iran’s nuclear enrichment program. WikiLeaks had reason to believe the source was credible, however contact with this source was lost. WikiLeaks would not normally mention such an incident without additional confirmation, however according to Iranian media and the BBC, today the head of Iran’s Atomic Energy Organization, Gholam Reza Aghazadeh, has resigned under mysterious circumstances. According to these reports, the resignation was tendered around 20 days ago.

On his blog, Frank Rieger, chief technology officer at security firm GSMK in Berlin, confirmed the resignation through official sources. He also noted that the number of operating centrifuges in Natanz shrank significantly around the time the accident mentioned by Wikileaks purportedly happened, based on data from Iran’s Atom Energy Agency.

An Iranian intelligence official said this weekend that authorities had detained several “spies” connected to cyberattacks against its nuclear program. Iranian officials have said that 30,000 computers were affected in the country as part of “electronic warfare against Iran,” according to The New York Times. Iran’s Mehr news agency quoted a top official in the Ministry of Communications and Information Technology as saying that the effect of “this spy worm in government systems is not serious” and had been “more or less” halted, the Times report said. The project manager at the Bushehr nuclear plant said workers there were trying to remove the malware from several affected computers, though it “has not caused any damage to major systems of the plant,” according to an Associated Press report. Officials at Iran’s Atomic Energy Organization said the Bushehr plant opening was delayed because of a “small leak” that had nothing to do with Stuxnet. Meanwhile, Iran’s Intelligence Minister, commenting on the situation over the weekend, said a number of “nuclear spies” had been arrested, though he declined to provide further details, according to the Tehran Times.

Specialists have hypothesized that it would take the resources of a nation state to create the software. It uses two forged digital signatures to sneak software onto computers and exploits five different Windows vulnerabilities, four of which are zero-day (two have been patched by Microsoft). Stuxnet also hides code in a rootkit on the infected system and exploits knowledge of a database server password hardcoded into the Siemens software. And it propagates in a number of ways, including through the four Windows holes, peer-to-peer communications, network shares, and USB drives. Stuxnet involves inside knowledge of Siemens WinCC/Step 7 software as it fingerprints a specific industrial control system, uploads an encrypted program, and modifies the code on the Siemens programmable logic controllers (PLCs) that control the automation of industrial processes like pressure valves, water pumps, turbines, and nuclear centrifuges, according to various researchers.

Symantec has reverse engineered the Stuxnet code and uncovered some references that could bolster the argument that Israel was behind the malware, all presented in this report (PDF). But it’s just as likely that the references are red herrings designed to divert attention away from the actual source. Stuxnet, for instance, will not infect a computer if “19790509” is in a registry key. Symantec noted that that could stand for the May 9, 1979 date of a famous execution of a prominent Iranian Jew in Tehran. But it’s also the day a Northwestern University graduate student was injured by a bomb made by the Unabomber. The numbers could also represent a birthday, some other event, or be completely random. There are also references to two file directory names in the code that Symantec said could be Jewish biblical references: “guavas” and “myrtus.” “Myrtus” is the Latin word for “Myrtle,” which was another name for Esther, the Jewish queen who saved her people from death in Persia. But “myrtus” could also stand for “my remote terminal units,” referring to a chip-controlled device that interfaces real-world objects to a distributed control system such as those used in critical infrastructure. “Symantec cautions readers on drawing any attribution conclusions,” the Symantec report says. “Attackers would have the natural desire to implicate another party.”

Theory: Stuxnet is designed to sabotage a plant, or blow something up.
Fact:Through its analysis of the code, Symantec has figured out the intricacies of files and instructions that Stuxnet injects into the programmable logic controller commands, but Symantec doesn’t have the context involving what the software is intended to do, because the outcome depends on the operation and equipment infected. “We know that it says to set this address to this value, but we don’t know what that translates to in the real world,” Chien said. To map what the code does in different environments, Symantec is looking to work with experts who have experience in multiple critical infrastructure industries.

Symantec’s report found the use of “0xDEADF007” to indicate when a process has reached its final state. The report suggests that it may refer to Dead Fool or Dead Foot, which refers to engine failure in an airplane. Even with those hints, it’s unclear whether the suggested intention would be to blow a system up or merely halt its operation.

In a demonstration at the Virus Bulletin Conference in Vancouver late last week, Symantec researcher Liam O’Murchu showed the potential real world effects of Stuxnet. He used an S7-300 PLC device connected to an air pump to program the pump to run for three seconds. He then showed how a Stuxnet-infected PLC could change the operation so the pump ran for 140 seconds instead, which burst an attached balloon in a dramatic climax, according to Threat Post.

Theory: The malware has already done its damage.
Fact: That actually could be the case and whomever was targeted has simply not disclosed it publicly, experts said. But, again, there’s no evidence of this. The software has definitely been around long enough for lots of things to have happened. Microsoft learned of the Stuxnet vulnerability in early July, but its research indicates that the worm was under development at least a year prior to that, said Jerry Bryant, group manager for Microsoft Response Communications. “However, according to an article that appeared last week in Hacking IT Security Magazine, the Windows Print Spooler vulnerability (MS10-061) was first made public in early 2009,” he said. “This vulnerability was independently rediscovered during the investigation of the Stuxnet malware by Kaspersky Labs and reported to Microsoft in late July of 2010.” “They’ve been doing this for almost a year,” Chien said. “It’s possible they hit their target again and again.”

Theory: The code will stop spreading on June 24, 2012.
Fact: There is a “kill date” encoded into the malware, and it is designed to stop spreading on June 24, 2012. However, infected computers will still be able to communicate via peer-to-peer connections, and machines that are configured with the wrong date and time will continue to spread the malware after that date, according to Chien.

Theory: Stuxnet caused or contributed to the Gulf of Mexico oil spill at Deepwater Horizon.
Fact: Unlikely, though Deepwater Horizon did have some Siemens PLC systems on it, according to F-Secure.

Theory: Stuxnet infects only critical infrastructure systems.
Fact: Stuxnet has infected hundreds of thousands of computers, mostly home or office PCs not connected to industrial control systems, and only about 14 such systems, a Siemens representative told IDG News Service.

And more theories and predictions abound. F-Secure’s blog discusses some theoretical possibilities for Stuxnet. “It could adjust motors, conveyor belts, pumps. It could stop a factory. With [the] right modifications, it could cause things to explode,” in theory, the blog post says. Siemens, the F-Secure post continues, announced last year that the code that Stuxnet infects “can now also control alarm systems, access controls, and doors. In theory, this could be used to gain access to top secret locations. Think Tom Cruise and ‘Mission Impossible.'”

Symantec’s Murchu outlines a possible attack scenario on CNET sister site ZDNet. And Rodney Joffe, senior technologist at Neustar, calls Stuxnet a “precision guided cybermunition” and predicts that criminals will try to use Stuxnet to infect ATMs run by PLCs to steal money from the machines. “If you ever needed real world evidence that malware could spread that ultimately could have life or death ramifications in ways people just don’t accept, this is your example,” said Joffe.

BABY COME BACK  | TEXAS v IRAN (cont.)

| PETROCURRENCY GLOSSARY |

the PETRODOLLAR
http://www.wisegeek.com/what-is-a-petrodollar.htm

“A petrodollar is a dollar earned by selling petroleum. Petrodollars flow into members of the Organization of the Petroleum Exporting Countries (OPEC) at a steady rate, and flow out at an almost equally steady rate as these countries invest petrodollars overseas. In fact, often money makes a round trip, flowing from a country like the United States to an OPEC member which in turn reinvests the funds in the United States. Prices for oil sales are generally given in United States Dollars (USD). In 1973, economist Ibrahim Oweiss wanted to come up with a term to describe the large volumes of currency changing hands as a result of oil sales. He coined the portmanteau “petrodollar,” referring to “petroleum” and the United States Dollar. People also use the term “oil money” or “petrocurrency” to describe petrodollars, although “petrocurrency” is also sometimes confusingly used to refer to the currency used by an oil producing country.

At various points in history, OPEC members have literally made more petrodollars than they knew what to do with. Rising oil prices resulted in such a flood of currency that these countries were unable to invest it on internal development projects. As a result, many nations started engaging in a practice known as petrodollar recycling, in which they promptly reinvest the currency in banks in regions like Europe and North America. Changes in oil prices can lead to ebbs and flows in the movement of the petrodollar and in the investment funds available to OPEC members. Some of these nations rely heavily on income from oil sales and are placed at a disadvantage when prices are depressed. In regions such as Dubai, the profound impact of petroleum sales on regional economies can be seen firsthand in the form of extravagant and rapid development reflecting the increasing wealth of some members of the population.

While the bulk of oil sales are conducted in USD and prices are quoted in USD, some countries have opted to sell in other currencies. The dominance of the USD in global commerce is credited in part to the petrodollar, and some theorists have suggested that changing economic trends may result in petrodollar warfare, in which there will be a push to denominate oil sales in other currencies. If, for example, the world switched to the petroeuro, based on the currency of the European Union, the United States Dollar might weaken as a result.”

for EXAMPLE
http://www.linkedin.com/in/josephevers
Investment Management industry, 2003 — Present (7 years )
“I created and ran a privately-held blackbox hedge fund based off of a proprietary, in-house FIX protocol implementation. We cribbed custom algorithms from bioinformatics, were the first to apply autocorrelation attacks to the market, and first to apply wavelets to price stochastics. As part of the management of this fund, we created our own international shipping arm to ease exploitation of petrodollar/petroeuro arbitrage. The chief chunks of our fund are global macro, managed futures and short bias, but you name it– options, swaps, rate agreements, bonds– we trade it in the course of a given week.”

PETRODOLLAR WARFARE
http://www.ratical.org/ratville/CAH/RRiraqWar.html
http://www.freepress.org/departments/display/13/2010/3954
Petrodollar warfare: Dollars, Euros and the upcoming Iranian oil bourse
by William R. Clark / August 05 2005

“This notion that the United States is getting ready to attack Iran is simply ridiculous…Having said that, all options are on the table.” — President George W. Bush, February 2005

Contemporary warfare has traditionally involved underlying conflicts regarding economics and resources. Today these intertwined conflicts also involve international currencies, and thus increased complexity. Current geopolitical tensions between the United States and Iran extend beyond the publicly stated concerns regarding Iran’s nuclear intentions, and likely include a proposed Iranian “petroeuro” system for oil trade. Similar to the Iraq war, military operations against Iran relate to the macroeconomics of ‘petrodollar recycling’ and the unpublicized but real challenge to U.S. dollar supremacy from the euro as an alternative oil transaction currency.



It is now obvious the invasion of Iraq had less to do with any threat from Saddam’s long-gone WMD program and certainly less to do to do with fighting International terrorism than it has to do with gaining strategic control over Iraq’s hydrocarbon reserves and in doing so maintain the U.S. dollar as the monopoly currency for the critical international oil market. Throughout 2004 information provided by former administration insiders revealed the Bush/Cheney administration entered into office with the intention of toppling Saddam.[1][2] Candidly stated, ‘Operation Iraqi Freedom’ was a war designed to install a pro-U.S. government in Iraq, establish multiple U.S military bases before the onset of global Peak Oil, and to reconvert Iraq back to petrodollars while hoping to thwart further OPEC momentum towards the euro as an alternative oil transaction currency ( i.e. “petroeuro”).[3] However, subsequent geopolitical events have exposed neoconservative strategy as fundamentally flawed, with Iran moving towards a petroeuro system for international oil trades, while Russia evaluates this option with the European Union.

In 2003 the global community witnessed a combination of petrodollar warfare and oil depletion warfare. The majority of the world’s governments – especially the E.U., Russia and China – were not amused – and neither are the U.S. soldiers who are currently stationed inside a hostile Iraq. In 2002 I wrote an award-winning online essay that asserted Saddam Hussein sealed his fate when he announced on September 2000 that Iraq was no longer going to accept dollars for oil being sold under the UN’s Oil-for-Food program, and decided to switch to the euro as Iraq’s oil export currency.[4] Indeed, my original pre-war hypothesis was validated in a Financial Times article dated June 5, 2003, which confirmed Iraqi oil sales returning to the international markets were once again denominated in U.S. dollars – not euros.

The tender, for which bids are due by June 10, switches the transaction back to dollars — the international currency of oil sales – despite the greenback’s recent fall in value. Saddam Hussein in 2000 insisted Iraq’s oil be sold for euros, a political move, but one that improved Iraq’s recent earnings thanks to the rise in the value of the euro against the dollar. [5]



The Bush administration implemented this currency transition despite the adverse impact on profits from Iraqi’s export oil sales.[6] (In mid-2003 the euro was valued approx. 13% higher than the dollar, and thus significantly impacted the ability of future oil proceeds to rebuild Iraq’s infrastructure). Not surprisingly, this detail has never been mentioned in the five U.S. major media conglomerates who control 90% of information flow in the U.S., but confirmation of this vital fact provides insight into one of the crucial – yet overlooked – rationales for 2003 the Iraq war.

Concerning Iran, recent articles have revealed active Pentagon planning for operations against its suspected nuclear facilities. While the publicly stated reasons for any such overt action will be premised as a consequence of Iran’s nuclear ambitions, there are again unspoken macroeconomic drivers underlying the second stage of petrodollar warfare – Iran’s upcoming oil bourse. (The word bourse refers to a stock exchange for securities trading, and is derived from the French stock exchange in Paris, the Federation Internationale des Bourses de Valeurs.)

In essence, Iran is about to commit a far greater “offense” than Saddam Hussein’s conversion to the euro for Iraq’s oil exports in the fall of 2000. Beginning in March 2006, the Tehran government has plans to begin competing with New York’s NYMEX and London’s IPE with respect to international oil trades – using a euro-based international oil-trading mechanism.[7] The proposed Iranian oil bourse signifies that without some sort of US intervention, the euro is going to establish a firm foothold in the international oil trade. Given U.S. debt levels and the stated neoconservative project of U.S. global domination, Tehran’s objective constitutes an obvious encroachment on dollar supremacy in the crucial international oil market.



From the autumn of 2004 through August 2005, numerous leaks by concerned Pentagon employees have revealed that the neoconservatives in Washington are quietly – but actively – planning for a possible attack against Iran. In September 2004 Newsweek reported:

Deep in the Pentagon, admirals and generals are updating plans for possible U.S. military action in Syria and Iran. The Defense Department unit responsible for military planning for the two troublesome countries is “busier than ever,” an administration official says. Some Bush advisers characterize the work as merely an effort to revise routine plans the Pentagon maintains for all contingencies in light of the Iraq war. More skittish bureaucrats say the updates are accompanied by a revived campaign by administration conservatives and neocons for more hard-line U.S. policies toward the countries…’

…administration hawks are pinning their hopes on regime change in Tehran – by covert means, preferably, but by force of arms if necessary. Papers on the idea have circulated inside the administration, mostly labeled “draft” or “working draft” to evade congressional subpoena powers and the Freedom of Information Act. Informed sources say the memos echo the administration’s abortive Iraq strategy: oust the existing regime, swiftly install a pro-U.S. government in its place (extracting the new regime’s promise to renounce any nuclear ambitions) and get out. This daredevil scheme horrifies U.S. military leaders, and there’s no evidence that it has won any backers at the cabinet level. [8]

Indeed, there are good reasons for U.S. military commanders to be ‘horrified’ at the prospects of attacking Iran. In the December 2004 issue of the Atlantic Monthly, James Fallows reported that numerous high-level war-gaming sessions had recently been completed by Sam Gardiner, a retired Air Force colonel who has run war games at the National War College for the past two decades.[9] Col. Gardiner summarized the outcome of these war games with this statement, “After all this effort, I am left with two simple sentences for policymakers: You have no military solution for the issues of Iran. And you have to make diplomacy work.” Despite Col. Gardiner’s warnings, yet another story appeared in early 2005 that reiterated this administration’s intentions towards Iran. Investigative reporter Seymour Hersh’s article in The New Yorker included interviews with various high-level U.S. intelligence sources. Hersh wrote:

In my interviews [with former high-level intelligence officials], I was repeatedly told that the next strategic target was Iran. Everyone is saying, ‘You can’t be serious about targeting Iran. Look at Iraq,’ the former [CIA] intelligence official told me. But the [Bush administration officials] say, ‘We’ve got some lessons learned – not militarily, but how we did it politically. We’re not going to rely on agency pissants.’ No loose ends, and that’s why the C.I.A. is out of there. [10]

The most recent, and by far the most troubling, was an article in The American Conservative by intelligence analyst Philip Giraldi. His article, “In Case of Emergency, Nuke Iran,” suggested the resurrection of active U.S. military planning against Iran – but with the shocking disclosure that in the event of another 9/11-type terrorist attack on U.S. soil, Vice President Dick Cheney’s office wants the Pentagon to be prepared to launch a potential tactical nuclear attack on Iran – even if the Iranian government was not involved with any such terrorist attack against the U.S.:

The Pentagon, acting under instructions from Vice President Dick Cheney’s office, has tasked the United States Strategic Command (STRATCOM) with drawing up a contingency plan to be employed in response to another 9/11-type terrorist attack on the United States. The plan includes a large-scale air assault on Iran employing both conventional and tactical nuclear weapons. Within Iran there are more than 450 major strategic targets, including numerous suspected nuclear-weapons-program development sites. Many of the targets are hardened or are deep underground and could not be taken out by conventional weapons, hence the nuclear option. As in the case of Iraq, the response is not conditional on Iran actually being involved in the act of terrorism directed against the United States. Several senior Air Force officers involved in the planning are reportedly appalled at the implications of what they are doing – that Iran is being set up for an unprovoked nuclear attack – but no one is prepared to damage his career by posing any objections. [11]

Why would the Vice President instruct the U.S. military to prepare plans for what could likely be an unprovoked nuclear attack against Iran? Setting aside the grave moral implications for a moment, it is remarkable to note that during the same week this “nuke Iran” article appeared, the Washington Post reported that the most recent National Intelligence Estimate (NIE) of Iran’s nuclear program revealed that, “Iran is about a decade away from manufacturing the key ingredient for a nuclear weapon, roughly doubling the previous estimate of five years.”[12] This article carefully noted this assessment was a “consensus among U.S. intelligence agencies, [and in] contrast with forceful public statements by the White House.” The question remains, Why would the Vice President advocate a possible tactical nuclear attack against Iran in the event of another major terrorist attack against the U.S. – even if Tehran was innocent of involvement?



Perhaps one of the answers relates to the same obfuscated reasons why the U.S. launched an unprovoked invasion to topple the Iraq government – macroeconomics and the desperate desire to maintain U.S. economic supremacy. In essence, petrodollar hegemony is eroding, which will ultimately force the U.S. to significantly change its current tax, debt, trade, and energy policies, all of which are severely unbalanced. World oil production is reportedly “flat out,” and yet the neoconservatives are apparently willing to undertake huge strategic and tactical risks in the Persian Gulf. Why? Quite simply – their stated goal is U.S. global domination – at any cost.

To date, one of the more difficult technical obstacles concerning a euro-based oil transaction trading system is the lack of a euro-denominated oil pricing standard, or oil ‘marker’ as it is referred to in the industry. The three current oil markers are U.S. dollar denominated, which include the West Texas Intermediate crude (WTI), Norway Brent crude, and the UAE Dubai crude. However, since the summer of 2003 Iran has required payments in the euro currency for its European and Asian/ACU exports – although the oil pricing these trades was still denominated in the dollar.[13]

Therefore a potentially significant news story was reported in June 2004 announcing Iran’s intentions to create of an Iranian oil bourse. This announcement portended competition would arise between the Iranian oil bourse and London’s International Petroleum Exchange (IPE), as well as the New York Mercantile Exchange (NYMEX). [Both the IPE and NYMEX are owned by U.S. consortium, and operated by an Atlanta-based corporation, IntercontinentalExchange, Inc.]

The macroeconomic implications of a successful Iranian bourse are noteworthy. Considering that in mid-2003 Iran switched its oil payments from E.U. and ACU customers to the euro, and thus it is logical to assume the proposed Iranian bourse will usher in a fourth crude oil marker – denominated in the euro currency. This event would remove the main technical obstacle for a broad-based petroeuro system for international oil trades. From a purely economic and monetary perspective, a petroeuro system is a logical development given that the European Union imports more oil from OPEC producers than does the U.S., and the E.U. accounted for 45% of exports sold to the Middle East. (Following the May 2004 enlargement, this percentage likely increased).



Despite the complete absence of coverage from the five U.S. corporate media conglomerates, these foreign news stories suggest one of the Federal Reserve’s nightmares may begin to unfold in the spring of 2006, when it appears that international buyers will have a choice of buying a barrel of oil for $60 dollars on the NYMEX and IPE – or purchase a barrel of oil for €45 – €50 euros via the Iranian Bourse. This assumes the euro maintains its current 20-25% appreciated value relative to the dollar – and assumes that some sort of US “intervention” is not launched against Iran. The upcoming bourse will introduce petrodollar versus petroeuro currency hedging, and fundamentally new dynamics to the biggest market in the world – global oil and gas trades. In essence, the U.S. will no longer be able to effortlessly expand credit via U.S. Treasury bills, and the dollar’s demand/liquidity value will fall.

It is unclear at the time of writing if this project will be successful, or could it prompt overt or covert U.S. interventions – thereby signaling the second phase of petrodollar warfare in the Middle East. Regardless of the potential U.S. response to an Iranian petroeuro system, the emergence of an oil exchange market in the Middle East is not entirely surprising given the domestic peaking and decline of oil exports in the U.S. and U.K, in comparison to the remaining oil reserves in Iran, Iraq and Saudi Arabia. What we are witnessing is a battle for oil currency supremacy. If Iran’s oil bourse becomes a successful alternative for international oil trades, it would challenge the hegemony currently enjoyed by the financial centers in both London (IPE) and New York (NYMEX), a factor not overlooked in the following (UK) Guardian article:

Iran is to launch an oil trading market for Middle East and Opec producers that could threaten the supremacy of London’s International Petroleum Exchange.

…Some industry experts have warned the Iranians and other OPEC producers that western exchanges are controlled by big financial and oil corporations, which have a vested interest in market volatility. [emphasis added]

The IPE, bought in 2001 by a consortium that includes BP, Goldman Sachs and Morgan Stanley, was unwilling to discuss the Iranian move yesterday. “We would not have any comment to make on it at this stage,” said an IPE spokeswoman. [14]

During an important speech in April 2002, Mr. Javad Yarjani, an OPEC executive, described three pivotal events that would facilitate an OPEC transition to euros.[15] He stated this would be based on (1) if and when Norway’s Brent crude is re-dominated in euros, (2) if and when the U.K. adopts the euro, and (3) whether or not the euro gains parity valuation relative to the dollar, and the EU’s proposed expansion plans were successful. Notably, both of the later two criteria have transpired: the euro’s valuation has been above the dollar since late 2002, and the euro-based E.U. enlarged in May 2004 from 12 to 22 countries. Despite recent “no” votes by French and Dutch voters regarding a common E.U. Constitution, from a macroeconomic perspective, these domestic disagreements do no reduce the euro currency’s trajectory in the global financial markets – and from Russia and OPEC’s perspective – do not adversely impact momentum towards a petroeuro. In the meantime, the U.K. remains uncomfortably juxtaposed between the financial interests of the U.S. banking nexus (New York/Washington) and the E.U. financial centers (Paris/Frankfurt).

The most recent news reports indicate the oil bourse will start trading on March 20, 2006, coinciding with the Iranian New Year.[16] The implementation of the proposed Iranian oil Bourse – if successful in utilizing the euro as its oil transaction currency standard – essentially negates the previous two criteria as described by Mr. Yarjani regarding the solidification of a petroeuro system for international oil trades. It should also be noted that throughout 2003-2004 both Russia and China significantly increased their central bank holdings of the euro, which appears to be a coordinated move to facilitate the anticipated ascendance of the euro as a second World Reserve Currency. [17] [18] China’s announcement in July 2005 that is was re-valuing the yuan/RNB was not nearly as important as its decision to divorce itself form a U.S. dollar peg by moving towards a “basket of currencies” – likely to include the yen, euro, and dollar.[19] Additionally, the Chinese re-valuation immediately lowered their monthly imported “oil bill” by 2%, given that oil trades are still priced in dollars, but it is unclear how much longer this monopoly arrangement will last.

Furthermore, the geopolitical stakes for the Bush administration were raised dramatically on October 28, 2004, when Iran and China signed a huge oil and gas trade agreement (valued between $70 – $100 billion dollars.) [20] It should also be noted that China currently receives 13% of its oil imports from Iran. In the aftermath of the Iraq invasion, the U.S.-administered Coalition Provisional Authority (CPA) nullified previous oil lease contracts from 1997-2002 that France, Russia, China and other nations had established under the Saddam regime. The nullification of these contracts worth a reported $1.1 trillion created political tensions between the U.S and the European Union, Russia and China. The Chinese government may fear the same fate awaits their oil investments in Iran if the U.S. were able to attack and topple the Tehran government. Despite U.S. desires to enforce petrodollar hegemony, the geopolitical risks of an attack on Iran’s nuclear facilities would surely create a serious crisis between Washington and Beijing.

It is increasingly clear that a confrontation and possible war with Iran may transpire during the second Bush term. Clearly, there are numerous tactical risks regarding neoconservative strategy towards Iran. First, unlike Iraq, Iran has a robust military capability. Secondly, a repeat of any “Shock and Awe” tactics is not advisable given that Iran has installed sophisticated anti-ship missiles on the Island of Abu Musa, and therefore controls the critical Strait of Hormuz – where all of the Persian Gulf bound oil tankers must pass.[22] The immediate question for Americans? Will the neoconservatives attempt to intervene covertly and/or overtly in Iran during 2005 or 2006 in a desperate effort to prevent the initiation of euro-denominated international crude oil sales? Commentators in India are quite correct in their assessment that a U.S. intervention in Iran is likely to prove disastrous for the United States, making matters much worse regarding international terrorism, not to the mention potential effects on the U.S. economy.

…If it [ U.S.] intervenes again, it is absolutely certain it will not be able to improve the situation…There is a better way, as the constructive engagement of Libya’s Colonel Muammar Gaddafi has shown…Iran is obviously a more complex case than Libya, because power resides in the clergy, and Iran has not been entirely transparent about its nuclear programme, but the sensible way is to take it gently, and nudge it to moderation. Regime change will only worsen global Islamist terror, and in any case, Saudi Arabia is a fitter case for democratic intervention, if at all. [21]

A successful Iranian bourse will solidify the petroeuro as an alternative oil transaction currency, and thereby end the petrodollar’s hegemonic status as the monopoly oil currency. Therefore, a graduated approach is needed to avoid precipitous U.S. economic dislocations. Multilateral compromise with the EU and OPEC regarding oil currency is certainly preferable to an ‘Operation Iranian Freedom,’ or perhaps another CIA-backed coup such as operation “Ajax” from 1953. Despite the impressive power of the U.S. military, and the ability of our intelligence agencies to facilitate ‘interventions,’ it would be perilous and possibly ruinous for the U.S. to intervene in Iran given the dire situation in Iraq. The Monterey Institute of International Studies warned of the possible consequences of a preemptive attack on Iran’s nuclear facilities:

An attack on Iranian nuclear facilities…could have various adverse effects on U.S. interests in the Middle East and the world. Most important, in the absence of evidence of an Iranian illegal nuclear program, an attack on Iran’s nuclear facilities by the U.S. or Israel would be likely to strengthen Iran’s international stature and reduce the threat of international sanctions against Iran. [23]

Synopsis:
It is not yet clear if a U.S. military expedition will occur in a desperate attempt to maintain petrodollar supremacy. Regardless of the recent National Intelligence Estimate that down-played Iran’s potential nuclear weapons program, it appears increasingly likely the Bush administration may use the specter of nuclear weapon proliferation as a pretext for an intervention, similar to the fears invoked in the previous WMD campaign regarding Iraq. If recent stories are correct regarding Cheney’s plan to possibly use a another 9/11 terrorist attack as the pretext or casus belli for a U.S. aerial attack against Iran, this would confirm the Bush administration is prepared to undertake a desperate military strategy to thwart Iran’s nuclear ambitions, while simultaneously attempting to prevent the Iranian oil Bourse from initiating a euro-based system for oil trades.

However, as members of the U.N. Security Council; China, Russia and E.U. nations such as France and Germany would likely veto any U.S.-sponsored U.N. Security Resolution calling the use of force without solid proof of Iranian culpability in a major terrorist attack. A unilateral U.S. military strike on Iran would isolate the U.S. government in the eyes of the world community, and it is conceivable that such an overt action could provoke other industrialized nations to strategically abandon the dollar en masse. Indeed, such an event would create pressure for OPEC or Russia to move towards a petroeuro system in an effort to cripple the U.S. economy and its global military presence. I refer to this in my book as the “rogue nation hypothesis.”

While central bankers throughout the world community would be extremely reluctant to ‘dump the dollar,’ the reasons for any such drastic reaction are likely straightforward from their perspective – the global community is dependent on the oil and gas energy supplies found in the Persian Gulf. Hence, industrialized nations would likely move in tandem on the currency exchange markets in an effort to thwart the neoconservatives from pursuing their desperate strategy of dominating the world’s largest hydrocarbon energy supply. Any such efforts that resulted in a dollar currency crisis would be undertaken – not to cripple the U.S. dollar and economy as punishment towards the American people per se – but rather to thwart further unilateral warfare and its potentially destructive effects on the critical oil production and shipping infrastructure in the Persian Gulf. Barring a U.S. attack, it appears imminent that Iran’s euro-denominated oil bourse will open in March 2006. Logically, the most appropriate U.S. strategy is compromise with the E.U. and OPEC towards a dual-currency system for international oil trades.

Of all the enemies to public liberty war is, perhaps, the most to be dreaded because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes…known instruments for bringing the many under the domination of the few…No nation could preserve its freedom in the midst of continual warfare. — James Madison, Political Observations, 1795

Footnotes:
[1]. Ron Suskind, The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O’ Neill, Simon & Schuster publishers (2004)
[2]. Richard A. Clarke, Against All Enemies: Inside America’s War on Terror, Free Press (2004)
[3]. William Clark, “Revisited – The Real Reasons for the Upcoming War with Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth,” January 2003 (updated January 2004) http://www.ratical.org/ratville/CAH/RRiraqWar.html
[4]. Peter Philips, Censored 2004, The Top 25 Censored News Stories, Seven Stories Press, (2003) General website for Project Censored: http://www.projectcensored.org/ Story #19: U.S. Dollar vs. the Euro: Another Reason for the Invasion of Iraq http://www.projectcensored.org/publications/2004/19.html
[5]. Carol Hoyos and Kevin Morrison, “Iraq returns to the international oil market,” Financial Times, June 5, 2003
[6]. Faisal Islam, “Iraq nets handsome profit by dumping dollar for euro,” [UK] Guardian, February 16, 2003 http://observer.guardian.co.uk/iraq/story/0,12239,896344,00.html
[7]. “Oil bourse closer to reality,” IranMania.com, December 28, 2004. Also see: “Iran oil bourse wins authorization,” Tehran Times, July 26, 2005
[8]. “War-Gaming the Mullahs: The U.S. weighs the price of a pre-emptive strike,” Newsweek, September 27 issue, 2004. http://www.msnbc.msn.com/id/6039135/site/newsweek/
[9]. James Fallows, ‘Will Iran be Next?,’ Atlantic Monthly, December 2004, pgs. 97 – 110
[10]. Seymour Hersh, “The Coming Wars,” The New Yorker, January 24th – 31st issue, 2005, pgs. 40-47 Posted online January 17, 2005. Online: http://www.newyorker.com/fact/content/?050124fa_fact
[11]. Philip Giraldi, “In Case of Emergency, Nuke Iran,” American Conservative, August 1, 2005
[12]. Dafina Linzer, “Iran Is Judged 10 Years From Nuclear Bomb U.S. Intelligence Review Contrasts With Administration Statements,” Washington Post, August 2, 2005; Page A01
[13]. C. Shivkumar, “Iran offers oil to Asian union on easier terms,” The Hindu Business Line (June 16, ` 2003). http://www.thehindubusinessline.com/bline/2003/06/17/stories/ 2003061702380500.htm
[14]. Terry Macalister, “Iran takes on west’s control of oil trading,” The [UK] Guardian, June 16, 2004 http://www.guardian.co.uk/business/story/0,3604,1239644,00.html
[15]. “The Choice of Currency for the Denomination of the Oil Bill,” Speech given by Javad Yarjani, Head of OPEC’s Petroleum Market Analysis Dept, on The International Role of the Euro (Invited by the Spanish Minister of Economic Affairs during Spain’s Presidency of the EU) (April 14, 2002, Oviedo, Spain) http://www.opec.org/NewsInfo/Speeches/sp2002/spAraqueSpainApr14.htm
[16]. “Iran’s oil bourse expects to start by early 2006,” Reuters, October 5, 2004 http://www.iranoilgas.com
[17]. “Russia shifts to euro as foreign currency reserves soar,” AFP, June 9, 2003 http://www.cdi.org/russia/johnson/7214-3.cfm
[18]. “China to diversify foreign exchange reserves,” China Business Weekly, May 8, 2004 http://www.chinadaily.com.cn/english/doc/2004-05/08/content_328744.htm
[19]. Richard S. Appel, “The Repercussions from the Yuan’s Revaluation,” kitco.com, July 27, 2005 http://www.kitco.com/ind/appel/jul272005.html
[20]. China, Iran sign biggest oil & gas deal,’ China Daily, October 31, 2004. Online: http://www.chinadaily.com.cn/english/doc/2004-10/31/content_387140.htm
[21]. “Terror & regime change: Any US invasion of Iran will have terrible consequences,” News Insight: Public Affairs Magazine, June 11, 2004 http://www.indiareacts.com/archivedebates/nat2.asp?recno=908&ctg=World
[22]. Analysis of Abu Musa Island, http://www.globalsecurity.org http://www.globalsecurity.org/wmd/world/iran/abu-musa.htm
[23]. Sammy Salama and Karen Ruster, “A Preemptive Attack on Iran’s Nuclear Facilities: Possible Consequences,” Monterry Institute of International Studies, August 12, 2004 (updated September 9, 2004)http://cns.miis.edu/pubs/week/040812.htm

KUWAIT FIREFIGHTER INTERVIEW
http://www.worldpress.org/Americas/3620.cfm
Interview with Author Frank Touby / September 9, 2010

Worldpress: In your book “Burning Sands” you write about your experience fighting the oilfield fires in Kuwait that Saddam Hussein lit 19 years ago. You got a position as a trainee oilfield firefighter with Safety Boss Ltd., of Calgary, Alberta, to essentially better entrench yourself as a journalist. Some of the scenes you describe are quite intense. Can you tell us a bit about that experience?
Frank Touby: It was the most fascinating and virtuous adventure of my life. We worked 14-hour days with no days off, and yet we were eager to get out there again at the start of each day. When we quenched a fire on a wild well that had been burning for five or more months we pinched off a toxic smoke trail that had stretched for thousands of miles around the earth. As the tail end of that noxious smoke stream trailed into the sky there was such a sense of exhilaration that came with participating in a truly worthy effort. I especially gained an appreciation for the skills and intelligence of farm boys, who provide most of the labor in the oil patch. They can operate almost any piece of heavy equipment for the first time just by looking at it. They are smart, dependable and energetic. I’m a guy whose career resulted from formal education and had an inclination to disregard such people whose work gets them dirty and who speak in less-than-correct English. Never again. On the other hand, these guys were so strong, so competent in their rightwing universes, that many of them couldn’t imagine others being truly needy of aid that government properly must provide. Not entirely their fault.

WP: Can you elaborate on that last point? What do you mean by “so competent in their rightwing universes…”?
FT: Sure. They were brought up in that rugged frontier milieu of independence, strength, self-made personhood and self-reliance. You look after yourself, your buds and your family in that model and everyone else does the same. So there is no need for crooked politicians or carpet-bagging bureaucrats to come in and tell you what to do with your land, your property and yourself. The men I worked with at Safety Boss, the blowout company, were Canadians mainly from Alberta and Saskatchewan. But it was very much the same with many of them. Mike Miller, the owner of Safety Boss, was not like that at all. He is a more urbane, philosophical man and a great, considerate leader. His company set a world record that likely will never be duplicated: 126 wild wells “killed” in five months. It probably won’t ever happen again because nobody will again set so many wells ablaze. There’s no point to it since it’s now proven that the wild wells can be quenched in a relatively short period of time. But nobody knew that at the time Saddam had his troops and sappers spend over a year preparing 700-plus wells to be torched.

WP: What did it teach you about the effects of war over resources?
FT: I must admit to having a jaded view that didn’t come from my experiences in Kuwait, but from events that transpired ever since. In short, I think war is almost a requirement to keep certain resources scarce and their prices high. Monopoly also serves that purpose—as it does with diamonds and with oil refineries that produce gasoline. War also accommodates the needs of the cabal Dwight Eisenhower warned us against as he left the presidency in 1961: “We must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex.” So far we have failed.

WP: How do you think the BP oil spill compares to the oil fires in Kuwait?
FT: Aside from being wild wells, they couldn’t be more dissimilar. While the desert in Kuwait was aflame with over 700 oil fires, BP managed to contaminate an area larger than that from a single well. Kuwait was heartless and malicious; BP, to the best of our knowledge, was heartless and incompetent. I fear the harm from BP will both overshadow the severity and outlast the harm from six months of wild wells in Kuwait.

WP: What do you think government’s role should be in getting developed countries off oil?
FT: There’s no excuse for our dependency on oil from any source. It’s solely caused by the control transnational corporations hold over governments. Alcohol (ethanol) is a better fuel than petroleum: higher octane, clean burning, endlessly renewable. It’s what the Model T Ford originally used before J. D. Rockefeller gave huge funds to the Women’s Christian Temperance League to get it outlawed, allegedly so his oil wells would be worth a fortune. (It’s detailed in David Blume’s book “Alcohol Can Be a Gas: Fueling an Ethanol Revolution for the 21st Century.”) Ethanol poses a threat to corporate monopolists because it can be produced by little guys, in contrast to the millions of dollars worth of refinery that it takes to produce gasoline. Ethanol doesn’t have to be made from corn grain, which is an atrocity since that’s a food crop. Almost any vegetable matter will work, including corn stalks that normally go to waste. Bulrushes, or cattails, are especially productive. Government’s role should be to encourage such oil replacements, but that won’t happen so long as corporatists control politicians and corporations are considered equal to real human beings in our laws.

WP: Do you have any ideas as to how people can break that corporate stronghold? Because you’re right; in the United States, for example, we’ve seen Congress’ attempt at an energy bill fail miserably. Certainly corporate influence had something to do with that.
FT: Yes. The situation in Canada is nearly the same as in the U.S. Corporations buy politicians and universities. The latter are the principal mechanisms of corruption since universities produce the civil service and also issue the various scientific dictates that are used to justify regulations favored by their corporate patrons. The effects of purchased politicians need no explanation. In Canada both the Liberal and Conservative parties are on the same corporatist pages, just as Republicans and Democrats are identically compromised in the States. Government ministries or departments, such as the regulators of pharmaceuticals and broadcasters, function as advocates for the corporations they’re nominally regulating. The solution is simple to state and perhaps impossible to remedy, short of a revolution either by law or by arms. It requires an end to corporate personhood: the ridiculous notion that a business corporation has human rights identical to those of real human beings. That was recently confirmed by the U.S. Supreme Court (Citizens United vs. FEC), which ruled that corporations mustn’t be denied the human right of freedom of speech by limiting the money they can spend on election campaigns. The result will naturally be that corporations can own any elections they choose. Enabled by government “regulators,” junk-food giants wreck the health of billions of people with unhealthful restaurant fare; farm and chemical oligopolies harm our food supplies; drug giants waste our health resources by ignoring or concealing unprofitable health alternatives while inventing new “diseases” and investing their research dollars on marketing schemes to sell prescription cures for such contrivances as “acid reflux disease” (aka, “heartburn,” effectively countered with baking soda); oil companies write their own environmental rules. Practically everything government regulates is now compromised by multinational corporations for their profit purposes. An intermediate step to remediate the harm might be to change tax codes in the U.S. and Canada, since both nations have well-established different tax categories for corporations than for individuals. Prohibit businesses from deducting any expenses and require them to report all worldwide revenues. It would have marked impact on each economy to start with, since many businesses and charities exist because of corporations’ abilities to write off related expenses. It would eliminate “charitable” deeds that are done in corporate names, but really those are promotional expenses. Corporations and all businesses can’t be expected to operate in any way except in their own interests. Regulation by government is needed to avoid oligopolies and other cancerous growths that strangle free enterprise or harm consumers and workers.
Universities should be prohibited from accepting funds from individuals or corporations to ensure their independence from corruption. They should be entirely funded by government, which has a responsibility to provide education just as it has to provide the military, healthcare, currency, police, fire departments, roads, regulation of enterprise and so forth. In other words, using the phrase of Seattle-based radio commentator Thom Hartmann, it’s incumbent on government to ensure and maintain “The Commons” that comprise civilization.

the PETROEURO
http://tradecrudeoil.coremach.com/capitalism-under-attack-petrodollars-petroeuros-and-the-iranian-oil-bourse/
Petrodollars, Petroeuros and the Iranian Oil Bourse
by Luigi Frascati / 2007

“This notion that the United States is getting ready to attack Iran is simply ridiculous […]. Having said that, all the options are on the table” (President George W. Bush, February 2005)

Who would have ever imagined it?
Forget about the Prophet Mohammed, Islam, the Koran, President Ahmadinejad and his nuclear program, Islamofascism and all the umpah-pah. The Mullahs do not like American Dollars anymore. As reported by Reuters UK ([http://rtv.rtrlondon.co.uk/2006-12-18/3e56a070.html]) Iran announced that it has ordered its Central Bank to start using Euros for foreign transactions, and to transform the nation’s Dollar-denominated assets held abroad into the single European currency. “The government has ordered the Central Bank to replace the Dollar with the Euro to limit the problems of the executive organs in commercial transactions,” government spokesman Gholam Hossein Elham told reporters.

Coming from OPEC’s fourth oil producer, this is a move that will undoubtedly have both deep economic reverberations and grave political consequences worldwide. It would certainly appear that rather than ‘wiping out Israel’ from the face of the planet, Iran is setting the tempo to wipe out American capitalism and influence everywhere. To understand the implications of such a move in financial affairs, one has to first revert to the importance of money in our economic systems and the effects that the ravages of inflation have over it.

Money is one of man’s most amazing inventions. Imagine the difficulty of our daily lives without those metal coins and coloured pieces of paper. To make any kind of transaction – from shopping for groceries to purchasing a real estate asset – you would have to find someone who had what you want and who wanted what you have, and then the two of you could barter. In a world with thousands of products, one would spend most of the time looking for trading partners and devoting very little time to actually earn an income. The alternative to avoid having to find trading partners would be for each and everyone of us to do a little bit of everything by ourselves.

But with money on the scene everything becomes more straightforward, simple and less time-consuming, and all of us can increase our productivity by and through specialization – that is doing what we do best, and then trade with our partners. As a direct and proximate consequence of our increased productivity, each of us can therefore become richer. It is easy to lose sight of the very basic economic point that we all owe a large part of our high living standards to the existence of money, its possession and the spending power that stems out of it. But there is a catch: money works best when its value is stable over time. And this is nowhere more true than in international trade.

Economically speaking, the power of the American Dollar and its influence in economic and financial affairs worldwide was born during the United Nations Monetary and Financial Conference held at Bretton Wood, New Hampshire in July 1944. The Conference was attended by the delegates of all 45 allied nations directly and indirectly involved in the fight against the powers of the Axis – Nazi Germany, Imperial Japan and Fascist Italy, and their socio-economic doctrines. As a result of the Bretton Woods Conference, a system of exchange rate among different currencies was set up anchored on the American Dollar, which was made convertible to gold – the common denominator and measure of wealth worldwide. Thus, the American Dollar became de facto the reserve currency of the world, accepted and traded everywhere. This system remained in place until the early 1970’s and it allowed countries to accumulate reserves in American Dollars, as opposed to gold.

When in 1970-1971 an economically resurgent Western Europe began demanding payment for their US Dollars, as it became clear that the American Government did not have enough gold reserves to buy back all those Dollars, the US Treasury under the Nixon Administration rather than defaulting on its payment ‘de-anchored’ the Greenback – that is it severed the link between the Dollar and gold. To avoid an international collapse of the American currency in world markets, however, the US treasury had to substitute gold with another valuable commodity so as to entice foreign countries to keep their foreign reserves in Dollars and to continue accepting the American currency.

Thus in 1972-73 an iron-clad arrangement was made with Saudi Arabia to support the power of the House of Saud in exchange for accepting only U.S. Dollars for its oil. The rest of OPEC was to follow suit and also accept only American Dollars. Because the world had to buy oil from the Arab oil-producing countries, it now had the reason to hold Dollars as payment for oil. Because the world needed ever increasing quantities of oil at ever increasing oil prices, the world’s demand for Dollars could only increase. Even though Dollars could no longer be exchanged for gold, they were now exchangeable for oil. The Petrodollar was born.



In 2000, the first man who actually began demanding Euros for his oil was none other than Saddam Hussein of Iraq – and we all know what has happened to him. To be more specific, in fact, Saddam Hussein Abd al-Majid al-Tikriti (1937-2006), former President of Iraq, made two strategic mistakes, the second one of which would ultimately cost him his neck – literally. Firstly, on August 2, 1990 he invaded Kuwait, a country very friendly with both the United Kingdom and the United States, and holding approximately ten percent of the world’s oil reserves. Saddam, furthermore, became a real threat to Saudi Arabia as well. By invading Kuwait and threatening Saudi Arabia, Saddam breached the Carter Doctrine postulated by President Jimmy Carter in 1980, which states that “[…] an attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force.” The Carter Doctrine was later on upheld by President George H.W. Bush in 1989 with National Security Directive 26, which declares that “Access to Persian Gulf oil and the security of key friendly states in the area are vital to U.S. national security […].” The Gulf War ensued in January 1991.



The second mistake of Saddam was to start demanding payment for his oil in Euros. At first, his demand was met with ridicule, later with neglect, but as it became clearer that he meant business the need arose to make an example of anyone who demanded payment in currencies other than U.S. Dollars. The punishment came with the worsening of the geo-political situation after the 9/11 attacks on the Twin Towers and an increased perception and worry about Saddam’s weapons of mass destruction – which he had used extensively against the Kurds and his own citizens. President Bush’s Shock-and-Awe intervention in Iraq followed, which ultimately brought about the demise of the Iraqi dictator.



Contemporary warfare has traditionally involved underlying conflicts regarding economics and resources. Today these intertwined conflicts also involve international currencies, and thus increased complexity. Current geopolitical tensions between the United States and Iran extend beyond the publicly stated concerns regarding Iran’s nuclear intentions, and likely include a proposed Iranian “petroeuro” system for oil trade – the Iranian Oil Bourse (‘Bourse’ is the French word for Stock Exchange). The proposed Iranian Oil Bourse signifies that without some sort of US intervention, the Euro is going to establish a firm foothold in the international oil trade.

This is so, because the Europeans would no longer have to buy and hold Dollars in order to secure their payment for oil, but would instead pay with their own currency. The adoption of the Euro for oil transactions would provide the European currency with a reserve status that would benefit the European at the expenses of the Americans. Given U.S. foreign debt levels and trade deficit, Tehran’s objective constitutes an obvious encroachment on the Dollar supremacy in the crucial international oil markets, and America can hardly afford that to happen. It is really a case of lethal economic terrorism and financial warfare, a matter of life and death.

And speaking of economic terrorism and financial warfare, it is very interesting and worth mentioning the link between oil and Euros on one side and Iran’s nuclear programme on the other side that Gholam Hossein Elham has made during the foresaid announcement. He has stated: “They (the Westerners) should put an end to their hostilities towards our nation and should also be aware that we are capable of achieving nuclear technology through very transparent and legal methods – something that they must respect. They must not waste their time with venting hostility against this nation, otherwise they will be harmed, more so than us.”

If Iran follows up with the intention to charge Euros for its oil, the upcoming Iranian Bourse will introduce Petroeuros currency hedging in direct competition with traditional Petrodollars. More than that, in political terms, it will pit America, Israel and Sunni Islam against Iran, Syria and Shiite Islam and will fundamentally create new dynamics and competition into the biggest markets in the world – those of global oil and gas trade. One of the Federal Reserve’s nightmares may well begin to unfold if it appears that international buyers will have a choice of buying a barrel of oil for USD 60 on the NYMEX and IPE – or purchase a barrel of oil for €45 – €50 through the Iranian Bourse. In essence, America would no longer be able to expand effortlessly its debt-financing with the issuance of US Treasury bills, and the international demand and liquidity of the American Dollar would fall. This is a very good reason to go to war.

PREVIOUSLY on SPECTRE : CABLE CUT CONSPIRACIES
https://spectregroup.wordpress.com/2008/02/18/how-to-run-a-traceroute-cable-cut-conspiracies-cont/
http://www.ilovebonnie.net/2008/02/13/google-maps-version-of-the-2008-submarine-cable-cuts/
http://www.ilovebonnie.net/2008/02/06/submarine-cables-subsidiares-and-subversion/
Undersea Cable Cuts and the Iranian Oil Bourse

“Through the research that I have exhaustingly done over the past few days, this is the one that has struck me as the most likely reason for the damages that have occurred to submarine internet cables. The Iranian oil bourse is going to be a stock market for petroluem, petrochemicals and gas. What’s the big catch here? The exchange planned on being ran with currencies excluding the U.S. dollar. If you remember from earlier in the post, Iran stopped allowing purchases of their oil with the U.S. dollar in December of 2007. So, obviously, the U.S. is not going to be happy about this. The biggest piece of information linking this to the recent damages is the proposed location of the bourse: the island of Kish. This is the island that is right next to at least two of the cuts that have recently occurred…”

IRAN OIL BOURSE
http://www.iranbourse.com/Default.aspx?tabid=215
http://www.islamidavet.com/english/2010/09/12/kish-island-open-to-foreign-investment/
http://www.oil-price.net/en/articles/iranian-oil-bourse-opening.php
Iranian Oil Bourse Opens
by Steve Austin / 2008.02.06

The Iranian Oil Bourse establishing Euro-based pricing of oil is set to open on February 17th 2008 and could have devastating effects on the US dollar. Currently all three major oil markets (WTI, NYMEX, IPE) trade barrels of oil in US dollars. Consequently any country buying oil needs dollars to pay for it. This enables the US Federal Reserve to issue huge volumes of dollars to meet increasing demand for oil. In return oil producing nations invest dollar proceeds in US treasury bills, allowing for the current US budget deficit. But this balance may become unsettled after a fourth major oil market opens this month, trading in Euros: the Iranian Oil Bourse (IOB).

Unlike other bourses, the IOB relies on a peer-to-peer trading model, using the Internet. IOB has been in the works for several years and encountered many hurdles on the way, the last of which are severed underwater internet cables creating an Internet outage throughout the Middle East days before the IOB’s opening and prompting conspiracy theories. In recent years the US has outfitted some of its submarines with the capability to splice optical fiber underwater so these theories may not be far-fetched. Having the world’s second largest oil reserves of 136 gigabarrels, Iran will likely extend its influence on financial markets when the IOB opens. Although under-reported by the media, this historical shift and its consequences should be watched closely.

GOVERNMENT-MADE BUBBLE?
http://www.foxbusiness.com/markets/2010/09/29/feature-irans-bourse-booms-despite-sanctions/
Iran’s bourse booms despite sanctions
by Robin Pomeroy / Sep 30, 2010

In the busy foyer of the Tehran Stock Exchange an old woman in a black chador clutches her shopping bag and gazes up hopefully at the electronic display showing the latest share prices. Like the other Iranians bustling past her, she is betting on a market that has soared to record highs despite ever-tightening international sanctions, lackluster oil prices and political uncertainty after last year’s disputed presidential election. While U.S. diplomats were busy upping Iran’s economic punishment over nuclear activities Washington fears are aimed at making a bomb, Iranian shares, which might have been expected to fall, have, instead, gone through the roof. Tehran’s Tepix index has risen 65 percent to all-time highs this year. Its latest record was set on Sept. 18, when it hit 18,658, up from 11,295 at the start of the year. By comparison, New York’s S&P 500 Index has made no major gains this year as the U.S. economy struggles to recover from the financial crisis.

Officials say privatisation, cheap valuations and moves to cut red tape and encourage private investors have lured Iranians away from the once-booming property market, the traditional home of the Iranian nest egg, which stagnated in late 2008. The world’s fifth-largest oil exporter hopes to raise $12.5 billion by privatising over 500 state firms during the 2010-11 year, and plans to sell all of its refineries and petrochemicals units, promising potential investors a solid pipeline of IPOs. Iranians are also increasingly reluctant to park their spare cash in the bank, where interest on instant access savings has fallen from about 12.5 percent three years ago to 6 percent now. Those rates seem healthy compared to Western economies, where central bank rates are near zero, but are no match for the rewards promised by a bourse which already boasts more than 330 listed firms and a market capitalisation above $70 billion.

Speaking in his office on the upper floors of the stock exchange, bourse chief Hassan Ghalibaf Asl summed up the logic: “The opportunities and good factors affecting the growth of the capital market and attracting investors are more important, and the weight of them is more, than bad factors.” Few dispute however, that the bad factors are there. From a lack of transparency to tightening sanctions, myriad challenges belie the Tehran Stock Exchange’s stellar performance. Firms related to the elite Revolutionary Guards and other state bodies have bought large stakes in privatised companies, further muddying the waters between public and private in a country where powerful quasi-official foundations pervade.

Last year, a consortium linked to the Revolutionary Guards took a controlling stake in the Telecommunications Company of Iran for $7.8 billion, raising concern that some firms being put up for sale are just being transferred within the public sector. Investments by these vast semi-official or politically connected organisations have caused the surges in stock prices that small investors have been happy to ride, Meir Javedanfar, an Iran expert at Middle East analysis firm Meepas, said. “Very few stock exchanges have record gains in a country where sanctions, economic isolation, unemployment and inflation are increasing,” he said. “All indicators point to this boom being a government-made bubble. It’s difficult to predict when it will burst.” Even in parliament, questions are being asked about the disconnect between soaring share prices and an economy facing not just sanctions but looming cuts to multi-billion-dollar state subsidies that currently guarantee cheap fuel to domestic industries and reduce the cost of goods for Iranian consumers. Many small investors are ordinary Iranians, who could end up suffering the most if boom turns to bust.

Sheltering from the blazing sun under the porticos of the bourse building, a man sits on a fold-out stool and sells economics text books laid at his feet on sheets of newspaper. Traders, the majority apparently amateurs, pass him on their way inside to swap rumours as they crowd around touchscreens, looking up data provided by the bourse on their chosen stocks. Iranians can place orders with professional brokers, without having to go in person to the bourse, but the building, with its atmosphere of anticipation, attracts scores of people, placing their cash alongside institutions like Iran’s pension funds. Apart from one turbaned cleric and a handful of women, most are middle aged men, and the mood is optimistic though smaller trades are driven largely by rumour, since rules requiring listed firms to disclose their performance and plans are lax.

With his boy-band haircut, jeans and T-shirt, 26-year-old Navid Sadri is not the typical day-trader on Tehran’s bourse, but he has been making his living on the market for eight years, long enough to know that a boom usually ends in a bust. “Eight months ago there was a very small crowd,” he says, pointing to the amateur traders hovering in the corridors above the bourse’s modest trading floor. “If every day there’s a bigger crowd it’s a sign that there will be a drop.” While domestic investment in the bourse booms, international sanctions and political uncertainty are hampering the flow of foreign funds and expertise that Iran needs to modernize. Foreign investment on the Tehran bourse accounts for just 0.5 percent of the shares, according to the bourse chief. “We don’t even look at the Iranian market. There is just too much political risk involved,” Robert McKinnon of ASAS Capital, an asset management company in Dubai, said in June, when bourse officials travelled to the city to drum up foreign interest.

In an effort to attract cash from abroad, Iran revoked a rule this year that had forced foreign investors to hold their initial capital in the Islamic Republic for three years. While foreign investors can now repatriate their capital whenever they want, U.S. rules ban any bank that does business with the United States from making transactions with Iran. That rule is enough to keep most major international banks at bay. So far, Tehran’s bourse has lured only a handful of smaller institutions willing to gamble on the world’s riskier markets. Fund management company Castlestone calls Iran stocks “a jaw-dropping opportunity” and plans to include them in a new high-growth emerging markets fund. Turquoise Partners, an investment firm with offices in Tehran and London, manages a $100 million fund on behalf of foreign investors wanting a piece of the Iranian action. “We’ve had a flood of money coming into the market in the last one and a half years,” Ali Mashayekhi, head of investment research at Turquoise, said.

CURRENCY WARS
http://www.ecb.int/stats/exchange/eurofxref/html/eurofxref-graph-usd.en.html#1999
http://www.feasta.org/documents/review2/nunan.htm
Petrodollar or Petroeuro? A new source of global conflict
by Cóilín Nunan

No observer of the lead-up to the war in Iraq and its aftermath could have failed to notice that the level of cooperation between Europe and America was extremely low. France and Germany were very strong opponents of the US/UK invasion and even after the war was declared over, disagreements persisted over the lifting of sanctions and how Iraq should be run. So was this just a one-off tiff or was it a symptom of deeper flaws in the relationship? I believe that the war on Iraq illustrated for the first time that continental Europe, led by France and Germany, no longer wishes to follow the Americans politically, although what has been termed a ‘clash of civilisations’ [1] is probably better viewed as a ‘clash of economies’.

While disagreements over the US trade barriers on steel imports or the European restrictions on imports of American genetically modified crops have attracted widespread comment, the most intense economic rivalry of all has received far less media attention than it perhaps should: this is the rivalry between the dollar and the euro for the position of world reserve currency, a privileged status that has been held by the dollar ever since the Bretton Woods agreement nearly 60 years ago.

At present, approximately two thirds of world trade is conducted in dollars and two thirds of central banks’ currency reserves are held in the American currency which remains the sole currency used by international institutions such as the IMF. This confers on the US a major economic advantage: the ability to run a trade deficit year after year. It can do this because foreign countries need dollars to repay their debts to the IMF, to conduct international trade and to build up their currency reserves. The US provides the world with these dollars by buying goods and services produced by foreign countries, but since it does not have a corresponding need for foreign currency, it sells far fewer goods and services in return, i.e. the US always spends more than it earns, whereas the rest of the world always earns more than it spends. This US trade deficit has now reached extraordinary levels, with the US importing 50% more goods and services than it exports. So long as the dollar remains the dominant international currency the US can continue consuming more than it produces and, for example, build up its military strength while simultaneously affording tax cuts.

Getting a share of this economic free lunch has been one of the motivations, and perhaps the main motivation, behind setting up the euro [2]. Were the euro to become a reserve currency equal to, or perhaps even instead of, the dollar, countries would reduce their dollar holdings while building up their euro savings. Another way of putting this would be to say that Eurozone countries would be able to reduce their subsidy to American consumption and would find that other countries were now subsidising Eurozone consumption instead.

A move away from the dollar towards the euro could, on the other hand, have a disastrous effect on the US economy as the US would no longer be able to spend beyond its means. Worse still, the US would have to become a net currency importer as foreigners would probably seek to spend back in the US a large proportion of the estimated three trillion dollars which they currently own. In other words, the US would have to run a trade surplus, providing the rest of the world with more goods and services than it was receiving in return. A rapid and wholesale move to the euro might even lead to a dollar crash as everyone sought to get rid of some, or all, of their dollars at the same time. But that is an outcome that no-one, not even France or Germany, is seeking because of the huge effect it would have on the world economy. Europe would much prefer to see a gradual move to a euro-dollar world, or even a euro-dominated one.

It turns out that there is a small group of countries which is playing the arbiter in this global contest. These are the world’s oil exporters, in particular OPEC and Russia. Ever since the days when the US dominated world oil production, sales of oil and natural gas on international markets have been exclusively denominated in dollars. This was partly a natural state of affairs since, up until the early 1950s, the US accounted for half or more of the world’s annual oil production. The tendency to price in dollars was additionally reinforced by the Bretton Woods agreement which established the IMF and World Bank and adopted the dollar as the currency for international loans.

The vast majority of the world’s countries are oil importers and, since oil is such a crucial commodity, the need to pay for it in dollars encourages these countries keep the majority of their foreign currency reserves in dollars not only to be able to buy oil directly but also to protect the value of their own currencies from falling against the dollar. Because a sudden devaluation of a country’s currency against the dollar would lead to a jump in oil prices and a possible economic crisis, every country’s central bank needs dollar reserves so as to be able to buy its own currency on the foreign exchange markets when its value needs to be supported.

The fact that oil sales and loans from the IMF are dollar-denominated also encourages poorer countries to denominate their exports in dollars as this minimises the risk of losses through any fluctuations in the value of the dollar. The knock-on effect of this is that, since many of these exports are essential raw materials which richer countries need to import, their denomination in dollars reinforces the need for rich countries to keep their own currency reserves in dollars.

While the denomination of oil sales is not a subject which is frequently discussed in the media, its importance is certainly well understood by governments. For example, when in 1971 President Nixon took the US off the gold standard, OPEC did consider moving away from dollar oil pricing, as dollars no longer had the guaranteed value they once did. The US response was to do various secret deals with Saudi Arabia in the 1970s to ensure that the world’s most important oil exporter stuck with the dollar [3]. What the Saudis did, OPEC followed. More recently, in June 2003, the Prime Minister of Malaysia publicly encouraged his country’s oil and gas exporters to move from the dollar to the euro. The European and American reactions were polar opposites: the EU’s Energy Commissioner, Loyola de Palacio, welcomed the suggestion, saying that ‘in the future the euro is [going to be] taking a place in the international markets in general as the money of exchange’ and that this was ‘a matter of realism’ [4]. Her counterpart in the US, the director of the Energy Information Administration, Guy Caruso, said that he couldn’t see ‘any particular merit’ in the move and that over the long run ‘the dollar’s always won out’ [5]. Either way, Malaysia is only a relatively minor oil exporter, so what it does can only have a very limited effect. A switch by a major oil exporter would be of far greater significance.

The first country to actually make the switch was a very important oil exporter indeed: Iraq, in November 2000 [6,7]. Before the war in Iraq began, some observers, myself included, argued that this might well be a major reason for the US desire to invade and the strong Franco-German opposition to the invasion [8,9]. Corroborating evidence included the apparent influence which loyalty (or lack thereof) to the dollar seemed to have on the US attitude towards other OPEC members. Iran had been talking of selling its own oil for euros [6,10] and was subsequently included in George Bush’s ‘axis of evil’. Venezuela, another important oil exporter, had started bartering some of its oil, thus avoiding the use of the dollar, and was encouraging OPEC to do likewise [11] – and the US was widely suspected in having played a part in the attempted coup against the Venezuelan president, Hugo Chavez.

Semi-official confirmation that petro-currency rivalry was at the heart of the split between France and Germany, on the one hand, and the US, on the other, was provided by Howard Fineman, the chief political correspondent for Newsweek, in an article he wrote in April 2003, in the aftermath of the war. The Europeans and Americans were then arguing over whether the UN’s oil-for-food programme in Iraq should remain in place or not. Using the term ‘clash of civilisations’ to describe the divide which was developing, Fineman explained that the disagreement had little to do with the French calls for the search for weapons of mass destruction to resume and for sanctions to remain in place until the search was complete. Instead, Fineman said, it was mainly about the dollar vs the euro. Citing White House officials and a presidential aide, he explained that the dispute between the two continents was really about ‘who gets to sell – and buy – Iraqi oil, and what form of currency will be used to denominate the value of the sales. That decision, in turn, will help decide who controls Iraq, which, in turn, will represent yet another skirmish in a growing global economic conflict. We want a secular, American-influenced pan-ethnic entity of some kind to control the massive oil fields (Iraq’s vast but only real source of wealth). We want that entity to be permitted to sell the oil to whomever it wants, denominated in dollars.’ Fineman concluded his article by confidently predicting that future Iraqi oil sales would be switched back to dollars [1].

Fineman’s White House sources would appear to have been reliable as that is precisely what has happened: when Iraqi oil exports resumed in June of last year, it was announced that payment would be in dollars only [12,13]. It was also decided that the billions of Iraqi euros which were being held in a euro account, controlled by the UN under the oil-for-food programme, were to be transferred into the Development Fund for Iraq, a dollar account controlled by the US [13,14,15].

Furthermore, Youssef Ibrahim, a former senior Middle East correspondent for the New York Times and energy editor on the Wall Street Journal, who is a member of the influential Council on Foreign Relations, has called Iraq’s switch to the euro ‘another reason’ for the war, saying that a general move by oil producers to the euro would be a ‘catastrophe’ for the US [16].

America’s willingness to use violence to defend its economic interests does not seem to have reduced the number of oil exporters considering switching to the euro as they recognise that their use of the dollar enables the US to build up its military strength. In addition to Malaysia, Indonesia has the switch under consideration [17] while Iran has been shifting its currency reserves into euros. Moreover, according to the Vice-President of the Iranian central bank, it has actually sold some of its oil to Europe for euros and is encouraging members of an Asian trade organisation, the Asian Clearing Union, to pay for Iranian oil in the European currency [18]. Along with Malaysia, it is also at the forefront of efforts to establish a new gold-backed currency, the Islamic Gold Dinar, to be used in international trade amongst Muslim countries instead of both the dollar and the euro [19]. In a further development, in June 2004, Iran announced that it had plans to establish an oil-trading market for Middle Eastern and OPEC producers which could threaten the dominance of London’s International Petroleum Exchange and New York’s Nymex [20]. Such a move could help remove some of the technical difficulties that exist with a switch away from dollar-denomination of oil sales.

It is therefore not surprising to find that, just as with Iraq, the European Union and the US are dealing with Iran in very different ways. While the EU has been holding trade negotiations with Iran [21] and involved in dialogue about its nuclear programme, the US has refused to get involved in direct talks with the Iranian government which it views as ‘evil’. The American Enterprise Institute, a highly influential American ‘think tank’, has in fact been actively calling for ‘regime change’ [22] and, although this policy has yet to be officially endorsed by the Bush administration, in July 2004 it was claimed in the British press that a senior official of the Bush administration had indicated that, if re-elected, Bush would intervene in the internal affairs of Iran in an attempt to overturn the Iranian government [23,24].

European enthusiasm for the ‘petroeuro’ also appears undampened by the US takeover of Iraq. Since the war, the European Union has been actively encouraging Russia, another opponent of the US invasion, to move to euro oil and gas sales. In October 2003, during a joint press conference with Germany’s Prime Minister Gerhard Schroeder, the Russian President Vladimir Putin declared that Russia was thinking about selling its oil for euros. A few days later, the European Commission President, Romano Prodi, said, after a summit between Russia and the European Union, that Russia was now drawn to having its imports and exports denominated in euros [25,26].

In December 2003, speculation about the future roles of the dollar and the euro increased when OPEC Secretary General Alvaro Silva, a former Venezuelan oil minister, said that the organisation was now considering trading in euros or in a basket of currencies other than the dollar, as the US currency was declining in value [27] . Although a few days later the Saudi oil minister Ali al-Naimi said that OPEC would not be discussing a switch to the euro at its next meeting (comments reinforced by the Qatari President of OPEC and the Algerian oil minister [28]), articles discussing a possible move continued to appear in the media [29,30] and the euro’s value against the dollar soared. Despite the speculation, no decision to move to the euro was taken at OPEC’s meeting in early February 2004 and thereafter the euro’s value fell back again.

In fact, close inspection of the dollar-euro exchange rate shows that since the euro’s introduction in January 1999, petro-currency rivalry appears to have played an important part in swinging the rate one way or the other. The markets, it seems, have noticed the importance of what is happening. On the other hand, the lack of an open discussion of the issues suggests that politicians and bankers are keen to move ahead with their plans with little or no explanation to the general public.

Should we not, however, be debating more openly what kind (or kinds) of international financial structure(s) we want to adopt, since the question has potentially huge implications for the stability of the world economy and for peace and stability in oil-exporting countries? A good starting point for such a debate would be the recognition that no country or countries should be allowed to dominate the system by controlling the issuance of the currency or currencies used. Similarly fundamental would be to prevent any country from running a persistent trade surplus or deficit so as to avoid the build up of unjust subsidies, unpayable debts and economic instability. At Bretton Woods, John Maynard Keynes, who understood how important these two conditions were, proposed a system which would have met them, but his proposal was rejected in favour of the dollar.[31] The dollar, though, is no longer a stable, reliable currency: the IMF has warned that the US trade deficit is so bad that its currency could collapse at any time.[32] Will we really have to wait for a full-blown dollar crisis before a public debate about creating a just and sustainable trading system can begin?

References
1. Howard Fineman, ‘In Round 2, it’s the dollar vs. euro’, April 23 2003, Newsweek, http://www.msnbc.com/news/904353.asp?0sl=22&newguid=FD367EA32A81424DB1136AF1FD3221F4&cp1=1
2. Anon., ‘Will the euro rule the roost?’, January 1 1999, BBC News, http://news.bbc.co.uk/1/hi/events/the_launch_of_emu/inside_em u/225434.stm
3. David E. Spiro, The Hidden Hand of American Hegemony: Petrodollar Recycling and International Markets, Cornell University Press, 1999
4. Anon., ‘EU says oil could one day be priced in euros’, 16 June 2003, Reuters
5. Irene Kwek, ‘EIA Says Oil Price Switch To Euro From Dollar Unlikely’, 16 June 2003, Dow Jones Newswires
6. Recknagel, Charles, ‘Iraq: Baghdad Moves to Euro’, November 1 2000,Radio Free Europe, http://www.rferl.org/nca/features/2000/11/01112000160846.asp
7. Faisal Islam, ‘When will we buy oil in euros?’, February 23 2003, The Observer, http://www.observer.co.uk/business/story/0,6903,900867,00.html
8. William Clark, ‘The Real Reasons for the Upcoming War With Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth’, January 2003, http://www.ratical.org/ratville/CAH/RRiraqWar.html
9. Cóilín Nunan, ‘Oil, currency and the war on Iraq’, January 2003, http://www.feasta.org/documents/papers/oil1.htm
10. Anon., ‘Iran may switch to euro for crude sale payments’, Alexander Oil and Gas, September 5 2002, http://www.gasandoil.com/goc/news/ntm23638.htm
11. Hazel Henderson, ‘Globocop v. Venezuela’s Chavez: Oil, Globalization and Competing Visions of Development’, April 2002, InterPress Service, http://www.hazelhenderson.com/Globocop%20v.%20Chavez.htm
12. Carola Hoyos and Kevin Morrison, ‘Iraq returns to international oil market’, June 5 2003, Financial Times
13. Coalition Provisional Authority Regulation Number 2, http://www.cpa-iraq.org/regulations/index.html#Regulations
14. UN Security Council Resolution 1483, http://www.un.org/Docs/sc/unsc_resolutions03.html
15. Judy Aita, ‘U.N. Transfers Oil-for-Food Program to CPA, Iraqi Officials Nov 22’, November 2003, Washington File, http://www.cpa-iraq.org/audio/20031122_Nov-22UN_Transfers_Oil_for_Food_Program-post.htm
16. Catherine Belton, ‘Why not price oil in euros?’, October 10 2003, Moscow Times
17. Kazi Mahmood, ‘Economic Shift Could Hurt U.S.-British Interests In Asia’, March 30 2003, IslamOnline.net
18. C. Shivkumar, ‘Iran offers oil to Asian union on easier terms’, June 16 2003, http://www.blonnet.com/2003/06/17/stories/2003061702380500.htm
19. Anon, ‘Malaysia, Iran discuss the use of gold dinar’, July 3 2003, Asia Times, http://www.atimes.com/atimes/Southeast_Asia/EG03Ae01.html
20. Terry Macalister, ‘Iran takes on west’s control of oil trading’, June 16 2004, The Guardian, http://www.guardian.co.uk/business/story/0,3604,1239644,00.html
21. Hooman Peimani, ‘EU and Iran talk trade, not war’, June 7 2003, Asia Times, www.atimes.com/atimes/Middle_East/EF07AK02.html
22. Guy Dinmore, ‘US lobbyists tune in for regime change in Iran’, December 5 2003, Financial Times
23. Michael Binyon and Bronwen Maddox, ‘US sets sights on toppling Iran regime’, July 17 2004, The Times
24. Jennifer Johnston, ‘Regime change in Iran now in Bush’s sights’, July 18 2004, The Sunday Herald, www.sundayherald.com/43461
25. Lisa Jucca and Melissa Akin, ‘Europe Presses Russia on Euro’, October 20 2003, Moscow Times
26. Simon Nixon, ‘What’s that in euros?’, October 18 2003, The Spectator, www.spectator.co.uk/article.php3?table=old§ion=current&issue=2003-10-18&id=3619
27. Anon., ‘OPEC may trade oil in euros to compensate for dollar decline’, December 9 2003, Associated Press, http://www.hindustantimes.com/news/181_490084,00020008.htm
28. Anon., ‘Saudi Arabia: Dollars only please’, December 13 2003, Reuters, http://money.cnn.com/2003/12/13/news/international/bc.energy .saudi.reut/
29. Patrick Brethour, ‘OPEC mulls move to euro for pricing crude oil’, January 12 2004, Globe and Mail, http://www.globeandmail.com/servlet/story/RTGAM.20040112.wopec0112/BNStory/Business/
30. Anon., ‘To euro or not: should oil pricing ditch the dollar?’, February 9 2004, AFP
31. Michael Rowbottom, Goodbye America! Globalisation, Debt and the Dollar Empire, Jon Carpenter Publishing, 2000
32. Charlotte Denny and Larry Elliott, ‘IMF warns trade gap could bring down dollar’, September 19 2003, The Guardian, http://www.guardian.co.uk/business/story/0,3604,1045193,00.html


Hundreds of bleached bones and skulls found in the wilderness of the Sahara desert may be the remains of the long lost Cambyses’ army, according to researchers Alfredo and Angelo Castiglioni

VANISHED 2,500 YEAR OLD PERSIAN ARMY FOUND IN EGYPTIAN DESERT?
http://www.archeologiaviva.tv/tv/video/80
http://news.discovery.com/archaeology/cambyses-lost-army-images.html
http://news.discovery.com/videos/archaeology-ancient-lost-army-found.html
http://news.discovery.com/archaeology/cambyses-army-remains-sahara.html
Bones, jewelry and weapons found in Egyptian desert may be the remains of Cambyses’ army that vanished 2,500 years ago.
BY Rossella Lorenzi / Nov 08, 2009

The remains of a mighty Persian army said to have drowned in the sands of the western Egyptian desert 2,500 years ago might have been finally located, solving one of archaeology’s biggest outstanding mysteries, according to Italian researchers. Bronze weapons, a silver bracelet, an earring and hundreds of human bones found in the vast desolate wilderness of the Sahara desert have raised hopes of finally finding the lost army of Persian King Cambyses II. The 50,000 warriors were said to be buried by a cataclysmic sandstorm in 525 B.C. “We have found the first archaeological evidence of a story reported by the Greek historian Herodotus,” Dario Del Bufalo, a member of the expedition from the University of Lecce, told Discovery News.

According to Herodotus (484-425 B.C.), Cambyses, the son of Cyrus the Great, sent 50,000 soldiers from Thebes to attack the Oasis of Siwa and destroy the oracle at the Temple of Amun after the priests there refused to legitimize his claim to Egypt. After walking for seven days in the desert, the army got to an “oasis,” which historians believe was El-Kharga. After they left, they were never seen again. “A wind arose from the south, strong and deadly, bringing with it vast columns of whirling sand, which entirely covered up the troops and caused them wholly to disappear,” wrote Herodotus.

A century after Herodotus wrote his account, Alexander the Great made his own pilgrimage to the oracle of Amun, and in 332 B.C. he won the oracle’s confirmation that he was the divine son of Zeus, the Greek god equated with Amun. The tale of Cambyses’ lost army, however, faded into antiquity. As no trace of the hapless warriors was ever found, scholars began to dismiss the story as a fanciful tale. Now, two top Italian archaeologists claim to have found striking evidence that the Persian army was indeed swallowed in a sandstorm. Twin brothers Angelo and Alfredo Castiglioni are already famous for their discovery 20 years ago of the ancient Egyptian “city of gold” Berenike Panchrysos. Presented recently at the archaeological film festival of Rovereto, the discovery is the result of 13 years of research and five expeditions to the desert. “It all started in 1996, during an expedition aimed at investigating the presence of iron meteorites near Bahrin, one small oasis not far from Siwa,” Alfredo Castiglioni, director of the Eastern Desert Research Center (CeRDO) in Varese, told Discovery News.

While working in the area, the researchers noticed a half-buried pot and some human remains. Then the brothers spotted something really intriguing — what could have been a natural shelter. It was a rock about 35 meters (114.8 feet) long, 1.8 meters (5.9 feet) in height and 3 meters (9.8 feet) deep. Such natural formations occur in the desert, but this large rock was the only one in a large area. “Its size and shape made it the perfect refuge in a sandstorm,” Castiglioni said. Right there, the metal detector of Egyptian geologist Aly Barakat of Cairo University located relics of ancient warfare: a bronze dagger and several arrow tips. “We are talking of small items, but they are extremely important as they are the first Achaemenid objects, thus dating to Cambyses’ time, which have emerged from the desert sands in a location quite close to Siwa,” Castiglioni said.

About a quarter mile from the natural shelter, the Castiglioni team found a silver bracelet, an earring and few spheres which were likely part of a necklace. “An analysis of the earring, based on photographs, indicate that it certainly dates to the Achaemenid period. Both the earring and the spheres appear to be made of silver. Indeed a very similar earring, dating to the fifth century B.C., has been found in a dig in Turkey,” Andrea Cagnetti, a leading expert of ancient jewelry, told Discovery News.

In the following years, the Castiglioni brothers studied ancient maps and came to the conclusion that Cambyses’ army did not take the widely believed caravan route via the Dakhla Oasis and Farafra Oasis. “Since the 19th century, many archaeologists and explorers have searched for the lost army along that route. They found nothing. We hypothesized a different itinerary, coming from south. Indeed we found that such a route already existed in the 18th Dynasty,” Castiglioni said. According to Castiglioni, from El Kargha the army took a westerly route to Gilf El Kebir, passing through the Wadi Abd el Melik, then headed north toward Siwa. “This route had the advantage of taking the enemy aback. Moreover, the army could march undisturbed. On the contrary, since the oasis on the other route were controlled by the Egyptians, the army would have had to fight at each oasis,” Castiglioni said. To test their hypothesis, the Castiglioni brothers did geological surveys along that alternative route. They found desiccated water sources and artificial wells made of hundreds of water pots buried in the sand. Such water sources could have made a march in the desert possible. “Termoluminescence has dated the pottery to 2,500 years ago, which is in line with Cambyses’ time,” Castiglioni said.

In their last expedition in 2002, the Castiglioni brothers returned to the location of their initial discovery. Right there, some 100 km (62 miles) south of Siwa, ancient maps had erroneously located the temple of Amun. The soldiers believed they had reached their destination, but instead they found the khamsin — the hot, strong, unpredictable southeasterly wind that blows from the Sahara desert over Egypt. “Some soldiers found refuge under that natural shelter, other dispersed in various directions. Some might have reached the lake of Sitra, thus surviving,” Castiglioni said.

At the end of their expedition, the team decided to investigate Bedouin stories about thousands of white bones that would have emerged decades ago during particular wind conditions in a nearby area. Indeed, they found a mass grave with hundreds of bleached bones and skulls. “We learned that the remains had been exposed by tomb robbers and that a beautiful sword which was found among the bones was sold to American tourists,” Castiglioni said. Among the bones, a number of Persian arrow heads and a horse bit, identical to one appearing in a depiction of an ancient Persian horse, emerged. “In the desolate wilderness of the desert, we have found the most precise location where the tragedy occurred,” Del Bufalo said. The team communicated their finding to the Geological Survey of Egypt and gave the recovered objects to the Egyptian authorities. “We never heard back. I’m sure that the lost army is buried somewhere around the area we surveyed, perhaps under five meters (16.4 feet) of sand.”

Mosalam Shaltout, professor of solar physics at the National Research Institute of Astronomy and Geophysics, Helwan, Cairo, believes it is very likely that the army took an alternative western route to reach Siwa. “I think it depended on their bad planning for sufficient water and meals during the long desert route and most of all by the occurrence of an eruptive Kamassen sandy winds for more than one day,” Shaltout told Discovery News. Piero Pruneti, editor of Archeologia Viva, Italy’s most important archaeology magazine, is also impressed by the team’s work. “Judging from their documentary, the Castiglioni’s have made a very promising finding,” Prunetic told Discovery News. “Indeed, their expeditions are all based on a careful study of the landscape… An in-depth exploration of the area is certainly needed!”

MISSING IN ACTION
http://news.discovery.com/archaeology/the-quest-for-cambyses-lost-army.html
BY Rossella Lorenzi / Nov 09, 2009

Indeed, many archaeologists and adventures have been scouring the desert, dreaming of solving the 2,500- year-old mystery. Already in the 1800s, archaeology pioneer Giovanni Battista Belzoni explored the desert in vain, searching for the lost army. Perhaps the most famous desert explorer is the Austro-Hungarian Count László Almásy (1895-1951), whose life provided inspiration for Anthony Minghella’s film The English Patient. In 1936, Almásy ventured into the desert in search for clues of the vanished soldiers, but the Great Sand Sea’s giant dunes and the khamsin — the hot, strong, unpredictable southeasterly wind that blows from the Sahara desert over Egypt — stopped him. He re-emerged from the Saharan sands four days later — miraculously alive.

In the last decade there have been several contrasting reports about intriguing findings in the Western Egyptian desert. It all started with reports about the 1996 Castiglioni brother expedition, and continued with geologist Aly Barakat’s announcement of important discoveries in the area around Bahrain. The revived interest over the lost army continued in 2000: reports circulated that a Helwan University geological team, prospecting for petroleum in the Western Desert, had stumbled across scattered human bones and ancient warfare relics such as daggers and arrowheads. Announcements of future serious investigation by the Egyptian Supreme Council of Antiquities (SCA) followed, but any information about that research has yet to be published.

In 2003, geologist Tom Bown, accompanied by archaeologist Gail MacKinnon and a film crew, returned to the desert. Their search proved inconclusive. In 2005, another follow-up expedition by a team from the University of Toledo, Ohio, reached the area around Bahrain, but failed to find any significant remains, apart from a large number of fossilized sand dollars, which they believed could have been mistaken for human bone fragments. Now twin brothers Angelo and Alfredo Castiglioni (famous for their discovery 20 years ago of the ancient Egyptian “city of gold” Berenike Panchrysos) have finally shown their findings. Presented recently at the archaeological film festival of Rovereto, the documentary is the result of 13 years of research and five expeditions to the desert. Have they really located the remains of the mighty Persian army? “We can’t tell yet. But they have shown us the first ever Achaemenid objects, thus dating to Cambyses’ time, as they emerged from the sands near Siwa. This is amazing and certainly demands further research,” Piero Pruneti, editor of Archeologia Viva.

HERODOTUS
http://classics.mit.edu/Herodotus/history.3.iii.html
http://www.google.com/cse?cx=000823599697007823270%3Axvyeoc7qlza&ie=UTF-8&q=Cambyses+&sa=Search
http://www.livius.org/he-hg/herodotus/hist06.htm
http://www.thefoghornmagazine.com/fact-block-2.php
http://www.reshafim.org.il/ad/egypt/herodotus/cambyses.htm

[3.26.1] “So fared the expedition against Ethiopia. As for those who were sent to march against the Ammonians, they set out and journeyed from Thebes with guides; and it is known that they came to the city of Oasis, inhabited by Samians said to be of the Aeschrionian tribe, seven days’ march from Thebes across sandy desert; this place is called, in the Greek language, Islands of the Blest. [3.26.2] Thus far, it is said, the army came; after that, except for the Ammonians themselves and those who heard from them, no man can say anything of them; for they neither reached the Ammonians nor returned back. [3.26.3] But this is what the Ammonians themselves say: when the Persians were crossing the sand from Oasis (probably the oasis of Kargeh) to attack them, and were about midway between their country and Oasis, while they were breakfasting a great and violent south wind arose, which buried them in the masses of sand which it bore; and so they disappeared from sight. Such is the Ammonian tale about this army.”

CAMBYSES II
http://en.wikipedia.org/wiki/Cambyses_of_Persia#The_Lost_Army_of_Cambyses
http://www.livius.org/caa-can/cambyses_ii/cambyses_ii.html
http://touregypt.net/featurestories/cambyses2.htm

NOW LONG DEAD
http://www.chnpress.com/news/?section=2&id=6865
Discovered Stone Slab Proved to be Gate of Cambyses’ Tomb
BY Maryam Tabeshian / 13 December 2006

A huge stone slab discovered accidentally last year was proved to have once been the entrance gate to the mausoleum of Cambyses II, son and successor of Cyrus the Great. Agricultural activities by local farmers near the world heritage site of Pasargadae last year resulted in the accidental discovery of a big stone slab bearing some carvings typical of Pasargadae monuments. The discovered slab was recently proved by archeologists to have been the entrance gate to the mausoleum of Cambyses II, son and successor of Cyrus the Great, founder of the Achameneid Empire (550-330 BC). “A huge stone slab measuring 1.60 meters in height comprised of 5 broken pieces was discovered last March by farmers at a distance of 100 meters from Tall-e Takht and was immediately transferred to Parse-Pasargadae Research Center to be studied by archeologists,” said Afshin Yazdani, archeologist of Parse-Pasargadae Research Center.

Tall-e Takht or ‘throne hill’ is a citadel located at the heart of Pasargadae historical complex, the first dynastic capital of the Achaemenid Empire, founded by Cyrus the Great, in Fars province. Remains of an unfinished tomb denoted to Achaemenid King Cambyses II can be seen close to Tall-e Takht, from which only a wall has survived the ravage of time. Based on studies by British archeologist David Stronach, the Tomb, also known as Zendan-e Soleiman/Eskandar (Solomon/Alexander Prison), originally consisted of an almost square, 4-meter-high tower in which a solitary, raised room was approached by a projecting monumental stone staircase. It resembles the Achaemenid era monument of Zoroaster’s Kaba in Naqsh-e Rostam historical site.

According to Yazdani, the stones used in the gate of Cambyses’ tomb are very similar to a stone slab discovered 50 years ago by archeologists. At the time, Stronach proposed a theory that the stone belonged to the mausoleum of Cambyses and drew a sketch of the original gate which he believed to have had two leaves, each comprising of 6 rectangular frames. He also drew 3 flowers each having 12 petals on the top and bottom of each frame. “As Stronach himself was uncertain about his own drawing of the gate, recent discovery of the gate proves his theory wrong. Based on the new studies, it became known that the entrance gate of what is called Tomb of Cambyses was made of two stone leaves each having two rectangular 35 by 59 cm frames with three 12-petaled flowers on the top and bottom,” explained Yazdani, adding that the height of each door leaf was found to be 1.75 meters – that is 8 centimeters shorter than the height of the wall. Archeologists believe that the gate was made shorter on purpose to allow circulation of air in and out of the mausoleum.

According to the inscriptions of Bisotun historic site, the mausoleum of Cambyses was destroyed by the Mongol invader Geomat who disguised himself as Bardia, King Cambyses’ brother and came to power shortly after Cambyses’ assassination and razed down Achaemenid temples. Achaemenid King Darius the Great clearly accounts in Bisotun inscription that he restored the Achaemenid temples after murdering Geomat. “Evidence left on the stone gate very well confirms that it was restored during the early days of Darius the Great’s reign,” added Yazdani. According to Yazdani, the new findings together with the fact that a similar structure to the mausoleum of Cambyses, Zoroaster’s Kaba, was built also by Darius the Great at Naqsh-e Rostam, proved that it was a temple whereas it had previously been variously regarded as either a tomb, or a fire temple, or a depository.

Cambyses was the son and successor of Cyrus the Great who ruled the Persian Empire from the death of his father in 530 BC to his own death in Ecbatane (Syria) eight years later. During his reign, Cambyses continued the politic of expansion started by his father. First, he took part with his father to the conquest of Babylonia and was named King of Babylon after he captured the city in 539. After rising to the throne, he invaded Egypt in 525 BC, putting an end to the 26th Dynasty of the Pharaohs and beginning a period of Persian rule that covered much of the next two centuries.

Cambyses later personally led a force up the Nile to conquer Ethiopia, but after annexing the north of the country, he ran short of supplies and had to return. While on his way back from Egypt with his army in 522 BC, Cambyses was assassinated upon order of one of his brothers, Smerdis, which he himself tried to have assassinated. At his death, after a short period during which Smerdis assumed the leadership, more palace struggles led to the rise to the throne of Darius the Great, whose task was to organize such a vast empire. The mausoleum of the son and successor of Cyrus the Great, Persian King Cambyses II, was also registered with other ancient monuments of Pasargadae historic complex in UNESCO’s list of World Heritage Sites in 1979.

‘RAN SHORT ON SUPPLIES’ AS IN
‘DREW STRAWS AND ATE EACH OTHER’
http://mitchtestone.blogspot.com/2008/10/lost-army-of-cambyses-redux.html

Cambyses II was the emperor of Persia (ruled 530–522 BCE) and successor to Cyrus the Great. Eager to emulate his father’s deeds of conquest, and to extend Persian rule across all the known nations (ie civilisations) of the world, Cambyses invaded Egypt in 525 BCE, defeating the last true Egyptian pharaoh Psammetichus III. Yet today he is remembered not for his feats of conquest, but for his lost army – a force of 50,000 warriors, dispatched to conquer a tiny oasis kingdom, that vanished into the desert and was lost without a single survivor or the slightest trace being discovered for more than 2,000 years.

Herodotus and Cambyses
The primary source for the tale of Cambyses and his lost army is the ancient Greek traveller and historian Herodotus, an intrepid man who travelled all over Egypt just 75 years after the Persian invasion. Herodotus followed in Cambyses’ footsteps and recorded the local tales and histories of the invader. Unfortunately his impartiality is questionable; he had the typical ancient Greek antipathy towards the Persians and his Histories slander Cambyses remorselessly, painting him as a despot, madman and general ne’er-do-well. Herodotus first recounts how Cambyses managed to cross the difficult Sinai desert region and meet the Egyptians with his army intact, which is relevant because it shows that the Persians were capable of coping with desert transits. They recruited Arabian tribes to create water depots at regular spots along the route – in effect, artificial oases – and in this manner were able to arrive at the battle site in good order and defeat Psammetichus.

Later, Cambyses travelled to the major Egyptian cult centres to be crowned pharaoh but, according to Herodotus, made only a perfunctory effort to learn about or pay respect to their customs. He then decided to launch military expeditions against the Ethiopians (to the south), the Carthaginians (along the coast to the west) and the ‘Ammoniums’ – ie the inhabitants of the Siwa Oasis, a small fertile enclave deep within the Western Desert, which was famous for the Oracle of the Temple of Ammon (the Siwan name for the Egyptian god Amun-Ra, whom the Greeks equated with Zeus). The priests of the temple were used to commanding respect from Egypt’s rulers, who were supposed to obtain ‘divine’ favour to legitimise their overlordship. Alexander the Great made sure to do this when he conquered Egypt 200 years later, but Cambyses, it seems, failed to follow the proper forms and disdained the Siwans.

The Siwan expedition
Cambyses took his army south along the Nile to launch his Ethiopian expedition, stopping at Thebes to detach a force to send to Siwa in 524 BCE. According to Herodotus, in Book III of his Histories, an army of 50,000 men was ordered to ‘enslave the Ammonians and burn the oracle of Zeus’. Led by guides, the army set off into the desert, reaching ‘the city of Oasis’, known to the Greeks as ‘The Isles of the Blest’ (modern-day Kharga), seven days’ march to the west. After this, they were never seen again, although the Siwans themselves were somehow able to give Herodotus a rough account of what happened next: “this is what the Ammonians themselves say: when the Persians were crossing the sand from the Oasis to attack them, and were about midway between … [Siwa] and the Oasis, while they were breakfasting a great and violent south wind arose, which buried them in the masses of sand which it bore; and so they disappeared from sight. Such is the Ammonian tale about this army.”

This is the full extent of what we know about the lost army, which has led many scholars to doubt the episode ever happened. Perhaps Herodotus was simply inventing the tale to make Cambyses look more foolish. Why would the Persian emperor waste his time launching a strike on Siwa? Why would he send such a huge army to conquer such a small place (probably only a few thousand residents at most)? Above all, why would he send them via such a perilous route with so little preparation or precaution?

Herodotus himself suggests, albeit indirectly, some of the answers. A possible motive for the expedition is that Cambyses was angered by the attitude of the priests of the Temple of Ammon, who – themselves angry at a perceived lack of due deference – may have been spreading the word that his kingship was illegitimate. They may even have predicted his death. Herodotus also drives home the point that Cambyses was an irascible drunk, given to fits of spite and cruel rage, and quite capable of nursing a lethal grudge. He was also unhinged enough to doom his men with inadequate planning and preparation.

An alternative explanation is that Siwa was only intended as a way point on a longer journey. Perhaps the real targets were lands further to the west. Cambyses’ intended assault on Carthage had been called off because the Phoenicians who provided his navy refused to move against their kin who had set up the colony at Carthage. Perhaps he intended to approach them by land instead – this would account for the apparently disproportionate size of the expeditionary force. If Herodotus is right, the Persian army met a bleak end. The region they were travelling across includes barren depressions of bare rock and boulders; wind-sculpted buttes; plains of salt and dust; vast sand seas of impassable dunes; searing desert winds hotter than 40°C that blow for days on end; massive sand storms that will bury anything that stands still; and an utter absence of water. How the Ammonians knew the fate of the lost army is unclear, given that they specifically told Herodotus that not one soldier had reached Siwa, but perhaps they simply assumed the most likely scenario.

The army in the desert
Apart from being a great unsolved mystery, the miserable desert fate of the lost army of Cambyses also presents the intriguing likelihood that there could be a huge find of skeletons, armour, clothing, weapons and equipment from the ancient Persian era awaiting discovery. The army would have included in its number soldiers from many different parts of the antique world. In the uniquely arid conditions, with the possibility that sand may have covered and protected, the remains could be amazingly well preserved. There could be an archaeological treasure trove somewhere in the Sahara.

Hard target
Herodotus provides a few clues about the possible location of the lost army, describing the army’s route from the oasis known as ‘Island of the Blest’, which is today a major agricultural town known as Kharga. From here they would presumably have tried to follow the traditional caravan route to Siwa, which goes via the oases at Dakhla (a few hundred kilometres to the west) and then Farafra (a few hundred more to the north-west). From Herodotus’ account it sounds as though the Persians may have got to Dakhla or even Farafra, but were then lost as they attempted to complete the final leg of the journey. Even narrowing it down this far, however, leaves a dauntingly vast area to examine. If the Persians got lost out of Dakhla and started going in the wrong direction they could have ended up pretty much anywhere in the Western Desert. The Western Desert is one of the hardest places in the world to be looking for lost relics. It is vast, covering about two-thirds of modern-day Egypt: an area of 680,000 square kilometres (263,000 square miles), equal to the combined size of Austria, Belgium, Denmark, Greece, the Netherlands, Norway and Switzerland. The conditions, as described above, are incredibly harsh and desolate. Even modern vehicles with four-wheel drives and special equipment cannot cope with some of the dunes found in the sand seas. Much of the area is restricted owing to the security issues of the region: millions of landmines from World War II, the proximity of the border with Libya and sensitivities about oil operations and terrorism. And there is always the likelihood that any finds that are stumbled across will soon be covered up by the shifting desert sands, never to be seen again.

The enigmatic Count Almásy
Undaunted, many desert adventurers have dreamed of solving the mystery of the lost army. Probably the most famous was the Austro-Hungarian playboy, pilot and desert explorer Count László Almásy, whose life and times provided the model for the Ralph Fiennes character in The English Patient. Almásy started off as a self-taught dabbler in the exotic world of desert discovery, but his expertise with motor vehicles and his reckless disregard for personal safety led him to pull off some amazing escapades. During the 1930s he was part of a crowd mainly composed of genteel British officers interested in desert travel and exploration, who were primarily fixated on locating the semi-legendary Zerzura, the Oasis of Little Birds, alluded to in medieval writings. Almásy amazed the other members of the Zerzura Club, as they had named themselves, by successfully discovering this hidden oasis, but his search for Cambyses’ army was less successful and even more dangerous. Almásy was an avid fan of Herodotus, and in 1936 determined to follow the tracks of the army as described by the ancient Greek. His journey is described by Saul Kelly in the book The Lost Oasis: The Desert War and the Hunt for Zerzura. Kelly tells how on a previous expedition Almásy had discovered pottery fragments that suggested how the Persians had hoped to cross the waterless desert. By burying huge caches of amphorae (jars) along the intended route, and employing local tribesmen to ferry water to them, they could effect a similar operation to their successful crossing of the Sinai.

This at least was Almásy’s theory, but when he ventured into the desert from Farafra on his 1936 expedition, he discovered not caches of jars but a series of cairns that he described as ‘ancient hollow, circular pyramids of stone about the height of a man’, which seemed to mark the route across the forbidding sand seas. Perhaps the Persians had employed scouts to build them, hoping to follow them all the way to Siwa. Kelly relates that the Almásy party then ran into problems that gave him an insight into the probable fate of Cambyses’ force. Their progress was halted by impassable giant dunes, and the hot desert wind called the khamsin (or khamaseen) blew up, whipping their vehicles with scalding, 44°C+ storm-force winds. All but one of the vehicles broke down and they were lucky to make it out of the desert alive in the third, following a corridor between two towering dunes until they reached Siwa four days later. Almásy planned a further expedition, but war broke out and he never got another chance.

Disputed discoveries
In the last decade there have been some slightly confused reports about discoveries in the Western Desert that sound almost too good to be true. According to Professor Mosalam Shaltout, chairman of the Space Research Center at the Desert Environment Research Institute of Egypt’s Minufiya University, an Italian-led expedition in December 1996 which was surveying for meteorites stumbled across archaeological remains in the El Bahrein Oasis area of the Western Desert. Aly Barakat, a geologist with the team, found a dagger blade and hilt, pottery shards, apparently human bone fragments, burial mounds, arrowheads and a silver bracelet, which, on the basis of a photograph, was identified as ‘most likely belonging to the Achaemenid period’ (ie ancient Persian).

Meanwhile, in 2000 there were widespread reports that a team of oil-prospecting geologists, said to be from Helwan University, in Cairo, had stumbled across similar finds in the same area, spotting scattered arrow heads and human bones. In 2003 geologist Tom Bown led an expedition to the area, accompanied by archaeologist Gail MacKinnon and a film crew, to follow up Aly Barakat’s discoveries, which they, controversially, said had been suppressed by the Egyptian authorities. Bown claimed to have found remains at the same site, near the El Bahrein Oasis, at a place later named Wadi Mastour, the Hidden Valley. In fact he reportedly went as far as describing seeing thousands of bones littering the desert. Yet another follow-up expedition in 2005, however, cast serious doubt on the claims of both Barakat and Bown. A team from the University of Toledo, in Ohio, together with British and Egyptian associates, travelled to the site near El Bahrein. They located a broken pot found by both Barakat and Bown, although they identified it as Roman, but they failed to find any other suggestive remains beyond a few burial sites, which they claim are common in the desert. Instead of fields of scattered human bones they found large numbers of fragments of fossilised sand dollars (sea urchin-like creatures that leave distinctive round calcite cases), which are apparently easy to mistake for human bones and could explain the previous claims.

Can Herodotus be trusted?
So despite tantalising claims and hints, the lost army of Cambyses has apparently not been found yet, nor any definitive proof that it really existed. The cairns and pottery found by Almásy and the weapons and bones allegedly seen by Barakat and Bown may not be what they seem, or perhaps they simply belong to some of the many other groups who have made the perilous desert crossing – for instance, the notorious Forty Days Road slave caravan used to follow the route through the Western Desert via Kharga. Ultimately the credibility of the tale comes down to Herodotus. In this sense he was not highly regarded even by other ancient writers, some of whom felt the sobriquet ‘the Father of History’ bestowed upon him by Cicero should be changed to ‘the Father of Lies’. As already noted, he was biased against the Persians and his portrait of Cambyses has a touch of the pantomime villain. In fact it seems from other contemporary sources that many groups in Egypt welcomed the invader, and an inscription specifically records Cambyses as honouring the Egyptian religion and customs in a praiseworthy manner. This does not mean that Herodotus made up the story about the lost army, or even that his sources deceived him, but it does add another layer of uncertainty to an already difficult search. Should you choose to believe him, however, you may be able to join the hunt yourself. In 2004 a tour operator called Aqua Sun Desert set up a desert safari to explore the Western Desert area around Dakhla, Farafra, Siwa and El Bahrein and to look for evidence of the lost army. It was reported at the time that the tours would continue for five years. As Aqua Sun manager Hisham Nessim says, ‘If we discover anything about the lost army, it will be the discovery of the century.’

SIWA
http://maps.google.com/maps?q=siwa+egypt&oe=utf-8&client=firefox-a&ie=UTF8&gl=us&ei=J5f4SrfRBYOesgPdqpC1CQ&ved=0CAsQ8gEwAA&hq=&hnear=Siwa,+Marsa+Matrouh,+Egypt&ll=28.620693,26.345215&spn=1.381451,2.903137&t=h&z=9

PREVIOUSLY
http://www.archaeology.org/0009/newsbriefs/cambyses.html
http://www.abc.net.au/tv/guide/netw/200407/highlights/234406.htm

CONTACT
Angelo + Alfredo Castiglioni
http://it.wikipedia.org/wiki/Angelo_e_Alfredo_Castiglioni
email : Alfredo_Castiglioni [at] virgilio [dot] it

BIOS
http://www.pulpinternational.com/pulp/entry/Lobby-cards-from-Castiglioni-shockumentaries.html
http://en.wikipedia.org/wiki/Mondo_film#The_Castiglioni_Brothers
http://www.cigv.it/gallery/Berenice
http://cat.inist.fr/?aModele=afficheN&cpsidt=2462518
http://web.archive.org/web/20060808213900/http://msnbc.msn.com/id/12837694/
http://www.castellodellacecchignola.it/delbufalo.html
http://www.dariodelbufalo.it/

DISSENT
http://rogueclassicism.com/2009/11/13/cambyses-lost-army-found-dont-eat-that-elmer/
http://egyptology.blogspot.com/2009/11/lost-army-and-other-sites-mentioned.html
http://rambambashi.wordpress.com/2009/11/13/cambyses-not-so-lost-army/
Cambyses’ Still Lost Army

There are two reasons to be suspicious. In the first place, Herodotus is not a very reliable author. Not because he is not interested in the truth: on the contrary, he is certainly one of the most truthloving writers of the ancient world. But it was hard to get correct information, and Herodotus was standing in a tradition that appreciated an artful presentation. So, in his Histories, Xerxes‘ failed expedition is mirrored by the failures of earlier Persian rulers. So, Herodotus says that Cyrus was defeated by the Massagetes (according to Xenophon, Cyrus died of natural causes); that Darius lost a navy in a storm at the Athos; that Darius also lost an army during a Scythian campaign; and that Cambyses lost an army in the desert. These stories are not necessarily untrue, but the repetition makes one suspicious. I would not be surprised if some of these stories were created by Herodotus because he believed they had to have happened.

But even if we assume that Cambyses sent out an expedition to the Oracle of Ammon, there is still a reason not to believe the claim by our two Italian archaeologists. What they have found, or claim to have found, is a set of Persian weapons (e.g., arrowheads), skulls, and bones. Even if we assume that they are indeed Persian, it is a serious logical fallacy to assume that they belong to soldiers of Cambyses’ campaign. The Persians controled Egypt for more than a century (from 525 to c.401) and there must have been dozens of occasions on which soldiers were sent to the west. All these expeditions may have found itself lost in the western desert. What archaeologists can find, is evidence that a Persian army got into trouble; but stating that the finds belonged to a particular expedition is introducing a secundum quid. I think we must be suspicious.

ARCHEOLOGICAL TOURISM
http://www.egypttoday.com/issues/0401/4E76/04014E76.asp
Safari Operator’s Tours to dig for lost Army
by Maria on Jan 03, 2004

Tourism companies, however, see it as a potential cash cow. “It is a great opportunity,” says Hisham Nessim, manager of Aqua Sun Resort. “We will give tourists a chance to participate in solving this ancient mystery and we will sell it as a touristic product.” Nessim, a former desert rally driver, leads the Egyptian Exploration Desert Team (EEDT), an exploratory “archaeological” mission funded entirely by private tourism firms. The plan, approved by the Ministry of Tourism, is to comb the Western Desert in 4WD vehicles packed with paying tourists hot on the trail of Cambyses’ army.

Archaeologists have reacted with suspicion and horror. “It’s a very, very bad idea,” contends Salima Ikram, associate professor of Egyptology at the American University in Cairo. “The more people go trampling through the desert, the more they muck up the archaeological evidence.” A foreign archaeologist, preferring not to be named, railed: “Do you think that if they find anything they will leave it intact? Of course not. They’ll pick it up, manhandle it and take home a few souvenirs. This is just the sort of sh-t we don’t need.”

Nessim brushes off his critics, who he says are blowing things out of proportion. Hundreds of desert safari expeditions take tourists to the Western Desert each year. The only difference here is that the safari’s route winds through areas deemed likely to contain remains of the lost army. Any evidence discovered will be referred to experts for analysis. “My license is not to dig, so if I find something I must report it to the authorities,” Nessim says, indicating that the Supreme Council of Antiquities (SCA) has no objections to the project. So far, Aqua Sun and co-sponsor Emeco Travel have organized two expeditions. Neither trip, each of which went ahead despite last-minute cancellations, made significant discoveries.

“We still have far to go. This secret has been hidden for over 2,000 years and we can’t expect to find it in just two trips,” says Nessim, who is reportedly cooperating with US space agency NASA to prepare a route for a third mission. “There are some places on the ground that I suspect and they [NASA] will check with satellites.”Remote sensors will also scan an area 50 km southwest of Siwa Oasis, where a Helwan University geological team prospecting for oil in 2000 discovered human bones, arrow-heads, frayed textiles and daggers in the dunes. The find sent shivers of excitement through the archaeological community, but an SCA team dispatched to excavate found nothing at the GPS coordinates they were given. The sand may have simply swallowed the evidence.

“The dunes in the Great Sand Sea move about 30-50 cm a year to the south and southeast because of the prevailing wind,” explains geologist and EEDT guide Bahei El-Asawi. “It’s hard to find anything, because the sand can cover one area and expose another.” The nature of the desert adds a challenge, says desert safari specialist Hani Zaki of Emeco Tours, who compares the search for Cambyses’ army to finding a needle in a haystack. “When you’re in the Great Sand Sea you can look 360 and all you see is sand. There are no landmarks, mountains or anything,” he says. “You don’t see anybody and there is almost no sign of life, but there is plenty of natural beauty.”

EEDT expeditions run between 10 and 22 days, traversing parts of the most beautiful and inhospitable desert in the world. The team’s 4WD vehicles are specially equipped for deep desert exploration, carrying extra fuel, water, rations, parts and GPS equipment. “There’s always a risk, but it’s greater if you’re not following the rules, are not well-equipped or don’t have experience,” says Zaki. “Without risk it’s not an adventure. Our role is to avoid major risks and minimize minor ones.” While Zaki is apologetic that the EEDT team does not include a professional archaeologist, he strongly rejects arguments that tourists are being deceived. Clients do not sign up for an archaeological dig, he says, they come to explore the desert with veteran guides “who know the desert like the back of their hand” and can provide valuable insights into desert history, geology, flora and fauna.The search for Cambyses’ lost army is “just a theme,” he says, insisting clients are aware that the chance of actually finding 50,000 desiccated soldiers and the bleached-white bones of their pack animals is remote. Instead, they hope to find traces like clay water vessels, trail markers, discarded weapons and – if lucky – the remains of a stray soldier.

Rival outfit Zarzora Expeditions is promoting similar themed trips, with itineraries that trace the steps of 19th Century German explorer Gerhard Rohlfs as well as Hungarian spy Count Laszlo Almasy (upon whom the 1996 film The English Patient was loosely based). The firm is also hoping to put together its own quest for Cambyses’ lost army.”It is an irresistible marketing tool,” says Wael Abed, the company’s general manager.

SANDSTORMS 101
http://www.environmentalgraffiti.com/featured/sandstorms-on-earth/2353
http://www.popularmechanics.com/science/worst_case_scenarios/1289311.html
Worst-Case Scenarios: How To Survive A Sandstorm

You’re traveling through the Iraqi desert to Baghdad to work on a reconstruction project. Up ahead is a huge cloud moving low over the ground. Uh-oh–a sandstorm. There’s no place to seek shelter. What should you do?

– Wet a bandanna or other cloth and place it over your nose and mouth. Use a small amount of petroleum jelly to coat the inside of your nostrils. The lubricant will help minimize the drying of mucous membranes.
– All members of a group should stay together : Link arms or use a rope to avoid becoming separated during the storm and to keep track of group members who otherwise could become injured or incapacitated.
– If driving in a car, pull off the road and onto the shoulder as far as possible. Turn off your lights, set the emergency brake, and make sure your taillights are not illuminated. Due to poor visibility, vehicles approaching from the rear in a sandstorm have been known to inadvertently leave the road and, “guided” by the taillights, collide with a parked car.
– Try to move to higher ground : Sand grains travel across the surface of the Earth mostly by saltation, or bouncing from place to place. Because grains of sand will not bounce high on grass, dirt or sand, moving to solid high ground is advisable, even if it’s just a few feet higher. However, sandstorms can be accompanied by severe thunderstorms, in which case there may be a risk of lightning. If you hear thunder or see lightning, do not move to high ground.
– Be Aware : Whenever you are in an area with sandstorm potential (basically, any place where there is a lot of sand and wind), wear long pants, socks and shoes. Because of the way sand moves, your feet and legs are more likely than the upper part of your body to be “burned” by the abrasive grains of sand.

WORD OF MOUTH
http://groups.google.com/group/iran_emails_repository

SCREAMING ‘GOD IS GREAT’ TO EACH OTHER IN THE DARK
http://video.google.com/videosearch?q=ALLAH%20O%20AKBAR%20TEHRAN%20site%3Ayoutube.com
for best effect (if your network can handle it) play them all at once

BEST PRACTICES FOR SECURE COMMUNICATIONS IN REPRESSIVE ENVIRONMENTS
“Update: We are no longer recommending people set up plaintext squid proxies. The Iranian regime appears to be doing deep-packet inspection on all traffic now.”
http://nedanet.org/
http://irevolution.wordpress.com/2009/06/15/digital-security/
http://iran.sharearchy.com/how_to_help_technical.html

KNOW WHAT YOU’RE DEALING WITH
http://www.globalsecurity.org/intell/world/iran/index.html
http://www.metafilter.com/82495/A-brief-history-of-modern-Iran

AND THIS: TAQIYYA, KITMAN, KHOD’EH, TAAROF
http://www.thefreelibrary.com/Iran+and+deception+modalities:+the+reach+of+taqiyya,+kitman,+khod’eh…-a0155873239
Iran’s Political Culture Of Righteous Deception

THIS IS WHAT THEOCRACY LOOKS LIKE

IRANIAN ELECTION FAKED OUTRIGHT (ONGOING)
#IranElection #gr88 #CNNFail viaTwitter
http://iran.twazzup.com/
http://www.iran101.blogspot.com/
http://www.demotix.com/search/context/location/Iran
http://almost.at/#Iran

PHOTO
http://www.boston.com/bigpicture/2009/06/irans_disputed_election.html
http://www.flickr.com/photos/mousavi1388
http://picfog.com/search/iranelection
http://tehranlive.org/

VIDEO
http://www.youtube.com/iraniannews
http://www.youtube.com/view_play_list?p=7A80EC9F4C083901
http://www.citizentube.com/
http://news.bbc.co.uk/2/hi/middle_east/8117054.stm

TORRENTS
http://giagro.wordpress.com/torrents/

EXTORTING SILENCE :
PARENTS OF SLAIN BOY CHARGED $3000 ‘BULLET FEE’ TO GET HIS BODY BACK
http://online.wsj.com/article/SB124571865270639351.html
Son’s Death Has Iranian Family Asking Why
BY Farnaz Fassihi  /  June 23, 2009

Tehran—The family, clad in black, stood at the curb of the road sobbing. A middle-aged mother slapped her cheeks, letting out piercing wails. The father, a frail man who worked as a doorman at a clinic in central Tehran, wept quietly with his head bowed. Minutes before, an ambulance had arrived from Tehran’s morgue carrying the body of their only son, 19-year-old Kaveh Alipour. On Saturday, amid the most violent clashes between security forces and protesters, Mr. Alipour was shot in the head as he stood at an intersection in downtown Tehran. He was returning from acting class and a week shy of becoming a groom, his family said.

The details of his death remain unclear. He had been alone. Neighbors and relatives think that he got trapped in the crossfire. He wasn’t politically active and hadn’t taken part in the turmoil that has rocked Iran for over a week, they said. “He was a very polite, shy young man,” said Mohamad, a neighbor who has known him since childhood. When Mr. Alipour didn’t return home that night, his parents began to worry. All day, they had heard gunshots ringing in the distance. His father, Yousef, first called his fiancée and friends. No one had heard from him.

At the crack of dawn, his father began searching at police stations, then hospitals and then the morgue. Upon learning of his son’s death, the elder Mr. Alipour was told the family had to pay an equivalent of $3,000 as a “bullet fee”—a fee for the bullet used by security forces—before taking the body back, relatives said.

Mr. Alipour told officials that his entire possessions wouldn’t amount to $3,000, arguing they should waive the fee because he is a veteran of the Iran-Iraq war. According to relatives, morgue officials finally agreed, but demanded that the family do no funeral or burial in Tehran. Kaveh Alipour’s body was quietly transported to the city of Rasht, where there is family.

Everyone in the neighborhood knows the Alipour family. In addition to their slain son, they have two daughters. Shopkeepers and businesses pasted a photocopied picture of Mr. Alipour on their walls and windows. In the picture, the young man is shown wearing a dark suit with gray stripes. His black hair is combed neatly to a side and he has a half-smile. “He was so full of life. He had so many dreams,” said Arsalan, a taxi driver who has known the family for 10 years. “What did he die for?”

ACID ATTACKS
http://twitter.com/johnperrybarlow
“RT @LaraABCNews: from trusted source, eyewitness at protests: the acid attacks were real, dumped on protesters from above.”

NEDA SOLTAN’S FAMILY THROWN OUT OF HOUSE, NO FUNERAL ALLOWED
http://www.guardian.co.uk/world/2009/jun/24/neda-soltan-iran-family-forced-out
Neda Soltan’s family ‘forced out of home’ by Iranian authorities

The Iranian authorities have ordered the family of Neda Agha Soltan out of their Tehran home after shocking images of her death were circulated around the world. Neighbours said that her family no longer lives in the four-floor apartment building on Meshkini Street, in eastern Tehran, having been forced to move since she was killed. The police did not hand the body back to her family, her funeral was cancelled, she was buried without letting her family know and the government banned mourning ceremonies at mosques, the neighbours said. “We just know that they [the family] were forced to leave their flat,” a neighbour said. The Guardian was unable to contact the family directly to confirm if they had been forced to leave.

The government is also accusing protesters of killing Soltan, describing her as a martyr of the Basij militia. Javan, a pro-government newspaper, has gone so far as to blame the recently expelled BBC correspondent, Jon Leyne, of hiring “thugs” to shoot her so he could make a documentary film. Soltan was shot dead on Saturday evening near the scene of clashes between pro-government militias and demonstrators, turning her into a symbol of the Iranian protest movement. Barack Obama spoke of the “searing image” of Soltan’s dying moments at his press conference yesterday.

Amid scenes of grief in the Soltan household with her father and mother screaming, neighbours not only from their building but from others in the area streamed out to protest at her death. But the police moved in quickly to quell any public displays of grief. They arrived as soon as they found out that a friend of Soltan had come to the family flat. In accordance with Persian tradition, the family had put up a mourning announcement and attached a black banner to the building.

But the police took them down, refusing to allow the family to show any signs of mourning. The next day they were ordered to move out. Since then, neighbours have received suspicious calls warning them not to discuss her death with anyone and not to make any protest. A tearful middle-aged woman who was an immediate neighbour said her family had not slept for days because of the oppressive presence of the Basij militia, out in force in the area harassing people since Soltan’s death.

The area in front of Soltan’s house was empty today. There was no sign of black cloths, banners or mourning. Secret police patrolled the street. “We are trembling,” one neighbour said. “We are still afraid. We haven’t had a peaceful time in the last days, let alone her family. Nobody was allowed to console her family, they were alone, they were under arrest and their daughter was just killed. I can’t imagine how painful it was for them. Her friends came to console her family but the police didn’t let them in and forced them to disperse and arrested some of them. Neda’s family were not even given a quite moment to grieve.”

Another man said many would have turned up to show their sympathy had it not been for the police. “In Iran, when someone dies, neighbours visit the family and will not let them stay alone for weeks but Neda’s family was forced to be alone, otherwise the whole of Iran would gather here,” he said. “The government is terrible, they are even accusing pro-Mousavi people of killing Neda and have just written in their websites that Neda is a Basiji (government militia) martyr. That’s ridiculous – if that’s true why don’t they let her family hold any funeral or ceremonies? Since the election, you are not able to trust one word from the government.” A shopkeeper said he had often met Soltan, who used to come to his store. “She was a kind, innocent girl. She treated me well and I appreciated her behaviour. I was surprised when I found out that she was killed by the riot police. I knew she was a student as she mentioned that she was going to university. She always had a nice peaceful smile and now she has been sacrificed for the government’s vote-rigging in the presidential election.”


Grave spaces at Behesht-e-Zahra cemetery reportedly set aside for those killed in Tehran clashes

MASS GRAVES
http://news.bbc.co.uk/2/hi/middle_east/8113552.stm
Her fiance, Caspian Makan, told BBC Persian TV about the circumstances of Neda’s death: “She was near the area, a few streets away, from where the main protests were taking place, near the Amir-Abad area. She was with her music teacher, sitting in a car and stuck in traffic. She was feeling very tired and very hot. She got out of the car for just for a few minutes. And that’s when it all happened. That’s when she was shot dead. Eyewitnesses and video footage of the shooting clearly show that probably Basij paramilitaries in civilian clothing deliberately targeted her. Eyewitnesses said they clearly targeted her and she was shot in the chest. She passed away within a few minutes. People tried to take her to the nearest hospital, the Shariati hospital. But it was too late.

We worked so hard to get the authorities to release her body. She was taken to a morgue outside Tehran. The officials from the morgue asked if they could use parts of her corpse for body transplants for medical patients. They didn’t specify what exactly they intended to do. Her family agreed because they wanted to bury her as soon as possible. We buried her in the Behesht-e-Zahra cemetery in southern Tehran. They asked us to bury her in this section where it seemed the authorities had set aside spaces for graves for those killed during the violent clashes in Tehran last week.

On Monday afternoon, we had planned to hold a memorial service at the mosque. But the authorities there and the paramilitary group, the Basij, wouldn’t allow it because they were worried it would attract unwanted attention and they didn’t want anymore trouble. The authorities are aware that everybody in Iran and throughout the whole world knows about her story. So that’s why they didn’t want a memorial service. They were afraid that lots people could turn up at the event. So as things stand now, we are not allowed to hold any gatherings to remember Neda.

DOCTOR ESCAPES
http://paulocoelhoblog.com/2009/06/24/the-doctor/
“(Late Sunday I watch Neda’s video. I suspect that I recognize Arash Hejazi, but I prefer not to believe in what I am seeing. I send him and email)

Sunday 21 June 2009 | Dear Arash
I need to know where you stand, if things that I am seeing/reading are true. Then I can myself take a position – depending on your advice, of course. love, Paulo

Mon, 22 Jun 2009 | Subject: your country | Dearest Paulo,
I am now in Tehran. The video of Neda’s murder was taken by my friend, and you can recognize me in the video. I was the doctor who tried to save her and failed. She died in my arms. I am writing with tears in my eyes. Please don’t mention my name. I’ll contact you with more details soon. Love, Arash

(At this point, I decide to put the video in my blog. For the rest of the day, I try to contact him. At one point, someone answers his phone as a “CNN journalist”. I start to become worried)

Monday 22 June 2009 | Dear Arash
so far, no news from you. After I published the video in my blog, it seems that it spread worldwide, including posts in NY Times, Guardian, National Review, etc. Therefore, my main concern now is about you. You NEED to answer this email, saying that you are all right
and the name of the person where we spend the New Year’s Eve in 2001 together, just to be sure that it is you really who is answering this email. I don’t buy this CNN person answering your mobile.
If you don’t do that, I may leak your name to the press, in order to protect you – visibility is the only protection at this point. I know this because I am a former prisoner of conscience. If you do that, unless instructed otherwise by you, I will stop the pressure for the moment. My main concern now is you and your family. love, Paulo
P.S. – there are several trusted friends in blind copy here.

Tuesday, June 23, 2009 | Dearest Paulo
I am alright for now. I am not staying at home. I don’t know about CNN. The friend’s name was Frederick. Love Arash

Tuesday, June 23, 2009 | Dearest Paulo
Trying to leave the country tomorrow morning. If I don’t arrive in London at 2 pm., something has happened to me. Till then, wait.
My wife and my son are in (edited). Their phone (edited) Her email (edited) Please wait till tomorrow. If something happens to me, please take care of (name of wife) and (name of son), they are there, alone, and have no one else in the world. Much love, it was an honor having you as a friend. Arash

(At this point, a Brazilian journalist, Luis Antonio Ryff, who traveled to Iran to cover my visit, recognizes Arash in the video, and writes me to double-check. I confirm, but I ask him to keep his name secret until today. Ryff agrees – even knowing that this would be a major scoop for him. I would like to thank him here, for his dignity)

Wednesday 24 June 2009
Arash landed in London”

IRAN OPPOSITION GROUPS
http://www.globalsecurity.org/intell/world/iran/links.htm

TAKE-DOWN OF ‘WANTED’ WEBSITE
http://sites.google.com/site/gerdabdeath/index
http://cyberwar4iran.blogspot.com/
http://pastebay.com/24982
Primary Target: gerdab.ir hosting protestor images
“Iran’s government is putting pictures of targeted protestors on the web for the Basij to identify and harass, arrest, or worse. These individuals could be jailed, or worse, dead by tomorrow. This website needs to die.”

PROXY FIGHT
http://www.google.com/insights/search/#q=proxy%2C&geo=IR&date=5%2F2009%202m&cmpt=q
http://www.wired.com/dangerroom/2009/06/activists-launch-hack-attacks-on-tehran-regime/
Activists Launch Hack Attacks on Tehran Regime
“Pro-democracy activists on the web are asking supporters to use relatively simple hacking tools to flood the regime’s propaganda sites with junk traffic. “NOTE to HACKERS – attack http://www.farhang.gov.ir – pls try to hack all iran gov wesites [sic]. very difficult for us,” Tweets one activist. The impact of these distributed denial of service (DDOS) attacks isn’t clear. But official online outlets like leader.ir, ahmadinejad.ir, and iribnews.ir are currently inaccessible. “There are calls to use an even more sophisticated tool called BWraep, which seems to exhaust the target website out of bandwidth by creating bogus requests for serving images,” notes Open Society Institute fellow Evgeny Morozov. In both Iran and abroad, the cyberstrikes are being praised as a way to hit back against a regime that so blatantly engaged in voter fraud. But some observers warn that the network strikes could backfire — hurting the very protesters they’re meant to assist. Michael Roston is concerned that “it helps to excuse the Iranian regime’s own cyberwarfare.” Text-messaging networks and key opposition websites mysteriously went dark just before the election. Morozov worries that it “gives [the] hard-line government another reason to suspect ‘foreign intervention‘ — albeit via computer networks — into Iranian politics.” Iran has one of the world’s most vibrant social media communities. That’s helping those of us outside Iran follow along as this revolution is being YouTubed, blogged, and Tweeted. But Iran’s network infrastructure there is relatively centralized. Which makes Internet access there inherently unstable. Programmer Robert Synott worries that if outside protesters pour too much DDOS traffic into Iran, carriers there “will simply pull the plug to protect the rest of their network.” For the moment, however, those connections are still live. And activists are using them to mobilize mass protests in Tehran. Opposition leader Mir Hossein Mousavi has just appeared. Tens of thousands of protesters are chanting “‘No fear, No fear, we are with each other.’” Meanwhile, universities are recovering from assaults by pro-regime goons. Students were bloodied. Memory cards and software were swiped by police. Computers were smashed.”

PROXY WAR JUST AS DANGEROUS
http://blog.austinheap.com/2009/06/22/state-of-the-iran-proxies/
https://www.xroxy.com/proxylist.php?port=&type=Distorting&ssl=nossl&country=IR&latency=&reliability=&sort=ssl
http://en.wikipedia.org/wiki/Transport_Layer_Security
http://www.openssl.org/
http://en.wikipedia.org/wiki/Squid_cache

‘USE OF PROXY SERVERS BY IRANIANS IS EXTREMELY UNSAFE’
[open letter by Isaac Levy, security researcher, IT professional, Defcon panelist, cyberwarfare analyst – we believe this information is correct, but we are not in Iran; please check for yourself]
BUT IF IT’S BAD AS THAT: SSL WORKS ON ANY PORT – MAKE SURE IT SAYS HTTPS
“People in Iran please tell every person you know: EVERYONE use SSL proxy servers starting tomorrow on all internet traffic, or please stop using proxies! In spite of everyone’s best intentions, when used in limited numbers as they are right now, it’s likely that internet proxies are simply automating an opposition arrest list (or death list) for the regime. Please understand that Iran’s network-control is state of the art, and Iranian security can inspect ALL traffic easily in an automated fashion, through its centralized choke point. It’s likely that anyone using a proxy is quickly spotted and tracked. Proxies are an effective way to get information out, but the use of proxies will not be safe unless EVERY SINGLE PERSON in Iran uses one. EVERYONE.

SSL/TLS (https) can be about 4 to 5 times the packet size in transmission, which makes the bandwidth throttling of the Iranian Security forces more difficult (the Iranian internet is painfully, selectively, slow since it was shut down). If everyone were to use it, for all communications, then all traffic would look the same, and dissidents could not be so easily singled out. This is sometimes called ‘faking the weather.’ We must recommend either EVERYONE uses SSL proxies, in order to protect each other, or NO ONE does. IT/Networking professionals will recognize the tactics in commonplace IPS or IDS systems. Iran is clearly using payload inspection and filtering systems- both for blocking, and collecting information. This is done easily, since (without SSL) none of the material being sent is encrypted. Security professionals will understand that scaling firewalls to a national size is a solved problem. Cisco’s Netflow is used in network gear throughout the world to record network traffic, and common new style ‘deep packet inspection’ network products are capable of extremely efficient real-time network processing and data collection.

The longer you wait the more proxy users will be arrested. Tell your grandmothers, tell everyone you know: find a safe SSL proxy, learn to use it, and only use SSL/TLS proxies from now on. They are not difficult to use. If everyone does this, Iran will have an unfiltered internet; to block it the Iranian government would be forced to turn off their WHOLE internet connection (again). Also remember, anonymous proxies can be hijacked: SSL provides validation that you’re talking to the right person.

In Summation: Without maximum use in Iran of these SSL/TLS proxy technologies, in spite of best intentions, and with incredible efficiency, the outside internet community is most likely helping to automate an Iranian dissident death/arrest list. I can not overstate this. Everyone in Iran please start using ssl proxies immediately. today. now.

Once more, put simply?
On the outside, https proxies (SSL/TLS) for encryption and server validation* are absolutely necessary. Please set them up. (* validation to defend against Iran Security Forces performing man-in-the-middle attacks) On the inside, EVERY Iranian citizen must use SSL web proxies. If both of these things are not done, the best intentions of the internet community will only help automate death lists for citizens using the internet to protest the faked election, and document the violence and repression that has followed. If both of these things (inside and outside the country) ARE done, Iranians regain cheap and fast internal unblocked internet communications, as well as a very robust communications line to the outside world. Again, EVERYONE has to do it. Both sides. Iranian grandmothers must understand that they all must learn to do this, to protect Iranian opposition protesters. It is easy and you only have to do it once.

Inside Iran, look for things like this:
http://proxy.org/ssl_proxies.shtml
http://www.anonymousproxylists.net/FreshAnonymousProxyLists/Free%20SSL%20Proxy%20List.html
Outside of Iran, Tech Specs, 2 parts:
1 )SSL Capable proxy servers:
Squid
Apache 2.x (enable mod_ssl, mod_proxy)
Apache 1.x, (enable mod_ssl, mod_proxy)
Tinyproxy
2) Cheap, valid SSL certificates:
(Critical to avoid Iran Security mitm attacks!)
https://www.godaddy.com/
http://ask.slashdot.org/article.pl?sid=02/10/02/000241

CONTACT
Isaac Levy
email : isaac [at] diversaform [dot] com

[NOTE : it should be understood that the obvious reason the internet was not simply turned off is that Iran’s entire financial sector needs it to conduct business, and many use tools like SSL.]

A RESPONSE : AS WITH ANY CONSPIRACY, DO NOT UNDERESTIMATE INCOMPETENCE
“any circumvention system, open proxy or not, requires an element of trust in the intermediary you’re using to get around the block. turning on SSL would be added comfort, i guess — if, as the author says, everyone else did as well, but it would also slow things down even more (that’s his point, i guess: then IRI would have to monitor less to keep traffic flowing at an acceptable speed). and anyway, there is some security in obscurity: there is a large and evolving population of open proxies, and many people of all stripes use them; open proxies have been commonly used since filtering was first deployed, years ago). to imagine that doing so without SSL will lead to one’s arrest would mean ascribing to The State a technologically perfect and comprehensive surveillance. while the Net certainly aids in data collection and monitoring that wasn’t previously possible, as we know, no system is without its cracks. it would probably be good if people outside of iran were reminded that the government of iran isn’t somehow omnipotent just because it has authoritarian elements.”

RECOMMENDED FURTHER ENCRYPTION : TOR [NOW IN FARSI]
http://www.torproject.org/index.html.fa
http://torir.org/
The More People Use It, The Stronger It Gets
“Tor is well known and respected as the best most efficient most anonymous proxy service. The Onion Routing makes the user almost completely untraceable.”

TOR BRIDGES
http://www.eff.org/deeplinks/2009/06/help-protesters-iran-run-tor-relays-bridges
https://www.torproject.org/bridges
http://news.zdnet.co.uk/security/0,1000000189,39616925,00.htm
https://www.blackhat.com/presentations/bh-dc-09/Marlinspike/BlackHat-DC-09-Marlinspike-Defeating-SSL.pdf
from Moxie Marlinspike:

“I’m not following the tech situation in Iran very closely, but it seems like activists within Iran who are trying to share information and coordinate actions should be using TOR rather than just SSL proxies. TOR can probably provide the most robust defense against attempts at censoring information, allowing Iranians to use social networking tools, as well as providing (at least) network-level anonymity.

The problems with SSL proxies are:
1) There are reports that port 443 is blocked. You could run an SSL proxy on another port, but most are on 443 right now. TOR bridges, however, are available on a wide range of ports.
2) Every time a list of SSL proxies is published, the government can just blacklist them all. While the government could ban direct access to the entire TOR directory, TOR bridges make it difficult for them to restrict TOR traffic outright.
3) Simple SSL proxies are more vulnerable to any number of attacks. For instance, it’s often not possible to determine who’s running the proxy (the government or not?), and while this is also true for any individual TOR node, no individual TOR node simultaneously knows both the client’s identity as well as the site they’re visiting. TOR is also more resilient to timing attacks and other MITM attacks on SSL traffic.”

CROWD-SOURCED AMATEUR BOTNET AS CIVIL RIGHTS ACTION
http://www.pagereboot.com/
http://arielsilverstone.com/category/iran/
http://www.fastcompany.com/blog/kit-eaton/technomix/iranian-protests-becoming-crowd-sourced-cyber-war-sorts
Iranian Protests Becoming Crowd-Sourced Cyber War
BY Kit Eaton / Jun 17, 2009

“The really interesting thing about these attacks are not that they’re going on–DDoS attacks after elections apparently isn’t a new phenomenon–but how they’re being carried out. Rather than using simple code, with automated viral botnets and the like, these efforts are largely being driven by hand. There are a number of simple scripts going around that can be downloaded and which continually re-load the target Web sites in a browser window. It’s a simpler system, being coordinated by word of mouth, Twitter and other means, but it appears to be effective–all the target sites are offline, or have bandwidth issues.

And the subtlety that this is a crowd-sourced form of cyber war, or cyber revolution, rather than an anonymous automated network of infected PCs, shouldn’t go unnoticed. The new technological infrastructure is giving people a way to protest and act in ways that wouldn’t have been possible before. While the morality of DDoS attacks remains a grey area, it’s nevertheless a fascinating V for Vendetta-style effect in action.”

DDOS
http://asert.arbornetworks.com/2009/06/iran-ddos-activity-chatter-tools-and-traffic-rates/
http://en.wikipedia.org/wiki/Ddos#Distributed_attack
http://www.nartv.org/2009/06/16/iran-ddos/
http://www.nartv.org/2009/06/20/iran-ddos-2/

TO UNKNOWN EFFECT
http://www.wired.com/dangerroom/2009/06/web-attacks-expand-in-irans-cyber-battle/
Web Attacks Expand in Iran’s Cyber Battle (Updated)
BY Noah Shachtman / June 16, 2009

More and more of Iran’s pro-government websites are under assault, as opposition forces launch web attacks on the Tehran regime’s online propaganda arms. What started out as an attempt to overload a small set of official sites has now expanded, network security consultant Dancho Danchev notes. News outlets like Raja News are being attacked, too. The semi-official Fars News site is currently unavailable. “We turned our collective power and outrage into a serious weapon that we could use at our will, without ever having to feel the consequences. We practiced distributed, citizen-based warfare,” writes Matthew Burton, a former U.S. intelligence analyst who joined in the online assaults, thanks to a “push-button tool that would, upon your click, immediately start bombarding 10 Web sites with requests.” But the tactic of launching these distributed denial of service, or DDOS, attacks remains hugely controversial. The author of one-web based tool, “Page Rebooter,” used by opposition supporters to send massive amounts of traffic to Iranian government sites, temporarily shut the service down, citing his discomfort with using the tool “to attack other websites.” Then, a few hours later, he turned on the service again, after his employers agreed to cover the costs of the additional traffic. WhereIsMyVote.info is opening up 16 Page Reboot windows simultaneously, to flood an array of government pages at once.

Other online supporters of the so-called “Green Revolution” worry about the ethics of a democracy-promotion movement inhibitting their foes’ free speech. A third group is concerned that the DDOS strikes could eat up the limited amount of bandwidth available inside Iran — bandwidth being used by the opposition to spread its message by Twitter, Facebook, and YouTube. “Quit with the DDOS attacks — they’re just slowing down Iranian traffic and making it more difficult for the protesters to Tweet,” says one online activist.

But Burton — who helped bring Web 2.0 tools to the American spy community — isn’t so sure. “Giving a citizenry the ability to turn the tables on its own government is, I think, what governance is all about. The public’s ability to strike back is something that every government should be reminded of from time to time.” Yet he admits to feeling “conflicted.” about participating in the strikes, he suddenly stopped. “I don’t know why, but it just felt…creepy. I was frightened by how easy it was to sow chaos from afar, safe and sound in my apartment, where I would never have to experience–or even know–the results of my actions.”

PREPAREDNESS
http://www.renesys.com/blog/2009/06/strange-changes-in-iranian-int.shtml
http://www.renesys.com/blog/2009/06/iran-and-the-internet-uneasy-s.shtml
http://www.renesys.com/blog/2009/06/the-proxy-fight-for-iranian-de.shtml
The Proxy Fight for Iranian Democracy
BY James Cowie / June 22, 2009

If you put 65 million people in a locked room, they’re going to find all the exits pretty quickly, and maybe make a few of their own. In the case of Iran’s crippled-but-still-connected Internet, that means finding a continuous supply of proxy servers that allow continued access to unfiltered international web content like Twitter, Gmail, and the BBC. A proxy server is a simple bit of software that you run on your computer. It effectively lets you share your computer with anonymous strangers as a “repeater” for content that they aren’t allowed to fetch themselves. For example, an Iranian web browser might be manually configured to use your computer (identified by an IP address and a port number) as a Web proxy. When your anonymous friend reads twitter.com, or posts a tweet, the request goes via your computer, instead of to Twitter’s web server directly. Except for a little delay, and the fact that your friend gets to see what the uncensored Internet looks like from New York or London or São Paolo instead of Tabriz or Qom, surfing through a proxy is pretty much like surfing without one. As you might imagine, open web proxies are valuable commodities in places where it’s forbidden, possibly dangerous, to surf the Internet. Iran’s opposition movement has been vigorously trading lists of open proxies over the past week. And as you might further imagine, the Iranian government censors have worked overtime to identify these proxies and add them to the daily blacklists.

As an experiment, we geolocated a list of about 2,000 web proxies (unique IP addresses and port numbers) that were shared on Twitter and other web sites over the course of the last week, to see if we could discern patterns in the places that are hosting them. Most of these are no longer reachable from inside Iran, of course, precisely because they were made public. The USA and Western Europe were well-represented, but so were China, India, Russia, Romania, Bulgaria, Vietnam, … 87 countries in all, a pretty impressive breadth of representation, considering the relatively small size of this sample. (You can also see about a dozen Iranian IP addresses represented in the set. Not surprisingly, all but one of these belong to networks originated by DCI, the government-run service provider who operates the modern-day Internet equivalent of the Alamūt Castle.)

In a geographic visualization of the proxies, drawn in Google Earth, each of the colored arcs represents a single open web proxy; they are “fountaining” out of a cable landing or Internet traffic exchange point that makes approximate sense for their Iranian Internet routing. For example, all of the web proxies in Europe are drawn from the Marseilles termination of the Sea-Me-We-4 cable. The web proxies in Turkey are drawn in light blue, radiating from Ankara, where the Iran-Turkey gas pipeline passes through on its way from Bazargan. Those unusual Iranian proxies emerge from Tehran, and so forth. If we rotate the globe, you can see how the countries of Asia are doing their part to keep the bits flowing in Iran. India, China, South Korea, Taiwan, Vietnam, and Japan are all visible sources of web proxy activity.

I’d like to be able to say that these maps are a measure of the strength of the democratic impulse and volunteer spirit in all the countries of the world. But that might be a stretch. You see, looked at another way, an open proxy is a security hole, something you might find in a machine that’s been compromised, or at the very least, badly administered. Security purists think of them as the “unlocked gun cabinet” of the Internet — a resource for anyone who wants to abuse a website, commit fraud, cover their tracks. Some of the proxies in this dataset are undoubtedly fresh, created by people who want to keep the Internet alive for the Iranian people. But many of these proxies have probably been around for months or years, mapped out by those that map out such things. We did see a few organizers try to explain the concept of an ACL (Access Control List) to all the new proud parents of open proxies. If you are diligent, it is possible to restrict the anonymous users of your new proxy to just the Iranians, or even just the Iranian non-government networks, if you have a good enough list of the IP address blocks (network prefixes) in question. But I expect that the complexity of configuring anything tighter than an “open access” proxy is going to prove too high a barrier to entry for most people who might volunteer to run one.

For one thing, we know how hard this is. Renesys has pretty good lists of per-country networks and their transit patterns, based on our analysis of the global routing tables, and trust me, they take some work to maintain. And even given good maps of Iran’s address space to work from, ACLs are notoriously hard to test, if you don’t have Iranian friends who can try your server from inside the protest zone and report back to you with problems. Most people aren’t going to bother, and that’s probably okay. Freedom is messy. There’ll be time for security later. Perhaps the strangest thing of all, given how diverse and active and vocal the proxy server farmers have been, is that by and large, it isn’t working. The rate with which new proxies are being created has slumped over the last few days. It’s getting harder and harder to propagate new proxies to the people who need them, as the government consolidates its hold on the filtering mechanisms. Any new proxy addresses that are posted to Twitter, or emailed, will be blocked very quickly.

People we talk to inside Iran say that almost no proxies are usable any more. Freegate, a Chinese anti-censorship application that makes use of networks of open proxies, has proven popular in Iran. But this week, it, too, has been experiencing problems. Many popular applications, like Yahoo! Messenger, have stopped working. The authorities are said to be using power interruptions as a cyberweapon, causing brief outages during rallies that cause computers to reboot, just as people are trying to upload images and video. The net result, as Arbor’s excellent analysis shows, has been a drastic reduction in inbound traffic on filtered ports since the election.

If there’s a lesson here for the rest of the world, perhaps it’s this: Install a few proxy instances on machines you control. Learn how to lock them down properly. Swap them with your friends overseas who live in places where the Internet is fragile. Set up your tunnels and test them. And don’t wait until the tanks are in the streets to figure this out, because by that point, you may have already lost the proxy war.

MARKET OPPORTUNITY
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/06/30/ED4318FMT4.DTL
Silicon Valley should step up, help Iranians
BY Cyrus Farivar / June 30, 2009

“Until Iran’s election and ensuing political crisis, many Silicon Valley companies had ignored Persian-language services almost entirely. It’s easy to understand why. First, there’s an American embargo against Iran, which forbids American companies from doing business with that country. Second, there is a perception that the Iranian community (particularly outside of Los Angeles) is not that large or significant. Third, most Iranians in the United States are well-educated, upper-class people who speak English very well.

So ignoring Iran has been convenient – there has seemingly been no real business motivation for tech companies to make their products useful for Iranians both inside and outside Iran. This thinking is despite the fact that there are more Persian speakers worldwide than Korean speakers. That’s about 100 million people, including the 75 million Iranians (including the diaspora) plus neighboring Tajikistan and Afghanistan. Sure, Korea is a much more wired society than Iran, but that also means there is that much more opportunity for Iranian online applications and software to take off in the marketplace.

So instead of superficial support, like Twitter users changing their avatars to green to support Iran’s reformist movement, Silicon Valley minds and money should pool resources as a way to help Iranians get around this information blockade by providing easier-to-use proxies, anonymizers and maybe even unfiltered Internet access through hardware.

Long-range Wi-Fi, 3G, satellite or other wireless communications devices from Iran’s neighboring countries or even the Persian Gulf could be used to get faster and better information in and out of Iran. One Arizona company, Space Data, even advertises the capability to use helium-filled balloons to provide Internet and mobile phone access. Much of Iran could theoretically be covered with one or two such balloons. All of that may sound crazy, but not helping Iranian reformers at their darkest hour would be crazier.”

BRUTAL LEARNING CURVE
http://www.theroadtothehorizon.org/2009/06/who-is-on-twitter-from-iran.html
http://travellerwithin.blogspot.com/2009/06/on-disclosing-sources-in-iran.html
http://several.amplify.com/2009/06/20/why-rt-iran-or-rt-from-iran-doesnt-do-what-you-think-it-does/

MEANWHILE : WORLD OF WARCRAFT STILL UNFILTERED, ALSO XBOX
http://yro.slashdot.org/story/09/06/21/127229/Researchers-Find-Gaps-In-Iranian-Filtering
“With all the turmoil and internet censorship in Iran making it difficult to get an accurate picture of what’s going, security researchers have found a way to locate gaps in Iran’s filtering by analyzing traffic exiting Iran. The short version is that SSH, torrents and Flash are high priorities for blocking, while game protocols like WoW and Xbox traffic are being ignored, even though they also allow communication. Hopefully, this data will help people think of new ways to bypass filtering and speak freely, even though average Iranians have worse things to worry about than internet censorship, now that the reformists have been declared anti-Islamic by the Supreme Leader. Given the circumstances, that declaration has been called ‘basically a death sentence’ for those who continue protesting.”

Reader CaroKann sends in a related story at the Washington Post about an analysis of the vote totals in the Iranian election (similar to, but different from the one we discussed earlier) in which the authors say the election results have a one in two-hundred chance of being legitimate.
http://science.slashdot.org/story/09/06/16/2137203/Statistical-Suspicions-In-Irans-Election

HOW GOOD’S YOUR DATA?
http://asert.arbornetworks.com/2009/06/iranian-traffic-engineering/
Iranian Traffic Engineering
BY Craig Labovitz / June 17th, 2009

The outcome of the Iranian elections now hangs in the balance and perhaps, also on the availability of the Internet (or at least Twitter and Facebook according to the US State Department). Based on significant Internet engineering changes over the last week, the Iranian government seems to agree… While other countries (e.g. Burma in 2007) completely unplugged the country during political unrest, Iran has taken a decidedly different tact.

Before going further, I should note that we have no direct insight into Iranian political machinations nor telecommunications policy. But the 100 ISPs participating in the Internet Observatory provide some interesting hints on how the Iranian government may hope to control Internet access. The state owned Data communication Company of Iran (or DCI) acts as the gateway for all Internet traffic entering or leaving the country. Historically, Iranian Internet access has enjoyed some level of freedom despite government filtering and monitoring of web sites.

In normal times, DCI carries roughly 5 Gbps of traffic (with a reported capacity of 12 Gbps) through 6 upstream regional and global Internet providers. For the region, this represents an average level of Internet infrastructure (for purposes of perspective, a mid size ISP in Michigan carries roughly the same level of traffic).

Then the Iranian Internet stopped. One the day after the elections on June 13th at 1:30pm GMT (9:30am EDT and 6:00pm Tehran / IRDT), Iran dropped off the Internet. All six regional and global providers connecting Iran to the rest of the world saw a near complete loss of traffic. The below graph shows Iranian Internet traffic through Iran’s six upstream providers.

{Note: All data comes from analysis of Internet Observatory anonymous ASPath traffic statistics from which we infer upstream ISP traffic. Also a few caveats — Iranian traffic is such a small part of global Internet traffic levels that the Observatory data is fairly noisy. We used a number of standard statistical approaches to normalize the sampled dataset.}

As noted earlier, Iran normally sees around 5 Gbps of traffic with typical diurnal and weekly curves (though Iran sees dips both on Iranian weekend of Thurs / Friday as well as during western Sat / Sun weekends). From the view of the Observatory, most Internet traffic to Iran goes through Reliance (formerly Flag) Telecom, the major Asia Pacific region underseas cable operator. Singtel, a major pan-Asian provider and Türk Telekom also provide significant transit.

Initially, DCI severed most of the major transit connections into Iran. Within a few hours, a trickle of traffic returned across TeliaSonera, Reliance and SignTel — all well under 1 Gbps.

The below graph shows a zoomed in view of the outage and earlier graph.

As of 6:30am GMT June 16, traffic levels returned to roughly 70% of normal with Reliance traffic climbing by more than a Gigabit. So what is happening to Iranian traffic? I can only speculate. But DCI’s Internet changes suggest piecemeal migration of traffic flows. Typically off the shelf / inexpensive Internet proxy and filtering appliances can support 1 Gbps or lower. If DCI needed to support higher throughput (say, all Iranian Internet traffic), then redirecting subsets of traffic as the filtering infrastructure comes online would make sense.

Unlike Burma, Iran has significant commercial and technological relationships with the rest of the world. In other words, the government cannot turn off the Internet without impacting business and perhaps generating further social unrest. In all, this represents a delicate balance for the Iranian government and a test case for the Internet to impact democratic change. Events are still unfolding in Iran, but some reports are saying the Internet has already won.

INTERNET FILTERING IN DEPTH
http://opennet.net/research/profiles/iran
http://opennet.net/about-filtering
http://www.cl.cam.ac.uk/~sjm217/papers/opennet08tools.pdf
http://opennet.net/sites/opennet.net/files/Deibert_03_Ch02_029-056.pdf
http://www.govcom.org/maps/censorship/gco_tab_iran.pdf
http://www.genderit.org/upload/ad6d215b74e2a8613f0cf5416c9f3865/A_Report_on_Internet_Access_in_Iran_2_.pdf

PARENTAL CONTROLS
http://futureoftheinternet.org/could-iran-shut-down-twitter
Could Iran Shut Down Twitter?
BY Jonathan Zittrain / June 15th, 2009

Iran has been able to impose a finely grained Internet filtering regime, not having to deal with the sheer volume of traffic that, say, China has. It’s able to treat its Internet-using public the way a school can filter what its kids see on their PCs. All Internet traffic is routed through a server farm that applies the filtering. (The government used to run U.S. company Secure Computing’s (since acquired by McAfee) SmartFilter software. Secure Computing denied selling the software to Iran; see Wikipedia’s summary. Today Iran runs its own home-grown filtering software.)

So it’d be trivial for the Iranian government to block access to Twitter as it could to any particular Web site, and it could even block access to some Twitter users’ feeds there while leaving others open, by simply configuring its filters to allow some Twitter urls through while filtering others. But Twitter isn’t just any particular Web site. It’s an atom designed to be built into other molecules. More than most, Twitter allows multiple paths in and out for data. Its open APIs make it trivially easy for any other Web service provider to insert a stream of tweets in or to capture what comes out. Thus Twitterfall can provide a waterfall of tweets — all viewable by going there instead of to Twitter. Anyone using at Twitterfall can tweet from there as well. You can hook up your Facebook status in either direction, so that when you tweet it automatically updates your Facebook status — or the other way around.

The very fact that Twitter itself is half-baked, coupled with its designers’ willingness to let anyone build on top of it to finish baking it (I suppose it helps not to have any apparent business model that relies on drawing people to the actual Twitter Web site), is what makes it so powerful. There’s no easy signature for a tweet-in-progress if its shorn of a direct connection to the servers at twitter.com. And with so many ways to get those tweets there and back without the user needing twitter.com, it’s far more naturally censorship resistant than most other Web sites. Less really is more. Publius points out that Iran could simply cut off all Internet access, or at least all access for most people there. Maybe it’ll come to that.

BLOCKED SITE CHECK
http://www.herdict.org/web/explore/country/IR
http://www.herdict.org/web/participate/download
http://www.herdict.org/blog/
http://www.herdict.org/web/
“Have you ever come across a web site that you could not access and wondered,”Am I the only one?” Herdict Web aggregates reports of inaccessible sites, allowing users to compare data to see if inaccessibility is a shared problem. By crowdsourcing data from around the world, we can document accessibility for any web site, anywhere.”

CROWD-SOURCING GOES DARKSIDE
http://webecologyproject.org/WEP-twitterFINAL.pdf
http://online.wsj.com/article/SB124658422588090107.html
Iran Pro-Regime Voices Multiply Online
BY Christopher Rhoads and Geoffrey A. Fowler / July 3, 2009

Supporters of Iran’s regime are taking a cue from the opposition’s strategy: They’re mounting an online offensive. Thousands of Iranians used social-networking sites and blogs after Iran’s election last month to criticize the government and spread news of its violent clashes with protesters. But over the past week, a growing number of Iranian users of Twitter — the online service that allows users to send short messages — have been “tweeting” in favor of the regime, according to Internet security experts and others studying the development.

Some messages throw cold water on planned protests. “Staying at home tomorrow to avoid angering my elected govt,” one user with the name Eyeran wrote. Others make threats. A user with the name Vagheeiat (Persian for “realities”) said in an online message to an apparent opposition supporter: “The Basij [volunteer militia] protects the honor of the people and is the killer of you, liars and puppets of the U.S.” Ariel Silverstone, an Internet security expert in Atlanta, says the number of pro-government messages on Twitter in the past few days has increased to about 100 every six hours from just one every 12 hours or so earlier in the post-election period.

It is impossible to determine whether the comments come from members of Iran’s government or simply supporters. Attempts to reach such users of Twitter weren’t successful. But Internet experts see clues in certain patterns of use. In the case of Vagheeiat, the user biography on Twitter says the person who sent the message is a member of a unit of the Revolutionary Guard, which oversees the Basij. The user’s profile links to the Web site of the Revolutionary Guard unit. Vagheeiat used Twitter on only one day, last Thursday.

On Twitter, users can receive the messages of others by choosing to “follow” them, or joining in conversations on a certain topic. Many of the Iranian users sending pro-government missives opened accounts only a few days ago, and have few, if any, followers — nor are they following anyone else, Mr. Silverstone said. Also pointing to an orchestrated effort, some pro-regime messages are simultaneously blasted from different online accounts at regular intervals. Among them: “Mousavi the Instigator is in custody,” referring to opposition leader Mir Hossein Mousavi. Twitter Inc.’s co-founder Biz Stone declined to comment.

The government “has made a concrete effort to fight the opposition online,” Mr. Silverstone says. “Over the past few days this has really increased.” While some of the tactics are new — particularly the use of Twitter — the regime and its supporters aren’t new to the Internet. President Mahmoud Ahmadinejad has had his own blogs, in English and Persian, since the summer of 2006, and posted four messages before the recent election. Earlier this year, the Revolutionary Guard put out a call online for 10,000 bloggers to spread its views.

In one instance, the regime has sought to tap into the power of the Internet to help identify and round up individuals for arrest. A Web site called Gerdab, which means “vortex” in Persian, shows nearly two dozen candid photos of individuals with their faces circled in red. The site, which says it is owned by the organized-crime-fighting unit of the Revolutionary Guard, states that these people were behind the post-election chaos, and seeks information about them. There are spaces for visitors to the site to enter names, addresses, phone numbers and other information about the people who are marked. The site says that so far two of the people pictured had been identified and arrested.

The technique — which is commonly called crowd-sourcing and relies on the shared knowledge of numbers of people — is typically used for things like working out the bugs in new software or rating restaurants. “It would not be the first time that a photo has led to trouble or imprisonment in a conflict. However, this is a new development in officially sanctioned stalking and persecution by crowd-sourcing information online,” an Iranian blogger in Brussels wrote under the pen name Hamid Tehrani. He is the Iran editor of Web site Global Voices Online, but declined to provide his real name.

The online protest movement appears to be losing steam. After the election, fan pages for Mr. Mousavi on the social-networking site Facebook were signing up several thousand new users a day. The number of supporters listed by the most popular Facebook fan page for Mr. Mousavi, which swelled from about 2,500 a few weeks before the election to more than 100,000, hasn’t grown much since last week. Sassan, a Californian in his 30s who declined to give his last name, says his cousin in Iran stopped using Facebook after his friends were shown pictures of their Facebook pages and copies of their emails while jailed after a protest.

Other observers say the action online is mirroring what is happening on the street. “There is a little less activity because there is a little less to take a picture of,” says Jonathan Zittrain, a co-founder of Harvard University’s Berkman Center for Internet & Society. Richard Stiennon, the founder of Internet security firm IT-Harvest, notes the number of messages on Twitter relating to the Iranian unrest has plummeted in recent days — giving way to last week’s news of the death of pop star Michael Jackson.

CHARTING IRAN’S FILTERED TRAFFIC
http://asert.arbornetworks.com/2009/06/a-deeper-look-at-the-iranian-firewall/
A Deeper Look at The Iranian Firewall
BY Craig Labovitz

In the previous blog post about the Iranian firewall, we explored macro level Iranian traffic engineering changes (showing that Iran cut all communication after the election and then slowly added back Internet connectivity over the course of several days). Like many other news reports and bloggers, we also speculated on Iran’s intent — how was the government manipulating Internet traffic and why?

Thanks to the cooperation of several ISPs in the region and Internet Observatory data, we can now do a bit better than speculate — we have pieced together a rough picture of what the Iranian government’s Internet firewall appears to be doing. The data shows that DCI, the Iranian state run telecommunications agency, has selectively blocked or rate-limited targeted Internet applications (either by payload inspection or ports).

I’ll step through several of these applications. On average, Internet traffic is dominated by web pages (roughly 40-50% of all Internet traffic). And the vast majority of this web traffic (unless you happen to be Google or Facebook) goes into ISPs and the millions of associated end users (as opposed to traffic going out of a country or ISP). Iran is no exception.

The below graph shows web traffic (TCP port 80) into Iran over the days before and immediately after the election. Though the graph clearly shows a brief post-election outage followed by a decrease in web traffic, the Iranian web traffic was comparatively unaffected by Iran filter changes. Based on reports of Iran’s pre-existing Internet filtering capabilities, I’d speculate DCI did not require significant additional web filtering infrastructure.

In contrast, the next graph shows streaming video traffic (Adobe Flash) going into and out of Iran. Note the significant increase of video traffic immediately preceding the election (presumably reflecting high levels of Iranian interest in outside news sources). All video traffic immediately stops on the Saturday following the election (June 13th at 6:00pm Tehran / IRDT) and unlike the web, never returns to pre-election levels.

The next graph on Iranian applications filters shows email into and out of the country. Again note the run up in email traffic immediately preceding the election (especially outbound mails). And then? The data suggests DCI began blocking some outgoing email even before the election completed. Following the election, email returned at reduced levels (again, presumably because DCI had filtering infrastructure in place).

Finally, a look at the top applications now blocked by the DCI firewall(s). The chart shows average percentage decrease in application traffic in the days before and after the election. As discussed earlier, the Iranian firewalls appear to be selectively impacting application traffic. I’ll note that ssh (a secure communication protocol) tops the list followed by video streaming and file sharing.

While the rapidly evolving Iranian firewall has blocked web, video and most forms of interactive communication, not all Internet applications appear impacted. Interestingly, game protocols like xbox and World of Warcraft show little evidence of government manipulation.

Perhaps games provide a possible source of covert channels (e.g. “Bring your elves to the castle on the island of Azeroth and we’ll plan the next Ahmadinejad protest rally?”)

CHOKE POINT
http://www.herdict.org/web/explore/country/IR
http://www.technologyreview.com/blog/guest/23691/
Why Twitter Doesn’t Mean the End of Iranian Censorship
BY Hal Roberts / June 16, 2009

Amid post-election protests in Iran, the government has apparently increased its filtering of sites, such as Twitter and Facebook, that host potentially offensive (to the government) content–and even reportedly turned off for a short period the Internet connection to the rest of the world. A question simple to ask–but difficult to answer–is whether Iranians are successfully bypassing the filtering through proxies or other filtering circumvention tools.

Academic research has established for years that the government of Iran closely filters its Internet connections, blocking sites that it does not like (mostly pornographic ones, but political and religious sites as well). The government of Iran can do this easily because virtually all traffic flows through a single government-controlled ISP. (In fact, Iran for years used McAfee SmartFilter, a product of a U.S. company, to perform this filtering, but it uses its own homegrown filtering tools now.)

Some users combat this filtering by employing proxies, routing their traffic through a machine outside of Iran so that the Iran filter sees only traffic to that proxy, effectively exchanging Iran’s control of the network for the proxy’s control of its network. Iran responds by blocking these proxies as it finds them, and these proxy users respond by continually looking for new, unblocked proxies or by using tools like UltraSurf that do the work of filtering out government interference themselves.

Data about proxy use is naturally hard to find (the point is to hide the users’ usage), but our best data indicate that interest in using proxies has increased substantially over the past year and has doubled in the past week. But such use is confined to a small portion of Iranian Internet users; it’s in the low single percentage points. Google searches for “proxy,” for instance, remain orders of magnitude less popular than searches for “election.” Likewise, a steady flow of information about the protests has come out of Twitter, but the number of Iranian users actually Twittering seems to be a tiny portion of Iranians. As far as we can tell, the Iranian government has done a pretty good job of blocking its citizens’ Web requests to sites that it does not want them to see, including during the current crisis.

But new technologies make the battle over filtering harder to judge. Even though the government has reportedly blocked Twitter.com, a defining attribute of Twitter is that it is an open system in that it allows a wide diversity of external tools and sites to read from and write to its service through its programming interface. Jonathan Zittrain and John Palfrey point out that as content is divorced from delivery through such open systems, blocking, for example, Twitter-as-a-network-system much harder than simply blocking Twitter the site, since there are dozens of tools and sites that directly read and write the Twitter data stream.

And as with other recent global crises, the widespread use of distributed denial of service (DDoS) attacks has made it possible to filter a site by flooding it with so much data that it can no longer respond to legitimate users, rendering proxies useless for those sites. The tools to launch DDoS attacks, including simple Twitter campaigns to overload a list of sites, have become easily available, so both pro-government and protest actors have directed these attacks at each other’s sites.

But the technical issue of whether a given site returns a response for a given set of people captures only one small part of the larger problem of determining who controls the flows of information on the Internet and through media and social networks in general. A fuller approach to the problem is to think about those flows of information and how they are being filtered, by social and political as well as technical means. We should ask, for example, whether the information from the core group of proxy/Twitter users is filtering out to the wider Iranian and global communities, how it is flowing to and through those communities, and what effect the information is having as it filters out. The answers to those questions are impossible to determine in real time from the outside, given the chaos and confusion of the situation. As with the protests, time and perspective will tell.

{As a Fellow at the Berkman Center for Internet & Society at Harvard University, Hal Roberts performs primary research into global Internet filtering.}

CALL FOR BOYCOTT
http://www.wired.com/threatlevel/2009/06/nokia-siemens-boycott/

DEEP PACKET INSPECTION
http://online.wsj.com/article/SB124562668777335653.html
http://www.wired.com/threatlevel/2009/06/wsj-nokia-and-siemens-help-iran-spy-on-internet-users/
WSJ: Nokia, Siemens Help Iran Spy on Internet Users
BY Kim Zetter E / June 22, 2009

According to a somewhat confusing Wall Street Journal story, Iran has adopted NSA-like techniques and installed equipment on its national telecommunication network last year that allows it to spy on the online activities and correspondence — including the content of e-mail and VoIP phone calls — of its internet users. Nokia Siemens Networks, a joint venture between Germany’s Siemens and Finland’s Nokia, installed the monitoring equipment late last year in Iran’s government-controlled telecom network, Telecommunication Infrastructure Co., but authorities only recently engaged its full capabilities in response to recent protests that have broken out in the country over its presidential election.

The equipment allows the state to conduct deep-packet inspection, which sifts through data as it flows through a network searching for keywords in the content of e-mail and voice transmissions. According to the Journal, Iran seems to be doing this for the entire country from a single choke point. “Seems,” because although the Journal states that Nokia Siemens installed the equipment and that signs indicate the country is conducting deep-packet inspection, the paper also says “it couldn’t be determined whether the equipment from Nokia Siemens Networks is used specifically for deep packet inspection.”

Although the Journal has published questionable “spying” stories in the past, we’re willing to go with them on this one. It’s previously been reported that Iran was blocking access to some web sites for people inside the country as protesters took to the streets and the internet to dispute the results of the country’s recent presidential election. But sources told the Journal that the government’s activities have gone beyond censorship to massive spying. They say the deep-packet inspection, which deconstructs data in transit then reconstructs it, could be responsible for network activity in Iran having recently slowed to less than a tenth of its regular speed. The slowdown could be caused by the inspection at a single point, rather than at numerous network points, as China reportedly does it. A brochure promoting the equipment sold to Iran says the technology allows for “the monitoring and interception of all types of voice and data communication on all networks.”

A spokesman for Nokia Siemens Networks defended the sale of the equipment to Iran suggesting that the company provided the technology with the idea that it would be used for “lawful intercept,” such as combating terrorism, child pornography, drug trafficking and other criminal activity. Equipment installed for law enforcement purposes, however, can easily be used for spying as well. “If you sell networks, you also, intrinsically, sell the capability to intercept any communication that runs over them,” the spokesman told the Journal. He added that the company “does have a choice about whether to do business in any country” but said, “We believe providing people, wherever they are, with the ability to communicate is preferable to leaving them without the choice to be heard.” In March, the company sold off its monitoring technology to a German investment firm.

DOMESTIC CONCERN
http://www.openinternetcoalition.org/files/OIC_DPI_Iran_062909.pdf
http://www.nextgov.com/nextgov/ng_20090629_3881.php
http://www.wired.com/threatlevel/2009/06/deep-packet-inspection/
Deep-Packet Inspection in U.S. Scrutinized Following Iran Surveillance
BY Kim Zetter / June 29, 2009

Following a report last week that Iran is spying on domestic internet users with western-supplied technology, advocacy groups are pressuring federal lawmakers to scrutinize the use of the same technology in the U.S. The Open Internet Coalition sent a letter to all members of the House and Senate urging them to launch hearings aimed at examining and possibly regulating the so-called deep-packet inspection technology. Two senators also announced plans to introduce a bill that would bar foreign companies that sell IT technology to Iran from obtaining U.S. government contracts, legislation that is clearly aimed at the two European companies that reportedly sold the equipment to Iran. The Wall Street Journal reported last week that Nokia Siemens Networks, a joint venture between Germany’s Siemens and Finland’s Nokia, recently gave Iran deep-packet inspection equipment that would allow the government to spy on internet users. According to the Journal, Iranian officials have used deep-packet surveillance to snoop on the content of e-mail, VoIP calls and other online communication as well as track users’ other online activity, such as uploading videos to YouTube. Iranian officials are said to be using it to monitor activists engaged in protests over the country’s recent disputed presidential election, though the Journal said it couldn’t confirm whether Iran was using the Nokia Siemens Networks equipment for this purpose or equipment from another maker. Nokia Siemens has denied that it provided Iran with such technology.

But similar technology is being installed at ISPs in the U.S. It spurred extensive controversy last year when Charter Communications, one of the country’s largest ISPs, announced that it planned to use deep-packet inspection to spy on broadband customers to help advertisers deliver targeted ads. The plan sparked a backlash and heated congressional hearings. Publicity about the issue died down, however, after Charter retreated from its plan, and Congress moved on to other matters. But deep-packet inspection didn’t go away. ISPs insist they need it to help combat spam and malware. But the technology is ripe for abuse, not only by ISPs but also by the U.S. government, which could force providers to retain and hand over data they collect about users.

In its letter to lawmakers urging them to investigate the technology, the Open Internet Coalition delicately avoided placing the U.S. government in the same category as Iran by not mentioning possible U.S. government abuses of the technology. “We do not believe U.S. network owners intend to interfere with political communications in the way the Iranian government is doing, but the control technologies they are deploying on the internet carry the same enormous power,” the Coalition writes. “And, whether an inspection system is used to disrupt political speech or achieve commercial purposes, both require the same level of total surveillance of all communications between end-users and the internet.”

At a House subcommittee hearing this year to examine the technology, Rep. Rick Boucher (D-Virginia) also expressed alarm. “The thought that a network operator could track a user’s every move on the Internet, record the details of every search and read every e-mail or attached document is alarming,” he said. With regard to the sale of the technology to Iran, Sens. Charles E. Schumer (D-New York) and Lindsey Graham (R-South Carolina) attempted to address the Nokie Siemens issue with a bill that would prevent foreign companies selling sensitive technology to Iran from either obtaining new government contracts or renewing existing ones, unless they halt their exports to Iran. According to NextGov, Nokia did more than $10 million in business with the U.S. government between 2000 and 2008; Siemens has nearly 2,000 U.S. government contracts and obtained $250 million in U.S. government contracts this year alone. Nokia Siemens Networks currently has more than $5 million in U.S. government contracts. Neither Schumer nor Graham mentioned how such a law would be enforced if foreign companies used proxies to sell their products to Iran to circumvent the regulation.

The U.S. government embargo against U.S. companies selling to Iran is one of the tightest. The embargo currently prevents any U.S. individual or company from obtaining a license to sell goods and technologies to Iran that could be used for, among other things, missile proliferation purposes, chemical and biological warfare proliferation, human rights and crime control. The embargo, however, has done little to prevent Iran from obtaining U.S. technology anyway. In the meantime, consumers called for a boycott of Nokia and Siemens products. And Hands Across the Mideast Support Alliance (HAMSA) has organized a writing campaign urging users to send a protest letter to Nokia. According to the organization’s site, nearly 4,000 people have acknowledged sending the letter so far.


THE ‘LIPSTICK REVOLUTION’
http://www.pbs.org/mediashift/2008/09/activists-face-obstacles-online-in-winning-womens-rights-in-iran260.html
http://blogs.abcnews.com/womenomics/2009/06/women-rising-in-iran.html
http://www.abcnews.go.com/Politics/International/story?id=7880379
Iranian Women Take To The Streets, Demand Equal Rights, Economic Opportunities
BY Martha Raddatz and Susan Rucci / June 19, 2009

The huge rallies this week in Iran, the largest seen since the 1979 Islamic Revolution, have included thousands of women, who have taken to the streets to oppose the government of President Mahmoud Ahmadinejad. Some are dubbing itthe “lipstick revolution.” A week after the contested election that declared incumbent President Ahmadinejad the winner, protests over alleged voting fraud still continue strong.

Women, old and young, are visible at every rally — chanting, shouting, defiantly flashing V for Victory signs, carrying placards protesting the election results, defying the police and, in some cases, facing brutal retaliation. Others say the presence of so many woman is only the tip of the iceberg. “This movement is not about wearing lipstick and throwing their veil off,” Kelly Nikinejad, editor of Tehranbureau.com, told ABC News. “It’s so much deeper than that.” Many Iranian women want what they have desired for so long — equal rights. Women make up an important part of Iran’s population. They constitute 65 percent of all university students, but only 12 percent of women are in the workforce. Additionally, under the current law, women do not have equal divorce, child custody or inheritance rights. Last year, Ahmadinejad’s government tried to push a “family protection law” through parliament. The law would ease restrictions on polygamy and taxing mehriyeh, the traditional payment a husband gives a wife upon marriage, angering many.

In this election, women, who have been on the forefront of many a political movement in the country including the 1979 Revolution, threw their weight boldly behind Mir Hossein Mousavi, the reformist candidate who enjoys overwhelming support but according to election results, was defeated by a wide margin by Ahmadinejad, leading the opposition and their supporters to cry foul. “They are very brave,” Nikinejad said. “They go and they get beat up every day and they come back and they say I hurt, I hurt there, and then the next day they go back and they get pepper sprayed, beaten up, it’s amazing.” The bold support for Mousavi does not mean that Ahmadinejad does not have a female base. In fact, many women showed up at his rallies as well and strongly believe that he would solve their problems — from housing to health care. But to many Iranian women frustrated about their lives, Mousavi’s message of change and hope and equal rights struck a deep chord.

Iranian Women Demand Equal Rights
And they saw hope not only in Mousavi, but also in his wife, Zahra Rahnavard, a reflection of themselves. Rahnavard became the first Iranian women to openly campaign with her husband. “She was the image of change in Iran,” Nikinejad said. “She’s a very educated woman. She has two PhDs. She’s authored 20 books.” Mousavi and his wife called for more economic and social rights for women. “Changing this mentality and picture [of women] can be very helpful because if we step toward improving the situation of our women then we have progressed along the path of elimination of discrimination,” Mousavi said at a rally last week. “Women will be educated and trained so that they can be employed,” he said at another event.

His wife has also spoken out openly against Ahmadinejad’s government. “Today, we feel that an atmosphere of freedom of speech, press and thought, which we are all interested in and have confidence in, is absent. We feel that we do not possess an independent and great economy because of the wrong policies and adventurous behavior at a national and international level, and because of unilateral decisions without consultation with experts,” Rahnavard said at a political rally. “Now is the time we feel that we must be present on the scene.” Over the last few years, women once fearful in many of parts of the world are finding the courage to speak out. In 2002, in Bangladesh thousands of women marched demanding equal rights, and earlier this year 300 Afghan women protested a Taliban law that allowed marital rape. But the big question that remains to be answered is whether these courageous acts witnessed around the world will make a difference in Iran.

JUST BEFORE ELECTION, SMS GETS SHUT OFF
http://www.breakingtweets.com/2009/06/11/sms-system-down-in-iran-just-hours-before-election/
“The SMS (Short Message Service) system in Iran has been taken down, just hours before polls open for Friday’s presidential election. The Ghalam News report, translated from Persian, says that the popular network “was cut off throughout the country.” The action occurred just before midnight local time, less than nine hours before the start of elections. “All walks of life from all over the country” are discovering that “messages on different cell phone networks will not send.” The disruption in communication occurred after reformist candidates have been increasingly using Twitter and text messaging to rally support, per the Wall Street Journal. Approximatey 110 millions SMS messages have been sent per day leading up to the election, according to The Tehran Times.”

SYSADMINS DETAINED
http://www.boingboing.net/2004/08/24/iran-web-censorship-.html
“Persian blogger Hossein Derakshan says Iranian officials recently detained several staff and web technicians who worked on banned reformist websites, in order to gain control of the sites. They have now reportedly taken control of the servers, shut them down, and deleted all of their content.”

THROTTLING DISSENT
http://opennet.net/research/profiles/iran
http://www.renesys.com/blog/2009/06/strange-changes-in-iranian-int.shtml
http://opennet.net/blog/2009/06/cracking-down-digital-communication-and-political-organizing-iran
http://opennet.net/research/profiles/iran
“The Islamic Republic of Iran continues to expand and consolidate its technical filtering system, which is among the most extensive in the world. A centralized system for Internet filtering has been implemented that augments the filtering conducted at the Internet service provider (ISP) level. Iran now employs domestically produced technology for identifying and blocking objectionable Web sites, reducing its reliance on Western filtering technologies. The regulatory agencies in Iran charged with policing the Internet continue to expand. The Revolutionary Guard has begun to play an active role in enforcing Internet content standards.”

PRESS BLACKOUT
http://www.rsf.org/An-election-without-free-flow-of.html
http://www.google.com/hostednews/afp/article/ALeqM5hpy1TiemIsKmu6FEgv42JU5swSxw
http://www.reuters.com/article/latestCrisis/idUSEVA639005?rpc=60
Iran cancels foreign media accreditation

STORMTROOPERS UNLEASHED
http://www.alarabiya.net/articles/2009/06/14/75922.html
http://evideo.alarabiya.net/ShowClip.aspx?clipid=2009.06.14.05.25.24.078

MASS ARRESTS
http://www.iranhumanrights.org/2009/06/increasingrepression/
“A purge of reform-oriented individuals….” / 17 June 2009

PROXY WARS (cont.)
http://www.spiegel.de/international/world/0,1518,626412,00.html
http://www.globalsecurity.org/intell/world/iran/proxy-groups.htm

RURAL OUT-OF-TOWN RIOT POLICE BEING PUT UP IN HOTELS
http://www.guardian.co.uk/news/blog/2009/jun/24/iran-crisis
Newspaper Roozonline has an interview (in Persian) with one of the young plainclothes militiamen who have been beating protesters. The Guardian’s Robert Tait sends this synopsis: “The man, who has come from a small town in the eastern province of Khorasan and has never been in Tehran before, says he is being paid 2m rial (£122) to assault protestors with a heavy wooden stave. He says the money is the main incentive as it will enable him to get married and may even enable him to afford more than one wife. Leadership of the volunteers has been provided by a man known only as “Hajji”, who has instructed his men to “beat the counter-revolutionaries so hard that they won’t be able to stand up”. The volunteers, most of them from far-flung provinces such as Khuzestan, Arak and Mazandaran, are being kept in hostel accommodation, reportedly in east Tehran. Other volunteers, he says, have been brought from Lebanon, where the Iranian regime has strong allies in the Hezbollah movement. They are said to be more highly-paid than their Iranian counterparts and are put up in hotels. The last piece of information seems to confirm the suspicion of many Iranians that foreign security personnel are being used to suppress the demonstrators. For all his talk of the legal process, this interview provides a key insight into where Iran’s supreme leader, Ayatollah Ali Khamenei, believes the true source of his legitimacy rests.”

HIZBULLAH AND HAMAS FLOWN IN?
http://lebasshakhsi.blogspot.com/
https://sites.google.com/site/tatsumairanupdate/
Suppression of Dissent – The Players

Currently, there are two or three, maybe four, groups who are suppressing the students on the ground that you’ll read about throughout this thread:
1. The Basij
2. Ansar Hizbullah (which I will refer to as Ansar)
3. Lebanese Hizbullah (Unconfirmed rumour but either a probable or a persistent one. Der Spiegel, based on a Voice of America report, says that 5,000 Hizbullah fighters are currently in Iran masquerading as riot police, confirming the independent reports. Iran Press News has posted two photographs of men they claim are Hizbullah and Hamas mercenaries. Many different independent reports and video point that way. Even in the last days other independent twitter feeds have declared witnessing thugs beating on people while shouting in Arabic; I will refer to them as Hizbullah)
4. Lebanese Hamas (unconfirmed and doubtful. This rumour has been cropping up, with some of the most twitter feeds saying they had visual confirmation of Lebanese Hamas fighters along with Lebanese Hizbullah member. You should definitely take with a grain of salt, but it has been mentioned often enough, by sources generally always right, that it deserves of a mention here. Iran Press TV also claims to have posted a picture of Hamas mercenaries. I will refer to them as Hamas)

– The Basij are your regular paramilitary organization. They are the armed hand of the clerics. The Basij are a legal group, officially a student union, and are legally under direct orders of the Revolutionary Guard. Their main raison d’être is to quell dissent. They are the ones who go and crack skulls, force people to participate in pro-regime demonstrations, and generally try to stop any demonstrations from even starting. They are located throughout the country, in every mosque, every university, every social club you can think of. They function in a way very similar to the brownshirts.

They were the ones who first started the crackdown after the election, but it wasn’t enough. While they are violent and repressive, they are still Persian and attacking fellow citizens. A beating is one thing, mass killings another.

– Another group was working with them, whose members are even more extreme, is Ansar. There is a lot of cross-membership between the Basij and Ansar, though not all are members of the other group and vice-versa. The vast majority of Ansar are Persians (either Basij or ex-military), though a lot of Arab recruits come from Lebanon and train with them under supervision of the Revolutionary Guard. They are not functioning under a legal umbrella, they are considered a vigilante group, but they pledge loyalty directly to the Supreme Leader and most people believe that they are under his control. They are currently helping the Basij to control the riots, but due to the fact that they are Persians and in lower numbers than the Basij, they are not that active.

– The Lebanese Hizbullah is a direct offshoot (and under direct control) of the Iranian Hizbullah (itself under direct control of the Supreme Leader) and cooperates closely with Ansar though Ansar occupies itself only with Iran’s domestic policies, while Hizbullah occupies itself only with Iran’s foreign policy unless there is a crisis like right now. However, Hizbullah has been called to stop violent riots in Iran in the past.

(The following paragraph includes some speculation based on reports from ground zero, it is no confirmed, this is what was reported early on by various twitter feeds considered credible, so do not take this as anything but unconfirmed rumours) Hizbullah flew in a lot of their members in Iran, most likely a good deal even before the elections in case there were trouble. They are the ones who speak Arabs and are unleashing the biggest level of violence on the Persians so far. Another wave arrived recently and there is chatter that yet another wave of Hizbullah reinforcements are coming in from Lebanon as we speak. According to Iranians on the ground, they are the ones riding motorcycles, beating men women and children indiscriminately and firing live ammunitions at students.

– The Lebanese Hamas is a branch of Hamas set-up in Lebanon. Like Hamas in Gaza, Hamas in Lebanon is directly under the orders of the Hamas council of Damascus known as Majlis al-Shurah. While it is surprising to hear that they might be involved, and as I said take these reports with a grain of salt until we get more confirmations, it is not illogical either. Iran has become the main benefactor of Hamas in the last years, branching out from only supporting Islamic Jihad. They now provide Hamas with the bulk of their budget, with advanced weaponry and training by the Iranian Revolutionary Guard. Not only does Hamas own them a lot, but if the Republic falls, Hamas finds itself in dire trouble. It is very likely that, at the call of Iran, the Majlis al-Shura would have decided to send fighters from their Lebanese Hamas branch along with Hizbullah fighters if it was requested of them.

Other Players
The Police – Iran’s police force is not dissimilar to your run-of-the-mill law enforcement apparatus in other dictatorships, with the difference that they are not generally as brutal and repressive. This is because the Basij are generally in charge of these activities, meaning that Iranian policemen generally concentrate more on the law and order aspect of Iranian daily life.

Today, it is thought that the Iranian police numbers close to 60,000 members, in contrast with up to a million Basij members. This is one of the reasons why we hear much more about the plainclothes militia than we do about the police right now, the other being that the Basij and Ansar are much more willing to violently assault their fellow citizens than even the regular police force. This is not as much a testament to the decency of your average police officers as much as a damning report of what the Basij and Ansar thugs are like.

There are also subdivisions and extra-legal forces attached to the police force. The major subdivision would be the riot police (So-called Unit 110) who are actually much more violent than regular police officers, but also in much, much smaller numbers. There is also VEVAK, the secret police. Very little is known and confirmed about them, except their extreme tactics include murder, kidnapping and torture.

The Army
In Iran, there are actually two armies. They are divided between Artesh and Pasdaran. Artesh is the regular Military apparatus of the Republic. Their numbers, including reservists, go up to a million members, but only half of them have received anything more than very basic training. As it is often the case in police states, there is very little known and confirmed about the structure of the Army itself. They were created prior to the Iranian Revolution, in fact this army has existed in one form or another, and is a continuation, for more than 2,500 years. This is not as impressive as it sounds, however, as they often underwent drastic changes, there is no real links between the current incarnations, and the top echelons were most often purged when new rulers took power. In fact, in the last 100 years, those purges happened between two or three times, depending on the count, the last time centered around the time of the Islamic revolution, when most generals were forced to flee, killed, or killed while in exile.

Artesh took the brunt of the military casualties during the Iran-Iraq war, the army is considered to very nationalist and not extremely religious, which explains why they have declared their neutrality and refusal to repress the situation, as they see their purpose to defend the Iranian population. Everyone agrees they will be the ultimate key to this Revolution when they finally decide to take a side, or alternatively force the Pasdaran to stay on the sidelines with them.

Pasdaran, also known as Iranian Revolutionary Guard
The Iranian Ground forces (I will focus on them, as the Navy and Air force are currently irrelevant, will update if the situation changes) have been estimated between 100,000 and 130,000 units total. As always, truth most likely resides somewhere in the middle. They are, much like the Basij and Ansar, subservient directly to the Supreme Leader, and ideologically created in the spirit of defending the Islamic Revolution ideals and Republic, not Iran per se. They also control the Basij.

They are a child of the revolution, and they are more geared toward guerilla warfare than they are for military engagements. They are also the force responsible for training the various terrorist groups financed and supported by the Iranian government. They are fanatically devoted to the Republic through intense indoctrination.

The elite troops are called Quds. They are considered the elite of the elite, but they only number between 2000-6000, although rumours say that they are twice or three time as big. They are, however, rumours and quite unlikely. Ultimately, the Revolutionary Council and the Supreme Leader will call on them if they think they are on the verge of losing power, however it is unlikely that the army will just stay on the sidelines if this happens.

The Grand Ayatollahs
The Grand Ayatollahs are Shiite clerics who first attained the position of Ayatollahs and then, through their knowledge of Islamic Jurisprudence, attained a supreme position and are regarded as the most important voice in Shia Islam today. They revolve around the holy Shiite city of Qom, though some live outside Iran.

THERE’S IRONY + THERE’S ORWELL
BASIJ-E MOSTAZAFAN, THE ‘MOBILIZATION OF THE OPPRESSED’
http://en.wikipedia.org/wiki/Basij
http://www.globalsecurity.org/intell/world/iran/basij.htm
Niruyeh Moghavemat Basij / Mobilisation Resistance Force

The Pasdaran was given the mandate of organizing a large people’s militia, the Basij, in 1980. Islamic Revolution Guards (Vezarat-e Sepah Pasdaran-e Enqelab-e Islamic) is in charge of the paramilitary national Mobilization of the Oppressed (Baseej-e Mostazafan) Organisation. It is from Basij ranks that volunteers were drawn to launch “human wave” attacks against the Iraqis, particularly around Basra.

The precise size of the Basij is an open question. Basij membership comprises mainly boys, old men, and those who recently finished their military service. Article 151 of the Constitution says the government is obligated to provide military-training facilities for everyone in the country, in accordance with the precepts of Islam under which all individuals should have the ability to take up arms in defense of their country

Iranian officials frequently cite a figure of 20 million, but this appears to be an exaggeration based on revolutionary leader Ayatollah Ruhollah Khomeini’s November 1979 decree creating the Basij. Khomeini said at the time that “a country with 20 million youths must have 20 million riflemen or a military with 20 million soldiers; such a country will never be destroyed.” In a 1985 Iranian News Agency report, Hojjatoleslam Rahmani, head of the Basij forces of the Pasdaran, was quoted as stating that there were close to 3 million volunteers in the paramilitary force receiving training in some 11,000 centers.

General Yahya Rahim-Safavi, the commander of the IRGC, predicted that in the Third Five-Year Development Plan (2000-04) the number of Basijis will expand to 15 million (9 million men, 6 million women) to better counter potential domestic and foreign threats. While apparently falling short of the goal outlined in the plan, Basij commander Brigadier General Mohammad Hejazi estimated the number of Basij personnel at 10.3 million in March 2004 and 11 million in March 2005. Basij commander General Mohammad Hejazi said on 14 September 2005 that the Basij has more than 11 million members across the country.

Other estimates place the force at 400,000. There are about 90,000 active-duty Basij members who are full-time uniformed personnel; they are joined by up to 300,000 reservists. The Basij can mobilize up to 1 million men. This includes members of the University Basij, Student Basij, and the former tribal levies incorporated into the Basij (aka Tribal Basij). Middle-school-aged members of the Student Basij are called Seekers (Puyandegan), and high-school members are called the Vanguard (Pishgaman).

The Niruyeh Moghavemat Basij – the Mobilisation Resistance Force – was the strong right arm of Ayatollah Khomeini. Its volunteers were martyred in their tens of thousands in the Iran-Iraq war, and were given the role of moral police at home. The supreme leader’s equally conservative successor, Ayatollah Ali Khamenei, has been careful not to let any of Iran’s overlapping security forces fall under the control of his elected rival.

Ashura Brigades were reportedly created in 1993 after anti-government riots erupted in various Iranian cities. In 1998 they consisted of 17,000 Islamic militia men and women, and were composed of elements of the Revolutionary Guards and the Baseej volunteer militia.

The Basij, or Baseej paramilitary volunteer forces, come under the control of the Revolutionary Guards. They have been active in monitoring the activities of citizens, enforcing the hijab and arresting women for violating the dress code, and seizing ‘indecent’ material and satellite dish antennae. In May 1999 the Minister of Islamic Culture and Guidance stated in public remarks that the Government might support an easing of the satellite ban. However, Supreme Leader Khamenei, who makes the ultimate determination on issues that involve radio and television broadcasting, quickly criticised any potential change as amounting to “surrender” to Western culture, effectively ending any further debate of the idea. The “Special Basijis” are not permitted to participate in political parties or groups, although other members of the Basij can belong to political associations if they are not on a Basij mission and do not use the name or resources of the Basij for the association. Basijis can participate in specialist or trade associations.

Hezbollahi “partisans of God” consist of religious zealots who consider themselves as preservers of the Revolution. They have been active in harassing government critics and intellectuals, have firebombed bookstores and disrupted meetings. They are said to gather at the invitation of the state-affiliated media and generally act without meaningful police restraint or fear of persecution.

President Mohammad Khatami told the cabinet on 22 November 2000 that “the Basij is a progressive force which seeks to play a better role in maintaining religious faith among its allies, and acquiring greater knowledge and skills.” The deputy commander of the Islamic Revolution Guards Corps, Brigadier-General Mohammad Baqer Zolqadr, made comments in a similar vein at the annual Basij Supreme Association for Political Studies and Analysis gathering. He told the audience that the Basij pursued military activities in the first decade after the revolution because the main threat facing Iran at the time was a military one. Now, Zolqadr explained, the Basij will become “involved anywhere if the country’s security, goals, or national interests are threatened.” A statement issued by the Basij Center at the Science and Technology University on 23 November 2000 explained how this will be accomplished : “The Basij Resistance Force is equipped with the most modern and up-to-date weapons and is undergoing the most advanced training. It is making such achievements that if the enemy finds out it will tremble and have a heart attack.” The Basij demonstrated what it would do in case that faile during 23 November 2000 civil defense exercises, when armed Basijis took up positions in the streets and along strategic locations.

The Basij Resistance Force appeared to be undergoing something of a revival under the administration of President Mahmud Ahmadinejad. This could be connected with the organization’s alleged role in securing votes for Ahmadinejad during the presidential campaign and on election day. Ahmadinejad appointed Hojatoleslam Heidar Moslehi, the supreme leader’s representative to the Basij, as an adviser in mid-August 2005. But the revival — along with changes in the paramilitary organization’s senior leadership — could also be connected with preparations for possible civil unrest. In late September 2005, the Basij staged a series of urban defense exercises across the country. General Mirahmadi, the first deputy commander of the Basij, announced in Tehran that the creation of 2,000 Ashura battalions within the Basij will enhance Iran’s defensive capabilities. Ashura units have riot-control responsibilities.

ANTI-BASIJ SELF-DEFENSE TACTICS, AS EXPLAINED BY IRANIAN SWAT COP
http://www.iranian.com/main/node/69429
Street Survival Guide / 23-Jun-2009

“This is a document that a friend of mine who is an Iranian-American police officer has put together. He is the member of the SWAT team and he’s an expert on anti riot tactics. he has been watching and studying the videos and the tactics that basij has been using and he put the document together. It would be great to spread this document and pass it on to the kids in Iran. It might save their lives.” — “SB”

“Here are some simple ways of defending yourself when attacked by Basij or Security forces.

Anti riot attacks
Once caught by security forces, the best way to break free is by swinging relentlessly in all directions. Keep in mind that security forces have to hold on to you, which means they only can use one hand to deflect the blows. Brass Knuckle is extremely effective when trying to break loose from the grip of security forces. Wooden brass knuckle is strong and simple to make. The image above is a sample of a basic wooden brass knuckle that can be made with a piece of wood, a cutter and a drill. It should not take more than 30 minutes to make a wooden brass knuckle. Wooden brass knuckle is extremely strong, light weight and versatile. Make sure that the top edges are sharp and round.

Motorcycle attacks
Iranian Basij motorcycle units use attack and retrieve tactics which is meant to create fear more than anything else. The same tactic was used by US police forces on horsebacks when confronting the civil right protestors. The advantage of utilizing motorcycles in urban environment is obvious: motorcycles can go places that cars can’t. However, motorcycles have disadvantages which can handicap the force that uses them.

The most effective way of disabling motorcycles is using tire spikes. Though made of carbon cratnor material, the Basij motorcycle tires cannot withstand multiple punctures. The easiest way to spike Basiji’s tires is by using a simple tire spike system called Iron Caltrop. This simple device can be made in a matter of minutes by wrapping two pieces of nail together in a 65 degree angle. By dropping a handful of Iron Caltrop on the ground, you can deflate the tires of Basijis’ motorcycles in a matter of minutes. If you ride, you know how difficult it is to steer a motorcycle with two flat tires.

Tear gas
A fabric socked in vinegar can very well protect you against tear gas. Cover your nose and mouth with the fabric and keep plenty of water around to wash your eyes if you come in direct contact with tear gas. Urban Legend: burning tires will reduce the effect of tear gas. Not true, it actually increases the effect and it smells bad too.

Batons
Riot police is trained to use batons. They understand that it’s easy to hit a stationary target and much easier to hit a target that is running away. Hitting somebody with baton is a matter of timing. The worst thing you can do is to run away from baton whirling security guards because it allows them to time the strike perfectly. The most effective way to counter a security guard with baton is to throw off his timing by going directly at him. That’s right. Run away and turn and go directly at him. When you go directly at the guard and close the distance, you completely screw up his timing. A boxer cannot hit a person that is standing 2 inches away from his face. That’s why boxer bounce around. A baton whirling guard is just like a boxer, he needs to time his strikes. By going directly at the guard and closing distance you mess-up his timing and might even be able to take him down.

Riot formation
Basij and police security guardsmen perform best when crowd disperses and becomes separated. The worst scenario for the riot police is when the crowd is together and inseparable. South Korean labor protestors in the 90s were the best organized units in history of rioting. Thousands of them held on to each other (locked arms) and no matter what, they did not let go. It made it impossible for the riot police to disperse them.

Just a few tips. Please translate and send it back to the youth in Iran. This can save their lives.”

STREET SURVIVAL GUIDE
http://twitter.com/lettersoftheliv
http://andrewsullivan.theatlantic.com/the_daily_dish/2009/06/the-survivalist-guide-to-protesting.html
The Survivalist Guide To Protesting / 25 Jun 2009

“A twitterer named lettersoftheliv has published an exhaustive series of tweets as a how-to guide for non-violent demonstrations.

Here’s how to protect yourself from tear gas:
– Do not pick up/throw back tear gas canisters- will severely burn your hands.
– Vinegar soaked bandana helps you breath with tear gas. Contaminates fast, have extra.
– Most tear gas injuries come from PANIC/chaos,not the chemicals:Ppl lose heads.Effects intense but very short-term.
– Stay calm and yell “WALK, WALK” as you walk away from tear gas/pepper spray attack- spread calm.
– Do not wear contact lens- pepper spray can linger and damage your eyes.

How to protect yourself during a basij assault:
– Go limp – When rigid,easy to pick up & move. If limp weight,hard to pick up & move (Always tuck your head by looking at your belly) link arms, stay in large groups, never touch a basiji, consider Sit Down when attacked (depending on plan/setting/ and Weapon)
– If grp sits dwn & police grab at 1 to beat, that 1 should scoot back & ppl behind open up & pull thru to back.Ppl in front close gap.
– If sit in grp&1 beaten w/batons,Ppl drape selves over target:spread hits over 3 ppl’s butts, not 1 prsn’s head.Cover head & torso
– “No-Hit Strategy”-attacked ppl hv instinct 2 hit back:Never let ppl rcv more than 2 hits b4 swarming as group 2 protect.
– Swarm/Surround agitators who are becoming violent so they cannot escalate the situation.
– If police push u n grp,unsafe 2 push back:escalates situation.All cross ankles & sit in place.Impossible 2 push seated group.
– At times you deem appropriate, sing or chant- do things to keep groups spirit strong- this is unbelievably important.
– Stay alert, “Ignore” harassment- ignore yelling, throwing objects, etc Do not react emotionally- Do not engage baiting
– Most powerful weapon you wield is SHAME- from your own religious/cultural context, choose symbolic NV acts.
– Always scan for escape routes, easiest exits.

General preparation:
– Know and trust ppl u are protesting with- don’t mix NV and violent protesters
– Be prepared – with talking points, chants, alternative plans, exit strategy, contingency plans, supplies, etc
– Practice/Roleplay NV de-escalation & tolerating/surviving/escaping “basiji” in GROUPS. Discuss-strengths,weaknesses
– Share “if I get arrested” info-emergency contacts/needs
– Assign jobs- scout, scene assessment, food, map, exits, etc. Have 1 person off-site know where you are. appoint teams of people 4 tasks- a team 2 scout & swarm agitators, keep deescalated (assume agitators r plants)
– Avoid alcohol, drugs and caffeine- dehydrating. Don’t use anything that will impair judgement.
– Stay hydrated- use oral rehydration solution:1 ts salt,8 ts sugar,1 liter clean drinking water: Stir.
– If no bathroom available use privacy circle, group stands in circle around person, faces outward.

What to wear (or not to wear):
– Wear a waterproof, nonabsorbent outer layer if possible. Cover your arms and legs.
– Wear 2 pairs of underwear. If you get arrested, you have 1 to wear and 1 to wash.
– Dress in layers, appropriately for weather.
– WOMEN- Don’t wear tampons- wear pads (can’t remove if arrested or trapped, toxic shock syndrome)”

PARTIAL LIST OF DEAD AND DETAINED
http://www.iranhumanrights.org/2009/06/list/

TEHRAN UNIVERSITY FACULTY RESIGNS
http://andrewsullivan.theatlantic.com/the_daily_dish/2009/06/tehran-universitys-faculty-resigns-en-masse.html
http://www.guardian.co.uk/world/2009/jun/17/iran-election-protests-arrests1

DEATH PENALTY FOR BLOGGERS?
http://committeetoprotectbloggers.org/category/iran/
http://www.readwriteweb.com/archives/iranian_deth_penalty_for_bloggers.php

TRANSLATION PROJECTS
http://translate4iran.org/
http://translate4iran.wikispaces.com/

‘THE STREET’ – KHIABAN NEWS LEAFLET
http://moniroravanipor.com/images/stories//xyaban1.pdf
http://irangcc.wordpress.com/2009/06/21/translating-the-street-newspaper-circulating-among-iran-protesters/

“Writings. Eyewitness accounts. Send your own articles to us at xyaban [at] gmail [dot] com
For subscriptions email khyaboon [at] gmail [dot] com

Long live popular sovereignty! Long live resistance to the Coup D’état! Death to dictatorship!
The Street – Issue 1 – 29 Khordad 1388 (June 19, 2009)

Aiming to negate students’ impact on the current developments: University dormitories ordered closed
Iran in a bloodbath
Workers of [car maker] Iran Khodro on Strike
Tens of thousands protesters march from Tupkhaneh Square to Haft Tir
In the provinces, coup-makers practice violent oppression

Media and the streets. A bloody page in Iran’s modern history seems to be turning in the events we are witnessing. In past days and nights, Tehran and many Iranian cities have not stayed calm as peoples’ burning rage has thrown daily life into flux. The people in the streets are playing a game of cat and mouse with violent thugs; youth are in revolt, and the elderly rack their memories for re-learned lessons of the calamitous events of the 1979 revolution to pass on to the young.

Again, after thirty years, people are leaving the doors of their homes open [to give refuge] to courageous youth, and we hear from many how great people are, and how quickly they can change. Over the past days’ witness to events, we were different people, different slogans. During the campaign until election day, the huge crowds of people that had taken to the street with the green wave were spirited, the bliss of unawareness reigning over them. Yet since the results were announced, the situation changed and people became angry, and sought the crest of the wave to propel them beyond the ignorance, repression and hundreds of lies. During recent days and nights, the tide has again turned.

Like Azar of 1953 [CIA-backed anti-Mossadegh coup] and Tir of 1999 [reformist protests and regime crackdown], and – according to many present at the time – even like the protests of the revolutionary years and 1963 [clergy-led anti-shah protests]!!! Yes, we are seeing the naked face of repression. We see the green wave of reformism in its entire expanse, as it brings us into a shared arena with the existing system

Killing us and calls for calm have only made the situation more acute. Now we have more questions; more than just issues with vote counting. We want a different voice. We do not want to be sacrificed to corruption and graft again, for the nth time, so that our interests are ignored. We do not want a slaughterhouse that would set society back thirty years. We do not want a repeat of the fraud of 1979. We do not have any media but the world has gotten smaller so we no longer experience one thing on the streets yet read something different in world media. We do not want the next generation to be ignorant about what happened on the streets of Tehran, Esfahan, Tabriz, Shiraz, Mashhad, Ahvaz, Kermanshah, and the rest of the cities, large and small. We will represent a new voice in this power play: the voice of the people crying out in the streets. The people who have no delusions about colors and who demand change.”

TRANSLATED
http://irangcc.wordpress.com/2009/06/24/translation-from-khiaban-issue-5-“street-combat-techniques”/#more-499
http://irangcc.wordpress.com/2009/06/30/khiaban-78-baharestan-protest-account-and-more/
Khiaban Issue 7

Bullet in Baharestan
According to human rights and democracy activists in Iran, after 12 this afternoon, on Wednesday 3 Tir, all the access points to Baharestan Square were closed and no underground trains were stopping at Baharestan station. More special forces and anti-riot forces and even police had surrounded the Parliament building with their cars and motorcycles and ordered closed all the stores located on Baharestan Square, even stores along secondary roads terminating at the square. They threatened to burn down any stores that did not close. Despite strict control of all the approaches, a large crowd had reached the square by about 4:30 and was standing in silence. The security forces had warned them not to gather and to disperse. A number of people had black armbands on and a small number were holding proclamation signs above their heads. Those with signs were attacks by guard forces and civilian dressed forces. At about 4:40 guard and anti-riot forces surrounded the crowd gathered in the square and sprayed teargas to scatter the people, while the slogans ‘death to the dictator, people’ and ‘don’t be afraid, don’t be afraid, we are all together’ could be heard. The people trying to enter the square from surrounding streets were the target of baton attacks, and a number were also arrested. The arrested were herded with batons to cars and beaten with batons inside the cars. As the pressure from the crowd trying to enter the square steadily built, several shots were fired in the air to break up the people. But as pressure built more, they began firing directly into the people, and cries of ‘we will protest, we will protest’ and ‘they killed my brother’ rose from the crowd. For nearly an hour the sound of gunfire could be heard on Baharestan Square and the surrounding streets. Every time a group of people would escape to surrounding streets under pressure from guard forces, they were chased down by men on motorcycles and assaulted with batons – moving the clash to surrounding streets. According to reports, a number were killed in the clashes, and 30 people were arrested and more than 50 wounded. As of yesterday, Basiji and guard forces positioned at the head of all the streets are stopping the people, especially, the young people, and searching photos and film taken on their mobile phones. They are even stopping and searching cars.

Baharestan Has Awoken
As expected, Baharestan was surrounded by security forces. They were continuously dispersing the people, and the people gathering in another corner. Everyone was expecting – and there were murmurings – that Mousavi would arrive, but no one saw him. They had stopped the people and prevented them from moving towards the Parliament building. Against the protests of people trying to reach their homes on that side, a security official was yelling: ‘We know that none of your houses are on that side.’ The security officials were openly filming the people. One point worth mentioning is the weak presence of Basiji or plain clothes security forces compared to the police forces. More anti-riot guard forces were intending to intimidate the people. They were dragging their batons against the barricades or striking them against their shields to produce a frightening noise. They are charging several people. The crowd is large, and the protests more crowded than usual. They are still openly threatening ‘If you go, the Special Forces will come and you will be beaten!!!!!!!!!’ They cleared out the pedestrian bridge in a savage way. Men on motorcycles were moving through the protesters and threatening them with batons. But the crowd, as if they had no fear, was constantly signaling to each other ‘don’t run, we are ordinary passersby.’ They released some teargas. There was an odd apprehension among the security forces. Even with violence it took about an hour to disperse the crowd. The sound of gunshots arose. There were clashes at several locations where the police quickly hauled people off to jail while beating and jeering at them. There were searching the bags of black-clad boys, searching for a pretext or green gangs. I heard that they killed a person. The Baharestan subway station was closed – up to Sa’adi. Helicopters were constantly hovering above the crowd. The plain clothes police were not intervening a lot, and they were noticeably few, but there were armed, plain clothed individuals among the crowd, and it was not difficult to identify them. Once or twice during the clashes they also struck onlookers. They shoved the crowd and dispersed them to the surrounding streets.

Civility of Religion
They have threatened families of the slain victims – agreeing to deliver the bodies of love ones only on condition that they sign away their right to file complaints against the assailants and police force. They are extorting 5 to 14 million from families as payment for delivering the bodies of their love ones slain in clashes over the last 10 days.

EMANCIPATION
http://www.lrb.co.uk/v31/n14/zize01_.html
http://www.thecommentfactory.com/will-the-cat-above-the-precipice-fall-down-slavoj-zizek-on-iran-2259
Will the cat above the precipice fall down?
BY Slavoj Zizek / June 25, 2009

When an authoritarian regime approaches its final crisis, its dissolution as a rule follows two steps. Before its actual collapse, a mysterious rupture takes place: all of a sudden people know that the game is over, they are simply no longer afraid. It is not only that the regime loses its legitimacy, its exercise of power itself is perceived as an impotent panic reaction. We all know the classic scene from cartoons: the cat reaches a precipice, but it goes on walking, ignoring the fact that there is no ground under its feet; it starts to fall only when it looks down and notices the abyss. When it loses its authority, the regime is like a cat above the precipice: in order to fall, it only has to be reminded to look down…

In Shah of Shahs, a classic account of the Khomeini revolution, Ryszard Kapuscinski located the precise moment of this rupture: at a Tehran crossroad, a single demonstrator refused to budge when a policeman shouted at him to move, and the embarrassed policeman simply withdrew; in a couple of hours, all Tehran knew about this incident, and although there were street fights going on for weeks, everyone somehow knew the game is over. Is something similar going on now?

There are many versions of the events in Tehran. Some see in the protests the culmination of the pro-Western “reform movement” along the lines of the “orange” revolutions in Ukraine, Georgia, etc. – a secular reaction to the Khomeini revolution. They support the protests as the first step towards a new liberal-democratic secular Iran freed of Muslim fundamentalism. They are counteracted by skeptics who think that Ahmadinejad really won: he is the voice of the majority, while the support of Mousavi comes from the middle classes and their gilded youth. In short: let’s drop the illusions and face the fact that, in Ahmadinejad, Iran has a president it deserves. Then there are those who dismiss Mousavi as a member of the cleric establishment with merely cosmetic differences from Ahmadinejad: Mousavi also wants to continue the atomic energy program, he is against recognizing Israel, plus he enjoyed the full support of Khomeini as a prime minister in the years of the war with Iraq.

Finally, the saddest of them all are the Leftist supporters of Ahmadinejad: what is really at stake for them is Iranian independence. Ahmadinejad won because he stood up for the country’s independence, exposed elite corruption and used oil wealth to boost the incomes of the poor majority – this is, so we are told, the true Ahmadinejad beneath the Western-media image of a holocaust-denying fanatic. According to this view, what is effectively going on now in Iran is a repetition of the 1953 overthrow of Mossadegh – a West-financed coup against the legitimate president. This view not only ignores facts: the high electoral participation – up from the usual 55% to 85% – can only be explained as a protest vote. It also displays its blindness for a genuine demonstration of popular will, patronizingly assuming that, for the backward Iranians, Ahmadinejad is good enough – they are not yet sufficiently mature to be ruled by a secular Left.

Opposed as they are, all these versions read the Iranian protests along the axis of Islamic hardliners versus pro-Western liberal reformists, which is why they find it so difficult to locate Mousavi: is he a Western-backed reformer who wants more personal freedom and market economy, or a member of the cleric establishment whose eventual victory would not affect in any serious way the nature of the regime? Such extreme oscillations demonstrate that they all miss the true nature of the protests.

The green color adopted by the Mousavi supporters, the cries of “Allah akbar!” that resonate from the roofs of Tehran in the evening darkness, clearly indicate that they see their activity as the repetition of the 1979 Khomeini revolution, as the return to its roots, the undoing of the revolution’s later corruption. This return to the roots is not only programmatic; it concerns even more the mode of activity of the crowds: the emphatic unity of the people, their all-encompassing solidarity, creative self-organization, improvising of the ways to articulate protest, the unique mixture of spontaneity and discipline, like the ominous march of thousands in complete silence. We are dealing with a genuine popular uprising of the deceived partisans of the Khomeini revolution.

There are a couple of crucial consequences to be drawn from this insight. First, Ahmadinejad is not the hero of the Islamist poor, but a genuine corrupted Islamo-Fascist populist, a kind of Iranian Berlusconi whose mixture of clownish posturing and ruthless power politics is causing unease even among the majority of ayatollahs. His demagogic distributing of crumbs to the poor should not deceive us: behind him are not only organs of police repression and a very Westernized PR apparatus, but also a strong new rich class, the result of the regime’s corruption (Iran’s Revolutionary Guard is not a working class militia, but a mega-corporation, the strongest center of wealth in the country).

Second, one should draw a clear difference between the two main candidates opposed to Ahmadinejad, Mehdi Karroubi and Mousavi. Karroubi effectively is a reformist, basically proposing the Iranian version of identity politics, promising favors to all particular groups. Mousavi is something entirely different: his name stands for the genuine resuscitation of the popular dream which sustained the Khomeini revolution. Even if this dream was a utopia, one should recognize in it the genuine utopia of the revolution itself. What this means is that the 1979 Khomeini revolution cannot be reduced to a hard line Islamist takeover – it was much more. Now is the time to remember the incredible effervescence of the first year after the revolution, with the breath-taking explosion of political and social creativity, organizational experiments and debates among students and ordinary people. The very fact that this explosion had to be stifled demonstrates that the Khomeini revolution was an authentic political event, a momentary opening that unleashed unheard-of forces of social transformation, a moment in which “everything seemed possible.” What followed was a gradual closing through the take-over of political control by the Islam establishment. To put it in Freudian terms, today’s protest movement is the “return of the repressed” of the Khomeini revolution.

And, last but not least, what this means is that there is a genuine liberating potential in Islam – to find a “good” Islam, one doesn’t have to go back to the 10th century, we have it right here, in front of our eyes.

The future is uncertain – in all probability, those in power will contain the popular explosion, and the cat will not fall into the precipice, but regain ground. However, it will no longer be the same regime, but just one corrupted authoritarian rule among others. Whatever the outcome, it is vitally important to keep in mind that we are witnessing a great emancipatory event which doesn’t fit the frame of the struggle between pro-Western liberals and anti-Western fundamentalists. If our cynical pragmatism will make us lose the capacity to recognize this emancipatory dimension, then we in the West are effectively entering a post-democratic era, getting ready for our own Ahmadinejads. Italians already know his name: Berlusconi. Others are waiting in line.

STAGECRAFT OR STATECRAFT? – MOUSAVI’S LETTER
http://www.thenation.com/blogs/dreyfuss/443348
http://tehranbureau.com/2009/06/13/mousavi-letter/

AYATOLLAH MONTAZERI LETTER
http://kojayi.wordpress.com/2009/06/16/ayatollah-montazeris-letter/


“The measure of a nation is its vote.” – Ayatollah Khomeini


‘Real’ vote count, allegedly showing Ahmadinijad in THIRD place

ELECTION THEFT MEMO
President of the Committee of Election Monitoring : Election is Invalid
http://www.peykeiran.com/Content.aspx?ID=2104
http://niacblog.wordpress.com/2009/06/13/election-liveblogging-saturday/
http://mowj.ir/ShowNews.php?7217
http://niacblog.wordpress.com/page/2/
http://www.flickr.com/photos/andishehnouraee/3635977616/
from Iran Interior Ministry (Authenticity NOT VERIFIED)
“The chart that follows informs Khamenei of the vote’s “real” results. It says 42 million votes were cast with with Mousavi getting 19,075,623 votes, Mehdi Karroubi getting 13,387,104 votes, Ahmadinejad finishing a distant third with 5,698,417 votes, and Mohsen Rezaee getting 3,754,218.”

THE ASSEMBLY OF EXPERTS COULD STILL PULL RANK
http://en.wikipedia.org/wiki/Assembly_of_Experts

QOM
http://www.guardian.co.uk/commentisfree/2009/jun/15/rafsanjani-iran-elections
Rafsanjani: shark or kingmaker?
BY Simon Tisdall / 15 June 2009

More intriguing are similarly unsubstantiated claims that Rafsanjani is in the holy city of Qom, where he once studied and where he has strong links to a moderate clerical body, the Association of Combatant Clergy. Rafsanjani was said to be assessing whether he has sufficient votes in the 86-member Assembly of Experts to dismiss Ayatollah Ali Khamenei, the Supreme Leader and Ahmadinejad’s chief patron. Under Iran’s constitution, only the assembly has the power to do this.

The super-rich Rafsanjani, his family, and his supporters in the reformist Kargozaran party make no bones about helping finance and direct Mir Hossein Mousavi’s campaign to topple Ahmadinejad, whom they despise. But with Mousavi ostensibly beaten, the developing post-election struggle now pits Rafsanjani against Khamenei rather than the president – who is widely seen as a mouthpiece for the hardline fundamentalism typified by the Supreme Leader. Although he is supposed to stay above the fray, Khamenei endorsed Ahmadinejad this time, just as in the second round of the 2005 election.

Rafsanjani has made no secret of his belief that foreign and economic policies pursued during the past four years under Khamenei’s guidance have seriously damaged the Islamic Republic. His frustrations came to a head last week after Ahmadinejad was allowed to publicly accuse him of corruption. In an angry letter he lambasted Khamenei for failing to uphold the country’s dignity. In what was in effect an unprecedented challenge to Khamenei’s authority, he implied the Supreme Leader, normally above criticism, was negligent, partial, and possibly involved in plans to steal the election.

“I am expecting you to resolve this position in order to extinguish the fire, whose smoke can be seen in the atmosphere, and to foil dangerous plots,” Rafsanjani wrote. “If the system cannot or does not want to confront such ugly and sin-infected phenomena as insults, lies and false allegations, how can we consider ourselves followers of the sacred Islamic system?”

Rafsanjani remains unpopular with many Iranians who believe the corruption claims and blame him for a murderous, covert campaign to silence dissidents at home and abroad during his 1989-97 presidency. Those latter allegations earned him another nickname: the “grey eminence”. At the same time he is respected as one of the Islamic revolution’s founding fathers and a close associate of its first leader, Ayatollah Ruhollah Khomeini. As a result he can count on some powerful friends if he decides to try to shame Khamenei into allowing an election re-run or standing down.

Apart from his clerical allies in Qom, prominent establishment conservatives such as Ali Akbar Velayati and Ali Akbar Nateq-Nuri have criticised Ahmadinejad. So, too, has Ali Larijani, the influential Majlis (parliament) speaker and former national security chief. The mayor of Tehran, Mohammad Bagher Qalibaf, is another potential ally, as are the former president Mohammad Khatami, Mousavi, the other defeated presidential candidates, and their millions of thwarted supporters.

If mobilised, his would comprise an elite coalition operating inside the hierarchy of the Islamic Republic, rather than from outside on the streets. It would not be a democratic movement; but it would be a dagger held to Khamenei’s breast. Not for nothing is the Machiavellian Rafsanjani, pistachio nut millionaire, pragmatist and ruthless political survivor, known by yet another nickname: the “kingmaker”. Iran awaits his next move.

HOW TO STEAL AN ELECTION
http://www.juancole.com/2009/06/stealing-iranian-election.html
Top Pieces of Evidence that the Iranian Presidential Election Was Stolen

1. It is claimed that Ahmadinejad won the city of Tabriz with 57%. His main opponent, Mir Hossein Mousavi, is an Azeri from Azerbaijan province, of which Tabriz is the capital. Mousavi, according to such polls as exist in Iran and widespread anecdotal evidence, did better in cities and is popular in Azerbaijan. Certainly, his rallies there were very well attended. So for an Azeri urban center to go so heavily for Ahmadinejad just makes no sense. In past elections, Azeris voted disproportionately for even minor presidential candidates who hailed from that province.
2. Ahmadinejad is claimed to have taken Tehran by over 50%. Again, he is not popular in the cities, even, as he claims, in the poor neighborhoods, in part because his policies have produced high inflation and high unemployment. That he should have won Tehran is so unlikely as to raise real questions about these numbers. [Ahmadinejad is widely thought only to have won Tehran in 2005 because the pro-reform groups were discouraged and stayed home rather than voting.)
3. It is claimed that cleric Mehdi Karoubi, the other reformist candidate, received 320,000 votes, and that he did poorly in Iran’s western provinces, even losing in Luristan. He is a Lur and is popular in the west, including in Kurdistan. Karoubi received 17 percent of the vote in the first round of presidential elections in 2005. While it is possible that his support has substantially declined since then, it is hard to believe that he would get less than one percent of the vote. Moreover, he should have at least done well in the west, which he did not.
4. Mohsen Rezaie, who polled very badly and seems not to have been at all popular, is alleged to have received 670,000 votes, twice as much as Karoubi.
5. Ahmadinejad’s numbers were fairly standard across Iran’s provinces. In past elections there have been substantial ethnic and provincial variations.
6. The Electoral Commission is supposed to wait three days before certifying the results of the election, at which point they are to inform Khamenei of the results, and he signs off on the process. The three-day delay is intended to allow charges of irregularities to be adjudicated. In this case, Khamenei immediately approved the alleged results.

I am aware of the difficulties of catching history on the run. Some explanation may emerge for Ahmadinejad’s upset that does not involve fraud. For instance, it is possible that he has gotten the credit for spreading around a lot of oil money in the form of favors to his constituencies, but somehow managed to escape the blame for the resultant high inflation. But just as a first reaction, this post-election situation looks to me like a crime scene. And here is how I would reconstruct the crime. As the real numbers started coming into the Interior Ministry late on Friday, it became clear that Mousavi was winning. Mousavi’s spokesman abroad, filmmaker Mohsen Makhbalbaf, alleges that the ministry even contacted Mousavi’s camp and said it would begin preparing the population for this victory. The ministry must have informed Supreme Leader Ali Khamenei, who has had a feud with Mousavi for over 30 years, who found this outcome unsupportable. And, apparently, he and other top leaders had been so confident of an Ahmadinejad win that they had made no contingency plans for what to do if he looked as though he would lose. They therefore sent blanket instructions to the Electoral Commission to falsify the vote counts. This clumsy cover-up then produced the incredible result of an Ahmadinejad landlside in Tabriz and Isfahan and Tehran. The reason for which Rezaie and Karoubi had to be assigned such implausibly low totals was to make sure Ahmadinejad got over 51% of the vote and thus avoid a run-off between him and Mousavi next Friday, which would have given the Mousavi camp a chance to attempt to rally the public and forestall further tampering with the election. This scenario accounts for all known anomalies and is consistent with what we know of the major players.”

SUGGESTIONS OF DATA MANIPULATION
http://www.fivethirtyeight.com/2009/06/another-iranian-oddity.html
http://www-personal.umich.edu/~wmebane/
http://andrewsullivan.theatlantic.com/the_daily_dish/2009/06/more-statistical-analysis.html
“Professor Mebane has updated his analysis to incorporate 2005 second round district-level data. In 2005 some opposition politicians called for a boycott of the election. The surge in turnout in 2009 is widely interpreted as meaning that many who boycotted in 2005 decided to vote in 2009. Hence towns that have high ratios should have lower proportions of the vote for Ahmadinejad (the coefficient should be negative). He then tested this hypothesis using an over-dispersed binomial model, finding that it worked well for most districts. Suspiciously however, whenever this data significantly deviated from his model, it was in Ahmadinejad’s favor.”

OFFICIAL: IN 50 CITIES TURNOUT WAS OVER 100%
http://www.presstv.ir/detail/98711.htm?sectionid=351020101
Guardian Council: Over 100% voted in 50 cities / 21 Jun 2009

Iran’s Guardian Council has suggested that the number of votes collected in 50 cities surpass the number of people eligible to cast ballot in those areas. The council’s Spokesman Abbas-Ali Kadkhodaei, who was speaking on the Islamic Republic of Iran Broadcasting (IRIB) Channel 2 on Sunday, made the remarks in response to complaints filed by Mohsen Rezaei — a defeated candidate in the June 12 Presidential election. “Statistics provided by the candidates, who claim more than 100% of those eligible have cast their ballot in 80-170 cities are not accurate — the incident has happened in only 50 cities,” Kadkhodaei said. Kadkhodaei further explained that the voter turnout of above 100% in some cities is a normal phenomenon because there is no legal limitation for people to vote for the presidential elections in another city or province to which people often travel or commute. According to the Guardian Council spokesman, summering areas and places like district one and three in Tehran are not separable. The spokesman, however, said that the vote tally affected by such issues could be over 3 million and would not noticably affect the outcome of the election.

He, however, added that the council could, at the request of the candidates, re-count the affected ballot boxes, and determine ” whether the possible change in the tally is decisive in the election results,” reported Khabaronline. Three of the four candidates contesting in last Friday’s presidential election cried foul, once the Interior Ministry announced the results – according to which incumbent President Mahmoud Ahmadinejad was declared the winner with almost two-thirds of the vote. Rezaei, along with Mir-Hossein Mousavi and Mehdi Karroubi, reported more than 646 ‘irregularities’ in the electoral process and submitted their complaints to the body responsible for overseeing the election — the Guardian Council.

BAD MATH
http://www.washingtonpost.com/wp-dyn/content/article/2009/06/20/AR2009062000004.html
The Devil Is in the Digits
BY Bernd Beber and Alexandra Scacco / June 20, 2009

Since the declaration of Mahmoud Ahmadinejad’s landslide victory in Iran’s presidential election, accusations of fraud have swelled. Against expectations from pollsters and pundits alike, Ahmadinejad did surprisingly well in urban areas, including Tehran — where he is thought to be highly unpopular — and even Tabriz, the capital city of opposition candidate Mir Hussein Mousavi’s native East Azarbaijan province.

Others have pointed to the surprisingly poor performance of Mehdi Karroubi, another reform candidate, and particularly in his home province of Lorestan, where conservative candidates fared poorly in 2005, but where Ahmadinejad allegedly captured 71 percent of the vote. Eyebrows have been raised further by the relative consistency in Ahmadinejad’s vote share across Iran’s provinces, in spite of wide provincial variation in past elections.

These pieces of the story point in the direction of fraud, to be sure. They have led experts to speculate that the election results released by Iran’s Ministry of the Interior had been altered behind closed doors. But we don’t have to rely on suggestive evidence alone. We can use statistics more systematically to show that this is likely what happened. Here’s how.

We’ll concentrate on vote counts — the number of votes received by different candidates in different provinces — and in particular the last and second-to-last digits of these numbers. For example, if a candidate received 14,579 votes in a province (Mr. Karroubi’s actual vote count in Isfahan), we’ll focus on digits 7 and 9.

This may seem strange, because these digits usually don’t change who wins. In fact, last digits in a fair election don’t tell us anything about the candidates, the make-up of the electorate or the context of the election. They are random noise in the sense that a fair vote count is as likely to end in 1 as it is to end in 2, 3, 4, or any other numeral. But that’s exactly why they can serve as a litmus test for election fraud. For example, an election in which a majority of provincial vote counts ended in 5 would surely raise red flags.

Why would fraudulent numbers look any different? The reason is that humans are bad at making up numbers. Cognitive psychologists have found that study participants in lab experiments asked to write sequences of random digits will tend to select some digits more frequently than others.

So what can we make of Iran’s election results? We used the results released by the Ministry of the Interior and published on the web site of Press TV, a news channel funded by Iran’s government. The ministry provided data for 29 provinces, and we examined the number of votes each of the four main candidates — Ahmadinejad, Mousavi, Karroubi and Mohsen Rezai — is reported to have received in each of the provinces — a total of 116 numbers.

The numbers look suspicious. We find too many 7s and not enough 5s in the last digit. We expect each digit (0, 1, 2, and so on) to appear at the end of 10 percent of the vote counts. But in Iran’s provincial results, the digit 7 appears 17 percent of the time, and only 4 percent of the results end in the number 5. Two such departures from the average — a spike of 17 percent or more in one digit and a drop to 4 percent or less in another — are extremely unlikely. Fewer than four in a hundred non-fraudulent elections would produce such numbers.

As a point of comparison, we can analyze the state-by-state vote counts for John McCain and Barack Obama in last year’s U.S. presidential election. The frequencies of last digits in these election returns never rise above 14 percent or fall below 6 percent, a pattern we would expect to see in seventy out of a hundred fair elections.

But that’s not all. Psychologists have also found that humans have trouble generating non-adjacent digits (such as 64 or 17, as opposed to 23) as frequently as one would expect in a sequence of random numbers. To check for deviations of this type, we examined the pairs of last and second-to-last digits in Iran’s vote counts. On average, if the results had not been manipulated, 70 percent of these pairs should consist of distinct, non-adjacent digits.

Not so in the data from Iran: Only 62 percent of the pairs contain non-adjacent digits. This may not sound so different from 70 percent, but the probability that a fair election would produce a difference this large is less than 4.2 percent. And while our first test — variation in last-digit frequencies — suggests that Rezai’s vote counts are the most irregular, the lack of non-adjacent digits is most striking in the results reported for Ahmadinejad.

Each of these two tests provides strong evidence that the numbers released by Iran’s Ministry of the Interior were manipulated. But taken together, they leave very little room for reasonable doubt. The probability that a fair election would produce both too few non-adjacent digits and the suspicious deviations in last-digit frequencies described earlier is less than .005. In other words, a bet that the numbers are clean is a one in two-hundred long shot.

{Bernd Beber and Alexandra Scacco, Ph.D. candidates in political science at Columbia University, will be assistant professors in New York University’s Wilf Family Department of Politics this fall.}

WHAT TO DO?
http://www.globalsecurity.org/intell/world/iran/links.htm

FAKING THE WEATHER, AND OTHER STRATEGIES
http://www.theundergroundnation.com/iran/
How to Confuse Iranian Censors on Twitter

Very briefly, preceding the recent elections in Iran, many leftists had been organizing protests and what not via facebook and other social networks. However, Iranian censors quickly jumped on this trend and blocked facebook’s site from the entire country. Following the elections, protests ensued and were organized and publicized on Twitter, which the luddite bureaucracy failed to block in time. Iranian censors are now combing the twitter network for dissidents in a Stasi like fashion. In retaliation, people around the world have tried to throw a wrench in their efforts:

1. Change Your Time zone and Home City:
Click Twitter Settings in the top right, change your Home City to Tehran and your time zone to GMT +3:30 Tehran Time. It’s likely that the first method of filtering will relate to the location of the user. If we flood twitter with accounts that all appear to be from Tehran, we build a bigger data cloud that the censors have to sift through in their search for Iranian dissidents. This is not full proof, but will likely buy them some time in the same way that searching “John Smith” on face book will yield a frustratingly large selection of people to search through.

2. Change the Name Associated with your Twitter Account
Click Twitter Settings and change your birth name to something Iranian. You can find a list of Iranian names here: http://tehran.stanford.edu/Information/Iranian_names.html . Should the censors end up on your account, your American (or whatever) name will be a likely clue that you aren’t worth their time.

3. Repost Content
Follow someone posting from Iran and repost their material. Content is the ultimate tell tale of who is and isn’t a dissident in this situation. By reposting someone else’s content censors be forced to look at the timestamp of the tweet to decipher who is the original writer. Ideally, your follow up tweet would be so close to the initial posting time that the two become indiscriminate. You can also go a step further and, if they have uploaded a photo, save the file and re upload it via your account (merely linking to their account is liable to clue the censors in). Edit: Be careful in reposting, there have been reports of false accounts going up to provide misinformation to the prostestors. More info here: http://emsenn.com/iran.php . Do not repost things verbatim, paraphrase. Also, when retweeting to not use the original posters name.

4. Maintain the ‘false data cloud’
Even in the event that Iran blocks twitter as they did Facebook, it is likely that the censors will still have access to the site, and will continue to comb it. Sustaining your efforts could serve to further delay the censors. Obviously, none of these methods are full proof. The idea is to buy any of the said dissidents time to hide, evacuate or so on… “If only for an instant, we will unite what you have divided. Our calls will be heard from shore to shore, through borders, races, classes and languages, For we bear a torch that burns one hundred thousand years strong, we carry the flame of revolution.”

AS PER STATE DEPT REQUEST
http://blog.twitter.com/2009/06/down-time-rescheduled.html
Down Time Rescheduled / June 15, 2009
“A critical network upgrade must be performed to ensure continued operation of Twitter. In coordination with Twitter, our network host had planned this upgrade for tonight. However, our network partners at NTT America recognize the role Twitter is currently playing as an important communication tool in Iran. Tonight’s planned maintenance has been rescheduled to tomorrow between 2-3p PST (1:30a in Iran).”

THE SYRIAN RAVE SCENE, + SIMILAR AREAS OF RESEARCH
http://www.state.gov/s/p/115458.htm
http://www.colbertnation.com/the-colbert-report-videos/147625/january-15-2008/jared-cohen
http://www.newyorker.com/talk/2007/11/05/071105ta_talk_lichtenstein
http://www.mediabistro.com/baynewser/twitter/profile_the_kid_at_the_state_department_who_figured_out_the_iranians_should_be_allowed_to_keep_tweeting_119136.asp
The Kid at State Who Figured Out the Iranians Should Be Allowed to Keep Tweeting / Jun 17 2009

Imagine our surprise, then, when we learned that, instead, it was a 27-year-old whiz kid whose job is to advise the State Department on how to use social media to promote U.S. interests the Middle East. And imagine our further surprise when we learned this young gentleman wasn’t one of Barack Obama’s social media geniuses, but instead was a Condi Rice pick hired specifically to advise the State Department on young people in the Middle East and how to “counter-radicalize” them. According to the New York Times, it was Jared Cohen, a member of the Policy Planning Staff, who contacted Twitter on Monday, inquiring about their plan to perform maintenance in what would be the middle of the day, Iran time. Following that contact, Twitter decided to postpone their maintenance so that it would take place in the middle of the night Iran-time, even though that meant it would be the middle of the day U.S. time. The Times noted that the move marked “the recognition by the United States government that an Internet blogging service that did not exist four years ago has the potential to change history in an ancient Islamic country.” So we wondered, who was this young guy with this remarkable insight?

Cohen was only 24 when he was hired into the Policy Planning Staff back in 2006. He’d received an undergraduate degree from Stanford and a master’s degree from Oxford, where he’d been on a Rhodes Scholarship. Oh, and he’d also talked his way into a visa for Iran (according to a December 2007 New Yorker profile), where he met young people his own age who threw underground house parties and made alcohol in bathtubs. “Iranian young people are one of the most pro-American populations in the Middle East,” Cohen told the New Yorker. “They just don’t know who to gravitate around, so young people gravitate around each other.” Cohen compiled his observations from that trip—and others to Lebanon, Syria, and Iraq—into a book released by Penguin, titled Children of Jihad: A Young American’s Travels Among the Youth of the Middle East (selected, by the way, as one of Kirkus Review’s “Best Books of 2007”).

The Times describes Cohen’s job today as “working with Twitter, YouTube, Facebook and other services to harness their reach for diplomatic initiatives in Iraq, Afghanistan and elsewhere.” In May, Cohen, whom CNN chose as one of its “Young People Who Rock,” organized a trip to Iraq for Twitter CEO Jack Dorsey and other new media executives “to discuss how to rebuild the country’s information network and to sell the virtues of Twitter,” as the Times put it. According to Federal News Radio, Dorsey has now been working with mobile companies in the Middle East “to establish a short code so that Iraqis can get on Twitter without actually having to have access to the internet.” “I’m a strong believer in the fact that access drives innovation,” Cohen told Federal News Radio. “In order for young people to have their innovative minds tapped into, they need to have access to the tools to do it, and I believe that cellphones and the internet will bring that.” Given Cohen’s background, it’s not surprising that he was the one to make the call on (and to) Twitter. It’s also an interesting indication about how these young kids, with their social media, might actually understand a thing or two about how the world works and how to get it to move in the direction you want it to go.

#CNNFAIL
http://cnnfail.com/

LIST OF DISINFORMATION AGENTS ON TWITTER
http://twitspam.org/?p=1403
http://blogs.wsj.com/digits/2009/06/22/battling-spam-in-iran-election-tweets/
http://blog.foreignpolicy.com/posts/2009/06/18/irans_fake_twitter_feeds

“Since Twitter started getting coverage for its role in the goings-on in Iran, commentators have expressed concern over which Twitter feeds are fake, and whether Twitter could be used to spread disinformation. The unofficial Twitter watchdog Twitspam has a list of “fake Iran election tweeters,” and their feeds make for fascinating examples of reverse propaganda in action.

Their techniques have different approaches and levels of subtelty. Some simply make up silly stories, like one user’s claim “BREAKINGNEWS: Ahmedinejads plane take off from Russia 2 hours ago & lost over BlackSea! Does he know how to swim? confrmation?” or another’s insistence that “Mussavi concedes, pleads halt to protest.” Others take a more egotistical approach, such as this user generously volunteering to become the leader: “Saturday – small groups organized by “ERAN SPAHBOD RUSTAM” will attack government buildings and basij.women,children stay home.” Finally, some Tweeters, in their rush to spread violence, seem rather unclear as to correct grammatical usage of Arabic words: “Get a mask and gloves – lets intifada tonight on the streets of Teheran – My group will barricade one street. Make your group 2. kick ass”

The most pernicious fake Twitter user, though, has been Persian_Guy, who’s not only provided fake news ( “Mussavi overheard: ‘We don’t need a black man’s help, that’s humiliating, at least not arab.'”) and calls for violence (“”non-Iranian Arabs waving Hamas/Hezbollah flags around the protests. Kill Arabs now, they are scums!”), but has even brought Twitter into the fake narrative. According to this user, “Twitter’s staff are ecstatic by what’s happening in Iran, “We’re so glad there’s chaos in Iran, finally Twitter is ‘useful.'”” Somehow, I doubt that will endear him to his fellow Tweeters.”

BATTLE NARRATIVE
http://www.thedailybeast.com/blogs-and-stories/2009-06-16/how-irans-hackers-killed-big-brother/
How Iran’s Hackers Killed Big Brother
BY Douglas Rushkoff / 6.16.09

“Perhaps the best indication for Americans that something important is going on in Iran right now is the fact that Twitter has delayed a scheduled downtime for maintenance in order for Iranians and others involved in the post-election digital melee to keep at it. For anyone lacking a Twitter feed and thus missing the intense virtual crossfire, what’s happening is nothing short of a test of Internet users’ ability to challenge not only a regime’s power over an election, but over the network itself. The effort alone constitutes a victory. Unlike the United States, where Facebook friends, Meetup groups, and other online innovations successfully elected a candidate who (at least initially) lacked top-down support, the Iranian power structure has less compunction about snuffing digital democracy. Incumbent Mahmoud Ahmadinejad is widely believed to have shut down Iranian access to Facebook as soon as it was clear his opponent’s supporters were using the social network to organize rallies and motivate voters. Not that Mousavi’s 36,000 Facebook friends at that point would have led to the undeniable landslide the opposition leader would have needed to actually win—but the heavy-handed gesture hinted at what was to come. It was the opening salvo in a digital war with global implications, and a blueprint for the democratizing influence of the Internet.

Now that Ahmadinejad has claimed victory, the blogosphere, Twitterverse, and the rest of the social-networking sphere is on virtual fire. Tens of thousands of messages per minute condemning the results as fraud are passing to and from Iran, as angry Iranians and sympathetic outsiders exchange datapoints, analysis, and on-the-ground coordinates. While only a small minority of these posts are from people actually organizing protests, rooting out provocateurs, or sending aid to victims of violence, it’s too easy to discount the more virtual interactions as trivial. Ahmadinejad sure hasn’t. His regime is working hard to stifle protest without completely unplugging Iran’s telecommunications infrastructure. Their tactics: limit cell service to in-country only, shut off text messaging, block transmissions to and from Facebook, and even shut down access to Friendfeed, a messaging aggregator extremely popular in Iran. They’re also identifying and then blocking messages from offending users and Web sites.

Iran’s Internet-savvy youth have fought back, however, exploiting “proxy servers” to make their messages appear to be coming from different sources, and exchanging the digital addresses of the ever-changing list of servers still capable of transmitting packets. Iran’s government counterattacked with a blockade, closing off the four Internet access routes it controlled, leaving just one pipe through Turkey for messages to breach it. One particularly aggressive opposition group responded by facilitating a “denial of service” attack on the Iranian government’s servers. All over the Internet, users of all nations can get easy instructions for how to install a small program that “pings” the offending servers so frequently that they crash, unable to handle the incoming requests. Of course, the problem with this strategy is that it also overloads the few, compromised pipelines into and out of the country.”

USEFUL? [INTERNET ARCHIVE]
http://archive.org

DIY SUBTITLING TOOL
http://www.overstream.net/

GOOGLE QUICKLY LEARNS PERSIAN
http://googleblog.blogspot.com/2009/06/google-translates-persian.html
http://translate.google.com/?sl=fa&tl=en#

CYBERWAR FOR BEGINNERS
http://reinikainen.co.uk/2009/06/iranelection-cyberwar-guide-for-beginners/
“The purpose of this guide is to help you participate constructively in the Iranian election protests through twitter.
1.Do NOT publicise proxy IP’s over twitter, and especially not using the #iranelection hashtag. Security forces are monitoring this hashtag, and the moment they identify a proxy IP they will block it in Iran. If you are creating new proxies for the Iranian bloggers, DM them to @stopAhmadi or @iran09 and they will distributed them discretely to bloggers in Iran.
2. Hashtags, the only two legitimate hashtags being used by bloggers in Iran are #iranelection and #gr88, other hashtag ideas run the risk of diluting the conversation.
3. Keep you bull$hit filter up! Security forces are now setting up twitter accounts to spread disinformation by posing as Iranian protesters. Please don’t retweet impetuosly, try to confirm information with reliable sources before retweeting. The legitimate sources are not hard to find and follow.
4. Help cover the bloggers: change your twitter settings so that your location is TEHRAN and your time zone is GMT +3.30. Security forces are hunting for bloggers using location and timezone searches. If we all become ‘Iranians’ it becomes much harder to find them.
5. Don’t blow their cover! If you discover a genuine source, please don’t publicise their name or location on a website. These bloggers are in REAL danger. Spread the word discretely through your own networks but don’t signpost them to the security forces. People are dying there, for real, please keep that in mind.
6. Denial of Service attacks. If you don’t know what you are doing, stay out of this game. Only target those sites the legitimate Iranian bloggers are designating. Be aware that these attacks can have detrimental effects to the network the protesters are relying on. Keep monitoring their traffic to note when you should turn the taps on or off.
7. Do spread the (legitimate) word, it works! When the bloggers asked for twitter maintenance to be postponed using the #nomaintenance tag, it had the desired effect. As long as we spread good information, provide moral support to the protesters, and take our lead from the legitimate bloggers, we can make a constructive contribution.
Please remember that this is about the future of the Iranian people, while it might be exciting to get caught up in the flow of participating in a new meme, do not lose sight of what this is really about.”

ANONYMOUS
http://anonnet.org/webirc/iran
http://www.whyweprotest.net/en/
http://iran.whyweprotest.net/showthread.php?t=29
Secure Connection Tools
“This site was made by people – ‘hacktivists’ – who are imbued with a set of skills related to Internet Technology, who saw what the Iranian government was doing to it’s people to suppress it’s messages for democracy and it’s hope for a free and fair electoral process. So, what I guess you could say is that computer nerds around the world saw what was unfolding and thought “We should help these people, we have the ability and the tools …why not help them?””

FREE CONSTANTLY-CHANGING IPs
http://iprental.com/
“Free Accounts for Iranian Citizens: We are offering free IPRental accounts to all Iranian citizens who want completely anonymous web browsing via untraceable USA IP addresses. Change Your IP Address Instantly….Constantly : If you have a need to access the web from different IP addresses, IPRental is your answer! Our revolutionary IP address rotation service allows you to connect to an ever-changing pool of fresh IPs for 100% anonymous web surfing, effective classifieds postings, creating ratings reviews and comments, accessing USA sites from overseas, or any other reason you may need to change or hide your IP address. IPRental is NOT JUST ANOTHER PROXY SERVICE which just gives you access to as many static IPs as they control, all of which are typically in a contiguous block and already blocked by the sites you wish to access. Instead IPRental gives you access to a vast ever-changing pool of non-contiguous residential USA IP addresses, allowing you to change your IP address whenever you like! To get your account email us at: iran [at] iprental [dot] com ”

HOW TO SETUP A PROXY FOR IRAN CITIZENS
http://dev.austinheap.com/iran/squid-iran-ideal.txt
http://proxyheap.austinheap.com/phase1.php
http://proxyheap.austinheap.com/checker.php
http://blog.austinheap.com/2009/06/15/how-to-setup-a-proxy-for-iran-citizens/
From Austin Heap, who setup the instructions: “Please don’t run this on a machine that you’re worried about or is used for production sites; and take basic security precautions, ie: moving ftp off the default port, using a firewall package, etc.”

http://iran.whyweprotest.net/forumdisplay.php?f=38
http://iran.whyweprotest.net/forumdisplay.php?f=35
http://iran.whyweprotest.net/forumdisplay.php?f=16

PROXY SERVER AS WEAPON
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/06/17/MN75188C6K.DTL
S.F. techie helps stir Iranian protests
BY Matthew B. Stannard / June 17, 2009

Little about Austin Heap’s first online venture, a site hosting free episodes of the cartoon “South Park,” suggested he would one day use his computer skills to challenge a government. But for the past few days, Heap, an IT director in San Francisco, has been on the virtual front lines of the crisis in Iran, helping people there protest the presidential election, which opponents of the incumbent regime maintain was fraudulent. Hundreds of thousands of demonstrators have taken to the streets since Saturday, organizing and sharing news on sites such as Twitter, Facebook and YouTube. The Iranian government, in response, has blocked those sites, along with mobile phone service and other communications tools. But Iran has the highest number of bloggers per capita in the world, said Abbas Milani, director of the Iranian Studies Program at Stanford University, and they were undeterred. “People used Twitter, and people used their cell phones and used all kinds of mechanisms.”

Heap, 25, has never followed Iranian news much. But as reports of the election began dominating Twitter – but not, he believed, American mainstream news – Heap felt the same defiant frustration that led him in the past to butt heads with the music and movie industry associations by creating file-sharing sites. “I believe in free information,” he said Tuesday. “And I especially have no room for a tyrannical regime shutting up a whole population. I was 13 and able to take on a huge company like Comedy Central from my bedroom. With a computer, everybody has the power to do that.”

Proxy server a weapon
Heap’s weapon in the past few days was the proxy server, a computer configured to act as an intermediary between a computer user and the Internet. Such servers have many legitimate functions, such as speeding response times, and some illegitimate ones, such as helping spammers hide their identities. What interested Heap was the use of a proxy server to bypass censorship. Properly configured, a proxy server could identify Web surfers in Iran and route them to Twitter and other sites the government had restricted. People around the world were posting network addresses for such proxies on Twitter and elsewhere, Heap said, but there was no organization and the servers were unpredictable.

Simple first effort
Heap’s first effort was simple: a list of working proxy servers that he published Sunday afternoon. Almost immediately, those servers began to vanish. Perhaps spammers or pornographers, who constantly cruise the Internet looking for open proxies, were overwhelming the system, he thought.

It was only later that Iranians on Twitter warned Heap – and others publishing lists of open proxies – that by posting public lists they were exposing those proxies to attack. “I really didn’t expect their government to be this on top of it,” he said. “I know everybody knows about Twitter. But I didn’t think it was going to be to this extent.” So Heap took another tack, creating a password-protected list of proxy servers and giving only a handful of people access to each, reducing the possibility of a widespread attack. On his blog, he published simple instructions for configuring proxy servers.

Heap wasn’t the only techie setting up or promulgating proxies, but his easy-to-follow instructions quickly spread through Twitter and the blogosphere. Suddenly, people were sending him addresses for new proxy servers in Australia, Japan and Mexico. Traffic on his blog grew from a couple of dozen unique users a day to more than 100,000 in 24 hours. A woman in Canada asked him for help getting her Iranian family back online. On Twitter, a Tehran resident posted: “@austinheap Thank you for all you are doing to help my people. This support and kindness will never be forgotten.”

‘Almost made me cry’
“Most of the reactions from Iran have almost made me cry,” he said. “Having somebody tell me that their family thanks me – that’s the power of the Internet.” The last 24 hours have been less fun, Heap said. He’s had to figure out which of the professed Iranians contacting him he can trust and which might be seeking access to a proxy service to shut it down. Monday night, his site came under a denial-of-service attack – a flood of phantom file requests from the United Kingdom designed to bring his system to its knees. Tuesday morning he received his first e-mailed threats. Still, he thinks he’s doing the right thing. “If I can help them get their message out and help them tell the story and step back, that’s my job,” he said. “(But) my mom is terrified right now.”

By mid-Tuesday, Iran appeared to be blocking all non-encrypted Internet traffic, making the 1,600 new proxy-server addresses now in his in-box temporarily useless. But Heap was working with other professionals and companies seeking new ways to reconnect. “I haven’t been in the middle of an outpouring like this, ever. And it makes me incredibly proud of the IT community,” he said. While it’s not clear how much impact Heap’s efforts are having, history may look back on his tweets about proxy servers as a profound moment in political evolution, said Stanford’s Milani. “The regime probably doesn’t recognize it, but I can tell you, the marriage of civil disobedience with the social networking savvy is the death of despotism in these places,” he said. “If you combine these two, you have a very potent force.”

PROXY KITS
http://proxy.org/
http://ultrareach.com/
http://www.howcast.com/videos/90601-How-To-Circumvent-an-Internet-Proxy
http://iran.sharearchy.com/#proxies
http://www.iranproxy.org/
http://www.twitter.com/IranAnon

AD HOC MESH NETWORKS
http://www.olsr.org/
http://en.wikipedia.org/wiki/Optimized_Link_State_Routing_Protocol
http://en.wikipedia.org/wiki/B.A.T.M.A.N.
http://www.open-mesh.net/
http://nightwing.lugro-mesh.org.ar/en/
http://www.blogin.it/

PSIPHON
http://en.wikipedia.org/wiki/Psiphon
http://www.psiphon.ca/

OPERA UNITE
http://www.oblomovka.com/wp/2009/06/16/wanted-spartacus-an-opera-unite-web-proxy-for-iran/

NETWAR IN THE EMERALD CITY
http://www.rand.org/pubs/monograph_reports/MR1382/MR1382.ch7.pdf
[RAND report by Paul de Armond in 2001 about 1999 WTO protest in Seattle]

BEAMING IN BROADBAND BY SATELLITE?
http://www.motherjones.com/mojo/2009/06/obama-and-iran-and-intelligence
“By the way, at the same press briefing, one reporter asked if the White House was considering beaming broadband capability into Iran via satellite so the opposition forces would be able to communicate with themselves and the outside world. Gibbs said he didn’t know such a thing was possible. (Is it?) But he said he would check on the technological feasibility and get back with an answer. That caused some head-scratching in the press room. If the United States could do that and was planning on doing so, wouldn’t this be one of those intelligence matters that Gibbs won’t discuss? But maybe some telecom entrepreneur or Silicon Valley whiz-kids can make this happen. The Google guys? The Twitter people? XM Radio? This is the sort of covert action that could be worth outsourcing—with the project manager actually taking full credit. Think of the endorsement possibilities: the Iranian Revolution…Brought to You by DIRECTV.”

PIRATE BAY IPREDATOR EFFORT TO ENCRYPT ALL INTERNETS
http://thepiratebay.org/blog/160
http://newteevee.com/2008/07/09/the-pirate-bay-wants-to-encrypt-the-entire-internet/
http://www.tfr.org/wiki/index.php?title=Technical_Proposal_(IPETEE)

GREAT FIREWALL OF CHINA WORKAROUNDS
http://chinesewall.ccc.de/index-en.html

CIVIL RIGHTS PROXY SPAM
http://yro.slashdot.org/story/07/08/20/1247230/Should-We-Spam-Proxies-to-China
Should We Spam Proxies to China? from the or-just-viagra-ads dept.
BY CmdrTaco / August 20 2007

“Frequent Slashdot Contributor Bennett Haselton is back with a story about fighting censorship with spam. He starts “Is it OK to send unsolicited e-mail to users in China, Iran, and other censored countries, telling them about new proxy sites for getting around Internet censorship? I hasten to add that I have NOT done this, am not planning on doing it and would not have any idea how to go about it anyway. Between the various companies that offer proxy services, I don’t know of anyone who is doing it (no, not even people who swore me to secrecy about it). But I think the question involves ethical issues that would not apply to most discussions of spam.”

It doesn’t seem that you could use conventional channels to advertise proxies to Chinese and Iranian users. If you bought ads on Google AdSense or a similar ad-serving network, China might threaten to block all ads served from that network unless they started screening out ads for anti-censorship services (especially in the case of Google, which seems to comply with most Chinese self-censorship demands). Then there’s the question of how to charge Chinese and Iranian users even small amounts for the services. It would not be a good idea to have the charges show up on their credit cards issued by Chinese banks. Paying small amounts with PayPal would be a little bit better since the charge would simply show up from “PayPal”, without revealing the recipient. And since all traffic to the PayPal site is encrypted over SSL, Chinese censors wouldn’t be able to detect or block users who were paying to circumvent the Great Firewall, unless they blocked all traffic to the PayPal site. But could PayPal be leaned on to provide the identities of Chinese users who were paying for circumvention services, under threat of having their site blocked otherwise? And the biggest impediment of all would be that once you start charging even $1 for a service, there’s a huge dropoff in people willing to sign up, even if they would have to spend much more than $1 worth of effort to find a free alternative somewhere else.

So, if circumvention services provide enough benefit to Chinese users, maybe spamming proxy sites would do more good than harm, and if the lack of freedom in the country means that you could not sell or advertise the services to Chinese users by conventional means, maybe that means spamming the proxy locations would be the only way to do this.”

THE FAX EFFECT
http://www.jackmyers.com/commentary/media-business-bloggers/46726327.html
Tiananmen Square and Technology
By David Houle / June 3, 2009

It was 20 years ago this week that the demonstrations in Tiananmen Square turned violent. After days of open demonstrations, the Chinese government had had enough and sent in the army. This led to one of the most iconic visual images of protest in recent decades: a single man standing right in front of four tanks, daring them to run him over.

The image is one that anyone over the age of 35 can remember as it flashed around the world, and represented the individual facing down superior force in a literal stand for freedom. It was this image that gave the communist Chinese government its first taste of international outrage as it was slowly moving toward a more open, capitalistic society. It was a government and a country unused to global scrutiny. While the crackdown on protestors continued, it was done quietly and out of camera range of foreigners and journalists. A single image had flashed around the world and had left an indelible mark on human consciousness.

One of the dynamics that led this single man to stand in front of the tanks was the impact of technology. When the government moved to end the demonstrations, it blocked all known communications channels, isolating the demonstrators. International TV and radio was jammed so the demonstrators had no idea whether there was support for them around the world. One thing the government missed was the new communications technology called the fax machine. Evidently in offices near Tiananmen Square and in universities there were fax machines. They were used by demonstrators to get the word out to the world. Much more importantly, the world responded, sending faxes by the hundreds, letting the demonstrators know that the whole world was watching. This is what gave the demonstrators strength. This is what emboldened the young man to stand in front of the tanks.

Fax technology was just a few years old in 1989. The fax machine first entered the office in the mid 1980s and didn’t make it into the home until the 1990s. It was this brand new technology of sending documents through phone lines that fueled the demonstrations. There were only a few million cell phones in the world in 1989, and certainly none available for the demonstrators at Tiananmen Square. So it was the fax machine using land lines that kept hope alive in Beijing.

What is striking is how much transformation in communications technology humanity has experienced in the 20 years since 1989. In 1995 there were 89 million cell phone subscribers in the world, in 2005 there were 2 billion, and today there are 4 billion! In 1995, the year the first commercial browser came to market, there were some 45 million people using the Internet. By 2005 that number had crossed 1 billion and there are close to 2 billion today. Cable and satellite TV was still in early stage growth in 1989, today they are global in reach. In 1989, the few laptops in the world were large, bulky and heavy and there weren’t very many of them.

Humanity is more globally connected than it has ever been. Terrorist attacks are caught on cell phone cameras and telecast to the world. Network news anchors speak live via videophone to correspondents anywhere in the world. Internet services such as Skype allow us all to cheaply communicate globally via video. Bandwidth expansion and data compression are such that a month’s worth of videos from YouTube equals what coursed through the Internet the entire year of 2000. We are constantly connected.

Communications technology may now provide us with more information than can possibly be absorbed and digested. The electronic feed trough of information is always on, and this can feel overwhelming. We move from the delight in access and availability to the desire to totally unplug. The good news for freedom and openness is that, with each technological step forward, barriers fall, dictators’ control lessens, ignorance decreases and people can take ever more informed actions.

The fax technology of 1989 provided the demonstrators with the knowledge that the whole world was watching, allowing one man to take an informed action that single-handedly stopped a phalanx of tanks. That was 20 years ago this week. How far we have traveled since then.

BONUS : UNVERIFIED PHONE NUMBERS
http://213.163.90.48/
“Call these numbers to discuss the Iranian elections! Do NOT do from within Iran.”
President : 00989121196107 / 00989123274006
Esfandiyar Rahim-Masha’i – Vice President of Iran : r_mashaee@ichto.ir
Council of Guardians : 00982166401012
Mojtaba Samareh-Hashemi – President’s trusted advisor and campaign manager : 00989121081443
Ali Akbar Javanfekr – Press advisor to the President : aajavan321@hotmail.com / 00989123279500 (telephone) / 00982164454028 (fax)
Gholamhoseyn Elham – Government spokesperson : 00989121486826

FAN MAIL
http://www.associatedcontent.com/article/1848399/what_you_can_do_to_help_iran_election.html?cat=75
Amnesty International USA suggests the following:

write officials at: info_leader@leader.ir

Supreme Leader of the Islamic Republic
Ayatollah Sayed ‘Ali Khamenei,
The Office of the Supreme Leader
Islamic Republic Street –
End of Shahid Keshvar Doust Street,
Tehran, Islamic Republic of Iran

Minister of the Interior
Sadegh Mahsouli
Dr Fatemi Avenue
Tehran, Islamic Republic of Iran
Fax: +98 21 8 896 203

FURTHER READING [HAVEN WENT OUT OF BUSINESS]
http://www.sealandgov.org/history.html
http://interviews.slashdot.org/story/00/07/02/160253/Answers-From-Sealand-CTO-Ryan-Lackey-Responds
Answers From Sealand HavenCo CTO Ryan Lackey / July 03 2000

“A few weeks ago, you asked questions of Ryan Lackey, CTO for HavenCo, a company dedicated to providing secure off-shore data hosting from Sealand, a principality off the coast of England. Ryan has lately survived dental emergencies, the loss of a laptop (it dropped into the North Sea — how many people can say that?) and other stresses, but he’s followed through with some interesting answers. He even has some ideas for how you can make a lot of money, and lists the tools you need to start your own data haven. Kudos to Ryan for taking the time to answer so thoroughly.

[by Jamie Zawinski] Q: Why do you need physical security at all?
Lots of people are asking questions about physical security, and how you’re going to repel missiles and commandos, but I’ve got the opposite question: why do you need physical security and a physical location at all? Would not the best way to protect your customers’ data be to wrap it in hard crypto and distribute it far and wide across the whole of the net, ensuring that there is not a single point of failure or a single physical installation that can be isolated? As we’ve seen again and again recently, the best protection against censorship and other legal attacks is massive redundancy and decentralization.

[Ryan Lackey] A: This actually brings up several issues, which I will address in turn.

1. Physical location vs. distributed presence
You seem to be suggesting a distributed data store, a la Eternity, by Ross Anderson. Basically, a federation of servers on the net, possibly hidden servers interfaced to the outside world through remailers (such as Blacknet) or ZKS Freedom. These servers would move data around among themselves, opaque to the outside world, and users would be able to store their data, manually or automatically, on as many servers as possible. There would presumably be some kind of payment system so users could anonymously pay for documents to be stored (as if you run the system for free, it will end up collapsing due to a flood of useless content; if you use a MRU/LRU scheme for your caches, script kiddies will just run scripts to keep their favorite documents in the cache, dropping real content out).

While this approach is interesting from a theoretical standpoint, there are no production-quality systems ready yet. Additionally, there are fundamental limits to distributed computation — latency, as you add nodes, or threat of compromise, if you have very few nodes. We’re going to be incorporating some distributed cache technology which should provide our datacenters with some of the benefits of freenet/eternity type systems. Our system will, however, have a small number of very secure nodes, such as our facilities on Sealand, in which customers can conduct trusted transactions — the intermediate results are guaranteed confidentiality and integrity in processing.

The distributed data serving systems are also not practical for any transaction oriented site, especially low-latency transaction oriented sites, at least without a small number of trusted nodes to do the processing. Due to security constraints, this means tamper-resistant hardware, and since this hardware is expensive, it needs to be purchased in limited quantity, and protected from theft/attack, meaning you want to put it in a small number of high security physical environments. Since it becomes a critical link in all of your transactions, you also need high quality bandwidth. These distributed hosting systems are certainly interesting, but don’t really meet all the neets of our customers. If we borrow 10% of the technology in building a secure distributed cache system, we’ll be able to offer 95% of the benefits, as well.

2. Secret physical location vs. single well-defended point
If you’re going to have a physical location, there’s no easy way to distribute to a very large number of physical locations; you have a base cost per site, and your security is incredibly low until you spend a substantial multiple of that. There are definite economies of scale in running larger datacenters. Keeping physical locations secret is difficult. Keeping active physical sites, with actual servers connected to the net, secret, while still having decent pingtimes and large pipes, is almost impossible. You would need to go with hidden fiber cables laid through some kind of territory in which you could destroy anyone or anything looking for them, and your physical site would need to have the same density as the surrounding area, as well as no magnetic anomaly, or unusual power consumption, or whatever. Or, you could communicate by non-DFable HF SS radio, but that would severely limit your bitrates. I’d say this is basically hopeless.

3. How much of our security is HavenCo, vs. Sealand
A fair bit of the security on Sealand is related to protecting the Principality of Sealand from the kind of takeover which was attempted in 1978, rather than strictly necessary for HavenCo itself. HavenCo’s security is primarily due to tamper-resistant hardware and cryptography, not the site security of Sealand

Silicon Valley should step up, help Iranians

Tuesday, June 30, 2009

PIGEON WATCHING
http://afp.google.com/article/ALeqM5jTEw64Ffr8aSSFUlDA_RAEI8D6DA
Iran busts ‘spy pigeons’ near nuclear site / Oct 20, 2008

“Security forces in Natanz have arrested two suspected “spy pigeons”
near Iran’s controversial uranium enrichment facility, the reformist
Etemad Melli newspaper reported on Monday. One of the pigeons was
caught near a rose water production plant in the city of Kashan in
Isfahan province, the report cited an unnamed informed source as
saying, adding that some metal rings and invisible strings were
attached to the bird. “Early this month, a black pigeon was caught
bearing a blue-coated metal ring, with invisible strings,” the source
was quoted as saying of the second pigeon. The source gave no further
description of the pigeons, neither their current status nor what
their fate will be. Natanz is home to Iran’s heavily-bunkered
underground uranium enrichment plant, which is not far from Kashan.
The activity is the focus of Iran’s five-year standoff with the West,
which that fears it aims to develop nuclear weapons. Tehran vehemently
denies the charge. Last year, Iran issued a formal protest over the
use of espionage by the United States to produce a key intelligence
report on the country’s controversial nuclear programme.”

PREVIOUSLY ON SPECTRE — 14 SQUIRRELS ARRESTED IN IRAN FOR SPYING
http://groups.google.com/group/spectre_event_horizon_group/browse_thread/thread/e74f48a800d6db2/27fac451590915d2

SPY SQUIRRELS
http://www.washingtonpost.com/wp-dyn/content/article/2007/07/19/AR2007071902453_3.html
BY Saleh Eskandari / July 10 / from Iranian newspaper Resalat /
translated by BBC

“A few weeks ago, 14 squirrels equipped with espionage systems of
foreign intelligence services were captured by [Iranian] intelligence
forces along the country’s borders. These trained squirrels, each of
which weighed just over 700 grams, were released on the borders of the
country for intelligence and espionage purposes. According to the
announcement made by Iranian intelligence officials, alert police
officials caught these squirrels before they could carry out any task.
Fixing GPS devices, bugging instruments and advanced cameras in the
bodies of trained animals like squirrels, mice, hamsters, etc, are
among modern methods of collecting intelligence. Given the fast speed
and the special physical features of these animals, they provide
special capabilities for spying operations. Once the animals return to
their place of origin, the intelligence gathered by them is then
offloaded. . . .”

MAYBE NOTHING : THE ABC’s OF LEG BANDS
http://www.birdsnways.com/wisdom/ww5eiii.htm
BY Carol Highfill / November 1996

Lost or Stolen Birds
“Bands are one method of identifying a lost or stolen bird. No matter
how careful bird owners and breeders are, the unthinkable sometimes
happens and a bird flies away. It may be found by a conscientious
person who would like to return the bird to its owner. If the bird is
wearing a band, the task becomes much easier. Many bands are traceable
and a finder (with help from a pet store, veterinarian or breeder) may
be able to trace the bird and its owner. If a finder advertises that a
bird has been found, the true owner can prove his ownership of this
particular bird if he has the band number. If a bird has been stolen,
the thief will often remove the band to prevent discovery. However,
there are documented cases where birds have been recovered years later
due to identification of the leg band. Removal of the band by a thief,
decreases the value of the bird and some thieves take their chances.
Reputable breeders and pet stores will question the history of an
unbanded bird. Anyone buying a bird as a pet should also question any
bird which is not banded. The ability to remove a leg band is one of
this method’s drawbacks when compared to chipping or fingerprinting.”

BUT THIS : WAR BIRDS
http://warandgame.blogspot.com/2007/10/homing-carrier-pigeons-in-war.html
http://www.abc.net.au/tv/guide/netw/200712/programs/ZY8444A001D4122007T203500.htm

“War of the Birds is the untold story of how carrier pigeons – members
of the elite MI-14 secret service division – are the forgotten heroes
of the Secret Service during the Second World War, playing a vital
role in securing the Allied Victory. Focusing on the efforts of five
forgotten Secret Service heroes of World War II – all of whom have
feathers – War of the Birds is a surprisingly suspenseful and dramatic
documentary about the war taking place in the air between Nazi and
Allied birds as they struggled to deliver crucial military
intelligence. Although today pigeons are seen as vermin, their role in
communicating information between the Allies in Britain and their
troops and agents in occupied Europe was paramount. In cases where
radio transmission and other forms of communication was not available
these brave birds, which have an in-built sense of direction over vast
distances and incredible flying power, saved the day. Drawing upon
emotive interviews and archival footage, we hear the miraculous tales
of pigeons like ‘White Vision’, which miraculously flew 60 miles over
heavy seas against 25mph winds to save 11 crew members from certain
death; ‘Mary of Exeter’ which flew for the Allied forces for five
years, getting wounded 22 times before finally being killed on duty;
and ‘Scotch Lass’ which returned to England from Holland with vital
microphotographs that saved hundreds of lives. Over fifty pigeons won
the Dickin Medal, the animal equivalent of the Congressional Medal of
Honour, after the Allies won the war. These brave birds survived enemy
bullets, Nazi attack falcons and flight exhaustion to defeat Hitler
and his forces and change the course of history. This documentary
serves to remind a new generation of the importance of pigeons in a
pre-digital and internet world.”

WINKIE
http://www.thecourier.co.uk/output/2006/01/31/newsstory7980552t0.asp
“One well known Kennoway pigeon fancier, Jim Hamilton, has raced the
birds for most of his life and even provided pigeons for the
government during the second world war. The exhibition tells the story
of one such pigeon named Winkie, who was based at RAF Leuchars during
the conflict. On February 23, 1942, the damaged Beaufort that Winkie
was travelling on ditched suddenly while returning from a strike off
the Norwegian coast. She broke free from her cage and flew back to
base 129 miles away, arriving wet and exhausted. After assessing
Winkie along with other circumstances, a sergeant was able to advise
where to search for the plane and the crew were soon rescued. As a
result, she was the first pigeon to be awarded the Dickin Medal, which
is the animal equivalent of the Victoria Cross.”

DICKEN MEDAL FOR (ANIMAL) GALLANTRY
http://en.wikipedia.org/wiki/Dickin_Medal
http://www.pdsa.org.uk/page309_3.html
http://www.guardian.co.uk/theobserver/2007/feb/18/features.magazine77
Decorated animal heroes
BY Hugo Potter / February 18 2007

· Paddy (1944) Carrier pigeon made the fastest recorded crossing of
the Channel to deliver messages from Normandy for D-Day.
· GI Joe (1946) Famous messenger pigeon which averted a bomb attack on
the Italian village of Colvi Vecchia, saving more than 1,000 lives.
· Judy (1946) English Pointer ship’s dog, alerted crew to approaching
aircraft. The only animal officially registered as a prisoner of war.
· Simon (1949) Ship’s cat served during the Chinese civil war.
Survived canon shell injuries to kill off a rat infestation on HMS
Amethyst.
· Roselle (2002) Guide dog who led her blind owner and a woman blinded
by debris from the World Trade Center during the attacks of 9/11.
· Sam (2003) Dog serving with the Royal Candian Regiment in Bosnia.
Disarmed a gunman and guarded refugees against a hostile crowd.

PADDY THE PIGEON [VIDEO]
http://www.bbc.co.uk/northernireland/realmedia/ypam/pigeon.ram

COMMANDO
http://news.bbc.co.uk/2/hi/uk_news/england/southern_counties/3956171.stm
Pigeon’s war medal up for auction / 26 October, 2004
“A bravery medal awarded to a pigeon for flying over enemy territory
carrying vital information during World War II is to be auctioned. The
bird, called Commando, was bred in Haywards Heath, Sussex, and carried
out 90 trips in German-occupied France. It brought back messages to
the UK in metal canisters strapped to its legs. Commando was given the
Dickin Medal for animal bravery in 1945 – one of only 54 to be given
out. It is to be auctioned at Spink in London on 4 November. Commando
was bred by pigeon fancier Sid Moon in a loft in the West Sussex town.
Mr Moon served with the Army Pigeon Service in World War I and made
his pigeons available to the war effort in 1939. Fewer than one in
eight of the birds sent on the missions returned home. They often fell
victim to German marksmen, birds of prey, bad weather or exhaustion.
But Commando survived the trips and was awarded the animal equivalent
of the Victoria Cross. The medal is being auctioned by Mr Moon’s
granddaughter Valerie Theobold and is expected to fetch between £5,000
and £7,000. She said: “The thing I remember is the noise of the
pigeons and probably also the smell of the pigeons. “But it is quite
interesting to think that all those pigeons carrying all those
messages through the war were coming from the loft.” Another of Mr
Moon’s relatives, John Theobold, said: “It was terribly hard for the
agents or for the people who were occupied trying to get message out
by radio because if they were caught they were shot. “So pigeons were
one way of getting information back that was crucial.””

SPY PIGEON TRAINER OBITUARY
http://news.bbc.co.uk/2/hi/uk_news/england/northamptonshire/3589853.stm
‘War secrets’ pigeon trainer dies / 1 April, 2004
“Northamptonshire’s Dowager Viscountess Dilhorne, who trained pigeons
to carry World War II secret communications from the continent, has
died aged 93. During the war the then Mary Manningham-Buller trained
carrier pigeons in a small Oxfordshire village. The birds were used by
secret agents and resistance fighters, flying back to her with coded
messages on their legs. The funeral of the Viscountess, who died on 25
March, will be held on Friday at Deene Park, Corby. She was the widow
of the 1st Viscount Dilhorne, formerly Reginald Manningham-Buller, who
was Lord Chancellor from 1962-64. He became the Conservative MP for
Daventry, later South Northamptonshire, in 1943 and left the Commons
for the Lords on becoming a peer in 1962. For many years after the war
Mary Manningham-Buller did not discuss her secret work for the
government, even though she had discovered that some of the messages
carried by her pigeons had been of critical importance to the
military. Lady Dilhorne was born Mary Lilian Lindsay, one of eight
children of David Lindsay, Lord Balcarres. Her mother was Constance
Lilian, youngest daughter of the MP for Huntingdon Sir Henry Pelly.
The Viscountess is survived by a son and three daughters. One, Eliza
Manningham-Buller, has been director-general of the Security Service
since 2002.”

PREVIOUSLY ON SPECTRE — REMOTE CONTROL SHARKS
http://groups.google.com/group/spectre_event_horizon_group/browse_thread/thread/e5b5a99207e6c271/73a683f9279c883a

CHINA’S REMOTE CONTROLLED BIRDS
http://technology.timesonline.co.uk/tol/news/tech_and_web/personal_tech/article1447178.ece
Scientists create remote-controlled pigeon / February 27, 2007
“Chinese scientists have succeeded in implanting electrodes in the
brain of a pigeon to control the bird’s flight remotely, state media
have reported. The Xinhua News Agency said scientists at the Robot
Engineering Technology Research Centre at Shandong University of
Science and Technology in eastern China used the micro-electrodes to
command the bird to fly right or left, and up or down. The implants
stimulated different areas of the pigeon’s brain according to
electronic signals sent by the scientists via computer, mirroring
natural signals generated by the brain, Xinhua quoted chief scientist
Su Xuecheng as saying. It was the first such successful experiment on
a pigeon in the world, said Mr Su, who conducted a similar successful
experiment on mice in 2005. The report did not specify what purpose
the pigeons may perform.”

ACOUSTIC KITTY
http://www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB54/st27.pdf
http://www.telegraph.co.uk/news/worldnews/northamerica/usa/1361462/CIA-recruited-cat-to-bug-Russians.html
CIA recruited cat to bug Russians
BY Charlotte Edwardes / 03 Nov 2001

“The CIA tried to uncover the Kremlin’s deepest secrets during the
1960s by turning cats into walking bugging devices, recently
declassified documents show. In one experiment during the Cold War a
cat, dubbed Acoustic Kitty, was wired up for use as an eavesdropping
platform. It was hoped that the animal – which was surgically altered
to accommodate transmitting and control devices – could listen to
secret conversations from window sills, park benches or dustbins.
Victor Marchetti, a former CIA officer, told The Telegraph that
Project Acoustic Kitty was a gruesome creation. He said: “They slit
the cat open, put batteries in him, wired him up. The tail was used as
an antenna. They made a monstrosity. They tested him and tested him.
They found he would walk off the job when he got hungry, so they put
another wire in to override that.” Mr Marchetti said that the first
live trial was an expensive disaster. The technology is thought to
have cost more than £10 million. He said: “They took it out to a park
and put him out of the van, and a taxi comes and runs him over. There
they were, sitting in the van with all those dials, and the cat was
dead.” The document, which was one of 40 to be declassified from the
CIA’s closely guarded Science and Technology Directorate – where
spying techniques are refined – is still partly censored. This implies
that the CIA was embarrassed about disclosing all the details of
Acoustic Kitty, which took five years to design. Dr Richelson, who is
the a senior fellow at the National Security Archive in Washington,
said of the document: “I’m not sure for how long after the operation
the cat would have survived even if it hadn’t been run over.” The memo
ends by congratulating the team who worked on the Acoustic Kitty
project for its hard work. It says: “The work done on this problem
over the years reflects great credit on the personnel who guided
it . . . whose energy and imagination could be models for scientific
pioneers.” By coincidence, in 1966, a British film called Spy With a
Cold Nose featured a dog wired up to eavesdrop on the Russians. It was
the same year as the Acoustic Kitty was tested.”

SPY GERBILS
http://www.telegraph.co.uk/news/uknews/1312843/MI5s-secret-plan-to-recruit-gerbils-as-spycatchers.html
MI5’s secret plan to recruit gerbils as spycatchers
BY Michael Smith / 29 Jun 2001

MI5 considered using a team of highly-trained gerbils to detect spies
and terrorists flying into Britain during the 1970s, Sir Stephen
Lander, the service’s director-general, revealed yesterday. The plan
was based on the ability of gerbils to detect a rise in adrenalin from
changes in the scent of human sweat. Sir Stephen said the Israelis had
put the idea into practice, placing gerbil cages to the side of
security checks for travellers at Tel Aviv airport. A suitably placed
fan wafted the scent of the suspect’s sweat into the cage.

The gerbils were trained by Pavlovian response to press a lever if
they detected increased adrenalin, receiving food as a reward. The
system was never put into practice by MI5 because the Israelis were
forced to abandon it after they found that the gerbil could not tell
the difference between terrorists and passengers who were scared of
flying. Speaking at a conference at the Public Record Office in Kew,
Sir Stephen said MI5 archives contained a complete volume on the idea
– which was based on Canadian research for the Royal Canadian Mounted
Police – written in the 1970s.

Although Dame Stella Rimington made a practice of speaking publicly in
an attempt to change MI5, yesterday’s Missing Dimension conference was
only the second occasion that Sir Stephen has done so. The conference
marks a new PRO exhibition on espionage, Shaken Not Stirred, starting
today, which includes exhibits on a number of spies including Mata
Hari and a spy paid the equivalent of £6.5 million by King George I to
spy on the Stuarts. The Missing Dimension refers to the fact that most
histories are written before intelligence files have been released and
so omit a crucial element of what occurred and why. Sir Stephen
admitted that it would be a long time before MI5 would be able to
release details of its Cold War activities.

JAY-Z TO LEAD FED
http://blogs.wsj.com/economics/2007/11/06/jay-z-the-new-alan-greenspan/
http://edition.cnn.com/video/#/video/business/2007/11/23/roth.us.poor.dollar.cnn

‘BROKEN WINDOWS’ THEORY AS APPLIED TO CURRENCY
http://www.flickr.com/groups/612007 [at] N21/pool/
http://www.monochrom.at/revaluation/


http://www.youtube.com/watch?v=OS2fI2p9iVs

IMPLODE-O-METER
http://ml-implode.com/
http://money.cnn.com/2007/11/12/real_estate/Cleveland_foreclosure_factors/?postversion=2007111415
http://www.modbee.com/business/story/120790.html

PREFACE (TENETS OF THE BORN-AGAIN DRUNK)
http://en.wikipedia.org/wiki/Twelve-step_program
These are the original Twelve Steps as published by AA
1. We admitted we were powerless over alcohol—that our lives had
become unmanageable.
2. Came to believe that a Power greater than ourselves could
restore us to sanity.
3. Made a decision to turn our will and our lives over to the care
of God as we understood Him.
4. Made a searching and fearless moral inventory of ourselves.
5. Admitted to God, to ourselves, and to another human being the
exact nature of our wrongs.
6. Were entirely ready to have God remove all these defects of
character.
7. Humbly asked Him to remove our shortcomings.
8. Made a list of all persons we had harmed, and became willing to
make amends to them all.
9. Made direct amends to such people wherever possible, except when
to do so would injure them or others.
10. Continued to take personal inventory and when we were wrong
promptly admitted it.
11. Sought through prayer and meditation to improve our conscious
contact with God as we understood Him, praying only for knowledge of
His Will for us and the power to carry that out.
12. Having had a spiritual awakening as the result of these steps,
we tried to carry this message to alcoholics, and to practice these
principles in all our affairs.

Other twelve-step groups have adapted these steps of AA as guiding
principles for problems other than alcoholism. In some cases the steps
have been altered to emphasize particular principles important to
those fellowships, or to remove gender biased or specifically
religious language. Twelve-step programs symbolically represent human
structure in three dimensions: physical, mental, and spiritual. The
disorders and diseases the groups deal with are understood to manifest
themselves in each dimension. For addicts and alcoholics the physical
dimension is best described by the “allergy-like bodily reaction”
resulting in the inability to stop using substances after the initial
use. For groups not related to substance abuse the physical
manifestation could be much more varied including, but not limited
too: agoraphobia, apathy, distractibility, forgetfulness,
hyperactivity, hypomania, insomnia, irritability, lack of motivation,
laziness, mania, panic attacks, poor impulse control, procrastination,
self-injury, suicide attempts, and stress. The illness of the
spiritual dimension, in all twelve-step groups, is considered to be
self-centeredness. This model is not intended to be a scientific
explanation, it is only a perspective that twelve-step organizations
have found useful.

The process is intended to replace self-centeredness with a growing
moral consciousness and a willingness for self-sacrifice and unselfish
constructive action. In twelve-step groups, this is known as a
spiritual awakening or religious experience. This should not be
confused with abreaction, which produces dramatic, but ephemeral,
changes. In twelve-step groups, “spiritual awakening” is believed to
develop, most frequently, slowly over a period of time.

THE 12 STEPS TO COLLAPSE
http://www.ft.com/cms/s/0/4d19518c-df0d-11dc-91d4-0000779fd2ac.html?nclick_check=1
America’s economy risks mother of all meltdowns
BY Martin Wolf  /  February 19 2008

“I would tell audiences that we were facing not a bubble but a froth –
lots of small, local bubbles that never grew to a scale that could
threaten the health of the overall economy.” Alan Greenspan, The Age
of Turbulence.

That used to be Mr Greenspan’s view of the US housing bubble. He was
wrong, alas. So how bad might this downturn get? To answer this
question we should ask a true bear. My favourite one is Nouriel
Roubini of New York University’s Stern School of Business, founder of
RGE monitor.
http://www.rgemonitor.com/blog/roubini/142759/

Recently, Professor Roubini’s scenarios have been dire enough to make
the flesh creep. But his thinking deserves to be taken seriously. He
first predicted a US recession in July 2006*. At that time, his view
was extremely controversial. It is so no longer. Now he states that
there is “a rising probability of a ‘catastrophic’ financial and
economic outcome”**. The characteristics of this scenario are, he
argues: “A vicious circle where a deep recession makes the financial
losses more severe and where, in turn, large and growing financial
losses and a financial meltdown make the recession even more severe.”

Prof Roubini is even fonder of lists than I am. Here are his 12 – yes,
12 – steps to financial disaster.

Step one is the worst housing recession in US history. House prices
will, he says, fall by 20 to 30 per cent from their peak, which would
wipe out between $4,000bn and $6,000bn in household wealth. Ten
million households will end up with negative equity and so with a huge
incentive to put the house keys in the post and depart for greener
fields. Many more home-builders will be bankrupted.

Step two would be further losses, beyond the $250bn-$300bn now
estimated, for subprime mortgages. About 60 per cent of all mortgage
origination between 2005 and 2007 had “reckless or toxic features”,
argues Prof Roubini. Goldman Sachs estimates mortgage losses at
$400bn. But if home prices fell by more than 20 per cent, losses would
be bigger. That would further impair the banks’ ability to offer
credit.

Step three would be big losses on unsecured consumer debt: credit
cards, auto loans, student loans and so forth. The “credit crunch”
would then spread from mortgages to a wide range of consumer credit.

Step four would be the downgrading of the monoline insurers, which do
not deserve the AAA rating on which their business depends. A further
$150bn writedown of asset-backed securities would then ensue.

Step five would be the meltdown of the commercial property market,
while step six would be bankruptcy of a large regional or national
bank.

Step seven would be big losses on reckless leveraged buy-outs.
Hundreds of billions of dollars of such loans are now stuck on the
balance sheets of financial institutions.

Step eight would be a wave of corporate defaults. On average, US
companies are in decent shape, but a “fat tail” of companies has low
profitability and heavy debt. Such defaults would spread losses in
“credit default swaps”, which insure such debt. The losses could be
$250bn. Some insurers might go bankrupt.

Step nine would be a meltdown in the “shadow financial system”.
Dealing with the distress of hedge funds, special investment vehicles
and so forth will be made more difficult by the fact that they have no
direct access to lending from central banks.

Step 10 would be a further collapse in stock prices. Failures of hedge
funds, margin calls and shorting could lead to cascading falls in
prices.

Step 11 would be a drying-up of liquidity in a range of financial
markets, including interbank and money markets. Behind this would be a
jump in concerns about solvency.

Step 12 would be “a vicious circle of losses, capital reduction,
credit contraction, forced liquidation and fire sales of assets at
below fundamental prices”.

These, then, are 12 steps to meltdown. In all, argues Prof Roubini:
“Total losses in the financial system will add up to more than
$1,000bn and the economic recession will become deeper more protracted
and severe.” This, he suggests, is the “nightmare scenario” keeping
Ben Bernanke and colleagues at the US Federal Reserve awake. It
explains why, having failed to appreciate the dangers for so long, the
Fed has lowered rates by 200 basis points this year. This is insurance
against a financial meltdown.

Is this kind of scenario at least plausible? It is. Furthermore, we
can be confident that it would, if it came to pass, end all stories
about “decoupling”. If it lasts six quarters, as Prof Roubini warns,
offsetting policy action in the rest of the world would be too little,
too late.

Can the Fed head this danger off? In a subsequent piece, Prof Roubini
gives eight reasons why it cannot***. (He really loves lists!) These
are, in brief: US monetary easing is constrained by risks to the
dollar and inflation; aggressive easing deals only with illiquidity,
not insolvency; the monoline insurers will lose their credit ratings,
with dire consequences; overall losses will be too large for sovereign
wealth funds to deal with; public intervention is too small to
stabilise housing losses; the Fed cannot address the problems of the
shadow financial system; regulators cannot find a good middle way
between transparency over losses and regulatory forbearance, both of
which are needed; and, finally, the transactions-oriented financial
system is itself in deep crisis.

The risks are indeed high and the ability of the authorities to deal
with them more limited than most people hope. This is not to suggest
that there are no ways out. Unfortunately, they are poisonous ones. In
the last resort, governments resolve financial crises. This is an iron
law. Rescues can occur via overt government assumption of bad debt,
inflation, or both. Japan chose the first, much to the distaste of its
ministry of finance. But Japan is a creditor country whose savers have
complete confidence in the solvency of their government. The US,
however, is a debtor. It must keep the trust of foreigners. Should it
fail to do so, the inflationary solution becomes probable. This is
quite enough to explain why gold costs $920 an ounce.

The connection between the bursting of the housing bubble and the
fragility of the financial system has created huge dangers, for the US
and the rest of the world. The US public sector is now coming to the
rescue, led by the Fed. In the end, they will succeed. But the journey
is likely to be wretchedly uncomfortable.

email : martin [dot] wolf [at] ft [dot] com

FORECLOSURE PORN
http://www.boingboing.net/2008/02/26/subprime-primer-stic.html
http://docs.google.com/TeamPresent?docid=ddp4zq7n_0cdjsr4fn&skipauth=true&pli=1

THE BANKRUPTCY BUBBLE
http://www.vanityfair.com/politics/features/2007/12/bush200712
The next president will have to deal with yet another crippling legacy
of George W. Bush: the economy. A Nobel laureate, Joseph E. Stiglitz,
sees a generation-long struggle to recoup.

The Economic Consequences of Mr. Bush
BY Joseph E. Stiglitz  /  December 2007
http://www2.gsb.columbia.edu/faculty/jstiglitz/index.cfm

The American economy can take a lot of abuse, but no economy is
invincible.

When we look back someday at the catastrophe that was the Bush
administration, we will think of many things: the tragedy of the Iraq
war, the shame of Guantánamo and Abu Ghraib, the erosion of civil
liberties. The damage done to the American economy does not make front-
page headlines every day, but the repercussions will be felt beyond
the lifetime of anyone reading this page.

I can hear an irritated counterthrust already. The president has not
driven the United States into a recession during his almost seven
years in office. Unemployment stands at a respectable 4.6 percent.
Well, fine. But the other side of the ledger groans with distress: a
tax code that has become hideously biased in favor of the rich; a
national debt that will probably have grown 70 percent by the time
this president leaves Washington; a swelling cascade of mortgage
defaults; a record near-$850 billion trade deficit; oil prices that
are higher than they have ever been; and a dollar so weak that for an
American to buy a cup of coffee in London or Paris—or even the Yukon—
becomes a venture in high finance.

And it gets worse. After almost seven years of this president, the
United States is less prepared than ever to face the future. We have
not been educating enough engineers and scientists, people with the
skills we will need to compete with China and India. We have not been
investing in the kinds of basic research that made us the
technological powerhouse of the late 20th century. And although the
president now understands—or so he says—that we must begin to wean
ourselves from oil and coal, we have on his watch become more deeply
dependent on both.

Up to now, the conventional wisdom has been that Herbert Hoover, whose
policies aggravated the Great Depression, is the odds-on claimant for
the mantle “worst president” when it comes to stewardship of the
American economy. Once Franklin Roosevelt assumed office and reversed
Hoover’s policies, the country began to recover. The economic effects
of Bush’s presidency are more insidious than those of Hoover, harder
to reverse, and likely to be longer-lasting. There is no threat of
America’s being displaced from its position as the world’s richest
economy. But our grandchildren will still be living with, and
struggling with, the economic consequences of Mr. Bush.

Remember the Surplus?

The world was a very different place, economically speaking, when
George W. Bush took office, in January 2001. During the Roaring 90s,
many had believed that the Internet would transform everything.
Productivity gains, which had averaged about 1.5 percent a year from
the early 1970s through the early 90s, now approached 3 percent.
During Bill Clinton’s second term, gains in manufacturing productivity
sometimes even surpassed 6 percent. The Federal Reserve chairman, Alan
Greenspan, spoke of a New Economy marked by continued productivity
gains as the Internet buried the old ways of doing business. Others
went so far as to predict an end to the business cycle. Greenspan
worried aloud about how he’d ever be able to manage monetary policy
once the nation’s debt was fully paid off.

This tremendous confidence took the Dow Jones index higher and higher.
The rich did well, but so did the not-so-rich and even the downright
poor. The Clinton years were not an economic Nirvana; as chairman of
the president’s Council of Economic Advisers during part of this time,
I’m all too aware of mistakes and lost opportunities. The global-trade
agreements we pushed through were often unfair to developing
countries. We should have invested more in infrastructure, tightened
regulation of the securities markets, and taken additional steps to
promote energy conservation. We fell short because of politics and
lack of money—and also, frankly, because special interests sometimes
shaped the agenda more than they should have. But these boom years
were the first time since Jimmy Carter that the deficit was under
control. And they were the first time since the 1970s that incomes at
the bottom grew faster than those at the top—a benchmark worth
celebrating.

By the time George W. Bush was sworn in, parts of this bright picture
had begun to dim. The tech boom was over. The nasdaq fell 15 percent
in the single month of April 2000, and no one knew for sure what
effect the collapse of the Internet bubble would have on the real
economy. It was a moment ripe for Keynesian economics, a time to prime
the pump by spending more money on education, technology, and
infrastructure—all of which America desperately needed, and still
does, but which the Clinton administration had postponed in its
relentless drive to eliminate the deficit. Bill Clinton had left
President Bush in an ideal position to pursue such policies. Remember
the presidential debates in 2000 between Al Gore and George Bush, and
how the two men argued over how to spend America’s anticipated $2.2
trillion budget surplus? The country could well have afforded to ramp
up domestic investment in key areas. In fact, doing so would have
staved off recession in the short run while spurring growth in the
long run.

But the Bush administration had its own ideas. The first major
economic initiative pursued by the president was a massive tax cut for
the rich, enacted in June of 2001. Those with incomes over a million
got a tax cut of $18,000—more than 30 times larger than the cut
received by the average American. The inequities were compounded by a
second tax cut, in 2003, this one skewed even more heavily toward the
rich. Together these tax cuts, when fully implemented and if made
permanent, mean that in 2012 the average reduction for an American in
the bottom 20 percent will be a scant $45, while those with incomes of
more than $1 million will see their tax bills reduced by an average of
$162,000.

The administration crows that the economy grew—by some 16 percent—
during its first six years, but the growth helped mainly people who
had no need of any help, and failed to help those who need plenty. A
rising tide lifted all yachts. Inequality is now widening in America,
and at a rate not seen in three-quarters of a century. A young male in
his 30s today has an income, adjusted for inflation, that is 12
percent less than what his father was making 30 years ago. Some 5.3
million more Americans are living in poverty now than were living in
poverty when Bush became president. America’s class structure may not
have arrived there yet, but it’s heading in the direction of Brazil’s
and Mexico’s.

The Bankruptcy Boom

In breathtaking disregard for the most basic rules of fiscal
propriety, the administration continued to cut taxes even as it
undertook expensive new spending programs and embarked on a
financially ruinous “war of choice” in Iraq. A budget surplus of 2.4
percent of gross domestic product (G.D.P.), which greeted Bush as he
took office, turned into a deficit of 3.6 percent in the space of four
years. The United States had not experienced a turnaround of this
magnitude since the global crisis of World War II.

Agricultural subsidies were doubled between 2002 and 2005. Tax
expenditures—the vast system of subsidies and preferences hidden in
the tax code—increased more than a quarter. Tax breaks for the
president’s friends in the oil-and-gas industry increased by billions
and billions of dollars. Yes, in the five years after 9/11, defense
expenditures did increase (by some 70 percent), though much of the
growth wasn’t helping to fight the War on Terror at all, but was being
lost or outsourced in failed missions in Iraq. Meanwhile, other funds
continued to be spent on the usual high-tech gimcrackery—weapons that
don’t work, for enemies we don’t have. In a nutshell, money was being
spent everyplace except where it was needed. During these past seven
years the percentage of G.D.P. spent on research and development
outside defense and health has fallen. Little has been done about our
decaying infrastructure—be it levees in New Orleans or bridges in
Minneapolis. Coping with most of the damage will fall to the next
occupant of the White House.

Although it railed against entitlement programs for the needy, the
administration enacted the largest increase in entitlements in four
decades—the poorly designed Medicare prescription-drug benefit,
intended as both an election-season bribe and a sop to the
pharmaceutical industry. As internal documents later revealed, the
true cost of the measure was hidden from Congress. Meanwhile, the
pharmaceutical companies received special favors. To access the new
benefits, elderly patients couldn’t opt to buy cheaper medications
from Canada or other countries. The law also prohibited the U.S.
government, the largest single buyer of prescription drugs, from
negotiating with drug manufacturers to keep costs down. As a result,
American consumers pay far more for medications than people elsewhere
in the developed world.

You’ll still hear some—and, loudly, the president himself—argue that
the administration’s tax cuts were meant to stimulate the economy, but
this was never true. The bang for the buck—the amount of stimulus per
dollar of deficit—was astonishingly low. Therefore, the job of
economic stimulation fell to the Federal Reserve Board, which stepped
on the accelerator in a historically unprecedented way, driving
interest rates down to 1 percent. In real terms, taking inflation into
account, interest rates actually dropped to negative 2 percent. The
predictable result was a consumer spending spree. Looked at another
way, Bush’s own fiscal irresponsibility fostered irresponsibility in
everyone else. Credit was shoveled out the door, and subprime
mortgages were made available to anyone this side of life support.
Credit-card debt mounted to a whopping $900 billion by the summer of
2007. “Qualified at birth” became the drunken slogan of the Bush era.
American households took advantage of the low interest rates, signed
up for new mortgages with “teaser” initial rates, and went to town on
the proceeds.

All of this spending made the economy look better for a while; the
president could (and did) boast about the economic statistics. But the
consequences for many families would become apparent within a few
years, when interest rates rose and mortgages proved impossible to
repay. The president undoubtedly hoped the reckoning would come
sometime after 2008. It arrived 18 months early. As many as 1.7
million Americans are expected to lose their homes in the months
ahead. For many, this will mean the beginning of a downward spiral
into poverty.

Between March 2006 and March 2007 personal-bankruptcy rates soared
more than 60 percent. As families went into bankruptcy, more and more
of them came to understand who had won and who had lost as a result of
the president’s 2005 bankruptcy bill, which made it harder for
individuals to discharge their debts in a reasonable way. The lenders
that had pressed for “reform” had been the clear winners, gaining
added leverage and protections for themselves; people facing financial
distress got the shaft.

And Then There’s Iraq

The war in Iraq (along with, to a lesser extent, the war in
Afghanistan) has cost the country dearly in blood and treasure. The
loss in lives can never be quantified. As for the treasure, it’s worth
calling to mind that the administration, in the run-up to the invasion
of Iraq, was reluctant to venture an estimate of what the war would
cost (and publicly humiliated a White House aide who suggested that it
might run as much as $200 billion). When pressed to give a number, the
administration suggested $50 billion—what the United States is
actually spending every few months. Today, government figures
officially acknowledge that more than half a trillion dollars total
has been spent by the U.S. “in theater.” But in fact the overall cost
of the conflict could be quadruple that amount—as a study I did with
Linda Bilmes of Harvard has pointed out—even as the Congressional
Budget Office now concedes that total expenditures are likely to be
more than double the spending on operations. The official numbers do
not include, for instance, other relevant expenditures hidden in the
defense budget, such as the soaring costs of recruitment, with re-
enlistment bonuses of as much as $100,000. They do not include the
lifetime of disability and health-care benefits that will be required
by tens of thousands of wounded veterans, as many as 20 percent of
whom have suffered devastating brain and spinal injuries.
Astonishingly, they do not include much of the cost of the equipment
that has been used in the war, and that will have to be replaced. If
you also take into account the costs to the economy from higher oil
prices and the knock-on effects of the war—for instance, the
depressing domino effect that war-fueled uncertainty has on
investment, and the difficulties U.S. firms face overseas because
America is the most disliked country in the world—the total costs of
the Iraq war mount, even by a conservative estimate, to at least $2
trillion. To which one needs to add these words: so far.

It is natural to wonder, What would this money have bought if we had
spent it on other things? U.S. aid to all of Africa has been hovering
around $5 billion a year, the equivalent of less than two weeks of
direct Iraq-war expenditures. The president made a big deal out of the
financial problems facing Social Security, but the system could have
been repaired for a century with what we have bled into the sands of
Iraq. Had even a fraction of that $2 trillion been spent on
investments in education and technology, or improving our
infrastructure, the country would be in a far better position
economically to meet the challenges it faces in the future, including
threats from abroad. For a sliver of that $2 trillion we could have
provided guaranteed access to higher education for all qualified
Americans.

The soaring price of oil is clearly related to the Iraq war. The issue
is not whether to blame the war for this but simply how much to blame
it. It seems unbelievable now to recall that Bush-administration
officials before the invasion suggested not only that Iraq’s oil
revenues would pay for the war in its entirety—hadn’t we actually
turned a tidy profit from the 1991 Gulf War?—but also that war was the
best way to ensure low oil prices. In retrospect, the only big winners
from the war have been the oil companies, the defense contractors, and
al-Qaeda. Before the war, the oil markets anticipated that the then
price range of $20 to $25 a barrel would continue for the next three
years or so. Market players expected to see more demand from China and
India, sure, but they also anticipated that this greater demand would
be met mostly by increased production in the Middle East. The war
upset that calculation, not so much by curtailing oil production in
Iraq, which it did, but rather by heightening the sense of insecurity
everywhere in the region, suppressing future investment.

The continuing reliance on oil, regardless of price, points to one
more administration legacy: the failure to diversify America’s energy
resources. Leave aside the environmental reasons for weaning the world
from hydrocarbons—the president has never convincingly embraced them,
anyway. The economic and national-security arguments ought to have
been powerful enough. Instead, the administration has pursued a policy
of “drain America first”—that is, take as much oil out of America as
possible, and as quickly as possible, with as little regard for the
environment as one can get away with, leaving the country even more
dependent on foreign oil in the future, and hope against hope that
nuclear fusion or some other miracle will come to the rescue. So many
gifts to the oil industry were included in the president’s 2003 energy
bill that John McCain referred to it as the “No Lobbyist Left Behind”
bill.

Contempt for the World

America’s budget and trade deficits have grown to record highs under
President Bush. To be sure, deficits don’t have to be crippling in and
of themselves. If a business borrows to buy a machine, it’s a good
thing, not a bad thing. During the past six years, America—its
government, its families, the country as a whole—has been borrowing to
sustain its consumption. Meanwhile, investment in fixed assets—the
plants and equipment that help increase our wealth—has been declining.

What’s the impact of all this down the road? The growth rate in
America’s standard of living will almost certainly slow, and there
could even be a decline. The American economy can take a lot of abuse,
but no economy is invincible, and our vulnerabilities are plain for
all to see. As confidence in the American economy has plummeted, so
has the value of the dollar—by 40 percent against the euro since 2001.

The disarray in our economic policies at home has parallels in our
economic policies abroad. President Bush blamed the Chinese for our
huge trade deficit, but an increase in the value of the yuan, which he
has pushed, would simply make us buy more textiles and apparel from
Bangladesh and Cambodia instead of China; our deficit would remain
unchanged. The president claimed to believe in free trade but
instituted measures aimed at protecting the American steel industry.
The United States pushed hard for a series of bilateral trade
agreements and bullied smaller countries into accepting all sorts of
bitter conditions, such as extending patent protection on drugs that
were desperately needed to fight aids. We pressed for open markets
around the world but prevented China from buying Unocal, a small
American oil company, most of whose assets lie outside the United
States.

Not surprisingly, protests over U.S. trade practices erupted in places
such as Thailand and Morocco. But America has refused to compromise—
refused, for instance, to take any decisive action to do away with our
huge agricultural subsidies, which distort international markets and
hurt poor farmers in developing countries. This intransigence led to
the collapse of talks designed to open up international markets. As in
so many other areas, President Bush worked to undermine multilateralism
—the notion that countries around the world need to cooperate—and to
replace it with an America-dominated system. In the end, he failed to
impose American dominance—but did succeed in weakening cooperation.

The administration’s basic contempt for global institutions was
underscored in 2005 when it named Paul Wolfowitz, the former deputy
secretary of defense and a chief architect of the Iraq war, as
president of the World Bank. Widely distrusted from the outset, and
soon caught up in personal controversy, Wolfowitz became an
international embarrassment and was forced to resign his position
after less than two years on the job.

Globalization means that America’s economy and the rest of the world
have become increasingly interwoven. Consider those bad American
mortgages. As families default, the owners of the mortgages find
themselves holding worthless pieces of paper. The originators of these
problem mortgages had already sold them to others, who packaged them,
in a non-transparent way, with other assets, and passed them on once
again to unidentified others. When the problems became apparent,
global financial markets faced real tremors: it was discovered that
billions in bad mortgages were hidden in portfolios in Europe, China,
and Australia, and even in star American investment banks such as
Goldman Sachs and Bear Stearns. Indonesia and other developing
countries—innocent bystanders, really—suffered as global risk premiums
soared, and investors pulled money out of these emerging markets,
looking for safer havens. It will take years to sort out this mess.

Meanwhile, we have become dependent on other nations for the financing
of our own debt. Today, China alone holds more than $1 trillion in
public and private American I.O.U.’s. Cumulative borrowing from abroad
during the six years of the Bush administration amounts to some $5
trillion. Most likely these creditors will not call in their loans—if
they ever did, there would be a global financial crisis. But there is
something bizarre and troubling about the richest country in the world
not being able to live even remotely within its means. Just as
Guantánamo and Abu Ghraib have eroded America’s moral authority, so
the Bush administration’s fiscal housekeeping has eroded our economic
authority.

The Way Forward

Whoever moves into the White House in January 2009 will face an
unenviable set of economic circumstances. Extricating the country from
Iraq will be the bloodier task, but putting America’s economic house
in order will be wrenching and take years.

The most immediate challenge will be simply to get the economy’s
metabolism back into the normal range. That will mean moving from a
savings rate of zero (or less) to a more typical savings rate of, say,
4 percent. While such an increase would be good for the long-term
health of America’s economy, the short-term consequences would be
painful. Money saved is money not spent. If people don’t spend money,
the economic engine stalls. If households curtail their spending
quickly—as they may be forced to do as a result of the meltdown in the
mortgage market—this could mean a recession; if done in a more
measured way, it would still mean a protracted slowdown. The problems
of foreclosure and bankruptcy posed by excessive household debt are
likely to get worse before they get better. And the federal government
is in a bind: any quick restoration of fiscal sanity will only
aggravate both problems.

And in any case there’s more to be done. What is required is in some
ways simple to describe: it amounts to ceasing our current behavior
and doing exactly the opposite. It means not spending money that we
don’t have, increasing taxes on the rich, reducing corporate welfare,
strengthening the safety net for the less well off, and making greater
investment in education, technology, and infrastructure.

When it comes to taxes, we should be trying to shift the burden away
from things we view as good, such as labor and savings, to things we
view as bad, such as pollution. With respect to the safety net, we
need to remember that the more the government does to help workers
improve their skills and get affordable health care the more we free
up American businesses to compete in the global economy. Finally,
we’ll be a lot better off if we work with other countries to create
fair and efficient global trade and financial systems. We’ll have a
better chance of getting others to open up their markets if we
ourselves act less hypocritically—that is, if we open our own markets
to their goods and stop subsidizing American agriculture.

Some portion of the damage done by the Bush administration could be
rectified quickly. A large portion will take decades to fix—and that’s
assuming the political will to do so exists both in the White House
and in Congress. Think of the interest we are paying, year after year,
on the almost $4 trillion of increased debt burden—even at 5 percent,
that’s an annual payment of $200 billion, two Iraq wars a year
forever. Think of the taxes that future governments will have to levy
to repay even a fraction of the debt we have accumulated. And think of
the widening divide between rich and poor in America, a phenomenon
that goes beyond economics and speaks to the very future of the
American Dream.

In short, there’s a momentum here that will require a generation to
reverse. Decades hence we should take stock, and revisit the
conventional wisdom. Will Herbert Hoover still deserve his dubious
mantle? I’m guessing that George W. Bush will have earned one more
grim superlative.

A ‘MINSKY MELTDOWN’?
http://en.wikipedia.org/wiki/Hyman_Minsky
http://cepa.newschool.edu/het/profiles/minsky.htm
http://www.metafilter.com/64260/Minsky-Meltdown-ahead

http://www.rgemonitor.com/blog/roubini/208166
http://forestpolicy.typepad.com/economics/2007/07/minsky-moment-h.html
http://online.wsj.com/article/SB118736585456901047.html

ECONOMIC ARSON
http://www.newyorker.com/talk/comment/2008/02/04/080204taco_talk_cassidy
The Minsky Moment
BY John Cassidy  /  February 4, 2008

Twenty-five years ago, when most economists were extolling the virtues
of financial deregulation and innovation, a maverick named Hyman P.
Minsky maintained a more negative view of Wall Street; in fact, he
noted that bankers, traders, and other financiers periodically played
the role of arsonists, setting the entire economy ablaze. Wall Street
encouraged businesses and individuals to take on too much risk, he
believed, generating ruinous boom-and-bust cycles. The only way to
break this pattern was for the government to step in and regulate the
moneymen.

Many of Minsky’s colleagues regarded his “financial-instability
hypothesis,” which he first developed in the nineteen-sixties, as
radical, if not crackpot. Today, with the subprime crisis seemingly on
the verge of metamorphosing into a recession, references to it have
become commonplace on financial Web sites and in the reports of Wall
Street analysts. Minsky’s hypothesis is well worth revisiting. In
trying to revive the economy, President Bush and the House have
already agreed on the outlines of a “stimulus package,” but the first
stage in curing any malady is making a correct diagnosis.

Minsky, who died in 1996, at the age of seventy-seven, earned a Ph.D.
from Harvard and taught at Brown, Berkeley, and Washington University.
He didn’t have anything against financial institutions—for many years,
he served as a director of the Mark Twain Bank, in St. Louis—but he
knew more about how they worked than most deskbound economists. There
are basically five stages in Minsky’s model of the credit cycle:
displacement, boom, euphoria, profit taking, and panic. A displacement
occurs when investors get excited about something—an invention, such
as the Internet, or a war, or an abrupt change of economic policy. The
current cycle began in 2003, with the Fed chief Alan Greenspan’s
decision to reduce short-term interest rates to one per cent, and an
unexpected influx of foreign money, particularly Chinese money, into
U.S. Treasury bonds. With the cost of borrowing—mortgage rates, in
particular—at historic lows, a speculative real-estate boom quickly
developed that was much bigger, in terms of over-all valuation, than
the previous bubble in technology stocks.

As a boom leads to euphoria, Minsky said, banks and other commercial
lenders extend credit to ever more dubious borrowers, often creating
new financial instruments to do the job. During the nineteen-eighties,
junk bonds played that role. More recently, it was the securitization
of mortgages, which enabled banks to provide home loans without
worrying if they would ever be repaid. (Investors who bought the
newfangled securities would be left to deal with any defaults.) Then,
at the top of the market (in this case, mid-2006), some smart traders
start to cash in their profits.

The onset of panic is usually heralded by a dramatic effect: in July,
two Bear Stearns hedge funds that had invested heavily in mortgage
securities collapsed. Six months and four interest-rate cuts later,
Ben Bernanke and his colleagues at the Fed are struggling to contain
the bust. Despite last week’s rebound, the outlook remains grim.
According to Dean Baker, the co-director of the Center for Economic
and Policy Research, average house prices are falling nationwide at an
annual rate of more than ten per cent, something not seen since before
the Second World War. This means that American households are getting
poorer at a rate of more than two trillion dollars a year.

It’s hard to say exactly how falling house prices will affect the
economy, but recent computer simulations carried out by Frederic
Mishkin, a governor at the Fed, suggest that, for every dollar the
typical American family’s housing wealth drops in a year, that family
may cut its spending by up to seven cents. Nationwide, that adds up to
roughly a hundred and fifty-five billion dollars, which is bigger than
President Bush’s stimulus package. And it doesn’t take into account
plunging stock prices, collapsing confidence, and the belated
imposition of tighter lending practices—all of which will further
restrict economic activity.

In an election year, politicians can’t be expected to acknowledge
their powerlessness. Nonetheless, it was disheartening to see the
Republicans exploiting the current crisis to try to make the
President’s tax cuts permanent, and the Democrats attempting to pin
the economic downturn on the White House. For once, Bush is not to
blame. His tax cuts were irresponsible and callously regressive, but
they didn’t play a significant role in the housing bubble.

If anybody is at fault it is Greenspan, who kept interest rates too
low for too long and ignored warnings, some from his own colleagues,
about what was happening in the mortgage market. But he wasn’t the
only one. Between 2003 and 2007, most Americans didn’t want to hear
about the downside of funds that invest in mortgage-backed securities,
or of mortgages that allow lenders to make monthly payments so low
that their loan balances sometimes increase. They were busy wondering
how much their neighbors had made selling their apartment, scouting
real-estate Web sites and going to open houses, and calling up
Washington Mutual or Countrywide to see if they could get another home-
equity loan. That’s the nature of speculative manias: eventually, they
draw in almost all of us.

You might think that the best solution is to prevent manias from
developing at all, but that requires vigilance. Since the nineteen-
eighties, Congress and the executive branch have been conspiring to
weaken federal supervision of Wall Street. Perhaps the most fateful
step came when, during the Clinton Administration, Greenspan and
Robert Rubin, then the Treasury Secretary, championed the abolition of
the Glass-Steagall Act of 1933, which was meant to prevent a
recurrence of the rampant speculation that preceded the Depression.

The greatest need is for intellectual reappraisal, and a good place to
begin is with a statement from a paper co-authored by Minsky that “apt
intervention and institutional structures are necessary for market
economies to be successful.” Rather than waging old debates about tax
cuts versus spending increases, policymakers ought to be discussing
how to reform the financial system so that it serves the rest of the
economy, instead of feeding off it and destabilizing it. Among the
problems at hand: how to restructure Wall Street remuneration packages
that encourage excessive risk-taking; restrict irresponsible lending
without shutting out creditworthy borrowers; help victims of predatory
practices without bailing out irresponsible lenders; and hold ratings
agencies accountable for their assessments. These are complex issues,
with few easy solutions, but that’s what makes them interesting. As
Minsky believed, “Economies evolve, and so, too, must economic
policy.” ♦

FORTUNE TELLING
“Stephen E. Flynn is Jeane J. Kirkpatrick Senior Fellow for National
Security Studies at the Council on Foreign Relations and the author of
The Edge of Disaster: Rebuilding a Resilient Nation (Random House,
2007), from which this essay is drawn.”

AMERICA THE RESILIENT  [IN BED]
http://www.foreignaffairs.org/20080301faessay87201/stephen-e-flynn/america-the-resilient.html
Defying Terrorism and Mitigating Natural Disasters
BY Stephen E. Flynn  /  Council on Foreign Relations  /  March/April
2008

When it comes to managing the hazards of the twenty-first century, it
is reckless to relegate the American public to the sidelines. During
the Cold War, the threat of nuclear weapons placed the fate of
millions in the hands of a few. But responding to today’s challenges,
the threats of terrorism and natural disasters, requires the broad
engagement of civil society. The terrorists’ chosen battlegrounds are
likely to be occupied by civilians, not soldiers. And more than the
loss of innocent lives is at stake: a climate of fear and a sense of
powerlessness in the face of adversity are undermining faith in
American ideals and fueling political demagoguery. Sustaining the
United States’ global leadership and economic competitiveness
ultimately depends on bolstering the resilience of its society.
Periodically, things will go badly wrong. The United States must be
prepared to minimize the consequences of those eventualities and
bounce back quickly.

Resilience has historically been one of the United States’ great
national strengths. It was the quality that helped tame a raw
continent and then allowed the country to cope with the extraordinary
challenges that occasionally placed the American experiment in peril.
From the early settlements in Virginia and Massachusetts to the
westward expansion, Americans willingly ventured into the wild to
build better lives. During the epic struggles of the American
Revolution, the American Civil War, and the two world wars; occasional
economic downturns and the Great Depression; and the periodic scourges
of earthquakes, epidemics, floods, and hurricanes, Americans have
drawn strength from adversity. Each generation bequeathed to the next
a sense of confidence and optimism about the future.

But this reservoir of self-sufficiency is being depleted. The United
States is becoming a brittle nation. An increasingly urbanized and
suburbanized population has embraced just-in-time lifestyles tethered
to ATM machines and 24-hour stores that provide instant access to
cash, food, and gas. When the power goes out and these modern
conveniences fail, Americans are incapacitated. Meanwhile, two decades
of taxpayer rebellion have stripped away the means necessary for
government workers to provide help during emergencies. Most city and
state public health and emergency-management departments are not
funded adequately enough for them to carry out even their routine
work. A flu pandemic or other major disaster would completely
overwhelm them. A report on disaster preparedness released in June
2006 by the U.S. Department of Homeland Security found that only 25
percent of state emergency operations plans and 10 percent of
municipal plans were sufficient to cope with a natural disaster or a
terrorist attack; the majority of the plans were deemed “not fully
adequate, feasible, or acceptable to manage catastrophic events.” And
even as community and individual preparedness is in decline, nine out
of ten Americans now live in locations that place them at a moderate
to high risk of experiencing damaging high wind, earthquakes,
flooding, hurricanes, volcanic eruptions, or wildfires. Climate change
will increase the frequency of such calamities.

The United States’ aging infrastructure compounds the risk of
destruction and disruption. One of the rationales for building the
interstate highway system was to support the evacuation of major
cities if the Cold War turned hot; in 2006, the year the system turned
50, Americans spent a total of 3.5 billion hours stuck in traffic.
Public works departments construct “temporary” patches for dams,
leaving Americans who live downstream one major storm away from having
water pouring into their living rooms. Bridges are outfitted with the
civil engineering equivalent of diapers. Like the occupants of a grand
old mansion who elect not to do any upkeep, Americans have been
neglecting the infrastructure that supports a modern society. In 2005,
after a review of hundreds of studies and reports and a survey of more
than 2,000 engineers, the American Society of Civil Engineers issued a
scathing report card on 15 categories of infrastructure: the national
power grid, dams, canal locks, and seven other infrastructure sectors
received Ds; the best grade, a C+, went to bridges, and even in that
case, 160,570 bridges, out of a total of 590,750, were rated
structurally deficient or functionally obsolete.

These downward trends in preparedness and infrastructural integrity
could be reversed by stepped-up investment and more effective
leadership. Unfortunately, Washington has been leading the nation in
the opposite direction. Since September 11, 2001, the White House has
failed to draw on the legacy of American grit, volunteerism, and
ingenuity in the face of adversity. Instead, it has sent a mixed
message, touting terrorism as a clear and present danger while telling
Americans to just go about their daily lives. Unlike during World War
II, when the entire U.S. population was mobilized, much of official
Washington today treats citizens as helpless targets or potential
victims.

This discounting of the public can be traced to the culture of secrecy
and paternalism that now pervades the national defense and federal law
enforcement communities. After decades of combating Soviet espionage
during the Cold War, the federal security establishment instinctively
resists disclosing information for fear that it might end up in the
wrong hands. Straight talk about the country’s vulnerabilities and how
to cope in emergencies is presumed to be too frightening for public
consumption.

This is madness. The overwhelming majority of Americans live in places
where the occurrence of a natural disaster is a matter of not if, but
when. And terrorist groups’ targets of choice are noncombatants and
infrastructure. These are hazards that can be managed only by an
informed, inspired, and mobilized public. Both the first preventers
and the first responders are likely to be civilians.

LESSON UNLEARNED
In retrospect, it is remarkable that the events of September 11 have
been used to elevate the role of professional warriors, spies, and
cops at the expense of enlisting citizens to assist in securing the
nation. Unfortunately, the prevailing interpretation of that day
focuses almost entirely on the three airliners that struck the World
Trade Center towers and the Pentagon. President George W. Bush has
concluded from those attacks that the U.S. government needs to do
whatever it takes to hunt down its enemies before they kill innocent
civilians again.

But it is the story of United Airlines flight 93, the thwarted fourth
plane, which crashed in a Pennsylvania field, that ought to be the
dominant 9/11 narrative. That plane’s passengers foiled al Qaeda
without any help from — and in spite of the inaction of — the U.S.
government. There were no federal air marshals aboard the aircraft.
The North American Aerospace Defense Command, or NORAD, could not
intercept it; it did not even know that the plane had been hijacked.
Yet United 93 was stopped 140 miles from its likely destination — the
U.S. Capitol or the White House — because of the actions of the
passengers who stormed the cockpit. Of all the passengers on the four
9/11 planes, only those aboard United 93 knew their hijackers’
intention. Theirs was the last plane off the ground. Once the
terrorists took control of it, they did not prevent passengers from
making urgent calls to family and friends, who told them what their
counterparts on the three earlier flights discovered only during their
final seconds. Americans should celebrate — and ponder — the reality
that the legislative and executive centers of the U.S. federal
government, whose constitutional duty is to “provide for the common
defense,” were themselves defended that day by one thing alone: an
alert and heroic citizenry.

The story of United 93 also raises a serious question that the 9/11
Commission failed to examine: might the passengers on the other three
planes have reacted, too, if they had known the hijackers’ plans? The
9/11 Commission documents that in the years leading up to the attacks
on New York and Washington, a number of people inside the U.S.
government had collected intelligence suggesting that terrorists were
interested in using passenger airliners as weapons. But because that
information was viewed as sensitive, the government never shared it
with the public. What if it had been widely publicized? How would the
passengers aboard the first three jets have behaved?

The next president needs to embrace the United 93 story — and
consider these questions — in order to reawaken the spirit of
community and volunteerism witnessed throughout the nation in the
months immediately following 9/11. If U.S. history is a guide, people
will respond to the call to service. They only need to be asked.

THE BEST DEFENSE
The rallying point should be a call for greater resilience. Building
the resilience of American society would increase the nation’s
security by depriving al Qaeda and other terrorists of the fear
dividend they hope to reap by threatening to carrying out catastrophic
attacks. In military terms, the United States is too large, and al
Qaeda’s capacity to attack the U.S. homeland too limited, for
terrorists like them to inflict nationwide destruction. All they can
hope for is to spawn enough fear to spur Washington into overreacting
in costly and self-destructive ways.

Fear arises both from being aware of a threat and from feeling
powerless to deal with it. And although it is impossible to eliminate
every threat that causes such fear, Americans do have the power to
manage their fear and their reactions to it. For more then six years,
however, Washington has been sounding the alarm about apocalyptic
terrorist groups while providing the American people with no
meaningful guidance on how to deal with the threats they pose or the
consequences of a successful attack. This toxic mix of fear and
helplessness jeopardizes U.S. security by increasing the risk that the
U.S. government will overreact to another terrorist attack.

What Washington should do instead is arm Americans with greater
confidence in their ability to prepare for and recover from terrorist
strikes and disasters of all types. Confidence in their resilience
would cap their fear and in turn undermine much of the incentives
terrorists have for incurring the costs and risks of targeting the
U.S. homeland.

The United States needs the kind of resilience that the British
displayed during World War II when V-1 bombs were raining down on
London. Volunteers put the fires out, rescued the wounded from the
rubble, and then went on with their lives until the air-raid warnings
were sounded again. More than a half century later, the United Kingdom
showed its resilience once more after suicide bombers attacked the
London Underground with the intent of crippling the city’s public
transportation system. That objective was foiled when resolute
commuters showed up to board the trains the next morning.

Such resilience results from a sustained commitment to four factors.
First, there is robustness, the ability to keep operating or to stay
standing in the face of disaster. In some cases, it translates into
designing structures or systems (such as buildings and bridges) strong
enough to take a foreseeable punch. In others (such as developing
transportation, energy, and communications networks), robustness
requires devising substitutable or redundant systems that can be
brought to bear should something important break or stop working.
Robustness also entails investing in and maintaining elements of
critical infrastructure, such as dams and levees, so that they can
withstand low-probability but high-consequence events.

Second is resourcefulness, which involves skillfully managing a
disaster once it unfolds. It includes identifying options,
prioritizing what should be done both to control damage and to begin
mitigating it, and communicating decisions to the people who will
implement them. Resourcefulness depends primarily on people, not
technology. Ensuring that U.S. society is resourceful means providing
adequate resources to the National Guard, the American Red Cross,
public health officials, firefighters, emergency-room staffs, and
other emergency planners and responders.

The third element of resilience is rapid recovery, which is the
capacity to get things back to normal as quickly as possible after a
disaster. Carefully drafted contingency plans, competent emergency
operations, and the means to get the right people and resources to the
right places are crucial. Some small communities, such as Eden
Prairie, Minnesota, are organizing themselves so that everyone can
pitch in right away in the case of an emergency. Citizens are being
trained to be auxiliary first responders, and local companies are

committing themselves to providing resources and lending expertise in
order to dramatically reduce the economic aftershocks of any disaster.
Among the larger cities, Seattle has put together a business emergency
network, a communications system linking the city government and
businesses. It is designed to aid the local business community in
predisaster preparation and to help disseminate information quickly
and accurately when disaster strikes.

Finally, resilience means having the means to absorb the new lessons
that can be drawn from a catastrophe. It is foolish for a society to
go right back to business as usual as soon as the dust clears, by,
say, rebuilding homes on floodplains or failing to resolve
interoperable communications issues that confound coordination and
information sharing among first responders. People must be willing to
make pragmatic changes, such as relocating when their homes are
repeatedly destroyed or reaching deeper into their pockets to pay for
the communications and other tools communities need to improve their
robustness, resourcefulness, and recovery capabilities before the next
crisis.

Working to strengthen the four features of resilience is a far more
open and inclusive process than a national effort centered on
security, because it requires drawing on the United States’ greatest
strengths: civil society and the private sector. Furthermore, whereas
boosting the security apparatus is usually very expensive, advancing
resilience almost always provides a positive return on a relatively
smaller investment. As a June 2007 report by the Council on
Competitiveness, a Washington-based group “committed to ensuring the
future prosperity of all Americans,” concluded, “The ability to manage
emerging risks, anticipate the interactions between different types of
risk, and bounce back from disruption will be a competitive
differentiator for companies and countries alike in the 21st century.”

BRAVE NEW AMERICA
Increasing the resilience of the American people will require
presidential leadership. For years, the fear of terrorism has been
stoked and the federal government’s ability to defeat radical
jihadists has been exaggerated. This has created a passive citizenry
that oscillates between fretfulness and cynicism. In his or her
inaugural address, the next president will need to call on Americans
to recapture their spirit of endurance and optimism. During the new
administration’s first hundred days, it must work with Congress to put
in place programs that help Americans build robustness, achieve
resourcefulness, enhance their ability to recover swiftly, and revise
designs and protocols based on lessons learned from crises. Given the
American tradition of self-reliance and volunteerism, the effort will
strike a strong bipartisan chord.

The new secretary of homeland security should be charged with
transforming the department’s law enforcement culture, which so far
has held citizens and the private sector at arms length. He or she
must also reach out to the private sector and task it with taking the
lead in advancing resilience at the company and community levels. CEOs
should not require much prodding. As globalization, interdependence,
and geopolitics become more volatile forces, people and companies will
gravitate to those firms and places that are dependable. Those
enterprises that do poorly at managing crises because they fail to
foresee and prepare for them will lose shareholder value and market
share. Companies adept at managing operational risk can also help
communities rebound when disasters strike. In 2005, for example, Wal-
Mart was able to bring 66 percent of its stores in the Gulf States
back into operation within 48 hours of Hurricane Katrina’s coming
ashore, providing many of the critical supplies that everyday
citizens, small businesses, and government agencies needed to get back
on their feet.

Two tricky but potentially influential allies in the effort could be
the mass media and Hollywood. To a large extent, the stories Americans
see on their small and big screens have been part of the problem. A
more inspirational and less dramatic reality is rarely portrayed. As
the mass evacuation of Manhattan on September 11 made clear, in real
crises Americans largely keep their wits about them and assist one
another. During World War II, Hollywood played a helpful public-
service role by supporting war-bond drives and producing training
films, while providing much-needed entertainment. Media executives
today could do the same by committing themselves to relating stories
and communicating messages that inform and inspire individual and
societal resilience.

In the end, everyday Americans will have to step up to the plate in
their homes, schools, and workplaces. An August 2006 study sponsored
by the Department of Homeland Security found that nine out of ten
Americans believed that being prepared for emergencies was important.
Yet a poll commissioned in the same month by Time magazine found that
only 16 percent of Americans thought they were “very well prepared”
for an emergency.

The good news is that most of the things people can do at the
individual level to prepare themselves, their families, and their
employees are relatively easy. These measures include purchasing a
three-day emergency kit, developing

a family emergency contact plan, and visiting Web sites maintained by
the Red Cross and other organizations that provide instructive what-to-
do lists. Such efforts can provide real peace of mind and save lives
when disaster strikes. They would also represent tangible expressions
of American support for the U.S. soldiers who put their lives on the
line beyond U.S. shores to protect a nation that today remains
recklessly exposed to the consequences of a successful terrorist
attack.

Rebuilding the resilience of U.S. society is an agenda that could
reverse the debilitating politics and mounting cynicism now bedeviling
the U.S. electorate. Whereas increasing security measures is an
inevitable answer to a society’s fears, resilience rests on a
foundation of confidence and optimism. It involves taking stock of
what is truly precious and ensuring its durability in a way that would
allow Americans to remain true to their ideals no matter what tempest
the future may bring.

INFLATION OR REVENUE?

http://media.washingtonpost.com/wp-srv/politics/interactives/factchecker/incometax_20071108.gif
http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1996,39140985&_dad=portal&_schema=PORTAL&product=_STRIND&root=theme0/strind/ecobac/eb011&zone=detail

http://www.mg.co.za/articlepage.aspx?area=/breaking_news/breaking_news__business/&articleid=322726&referrer=RSS
http://blogs.ft.com/wolfforum/2007/08/fear-makes-a-we.html/
http://www.cnbc.com/id/20461003
http://www.prudentbear.com/

PRICE DISTORTIONS
http://www.nytimes.com/2008/03/28/business/28commodities.html
Odd Crop Prices Defy Economics
BY Diana B. Henriques  /  March 28, 2008

Economists note there should not be two prices for one thing at the
same place and time. Could a drugstore sell two identical tubes of
toothpaste, and charge 50 cents more for one of them? Of course not.
But, in effect, exactly that has been happening, repeatedly and
mysteriously, in trading that sets prices for corn, soybeans and wheat
— three of America’s biggest crops and, lately, popular targets for

investors pouring into the volatile commodities market. Economists who
have been studying this phenomenon say they are at a loss to explain
it.

Whatever the reason, the price for a bushel of grain set in the
derivatives markets has been substantially higher than the
simultaneous price in the cash market. When that happens, no one can
be exactly sure which is the accurate price in these crucial commodity
markets, an uncertainty that can influence food prices and production
decisions around the world.

These disparities also raise the question of whether American farmers,
who rely almost exclusively on the cash market, are being shortchanged
by cash prices that are lower than they should be. “We do not have a
clear understanding of what is driving these episodic instances,” said
Prof. Scott H. Irwin, one of three agricultural economists at the
University of Illinois at Urbana-Champaign who have done extensive
research on these price distortions.

Professor Irwin and his colleagues, Prof. Philip T. Garcia and Prof.
Darrel L. Good, first sounded the alarm about these price distortions
in late 2006 in a study financed by the Chicago Board of Trade. Their
findings drew little attention then, Professor Irwin said, but lately
“people have begun to get very seriously interested in why this is
happening — because it is a fundamental problem in markets that have
generally worked well in the past.”

Market regulators say they have ruled out deliberate market
manipulation. But they, too, are baffled. The Commodity Futures
Trading Commission, which regulates the exchanges where these grain
derivatives trade, has scheduled a forum on April 22 where market
participants will discuss these anomalies and other pressure points
arising in the agricultural markets. The mechanics of the commodity
markets are more complex than selling toothpaste, however. The
anomalies are occurring between the price of a bushel of grain in the
cash market and the price of that same bushel of grain, as determined
by the expiration price of a futures contract traded in Chicago.

A futures contract is an agreement to deliver a specific amount of a
commodity — 5,000 bushels of wheat, say — on a certain date in the
future. Such contracts are important hedging tools for farmers, grain
elevators, commodity processors and anyone with a stake in future
grain prices. A futures contract that calls for delivery of wheat in
July may trade for more or less for each bushel than today’s cash
market price. But as each day goes by, its price should move a bit
closer to that day’s cash price. And on expiration day, when the
bushels of wheat covered by that futures contract are due for
delivery, their price should very nearly match the price in the cash
market, allowing for a little market friction or major delivery
disruptions like Hurricane Katrina.

But on dozens of occasions since early 2006, the futures contracts for
corn, wheat and soybeans have expired at a price that was much higher
than that day’s cash price for those grains. For example, soybean
futures contracts expired in July at a price of $9.13 a bushel, which
was 80 cents higher than the cash price that day, Professor Irwin
said. In August, the futures expired at $8.62, or 68 cents above the
cash price, and in September, the expiration price was $9.43, or 78
cents above the cash price.

Corn has been similarly eccentric. A corn futures contract expired
last September at $3.36, which was a remarkable 55 cents above the
cash price, but the contract that expired in March 2007 was roughly
even with the cash price. “As far as I know, nothing like this has
ever happened in the corn market,” said Professor Irwin. Wheat futures
had been especially prone to this phenomenon, going back several
years. Indeed, the 2007 study by Professor Irwin and his colleagues
concluded that wheat price distortions reflected a “failure to
accomplish one of the fundamental tasks of a futures market.”

And while the situation improved sharply for wheat futures in Chicago
late last year, it deteriorated for futures traded in Kansas City. And

it has gotten worse for corn and soybeans, Professor Irwin said. Many
people have a theory about why this is happening, but none of them
seem to cover all the available facts. Mary Haffenberg, a spokeswoman
for the CME Group, which owns the Chicago Board of Trade, where these
contracts trade, said the anomalies might be a temporary result of “a
lot of shocks to the system,” including sharp increases in worldwide
food demand, uncertainty about supplies and surging commodity
investments.

Veteran traders and many farmers blame the new arrivals in the
commodities markets: hedge funds, pension funds and index funds. These
investors and speculators, they complain, are distorting futures
prices by pouring in so much money without regard to market
fundamentals. “The market sends a sell signal, but they don’t sell,”
said Kendell W. Keith, president of the National Grain and Feed
Association. “So the markets are not behaving the way they otherwise
would — and the pricing formula for the industry is a lot fuzzier and
a lot less efficient than we’ve ever seen.”

Representatives of the new financial speculators dispute that. Their
money has vastly increased the liquidity in the futures markets, they
say, and better liquidity improves markets, making them less volatile
for everyone. And, as Professor Irwin noted, if new money pouring into
the market has been causing these distortions, they probably would be
occurring more consistently than they are. Some experienced commodity
analysts think the flaw may be in the design of the contracts, said
Richard J. Feltes, senior vice president and director of commodity
research for MF Global, the world’s largest commodity futures
brokerage firm. If futures were settled based on a cash index, it
would eliminate these odd disparities, Mr. Feltes said.

Ms. Haffenberg at the CME Group said cash settlement had “not been
ruled out,” but it raised the question of finding the appropriate cash
index. Other modest contract changes are awaiting approval of the
futures trading commission, she said. “We are continuing to have
industry meetings to discuss what we need to do,” she said. “But we
want to be careful, before we undertake any changes, that above all,
we don’t do any harm.”

Moreover, defenders of the exchange’s current contract design note
that these widely used agreements have gone largely unchanged for some
time — and yet, have only begun to display this odd and inconsistent
behavior in the last few years. Some economists are exploring whether
some unperceived bottlenecks in the delivery system explain what is
going on. But traders say that such bottlenecks would eventually
become known in the market and prices would adjust. Professor Irwin,
whose research is continuing, said there might not be a single
explanation for the price distortions.

Markets may simply be responding to the uneven impact of new financial
technology, which allows more money to flow in and out, and to
investors’ growing but fluctuating appetite for hard assets. “Those
factors may be combining to create this highly volatile environment
for discovering prices,” he said. “But for now, that is pure
conjecture on my part.”

What is not happening in these markets is equally mysterious.
Normally, price disparities like these are quickly exploited by
arbitrage traders who buy goods in the cheap market and sell them in
the expensive one. Their buying and selling quickly brings the prices
back into balance — but that is not happening here. “These are highly
competitive markets with very experienced traders,” he said. “Yet they
are leaving these profits alone? It just doesn’t make sense.”

WAIT WHY’D THEY DO THAT?
http://www.voxeu.com/index.php?q=node/466
http://www.voxeu.org/index.php?q=node/505

SPECTRE OF DEPRESSION
HAUNTS FEDERAL RESERVE  (NO RELATION)
http://www.telegraph.co.uk/money/main.jhtml?menuId=242&menuItemId=10359&view=HEADLINESUMMARY&grid=F7&targetRule=14
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/22/ccom122.xml
BY Danny Gabay  /  23/03/2008

Over the past week, the Federal Reserve under Ben Bernanke has taken a
much more aggressive approach to the ongoing credit crisis. It
combined providing $30bn (£15.1bn) to help JP Morgan pick up the
remnants of Bear Sterns with widening the collateral pool it will
accept, extending the period at which it is prepared to lend this new
money, and narrowing the discount spread, with a 75 basis point rate-
cut cherry on top.

As if that were not enough, the Office of Federal Housing Enterprise
Oversight (OFHEO) announced a cut in the surplus capital requirement
for the two government-sponsored bodies which back mortgages, known as
Fannie Mae and Freddie Mac. They say this will immediately inject up
to $200bn of liquidity to the mortgage-backed securities market, as
part of a combined package that could allow them to purchase or
guarantee about $2 trillion in mortgages this year.

This falls just short of throwing the proverbial kitchen sink at the
problem. The question is, will it work? The symbolism of using a
facility developed during the Great Depression, during which the
original JP Morgan made his name by buying up great swaths of the New
York stock market, will have been lost on no one.

But in reality we are thankfully a very long way from those dark days.
Just to put things into some sort of perspective, it is estimated that
around half of the banks that existed in America in 1929 had
disappeared by 1933 – 2,300 in 1931 alone. By contrast, the
delightfully-named Mortgage Lender Implode-O-Meter, which purports to
keep track of each US mortgage provider that “implodes”, says that
some 241 such institutions have hit the wall since late 2006.

Still, investors are clearly nervous. The euphoria which greeted the
smaller than expected cut in the US base rate has given way to more
sombre analysis, as investors have found themselves tripping over
rumours of more and more banks in trouble. Those who have a more
fatalistic outlook might be reminded of the old Jewish joke about a
rabbi who falls out of a 20th-storey window and, as he passes each
floor, mutters to himself: “So far, so good.”

As the crisis has deepened and widened, it can be easy to lose sight
of its original sources: the underlying value of the US housing stock,
the debt accumulated against it, and the willingness of commercial
banks to do business with each other. The number of US houses
completed and now ready for sale stands at around double its
historical average. During the past two US housing downturns, neither
of which was as deep as the present one, completions fell by around
35pc peak to trough.

From today’s level, a similar-sized fall would still leave the stock
of unsold homes higher than the two previous peaks. And while that
oversupply overhang persists, it can create a negative feedback loop,
undermining any recovery. The extent of the overhang today suggests
that it could weigh down the US housing market, and hence the US
consumer, for a long time to come.

An obvious analogy is with the UK in the wake of the early 1990s
housing crash. The level of house prices peaked in the summer of 1989,
and did not rise again until 1996. That may sound unduly negative, but
in fact it probably represents a pretty optimistic outcome for the US.
During that period, the UK managed to rebalance its wayward economy
and fiscal position, as domestic demand grew by less than GDP,
allowing the current account to heal. But it was also a period during
which many economists, journalists and politicians bemoaned the lack
of a so-called “feel-good factor”, as a depressed housing market
weighed on consumer sentiment, even though the economy was growing and
unemployment was falling.

Turning to the wider financial market, evaporation of liquidity in the
interbank market last summer was the first real indication of the
potential scale of this problem. Central banks have approached the
problem in different ways.

The European Central Bank led the charge to inject liquidity last
summer, and continues to view the issue as primarily one of
insufficient liquidity. The Fed, by contrast, perhaps because it is
much closer to the eye of the storm, appeared at first to be more
focused on preventing a liquidity crisis from spilling over into a
macroeconomic crisis, but has since adopted many measures similar to
those already deployed by the ECB.

As usual, the UK position sits somewhere between the two. The Bank
of England has, thankfully, abandoned all talk of moral hazard. As it
found out last week, when it was overwhelmed by demand for the
additional funds it made available to the market, the problem did not
go away with Northern Rock.

In fact, despite all that has been done, said and nationalised, the so-
called interbank spread – the difference between the rate set by the
central bank and the rate at which commercial banks will lend to each
other – remains elevated in US, UK and European markets. Hence the
interbank market remains in distress.

Some have argued that the relative lack of success of either the Fed
or the ECB strategy is a reason to do less. Others have gone further
and argued that central banks should stand aside and let profligate
lenders sink, to cleanse or purge the system.

Bernanke is a keen student of the 1930s, and if we have learned one
thing above all from the Great Depression, it is that the middle of a
banking crisis is not the time to be searching for the moral high
ground. Indeed, there are a number of tentative reasons to think the
Fed’s latest salvo may eventually come to be seen as the point at
which the tide began to turn in its favour.

{Danny Gabay is founder director of Fathom Financial Consulting.}

EMPIRE AS BUSINESS MODEL
http://www.energybulletin.net/12125.html
The Proposed Iranian Oil Bourse
BY Krassimir Petrov  /  17 Jan 2006

I. Economics of Empires

A nation-state taxes its own citizens, while an empire taxes other
nation-states. The history of empires, from Greek and Roman, to
Ottoman and British, teaches that the economic foundation of every
single empire is the taxation of other nations. The imperial ability
to tax has always rested on a better and stronger economy, and as a
consequence, a better and stronger military. One part of the subject
taxes went to improve the living standards of the empire; the other
part went to strengthen the military dominance necessary to enforce
the collection of those taxes.

Historically, taxing the subject state has been in various forms—
usually gold and silver, where those were considered money, but also
slaves, soldiers, crops, cattle, or other agricultural and natural
resources, whatever economic goods the empire demanded and the subject-
state could deliver. Historically, imperial taxation has always been
direct: the subject state handed over the economic goods directly to
the empire.

For the first time in history, in the twentieth century, America was
able to tax the world indirectly, through inflation. It did not
enforce the direct payment of taxes like all of its predecessor
empires did, but distributed instead its own fiat currency, the U.S.
Dollar, to other nations in exchange for goods with the intended
consequence of inflating and devaluing those dollars and paying back
later each dollar with less economic goods—the difference capturing
the U.S. imperial tax. Here is how this happened.

Early in the 20th century, the U.S. economy began to dominate the
world economy. The U.S. dollar was tied to gold, so that the value of
the dollar neither increased, nor decreased, but remained the same
amount of gold. The Great Depression, with its preceding inflation
from 1921 to 1929 and its subsequent ballooning government deficits,
had substantially increased the amount of currency in circulation, and
thus rendered the backing of U.S. dollars by gold impossible. This led
Roosevelt to decouple the dollar from gold in 1932. Up to this point,
the U.S. may have well dominated the world economy, but from an
economic point of view, it was not an empire. The fixed value of the
dollar did not allow the Americans to extract economic benefits from
other countries by supplying them with dollars convertible to gold.

Economically, the American Empire was born with Bretton Woods in 1945.
The U.S. dollar was not fully convertible to gold, but was made
convertible to gold only to foreign governments. This established the
dollar as the reserve currency of the world. It was possible, because
during WWII, the United States had supplied its allies with
provisions, demanding gold as payment, thus accumulating significant
portion of the world’s gold. An Empire would not have been possible
if, following the Bretton Woods arrangement, the dollar supply was
kept limited and within the availability of gold, so as to fully
exchange back dollars for gold. However, the guns-and-butter policy of
the 1960’s was an imperial one: the dollar supply was relentlessly
increased to finance Vietnam and LBJ’s Great Society. Most of those
dollars were handed over to foreigners in exchange for economic goods,
without the prospect of buying them back at the same value. The
increase in dollar holdings of foreigners via persistent U.S. trade
deficits was tantamount to a tax—the classical inflation tax that a
country imposes on its own citizens, this time around an inflation tax
that U.S. imposed on rest of the world.

When in 1970-1971 foreigners demanded payment for their dollars in
gold, The U.S. Government defaulted on its payment on August 15, 1971.
While the popular spin told the story of “severing the link between
the dollar and gold”, in reality the denial to pay back in gold was an
act of bankruptcy by the U.S. Government. Essentially, the U.S.
declared itself an Empire. It had extracted an enormous amount of
economic goods from the rest of the world, with no intention or
ability to return those goods, and the world was powerless to respond—
the world was taxed and it could not do anything about it.

From that point on, to sustain the American Empire and to continue to
tax the rest of the world, the United States had to force the world to
continue to accept ever-depreciating dollars in exchange for economic
goods and to have the world hold more and more of those depreciating
dollars. It had to give the world an economic reason to hold them, and
that reason was oil.

In 1971, as it became clearer and clearer that the U.S Government
would not be able to buy back its dollars in gold, it made in 1972-73
an iron-clad arrangement with Saudi Arabia to support the power of the
House of Saud in exchange for accepting only U.S. dollars for its oil.
The rest of OPEC was to follow suit and also accept only dollars.
Because the world had to buy oil from the Arab oil countries, it had
the reason to hold dollars as payment for oil. Because the world
needed ever increasing quantities of oil at ever increasing oil
prices, the world’s demand for dollars could only increase. Even
though dollars could no longer be exchanged for gold, they were now
exchangeable for oil.

The economic essence of this arrangement was that the dollar was now
backed by oil. As long as that was the case, the world had to
accumulate increasing amounts of dollars, because they needed those
dollars to buy oil. As long as the dollar was the only acceptable
payment for oil, its dominance in the world was assured, and the
American Empire could continue to tax the rest of the world. If, for
any reason, the dollar lost its oil backing, the American Empire would
cease to exist. Thus, Imperial survival dictated that oil be sold only
for dollars. It also dictated that oil reserves were spread around
various sovereign states that weren’t strong enough, politically or
militarily, to demand payment for oil in something else. If someone
demanded a different payment, he had to be convinced, either by
political pressure or military means, to change his mind.

The man that actually did demand Euro for his oil was Saddam Hussein
in 2000. At first, his demand was met with ridicule, later with
neglect, but as it became clearer that he meant business, political
pressure was exerted to change his mind. When other countries, like
Iran, wanted payment in other currencies, most notably Euro and Yen,
the danger to the dollar was clear and present, and a punitive action
was in order. Bush’s Shock-and-Awe in Iraq was not about Saddam’s
nuclear capabilities, about defending human rights, about spreading
democracy, or even about seizing oil fields; it was about defending
the dollar, ergo the American Empire. It was about setting an example
that anyone who demanded payment in currencies other than U.S. Dollars
would be likewise punished.

Many have criticized Bush for staging the war in Iraq in order to
seize Iraqi oil fields. However, those critics can’t explain why Bush
would want to seize those fields—he could simply print dollars for
nothing and use them to get all the oil in the world that he needs. He
must have had some other reason to invade Iraq.

History teaches that an empire should go to war for one of two
reasons: (1) to defend itself or (2) benefit from war; if not, as Paul
Kennedy illustrates in his magisterial The Rise and Fall of the Great
Powers, a military overstretch will drain its economic resources and
precipitate its collapse. Economically speaking, in order for an
empire to initiate and conduct a war, its benefits must outweigh its
military and social costs. Benefits from Iraqi oil fields are hardly
worth the long-term, multi-year military cost. Instead, Bush must have
went into Iraq to defend his Empire. Indeed, this is the case: two
months after the United States invaded Iraq, the Oil for Food Program
was terminated, the Iraqi Euro accounts were switched back to dollars,
and oil was sold once again only for U.S. dollars. No longer could the
world buy oil from Iraq with Euro. Global dollar supremacy was once
again restored. Bush descended victoriously from a fighter jet and
declared the mission accomplished—he had successfully defended the
U.S. dollar, and thus the American Empire.

II. Iranian Oil Bourse

The Iranian government has finally developed the ultimate “nuclear”
weapon that can swiftly destroy the financial system underpinning the
American Empire. That weapon is the Iranian Oil Bourse slated to open
in March 2006. It will be based on a euro-oil-trading mechanism that
naturally implies payment for oil in Euro. In economic terms, this
represents a much greater threat to the hegemony of the dollar than
Saddam’s, because it will allow anyone willing either to buy or to
sell oil for Euro to transact on the exchange, thus circumventing the
U.S. dollar altogether. If so, then it is likely that almost everyone
will eagerly adopt this euro oil system:

· The Europeans will not have to buy and hold dollars in order to
secure their payment for oil, but would instead pay with their own
currencies. The adoption of the euro for oil transactions will provide
the European currency with a reserve status that will benefit the
European at the expense of the Americans.

· The Chinese and the Japanese will be especially eager to adopt the
new exchange, because it will allow them to drastically lower their
enormous dollar reserves and diversify with Euros, thus protecting
themselves against the depreciation of the dollar. One portion of
their dollars they will still want to hold onto; a second portion of
their dollar holdings they may decide to dump outright; a third
portion of their dollars they will decide to use up for future
payments without replenishing those dollar holdings, but building up
instead their euro reserves.

· The Russians have inherent economic interest in adopting the Euro –
the bulk of their trade is with European countries, with oil-exporting
countries, with China, and with Japan. Adoption of the Euro will
immediately take care of the first two blocs, and will over time
facilitate trade with China and Japan. Also, the Russians seemingly
detest holding depreciating dollars, for they have recently found a
new religion with gold. Russians have also revived their nationalism,
and if embracing the Euro will stab the Americans, they will gladly do
it and smugly watch the Americans bleed.

· The Arab oil-exporting countries will eagerly adopt the Euro as a
means of diversifying against rising mountains of depreciating
dollars. Just like the Russians, their trade is mostly with European
countries, and therefore will prefer the European currency both for
its stability and for avoiding currency risk, not to mention their
jihad against the Infidel Enemy.

Only the British will find themselves between a rock and a hard place.
They have had a strategic partnership with the U.S. forever, but have
also had their natural pull from Europe. So far, they have had many
reasons to stick with the winner. However, when they see their century-
old partner falling, will they firmly stand behind him or will they
deliver the coup de grace? Still, we should not forget that currently
the two leading oil exchanges are the New York’s NYMEX and the
London’s International Petroleum Exchange (IPE), even though both of
them are effectively owned by the Americans. It seems more likely that
the British will have to go down with the sinking ship, for otherwise
they will be shooting themselves in the foot by hurting their own
London IPE interests. It is here noteworthy that for all the rhetoric
about the reasons for the surviving British Pound, the British most
likely did not adopt the Euro namely because the Americans must have
pressured them not to: otherwise the London IPE would have had to
switch to Euros, thus mortally wounding the dollar and their strategic
partner.

At any rate, no matter what the British decide, should the Iranian Oil
Bourse accelerate, the interests that matter—those of Europeans,
Chinese, Japanese, Russians, and Arabs—will eagerly adopt the Euro,
thus sealing the fate of the dollar. Americans cannot allow this to
happen, and if necessary, will use a vast array of strategies to halt
or hobble the operation’s exchange:

· Sabotaging the Exchange—this could be a computer virus, network,
communications, or server attack, various server security breaches, or
a 9-11-type attack on main and backup facilities.

· Coup d’état—this is by far the best long-term strategy available to
the Americans.

· Negotiating Acceptable Terms & Limitations—this is another excellent
solution to the Americans. Of course, a government coup is clearly the
preferred strategy, for it will ensure that the exchange does not
operate at all and does not threaten American interests. However, if
an attempted sabotage or coup d’etat fails, then negotiation is
clearly the second-best available option.

· Joint U.N. War Resolution—this will be, no doubt, hard to secure
given the interests of all other member-states of the Security
Council. Feverish rhetoric about Iranians developing nuclear weapons
undoubtedly serves to prepare this course of action.

· Unilateral Nuclear Strike—this is a terrible strategic choice for
all the reasons associated with the next strategy, the Unilateral
Total War. The Americans will likely use Israel to do their dirty
nuclear job.

· Unilateral Total War—this is obviously the worst strategic choice.
First, the U.S. military resources have been already depleted with two
wars. Secondly, the Americans will further alienate other powerful
nations. Third, major dollar-holding countries may decide to quietly
retaliate by dumping their own mountains of dollars, thus preventing
the U.S. from further financing its militant ambitions. Finally, Iran
has strategic alliances with other powerful nations that may trigger
their involvement in war; Iran reputedly has such alliance with China,
India, and Russia, known as the Shanghai Cooperative Group, a.k.a.
Shanghai Coop and a separate pact with Syria.

Whatever the strategic choice, from a purely economic point of view,
should the Iranian Oil Bourse gain momentum, it will be eagerly
embraced by major economic powers and will precipitate the demise of
the dollar. The collapsing dollar will dramatically accelerate U.S.
inflation and will pressure upward U.S. long-term interest rates. At
this point, the Fed will find itself between Scylla and Charybdis—
between deflation and hyperinflation—it will be forced fast either to
take its “classical medicine” by deflating, whereby it raises interest
rates, thus inducing a major economic depression, a collapse in real
estate, and an implosion in bond, stock, and derivative markets, with
a total financial collapse, or alternatively, to take the Weimar way
out by inflating, whereby it pegs the long-bond yield, raises the
Helicopters and drowns the financial system in liquidity, bailing out
numerous LTCMs and hyperinflating the economy.

The Austrian theory of money, credit, and business cycles teaches us
that there is no in-between Scylla and Charybdis. Sooner or later, the
monetary system must swing one way or the other, forcing the Fed to
make its choice. No doubt, Commander-in-Chief Ben Bernanke, a renowned
scholar of the Great Depression and an adept Black Hawk pilot, will
choose inflation. Helicopter Ben, oblivious to Rothbard’s America’s
Great Depression, has nonetheless mastered the lessons of the Great
Depression and the annihilating power of deflations. The Maestro has
taught him the panacea of every single financial problem—to inflate,
come hell or high water. He has even taught the Japanese his own
ingenious unconventional ways to battle the deflationary liquidity
trap. Like his mentor, he has dreamed of battling a Kondratieff
Winter. To avoid deflation, he will resort to the printing presses; he
will recall all helicopters from the 800 overseas U.S. military bases;
and, if necessary, he will monetize everything in sight. His ultimate
accomplishment will be the hyperinflationary destruction of the
American currency and from its ashes will rise the next reserve
currency of the world—that barbarous relic called gold.

.

About the Author
Krassimir Petrov (Krassimir_Petrov [at] hotmail [dot] com) has received his Ph.
D. in economics from the Ohio State University and currently teaches
Macroeconomics, International Finance, and Econometrics at the
American University in Bulgaria. He is looking for a career in Dubai
or the U. A. E.

BUFFETT’S OUT
http://www.pbs.org/wsw/news/fortunearticle_20031026_03.html
[GAVE ALL HIS MONEY AWAY WHILE IT WAS WORTH SOMETHING…]
America’s growing trade deficit is selling the nation out from under
us. Here’s a way to fix the problem — and we need to do it now.

Why I’m not buying the U.S. dollar
BY Warren E. Buffett  /  Oct. 26, 2003

I’m about to deliver a warning regarding the U.S. trade deficit and
also suggest a remedy for the problem. But first I need to mention two
reasons you might want to be skeptical about what I say. To begin, my
forecasting record with respect to macroeconomics is far from
inspiring. For example, over the past two decades I was excessively
fearful of inflation. More to the point at hand, I started way back in
1987 to publicly worry about our mounting trade deficits — and, as
you know, we’ve not only survived but also thrived. So on the trade
front, score at least one “wolf” for me. Nevertheless, I am crying
wolf again and this time backing it with Berkshire Hathaway’s money.
Through the spring of 2002, I had lived nearly 72 years without
purchasing a foreign currency. Since then Berkshire has made
significant investments in — and today holds — several currencies. I
won’t give you particulars; in fact, it is largely irrelevant which
currencies they are. What does matter is the underlying point: To hold
other currencies is to believe that the dollar will decline.

Both as an American and as an investor, I actually hope these
commitments prove to be a mistake. Any profits Berkshire might make
from currency trading would pale against the losses the company and
our shareholders, in other aspects of their lives, would incur from a
plunging dollar.

But as head of Berkshire Hathaway, I am in charge of investing its
money in ways that make sense. And my reason for finally putting my
money where my mouth has been so long is that our trade deficit has
greatly worsened, to the point that our country’s “net worth,” so to
speak, is now being transferred abroad at an alarming rate.

A perpetuation of this transfer will lead to major trouble. To
understand why, take a wildly fanciful trip with me to two isolated,
side-by-side islands of equal size, Squanderville and Thriftville.
Land is the only capital asset on these islands, and their communities
are primitive, needing only food and producing only food. Working
eight hours a day, in fact, each inhabitant can produce enough food to
sustain himself or herself. And for a long time that’s how things go
along. On each island everybody works the prescribed eight hours a
day, which means that each society is self-sufficient.

Eventually, though, the industrious citizens of Thriftville decide to
do some serious saving and investing, and they start to work 16 hours
a day. In this mode they continue to live off the food they produce in
eight hours of work but begin exporting an equal amount to their one
and only trading outlet, Squanderville.

The citizens of Squanderville are ecstatic about this turn of events,
since they can now live their lives free from toil but eat as well as
ever. Oh, yes, there’s a quid pro quo — but to the Squanders, it
seems harmless: All that the Thrifts want in exchange for their food
is Squanderbonds (which are denominated, naturally, in Squanderbucks).

Over time Thriftville accumulates an enormous amount of these bonds,
which at their core represent claim checks on the future output of
Squanderville. A few pundits in Squanderville smell trouble coming.
They foresee that for the Squanders both to eat and to pay off — or
simply service — the debt they’re piling up will eventually require
them to work more than eight hours a day. But the residents of
Squanderville are in no mood to listen to such doomsaying.

Meanwhile, the citizens of Thriftville begin to get nervous. Just how
good, they ask, are the IOUs of a shiftless island? So the Thrifts
change strategy: Though they continue to hold some bonds, they sell
most of them to Squanderville residents for Squanderbucks and use the
proceeds to buy Squanderville land. And eventually the Thrifts own all
of Squanderville.

At that point, the Squanders are forced to deal with an ugly equation:
They must now not only return to working eight hours a day in order to
eat — they have nothing left to trade — but must also work
additional hours to service their debt and pay Thriftville rent on the
land so imprudently sold. In effect, Squanderville has been colonized
by purchase rather than conquest.

It can be argued, of course, that the present value of the future
production that Squanderville must forever ship to Thriftville only
equates to the production Thriftville initially gave up and that
therefore both have received a fair deal. But since one generation of
Squanders gets the free ride and future generations pay in perpetuity
for it, there are — in economist talk — some pretty dramatic
“intergenerational inequities.”

Let’s think of it in terms of a family: Imagine that I, Warren
Buffett, can get the suppliers of all that I consume in my lifetime to
take Buffett family IOUs that are payable, in goods and services and
with interest added, by my descendants. This scenario may be viewed as
effecting an even trade between the Buffett family unit and its
creditors. But the generations of Buffetts following me are not likely
to applaud the deal (and, heaven forbid, may even attempt to welsh on
it).

Think again about those islands: Sooner or later the Squanderville
government, facing ever greater payments to service debt, would decide
to embrace highly inflationary policies — that is, issue more
Squanderbucks to dilute the value of each. After all, the government
would reason, those irritating Squanderbonds are simply claims on
specific numbers of Squanderbucks, not on bucks of specific value. In
short, making Squanderbucks less valuable would ease the island’s
fiscal pain.

That prospect is why I, were I a resident of Thriftville, would opt
for direct ownership of Squanderville land rather than bonds of the
island’s government. Most governments find it much harder morally to
seize foreign-owned property than they do to dilute the purchasing
power of claim checks foreigners hold. Theft by stealth is preferred
to theft by force.

So what does all this island hopping have to do with the U.S.? Simply
put, after World War II and up until the early 1970s we operated in
the industrious Thriftville style, regularly selling more abroad than
we purchased. We concurrently invested our surplus abroad, with the
result that our net investment — that is, our holdings of foreign
assets less foreign holdings of U.S. assets — increased (under
methodology, since revised, that the government was then using) from
$37 billion in 1950 to $68 billion in 1970. In those days, to sum up,
our country’s “net worth,” viewed in totality, consisted of all the
wealth within our borders plus a modest portion of the wealth in the
rest of the world.

Additionally, because the U.S. was in a net ownership position with
respect to the rest of the world, we realized net investment income
that, piled on top of our trade surplus, became a second source of
investable funds. Our fiscal situation was thus similar to that of an
individual who was both saving some of his salary and reinvesting the
dividends from his existing nest egg.

In the late 1970s the trade situation reversed, producing deficits
that initially ran about 1 percent of GDP. That was hardly serious,
particularly because net investment income remained positive. Indeed,
with the power of compound interest working for us, our net ownership
balance hit its high in 1980 at $360 billion.

Since then, however, it’s been all downhill, with the pace of decline
rapidly accelerating in the past five years. Our annual trade deficit
now exceeds 4 percent of GDP. Equally ominous, the rest of the world
owns a staggering $2.5 trillion more of the U.S. than we own of other
countries. Some of this $2.5 trillion is invested in claim checks —
U.S. bonds, both governmental and private — and some in such assets
as property and equity securities.

In effect, our country has been behaving like an extraordinarily rich
family that possesses an immense farm. In order to consume 4 percent
more than we produce — that’s the trade deficit — we have, day by
day, been both selling pieces of the farm and increasing the mortgage
on what we still own.

To put the $2.5 trillion of net foreign ownership in perspective,
contrast it with the $12 trillion value of publicly owned U.S. stocks
or the equal amount of U.S. residential real estate or what I would
estimate as a grand total of $50 trillion in national wealth. Those
comparisons show that what’s already been transferred abroad is
meaningful — in the area, for example, of 5 percent of our national
wealth.

More important, however, is that foreign ownership of our assets will
grow at about $500 billion per year at the present trade-deficit
level, which means that the deficit will be adding about one
percentage point annually to foreigners’ net ownership of our national
wealth. As that ownership grows, so will the annual net investment
income flowing out of this country. That will leave us paying ever-
increasing dividends and interest to the world rather than being a net
receiver of them, as in the past. We have entered the world of
negative compounding — goodbye pleasure, hello pain.

We were taught in Economics 101 that countries could not for long
sustain large, ever-growing trade deficits. At a point, so it was
claimed, the spree of the consumption-happy nation would be braked by
currency-rate adjustments and by the unwillingness of creditor
countries to accept an endless flow of IOUs from the big spenders. And
that’s the way it has indeed worked for the rest of the world, as we
can see by the abrupt shutoffs of credit that many profligate nations
have suffered in recent decades.

The U.S., however, enjoys special status. In effect, we can behave
today as we wish because our past financial behavior was so exemplary
— and because we are so rich. Neither our capacity nor our intention
to pay is questioned, and we continue to have a mountain of desirable
assets to trade for consumables. In other words, our national credit
card allows us to charge truly breathtaking amounts. But that card’s
credit line is not limitless.

The time to halt this trading of assets for consumables is now, and I
have a plan to suggest for getting it done. My remedy may sound
gimmicky, and in truth it is a tariff called by another name. But this
is a tariff that retains most free-market virtues, neither protecting
specific industries nor punishing specific countries nor encouraging
trade wars. This plan would increase our exports and might well lead
to increased overall world trade. And it would balance our books
without there being a significant decline in the value of the dollar,
which I believe is otherwise almost certain to occur.

We would achieve this balance by issuing what I will call Import
Certificates (ICs) to all U.S. exporters in an amount equal to the
dollar value of their exports. Each exporter would, in turn, sell the
ICs to parties — either exporters abroad or importers here — wanting
to get goods into the U.S. To import $1 million of goods, for example,
an importer would need ICs that were the byproduct of $1 million of
exports. The inevitable result: trade balance.

Because our exports total about $80 billion a month, ICs would be
issued in huge, equivalent quantities — that is, 80 billion
certificates a month — and would surely trade in an exceptionally
liquid market. Competition would then determine who among those
parties wanting to sell to us would buy the certificates and how much
they would pay. (I visualize that the certificates would be issued
with a short life, possibly of six months, so that speculators would
be discouraged from accumulating them.)

For illustrative purposes, let’s postulate that each IC would sell for
10 cents — that is, 10 cents per dollar of exports behind them. Other
things being equal, this amount would mean a U.S. producer could
realize 10 percent more by selling his goods in the export market than
by selling them domestically, with the extra 10 percent coming from
his sales of ICs.

In my opinion, many exporters would view this as a reduction in cost,
one that would let them cut the prices of their products in
international markets. Commodity-type products would particularly
encourage this kind of behavior. If aluminum, for example, was selling
for 66 cents per pound domestically and ICs were worth 10 percent,
domestic aluminum producers could sell for about 60 cents per pound
(plus transportation costs) in foreign markets and still earn normal
margins. In this scenario, the output of the U.S. would become
significantly more competitive and exports would expand. Along the
way, the number of jobs would grow.

Foreigners selling to us, of course, would face tougher economics. But
that’s a problem they’re up against no matter what trade “solution” is
adopted — and make no mistake, a solution must come. (As Herb Stein
said, “If something cannot go on forever, it will stop.”) In one way
the IC approach would give countries selling to us great flexibility,
since the plan does not penalize any specific industry or product. In
the end, the free market would determine what would be sold in the
U.S. and who would sell it. The ICs would determine only the aggregate
dollar volume of what was sold.

To see what would happen to imports, let’s look at a car now entering
the U.S. at a cost to the importer of $20,000. Under the new plan and
the assumption that ICs sell for 10 percent, the importer’s cost would
rise to $22,000. If demand for the car was exceptionally strong, the
importer might manage to pass all of this on to the American consumer.
In the usual case, however, competitive forces would take hold,
requiring the foreign manufacturer to absorb some, if not all, of the
$2,000 IC cost.

There is no free lunch in the IC plan: It would have certain serious
negative consequences for U.S. citizens. Prices of most imported
products would increase, and so would the prices of certain
competitive products manufactured domestically. The cost of the ICs,
either in whole or in part, would therefore typically act as a tax on
consumers.

That is a serious drawback. But there would be drawbacks also to the
dollar continuing to lose value or to our increasing tariffs on
specific products or instituting quotas on them — courses of action
that in my opinion offer a smaller chance of success. Above all, the
pain of higher prices on goods imported today dims beside the pain we
will eventually suffer if we drift along and trade away ever larger
portions of our country’s net worth.

I believe that ICs would produce, rather promptly, a U.S. trade
equilibrium well above present export levels but below present import
levels. The certificates would moderately aid all our industries in
world competition, even as the free market determined which of them
ultimately met the test of “comparative advantage.”

This plan would not be copied by nations that are net exporters,
because their ICs would be valueless. Would major exporting countries
retaliate in other ways? Would this start another Smoot-Hawley tariff
war? Hardly. At the time of Smoot-Hawley we ran an unreasonable trade
surplus that we wished to maintain. We now run a damaging deficit that
the whole world knows we must correct.

For decades the world has struggled with a shifting maze of punitive
tariffs, export subsidies, quotas, dollar-locked currencies, and the
like. Many of these import-inhibiting and export-encouraging devices
have long been employed by major exporting countries trying to amass
ever larger surpluses — yet significant trade wars have not erupted.
Surely one will not be precipitated by a proposal that simply aims at
balancing the books of the world’s largest trade debtor. Major
exporting countries have behaved quite rationally in the past and they
will continue to do so — though, as always, it may be in their
interest to attempt to convince us that they will behave otherwise.

The likely outcome of an IC plan is that the exporting nations —
after some initial posturing — will turn their ingenuity to
encouraging imports from us. Take the position of China, which today
sells us about $140 billion of goods and services annually while
purchasing only $25 billion. Were ICs to exist, one course for China
would be simply to fill the gap by buying 115 billion certificates
annually. But it could alternatively reduce its need for ICs by
cutting its exports to the U.S. or by increasing its purchases from
us. This last choice would probably be the most palatable for China,
and we should wish it to be so.

If our exports were to increase and the supply of ICs were therefore
to be enlarged, their market price would be driven down. Indeed, if
our exports expanded sufficiently, ICs would be rendered valueless and
the entire plan made moot. Presented with the power to make this
happen, important exporting countries might quickly eliminate the
mechanisms they now use to inhibit exports from us.

Were we to install an IC plan, we might opt for some transition years
in which we deliberately ran a relatively small deficit, a step that
would enable the world to adjust as we gradually got where we need to
be. Carrying this plan out, our government could either auction
“bonus” ICs every month or simply give them, say, to less-developed
countries needing to increase their exports. The latter course would
deliver a form of foreign aid likely to be particularly effective and
appreciated.

I will close by reminding you again that I cried wolf once before. In
general, the batting average of doomsayers in the U.S. is terrible.
Our country has consistently made fools of those who were skeptical
about either our economic potential or our resiliency. Many
pessimistic seers simply underestimated the dynamism that has allowed
us to overcome problems that once seemed ominous. We still have a
truly remarkable country and economy.

But I believe that in the trade deficit we also have a problem that is
going to test all of our abilities to find a solution. A gently
declining dollar will not provide the answer. True, it would reduce
our trade deficit to a degree, but not by enough to halt the outflow
of our country’s net worth and the resulting growth in our investment-
income deficit.

Perhaps there are other solutions that make more sense than mine.
However, wishful thinking — and its usual companion, thumb sucking —
is not among them. From what I now see, action to halt the rapid
outflow of our national wealth is called for, and ICs seem the least
painful and most certain way to get the job done. Just keep
remembering that this is not a small problem: For example, at the rate
at which the rest of the world is now making net investments in the
U.S., it could annually buy and sock away nearly 4 percent of our
publicly traded stocks.

In evaluating business options at Berkshire, my partner, Charles
Munger, suggests that we pay close attention to his jocular wish: “All
I want to know is where I’m going to die, so I’ll never go there.”
Framers of our trade policy should heed this caution — and steer
clear of Squanderville.

U.S. BANKRUPT SINCE 1971?
Summary in one paragraph: “This is the leader of the Swedish Pirate
Party explaining how the US went bankrupt in 1971, and has been
covering it up through an accelerating whack-a-mole borrowing frenzy
that is bursting right now. It has been paying rapidly growing VISA
bills using MasterCard and vice versa for 37 years. The creditors are
catching up, and the US is about to go extinct as a superpower. Become
irrelevant. It is not yet on its death bed, it is still walking,
breathing and capable of entertaining a conversation in public. But
there are ominous bloodstains on its hands used to cover the painful
coughing.”

MEASURING ONE’S ‘COLLAPSE GAP’
http://www.falkvinge.com/2008/03/why-us-is-collapsing.html
Why the US is collapsing
BY Rick Falkvinge  /  March 22, 2008

Last summer, I wrote (in Swedish) about how the US is in grave danger
of becoming the Fourth Reich. I also said that such a state would not
last for more than 15 years, because of a number of factors I would
elaborate on later.

I was right about the sequence of events, but horribly off on the
timing. Where I had expected them to happen gradually in about ten or
15 years, instead they are unfolding before my eyes at an accelerating
pace.

Some people believe that pirate politics is somehow about the right to
obtain music and movies without paying. Some, a bit more initiated,
believe it is for fight for civil liberties. In that, they are
correct. But few understand the scope of this fight. It is not against
the music industry. It is not against entertainment cartels.

I see the pirate fight as being against corrupt governments that
systematically curtail civil liberties as the primary and only defense
of a gigantic and growing financial bubble, built over four decades. A
fight against a small elite that are literally killing people to be
able to keep living in luxury without paying the bills for it. Some
bloggers have called this Fascism 2.0. The entertainment cartels are
just a small part of this bubble, and fascism is used here in its most
lexical sense.

fascism n. a merging of the interests of big corporations and
government, adjoined with a systematic curtailment of civil liberties

In order to understand what pirate politics are really about, you need
to understand global economic politics in ways that most people will
never encounter. You need to understand the gold coin of Bretton-
Woods, Toyota’s impact on Detroit, the strategic dollar advantage of
the Marshall Plan, why the WTO and UN WIPO are rivals, how and why the
US uses threats of trade sanctions, and how money is created and
ceases to exist on today’s financial markets. I will cover the basics
in this blog post.

The most prominent of these bubble-pumping governments is the US. And
their bubble is bursting. The dollar is not just falling in exchange
rate, as in “oh, the curves are on a downslope, interesting, btw I
wonder what’s for lunch today”. The US dollars are about to become as
irrelevant as the rubles, the deutschmarks, and the sesertii.

For these empires – the Soviet, German and Roman empire – followed the
exact same pattern. And if history is a teacher, future empires will
do so too.

THE DOLLAR BUBBLE
Part I: Background

Some of you may have noticed that the dollar has lost some of its
value against other currencies, the euro in particular. Usually, with
a healthy currency, this would not be a cause for alarm, other that a
sign that the American households might be overborrowing and
overmortgaging, and thus increasing the money supply, causing the rate
to fall due to supply/demand rules.

It is much more serious than that.

Let’s go back to 1947. The US did two extremely strategic moves at
that point. One was called The Marshall Plan and looked like charity,
giving money away to all of war-torn Europe, officially to help repel
communism.

Three years prior, it had established the Bretton Woods system, which
put the US Dollar at the center of rebuilding the countries, and
guaranteed an exchange in gold for the US Dollar. Every 35 US Dollars
would be exchangable and refundable with one ounce in gold.

I genuinely believe that these two deals were good for everybody
involved. The ruined Europe got a foundation for rebuilding its
nations.

But what the US accomplished was much more important than that: it
succeeded in making its own currency into a world currency. The dollar
became the trade standard.

This status is extremely important. In fact, it carries the entire US
economy and its continuous overspending. Let’s stop for a moment to
understand why.

Every nation has a currency reserve today. Savings in a piggy bank, if
you like. This currency reserve was filled with the world’s most
stable and standard currency, the dollar.

Let’s take that again: every nation has been buying dollars for the
past 60 years just to stockpile it, because the US Dollar has been the
standard currency.

And since they are buying the dollar, this means that the US is
getting something else of value in return. In effect, the US has been
able to print money at a rate that outpaces its industrial production,
just because countries have been buying its currency.

At the end of 2007, this stockpile across the world was two and a half
trillion dollars. More specifically, it was 2,445,180 million dollars.

What this means, is that unless the US has an equivalent on two and a
half trillion dollars in cash on hand, which it absolutely doesn’t,
the US has consumed goods and services for two and a half trillion
dollars that are not yet paid for. The countries bought dollars in
exchange for yen-or-whatever, the US bought shiny toys for the yen-or-
whatever, and never gave it a second thought.

This is like going on a shopping spree and paying with checks, and
having the luxury of the checks never arriving at the bank to charge
the account.

But the checks for that two and a half trillion dollars haven’t
vanished. They are sitting in vaults. And they are starting to trickle
in to the bank. A barely noticeable dripping at first, it is now
starting to turn into a small stream, and once people figure out what
is happening, it’s going to be a burst dam torrenting down the valley
of global finance.

How much is two and a half trillion dollars? Actually, it isn’t a lot
of money in the global economy. It’s about $7,500 for every man, woman
and child in the US. It is about four years’ worth of American
military spending. It’s about one-quarter of the American GDP.

The key here, however, is not how much money it is. It is that there
is no financial coverage for it. Spending $1,000 on a TV set isn’t a
lot of money, but it can cause a lot of bad consequences for you and
your standing if you don’t happen to have those $1,000, and no more
creditors are willing to lend you a hand.

And the US is running out of new creditors fast.

DUMPING GOLD
Part II: The war bankrupted the US

I wrote previously, that under the Bretton-Woods agreement, the dollar
was essentially an IOU. A loan paper, an obligation to the US. Every
35 dollars was good for one ounce of gold, to be paid at any time of
the creditor’s choosing. However, the war tore through the American
economy like a plough through a golf course. At the start of the war,
the gold coverage was 55%, which is healthy by modern bank standards.
During just 1970, however, that coverage dwindled from 55% to 22%.

Wait. 1970? Right. I’m not talking about Iraq. I’m talking about
Vietnam.

At this point, economists no longer believed in the US’ capacity of
regulating its expenditure and making good on its promises.
International pressure mounted to exchange dollars for the promised
gold, particularly from France, which converted large amounts of its
dollar currency reserves into gold at this time. It was a run on the
bank to withdraw the savings while the bank was still alive.

On August 15, 1971, president Nixon declared bankruptcy. It wasn’t
worded like that, of course. But what Nixon did was to state that the
US would no longer honor its creditors and pay gold for the dollar. He
declared the credit documents invalid. This event has been dubbed The
Nixon Shock. In any other milieu, cancelling payments is the same as
declaring bankruptcy. Here, it was “just an executive order”, and the
world at large didn’t really appreciate its consequences.

One such consequence was that the US was free to print as much money
as anyone was willing to buy, inflating the bubble without any check,
balance, or irritating warning light.

At the end of 1995, the foreign US Dollar stockpile was 610,337
million dollars. As I wrote earlier, today that number has grown to
2,445,180 million. That’s close to two trillion in 13 years. A
fourfolding of the debt. A 300% increase. Who is buying all of these
dollars?

Asian countries, it turns out. A small handful of countries have been
derogatorily called ODIC – Organization of Dollar Importing Countries.

The U.S. trade deficit was 763.6 billion dollars in 2006. This means
that the United States bought goods and services for three-quarters of
a trillion more than it was able to sell to other countries. Where did
the US get three-quarters of a trillion dollars to fund this trade
deficit in 2006? And an equal amount in 2007? And 2005?

You should start to get the answer by now. It didn’t. Part of it came
for printing money for foreign cash reserves, predominantly Asian
ones. In any case, the US spent that money anyway.

To put this in context, in a list of global trade balances for 164
countries, the US is at the bottom of the list. The worst of all
measured countries.

Not only that, but the silver medal goes to a country with a trade
deficit of 125 billion dollars. That means that the US’ trade deficit
is six times larger than the second worst! We’re not talking about a
goal photo here to determine who’s the worst offender, folks, we’re
talking about piles of money that are burning so big and fast you can
see the smoke from weather satellites!

The US is running a federal budget deficit as well, with a current
official debt running over nine trillion dollars and increasing fast.

TO YO TA
Part III: Compensating by enforcing lopsided trade terms

Towards the end of the 1970s, economists in the US administration
panicked. The Japanese cars, which flooded the market, struck at the
heart of the American pride.

Foreign cars were better than American cars from proud Detroit. This
just could not happen. Toy-o-ta. Even the name didn’t sound very
American. And yet, people in America were rejecting the pinnacle of
American engineering – cars – for a foreign-produced equivalent.

So the administration concluded quite simply that American’s dominance
in industrial production was over. Far from throwing in the towel,
another question was asked: “How can the US have a continued economic
dominance in a world where the US does not have an industrial
production of tradeable value?”

The answer came from an unexpected source.

Some time in the early 1980s, the then-CEO of Pfizer, Edmund Pratt,
was frustrated with competition from foreign companies that (quite
legally) copied and improved Pfizer’s products. At the point, however,
there was no way to change foreign laws to create a trade environment
where such competition would be outlawed.

To cut a long story short, Pratt ended up on the ACTN – the Advisory
Committee on Trade Negotiations – and recommended a plan to the
Department of Commerce that would guarantee American trade
superiority.

In short, it involved a two-pronged approach. The first part of it was
to enforce trade laws that favored American interests, and then
establishing “free trade” within that framework, set up to favor US
interests. The second part was to threaten trade sanctions against
countries that did not agree to this lopsided “free trade” agreement.

At first this was believed a risky business, since trade sanctions had
never been used as part of a systematic policy before, but only used
in exceptional cases. However, the strategy – focused on intellectual
“property”, i.e. mostly-American monopolies – turned out to work
extremely well.

A forum was sought to establish the new American trade terms as a
world standard. Pratt and ACTN went to WIPO, the UN-controlled World
Intellectual Property Organization, to seek their blessing. They were
basically thrown out on their faces, when the UN realized what they
were trying to accomplish.

So hijacking another vessel became necessary. That vessel was the
GATT, General Agreement on Tariffs and Trade.

Using a combination of unilateral threats, bilateral agreements of
“free” lopsided trade, and multilateral agreements once enough
countries had agreed to the terms, an all-encompassing and lopsided
trade agreement was devised. It would prohibit third world countries
from manufacturing medicine to save lives in their own population. It
would make sure that established players, primarily in the US, could
outmaneouver upstarts not by building better products, but through the
legal framework. The companies in the agreement, such as the record
industry, are now lobbying for warrantless searches of people’s mail
and homes to find out when their monopolies are infringed.

Using a combination of deceit and tricky negotiations, the agreement
was signed by many enough countries. That agreement is called TRIPs.
The vessel enforcing it is GATT, which was renamed World Trade
Organization, or WTO.

And that is how America came to enforce its monopolies over civil
liberties of the people in the US and elsewhere. The key takeaways
here is that America deliberately skewed international trade through a
combination of threats and coercion, in an attempt to irrelevantize
the fact that American industry didn’t produce anything sellable.

With the US now having a record trade deficit, the strategy has
ultimately failed.

(The full background to the TRIPs agreement can be found in the book
Information Feudalism. A very worthwhile, although very heavy, read.)

MONEY AS DEBT
Part IV: Understanding the monetary system

Most people, I would say it’s so “most” it can be approximated to
“all”, do not know where money comes from. How does a dollar appear?
If there is $1,000,000,000 in the total economy, who makes the
decision to change that number to $1,000,000,100?

Most people would answer “the government” or “the central bank”. This
is wrong.

The correct answer is: you do. When you borrow a hundred dollars,
those hundred dollars appear magically in the economy. They did not
exist before and will not exist after they have been repaid.

The monetary system works like this, somewhat simplified: a bank must
have a certain fraction of its outstanding loans as savings accounts.
If that fraction is 1/9 (a common number), and you deposit $1,000 in a
bank, that bank has the right to lend $9,000 to other people, at a
higher interest.

UPDATE II: the above paragraph has received a lot of comments on
various forums. To clarify: I simplified it a bit to not go into too
much detail. In the full somewhat more complex picture, the $1,000-
becomes-another-$9,000 involves a cascade of deposits in different
banks, multiplying the original limit. The first bank can only lend
$900 for the $1,000 of deposit, but those $900 becomes a deposit
somewhere else, generating another $810 in debt and magical new money,
which becomes a deposit in turn, etc, and that’s how $1,000 of deposit
generates another $9,000 of magical new shiny money in the economy. If
you’re interested, I reiterate – take 45 minutes to watch the Money As
Debt animation.

This is called the Fractional Reserve banking system. It is now doing
its third tour of the United States, introduced by President Wilson in
1913. Before that, Andrew Jackson killed the second tour in 1836.

Lately, through lobbying and obscurity, the fractional reserve
requirement has all but disappeared. Banks can now practically create
as much money as you want to borrow.

In short, while Andrew Jackson was able to remove the central
bank, he wasn’t able to eliminate unsound fractional reserve banking.
When one such unsound bank in Massachusetts collapsed, it was
discovered that its bank note circulation of $500,000 was backed by
exactly $86.48. Why is this obvious absurdity, and the banks’
protection from criminal prosecution if they suspended payments, not
called into question?

This has a number of interesting consequences. From a monetary
perspective, it means that if the interest rate is 4%, then 4% of all
credit will default, as that money must be used to pay interest on the
remaining money pool. Since every dollar in the system is borrowed,
every dollar is also owed interest on. Every single one. Where would
the money come from to pay that interest? The answer is that it
doesn’t. The system is designed so that a certain percentage of people
must go bankrupt.

Europe has had a similar system since the 1600s. If you’re interested
in more about this, I would very much recommend the 47-minute movie
Money As Debt.


http://video.google.com/videoplay?docid=-9050474362583451279

But the most important aspect is that the money supply is tightly tied
to household borrowing. If people were frugal and economical, and
everybody paid off all their debts, there would not any money left in
the economy! There would be a shortage of money, meaning that there
would not be any money to pay wages, rents, or creating new
businesses.

On the other side, the more people borrow (particularly using house
mortgages), the richer everybody feels because it increases the money
supply, without increasing actual value of goods, commodities and
services.

In 2006, this household debt was $45 trillion, compared to $5 trillion
in 1969. The money supply has been expanded ninefold.

This is significant because a collapse of the credit system means a
collapse of the money supply, and therefore create a society where
nobody will have any money.

You can see where I’m going with this with the recent subprime
mortgage market collapse, which is now snowballing.

Oh, and you’ve heard about the crash of 1929? The crash which
everybody talked about as the worst in history? That crash saw a mere
27% reduction in the money supply. Compare this with the fact that if
the US is forced into going back to a pre-1971, pre-bubble economy,
we’ll see an 89% reduction in the money supply.

To be absolutely clear: These numbers mean that in a worst case
scenario, every working citizen in the US is about to receive an 89%
pay cut on average. The best case scenario is hard to predict but I’m
betting my money that the money supply will reduce a good bit more
than the 27% of 1929.

The United States is heading for something that will make 1929 look
like just an ordinarily disturbing day with some red numbers. And its
fall will affect the rest of the Western world, as well.

CARGO CULT ECONOMICS
Part V: The fall of the dollar and of the US

Like I wrote previously, the US’ money printing machine is dependent
on the dollar being the world standard currency. It was so by legacy
even after the collapse of Bretton-Woods in 1971. No other economy was
large enough to back another currency. There was no competition for a
world standard.

Until 1999.

Since a few years back, the European Union has a larger economy than
the United States. This is according to three different sources, all
American: CIA, the World Bank, and the International Monetary Fund.

Let’s take that again, because it is a shock to many: The European
Union has a larger economy than the United States. A larger economy
with which to back its currency, the euro. Reuters reported this the
other day, but incorrectly attributed it to the decline of the dollar.
It has been true since at least 2005.

When the euro debuted in 1999, it was introduced at just above the US
dollar, but quickly fell to about .89, lower than the dollar. Today,
it is trading at 1.55 dollars per euro. Two euros is more than three
dollars.

To put fuel to the fire, the American Federal Reserve is expected to
cut interest rates on the dollar from 2.25% to 1% by mid-2008. In
contrast, the European Central Bank has been holding interest steady
at 4%.

What do the central banks’ interest rates have to do with this?

When keeping a national reserve, choosing between the dollar and euro
here is like having a choice of two different banks with different
interest rates. Everything else being equal, anybody rational would
choose the euro as savings account, because it gives a better interest
rate. But as I have already said, everything else is not equal. The
dollar is losing value quickly, too.

Many empires have overspent on their military using borrowed money,
and collapsed as a result. This was a major reason for the fall of the
Soviet Union, for instance. It is generally agreed that the
macroeconomically sustainable limit for military spending hovers
around 2% of GDP.

The US is currently spending 5% of its GDP on its military. It tops
the league of military spenders with an expenditure of 625 billion
dollars yearly. (That’s before emergency expenditures for the ongoing
war.) To hide the real numbers, only $515B are allocated to the
Pentagon openly. You need to dig deeper to discover that the funds for
building and maintaining the expensive nuclear arsenal lies with the
Department of Energy. The funds for funding and training insurgents
across the world lies with the Secretary of State. And so on.

To put this number in perspective, the world’s second largest spender
– China – spends $60 billion. About one-tenth. The total world
military spending is $1.1 trillion. This means the US spends more on
its military than the rest of the world combined.

The same U.S. military is also used to enforce the dollar bubble.

Like I said earlier, the dominance of the US depends on the dollar
being a standard currency. But with Bretton-Woods gone, the dollar’s
status as a world standard instead depends on many other things.

One of these things is oil trade.

Oil is currently – mostly – traded in dollars per barrel, which
creates a defacto dollar-based economy. A few years back, one
prominent oil producer switched to trading in euros per barrel.

This threatened the entire stability of the dollar as a world
currency, and by extension, the US’ economic bubble. After some chaos
and turmoil involving the bubble-funded US military, that particular
country is now exporting oil by the dollar again, thus once again
contributing to the dollar bubble.

That country was Iraq.

(The interpretation that the US administration invaded to protect its
currency bubble is mine and mine alone. But in this light of things,
it would have made perfect sense to do so. The alternative to spending
trillions on the war would have been risking a collapse of the entire
economy, one that now seems inevitable anyway. When I have checked
this hypothesis with Americans, though, they generally brush it off,
saying that I vastly overestimate the intelligence of the current
president.)

Today, Venezuela is trading in euros per barrel, and Iran has
announced plans to open a euro-based oil bourse in Teheran. (Yes, the
same Iran that the Republican candidate McCain is now singing about
bombing.)

In international trade, more and more agreements are being signed in
euros where anything else than dollars would have been unthinkable a
few years back. In New York, tourist shops are now brandishing “we
accept euro” signs – equally unthinkable a few years back. In
Amsterdam, most exchange offices have stopped accepting dollars for
currency altogether. It is falling so fast, they can’t resell it for
profit any longer.

In China, exporters are complaining about the cost of currency
insurance on trade deals signed in dollars, and are switching to the
euro. In Germany, Volkswagen is not selling one of its top models to
the US solely due to the falling dollar. In Tchad in Africa, people on
the streets have switched to the euro.

The thing that happens when we reach a critical tipping point – which
may already be here – and currency reserves start switching from the
dollar to the euro en masse, is that the collection agencies of the
world’s economy will come for two and a half trillion dollars of US
debt, which is currently held in stasis in currency reserves.

There is nothing that can pay these two and a half trillion dollars of
debt when the repo man comes knocking.

That tipping point will kill the dollar as a currency, sending it
plummeting to levels previously inconceivable. It will kill the dollar
as a world trade standard, the American economy, the American
military, and the United States’ status as a superpower. Just like
when the Soviet union collapsed. It is even conceivable that the
United States will fracture as a nation, just like the Soviet Union
did.

But unlike the Soviet Union, the American public will be hit hard. In
the Soviet Union, not much changed when the government-owned homes
weren’t paid for. They hadn’t been before either. Not much changed
when the food supplies were formally not coming, for they had not come
before either. People had learned to live with a malfunctioning
system. In the US, however, a lot of people will lose their homes and
might not be able to get food. This is not a recipe for a happy
society.

One prominent US economics professor recommends immediate investments
in precious metals: “gold, silver, and copper-jacketed lead”.

This difference in functionality of society before and after a
collapse is called the collapse gap. And it’s much larger in the US
than what it was in the Soviet Union, Germany, or Rome.

Final words

This is what the pirate fight is about, in my eyes. Preventing fascism
from spreading amongst corrupt administrations; defending civilization
against the systematic curtailment of civil liberties in order to
maintain a false image of prosperity and enrichen a self-serving
elite. You could even say “defending democracy”. The file sharing
debate is but the symbol, but a very powerful symbol. Like the
insignificant Belgian village of Waterloo, or the small overlooked
Pennsylvanian town named Gettysburg. They, too, were important
battlegrounds.

The US is already lost. I can think of no action that would prevent
its downfall. My fight is for Europe, which has copied every US
“intellectual property” policy in what can only be described as cargo
cult economics, and risks a similar fate.

CLOSING THE COLLAPSE GAP
http://energybulletin.net/23259.html

The USSR was better prepared for collapse than the US
BY Dmitry Orlov  /  4 Dec 2006

Good evening, ladies and gentlemen. I am not an expert or a scholar or
an activist. I am more of an eye-witness. I watched the Soviet Union
collapse, and I have tried to put my observations into a concise
message. I will leave it up to you to decide just how urgent a message
it is.

My talk tonight is about the lack of collapse-preparedness here in the
United States. I will compare it with the situation in the Soviet
Union, prior to its collapse. The rhetorical device I am going to use
is the “Collapse Gap” – to go along with the Nuclear Gap, and the
Space Gap, and various other superpower gaps that were fashionable
during the Cold War.

Slide [2] The subject of economic collapse is generally a sad one. But
I am an optimistic, cheerful sort of person, and I believe that, with
a bit of preparation, such events can be taken in stride. As you can
probably surmise, I am actually rather keen on observing economic
collapses. Perhaps when I am really old, all collapses will start
looking the same to me, but I am not at that point yet.

And this next one certainly has me intrigued. From what I’ve seen and
read, it seems that there is a fair chance that the U.S. economy will
collapse sometime within the foreseeable future. It also would seem
that we won’t be particularly well-prepared for it. As things stand,
the U.S. economy is poised to perform something like a disappearing
act. And so I am eager to put my observations of the Soviet collapse
to good use.

Slide [3] I anticipate that some people will react rather badly to
having their country compared to the USSR. I would like to assure you
that the Soviet people would have reacted similarly, had the United
States collapsed first. Feelings aside, here are two 20th century
superpowers, who wanted more or less the same things – things like
technological progress, economic growth, full employment, and world
domination – but they disagreed about the methods. And they obtained
similar results – each had a good run, intimidated the whole planet,
and kept the other scared. Each eventually went bankrupt.

Slide [4] The USA and the USSR were evenly matched in many categories,
but let me just mention four.

The Soviet manned space program is alive and well under Russian
management, and now offers first-ever space charters. The Americans
have been hitching rides on the Soyuz while their remaining spaceships
sit in the shop.

The arms race has not produced a clear winner, and that is excellent
news, because Mutual Assured Destruction remains in effect. Russia
still has more nuclear warheads than the US, and has supersonic cruise
missile technology that can penetrate any missile shield, especially a
nonexistent one.

The Jails Race once showed the Soviets with a decisive lead, thanks to
their innovative GULAG program. But they gradually fell behind, and in
the end the Jails Race has been won by the Americans, with the highest
percentage of people in jail ever.

The Hated Evil Empire Race is also finally being won by the Americans.
It’s easy now that they don’t have anyone to compete against.

Slide [5] Continuing with our list of superpower similarities, many of
the problems that sunk the Soviet Union are now endangering the United
States as well. Such as a huge, well-equipped, very expensive
military, with no clear mission, bogged down in fighting Muslim
insurgents. Such as energy shortfalls linked to peaking oil
production. Such as a persistently unfavorable trade balance,
resulting in runaway foreign debt. Add to that a delusional self-
image, an inflexible ideology, and an unresponsive political system.

Slide [6] An economic collapse is amazing to observe, and very
interesting if described accurately and in detail. A general
description tends to fall short of the mark, but let me try. An
economic arrangement can continue for quite some time after it becomes
untenable, through sheer inertia. But at some point a tide of broken
promises and invalidated assumptions sweeps it all out to sea. One
such untenable arrangement rests on the notion that it is possible to
perpetually borrow more and more money from abroad, to pay for more
and more energy imports, while the price of these imports continues to
double every few years. Free money with which to buy energy equals
free energy, and free energy does not occur in nature. This must
therefore be a transient condition. When the flow of energy snaps back
toward equilibrium, much of the US economy will be forced to shut
down.

Slide [7] I’ve described what happened to Russia in some detail in one
of my articles, which is available on SurvivingPeakOil.com. I don’t
see why what happens to the United States should be entirely
dissimilar, at least in general terms. The specifics will be
different, and we will get to them in a moment. We should certainly
expect shortages of fuel, food, medicine, and countless consumer
items, outages of electricity, gas, and water, breakdowns in
transportation systems and other infrastructure, hyperinflation,
widespread shutdowns and mass layoffs, along with a lot of despair,
confusion, violence, and lawlessness. We definitely should not expect
any grand rescue plans, innovative technology programs, or miracles of
social cohesion.

Slide [8] When faced with such developments, some people are quick to
realize what it is they have to do to survive, and start doing these
things, generally without anyone’s permission. A sort of economy
emerges, completely informal, and often semi-criminal. It revolves
around liquidating, and recycling, the remains of the old economy. It
is based on direct access to resources, and the threat of force,
rather than ownership or legal authority. People who have a problem
with this way of doing things, quickly find themselves out of the
game.

These are the generalities. Now let’s look at some specifics.

Slide [9] One important element of collapse-preparedness is making
sure that you don’t need a functioning economy to keep a roof over
your head. In the Soviet Union, all housing belonged to the
government, which made it available directly to the people. Since all
housing was also built by the government, it was only built in places
that the government could service using public transportation. After
the collapse, almost everyone managed to keep their place.

In the United States, very few people own their place of residence
free and clear, and even they need an income to pay real estate taxes.
People without an income face homelessness. When the economy
collapses, very few people will continue to have an income, so
homelessness will become rampant. Add to that the car-dependent nature
of most suburbs, and what you will get is mass migrations of homeless
people toward city centers.

Slide [10] Soviet public transportation was more or less all there
was, but there was plenty of it. There were also a few private cars,
but so few that gasoline rationing and shortages were mostly
inconsequential. All of this public infrastructure was designed to be
almost infinitely maintainable, and continued to run even as the rest
of the economy collapsed.

The population of the United States is almost entirely car-dependent,
and relies on markets that control oil import, refining, and
distribution. They also rely on continuous public investment in road
construction and repair. The cars themselves require a steady stream
of imported parts, and are not designed to last very long. When these
intricately interconnected systems stop functioning, much of the
population will find itself stranded.

Slide [11] Economic collapse affects public sector employment almost
as much as private sector employment, eventually. Because government
bureaucracies tend to be slow to act, they collapse more slowly. Also,
because state-owned enterprises tend to be inefficient, and stockpile
inventory, there is plenty of it left over, for the employees to take
home, and use in barter. Most Soviet employment was in the public
sector, and this gave people some time to think of what to do next.

Private enterprises tend to be much more efficient at many things.
Such laying off their people, shutting their doors, and liquidating
their assets. Since most employment in the United States is in the
private sector, we should expect the transition to permanent
unemployment to be quite abrupt for most people.

Slide [12] When confronting hardship, people usually fall back on
their families for support. The Soviet Union experienced chronic
housing shortages, which often resulted in three generations living
together under one roof. This didn’t make them happy, but at least

they were used to each other. The usual expectation was that they
would stick it out together, come what may.

In the United States, families tend to be atomized, spread out over
several states. They sometimes have trouble tolerating each other when
they come together for Thanksgiving, or Christmas, even during the
best of times. They might find it difficult to get along, in bad
times. There is already too much loneliness in this country, and I
doubt that economic collapse will cure it.

Slide [13] To keep evil at bay, Americans require money. In an
economic collapse, there is usually hyperinflation, which wipes out
savings. There is also rampant unemployment, which wipes out incomes.
The result is a population that is largely penniless.

In the Soviet Union, very little could be obtained for money. It was
treated as tokens rather than as wealth, and was shared among friends.
Many things – housing and transportation among them – were either free
or almost free.

Slide [14] Soviet consumer products were always an object of derision
– refrigerators that kept the house warm – and the food, and so on.
You’d be lucky if you got one at all, and it would be up to you to
make it work once you got it home. But once you got it to work, it
would become a priceless family heirloom, handed down from generation
to generation, sturdy, and almost infinitely maintainable.

In the United States, you often hear that something “is not worth
fixing.” This is enough to make a Russian see red. I once heard of an
elderly Russian who became irate when a hardware store in Boston
wouldn’t sell him replacement bedsprings: “People are throwing away
perfectly good mattresses, how am I supposed to fix them?”

Economic collapse tends to shut down both local production and
imports, and so it is vitally important that anything you own wears
out slowly, and that you can fix it yourself if it breaks. Soviet-made
stuff generally wore incredibly hard. The Chinese-made stuff you can
get around here – much less so.

Slide [15] The Soviet agricultural sector was notoriously inefficient.
Many people grew and gathered their own food even in relatively
prosperous times. There were food warehouses in every city, stocked
according to a government allocation scheme. There were very few
restaurants, and most families cooked and ate at home. Shopping was
rather labor-intensive, and involved carrying heavy loads. Sometimes
it resembled hunting – stalking that elusive piece of meat lurking
behind some store counter. So the people were well-prepared for what
came next.

In the United States, most people get their food from a supermarket,
which is supplied from far away using refrigerated diesel trucks. Many
people don’t even bother to shop and just eat fast food. When people
do cook, they rarely cook from scratch. This is all very unhealthy,
and the effect on the nation’s girth, is visible, clear across the
parking lot. A lot of the people, who just waddle to and from their
cars, seem unprepared for what comes next. If they suddenly had to
start living like the Russians, they would blow out their knees.

Slide [16] The Soviet government threw resources at immunization
programs, infectious disease control, and basic care. It directly
operated a system of state-owned clinics, hospitals, and sanatoriums.
People with fatal ailments or chronic conditions often had reason to
complain, and had to pay for private care – if they had the money.

In the United States, medicine is for profit. People seems to think
nothing of this fact. There are really very few fields of endeavor to
which Americans would deny the profit motive. The problem is, once the
economy is removed, so is the profit, along with the services it once
helped to motivate.

Slide [17] The Soviet education system was generally quite excellent.
It produced an overwhelmingly literate population and many great
specialists. The education was free at all levels, but higher
education sometimes paid a stipend, and often provided room and board.
The educational system held together quite well after the economy
collapsed. The problem was that the graduates had no jobs to look
forward to upon graduation. Many of them lost their way.

The higher education system in the United States is good at many
things – government and industrial research, team sports, vocational
training… Primary and secondary education fails to achieve in 12
years what Soviet schools generally achieved in 8. The massive scale
and expense of maintaining these institutions is likely to prove too
much for the post-collapse environment. Illiteracy is already a
problem in the United States, and we should expect it to get a lot
worse.

Slide [18] The Soviet Union did not need to import energy. The
production and distribution system faltered, but never collapsed.
Price controls kept the lights on even as hyperinflation raged.

The term “market failure” seems to fit the energy situation in the
United States. Free markets develop some pernicious characteristics
when there are shortages of key commodities. During World War II, the
United States government understood this, and successfully rationed
many things, from gasoline to bicycle parts. But that was a long time
ago. Since then, the inviolability of free markets has become an
article of faith.

Slide [19] My conclusion is that the Soviet Union was much better-
prepared for economic collapse than the United States is.

I have left out two important superpower asymmetries, because they
don’t have anything to do with collapse-preparedness. Some countries
are simply luckier than others. But I will mention them, for the sake
of completeness.

In terms of racial and ethnic composition, the United States resembles
Yugoslavia more than it resembles Russia, so we shouldn’t expect it to
be as peaceful as Russia was, following the collapse. Ethnically mixed
societies are fragile and have a tendency to explode.

In terms of religion, the Soviet Union was relatively free of
apocalyptic doomsday cults. Very few people there wished for a planet-
sized atomic fireball to herald the second coming of their savior.
This was indeed a blessing.

Slide [20] One area in which I cannot discern any Collapse Gap is
national politics. The ideologies may be different, but the blind
adherence to them couldn’t be more similar.

It is certainly more fun to watch two Capitalist parties go at each
other than just having the one Communist party to vote for. The things
they fight over in public are generally symbolic little tokens of
social policy, chosen for ease of public posturing. The Communist
party offered just one bitter pill. The two Capitalist parties offer a
choice of two placebos. The latest innovation is the photo finish
election, where each party buys 50% of the vote, and the result is
pulled out of statistical noise, like a rabbit out of a hat.

The American way of dealing with dissent and with protest is certainly
more advanced: why imprison dissidents when you can just let them
shout into the wind to their heart’s content?

The American approach to bookkeeping is more subtle and nuanced than
the Soviet. Why make a state secret of some statistic, when you can
just distort it, in obscure ways? Here’s a simple example: inflation
is “controlled” by substituting hamburger for steak, in order to
minimize increases to Social Security payments.

Slide [21] Many people expend a lot of energy protesting against their
irresponsible, unresponsive government. It seems like a terrible waste
of time, considering how ineffectual their protests are. Is it enough
of a consolation for them to be able to read about their efforts in
the foreign press? I think that they would feel better if they tuned
out the politicians, the way the politicians tune them out. It’s as
easy as turning off the television set. If they try it, they will
probably observe that nothing about their lives has changed, nothing
at all, except maybe their mood has improved. They might also find
that they have more time and energy to devote to more important
things.

Slide [22] I will now sketch out some approaches, realistic and
otherwise, to closing the Collapse Gap. My little list of approaches
might seem a bit glib, but keep in mind that this is a very difficult
problem. In fact, it’s important to keep in mind that not all problems
have solutions. I can promise you that we will not solve this problem
tonight. What I will try to do is to shed some light on it from
several angles.

Slide [23] Many people rail against the unresponsiveness and
irresponsibility of the government. They often say things like “What
is needed is…” plus the name of some big, successful government
project from the glorious past – the Marshall Plan, the Manhattan
Project, the Apollo program. But there is nothing in the history books
about a government preparing for collapse. Gorbachev’s “Perestroika”
is an example of a government trying to avert or delay collapse. It
probably helped speed it along.

Slide [24] There are some things that I would like the government to
take care of in preparation for collapse. I am particularly concerned
about all the radioactive and toxic installations, stockpiles, and
dumps. Future generations are unlikely to able to control them,
especially if global warming puts them underwater. There is enough of
this muck sitting around to kill off most of us. I am also worried
about soldiers getting stranded overseas – abandoning one’s soldiers
is among the most shameful things a country can do. Overseas military
bases should be dismantled, and the troops repatriated. I’d like to
see the huge prison population whittled away in a controlled manner,
ahead of time, instead of in a chaotic general amnesty. Lastly, I
think that this farce with debts that will never be repaid, has gone
on long enough. Wiping the slate clean will give society time to
readjust. So, you see, I am not asking for any miracles. Although, if
any of these things do get done, I would consider it a miracle.

Slide [25] A private sector solution is not impossible; just very,
very unlikely. Certain Soviet state enterprises were basically states
within states. They controlled what amounted to an entire economic
system, and could go on even without the larger economy. They kept to
this arrangement even after they were privatized. They drove Western
management consultants mad, with their endless kindergartens,
retirement homes, laundries, and free clinics. These weren’t part of
their core competency, you see. They needed to divest and to
streamline their operations. The Western management gurus overlooked
the most important thing: the core competency of these enterprises lay
in their ability to survive economic collapse. Maybe the young
geniuses at Google can wrap their heads around this one, but I doubt
that their stockholders will.

Slide [26] It’s important to understand that the Soviet Union achieved
collapse-preparedness inadvertently, and not because of the success of
some crash program. Economic collapse has a way of turning economic
negatives into positives. The last thing we want is a perfectly
functioning, growing, prosperous economy that suddenly collapses one
day, and leaves everybody in the lurch. It is not necessary for us to
embrace the tenets of command economy and central planning to match
the Soviet lackluster performance in this area. We have our own
methods, that are working almost as well. I call them “boondoggles.”
They are solutions to problems that cause more problems than they
solve.

Just look around you, and you will see boondoggles sprouting up
everywhere, in every field of endeavor: we have military boondoggles
like Iraq, financial boondoggles like the doomed retirement system,
medical boondoggles like private health insurance, legal boondoggles
like the intellectual property system. The combined weight of all
these boondoggles is slowly but surely pushing us all down. If it
pushes us down far enough, then economic collapse, when it arrives,
will be like falling out of a ground floor window. We just have to
help this process along, or at least not interfere with it. So if
somebody comes to you and says “I want to make a boondoggle that runs
on hydrogen” – by all means encourage him! It’s not as good as a
boondoggle that burns money directly, but it’s a step in the right
direction.

Slide [27] Certain types of mainstream economic behavior are not
prudent on a personal level, and are also counterproductive to
bridging the Collapse Gap. Any behavior that might result in continued
economic growth and prosperity is counterproductive: the higher you
jump, the harder you land. It is traumatic to go from having a big
retirement fund to having no retirement fund because of a market
crash. It is also traumatic to go from a high income to little or no
income. If, on top of that, you have kept yourself incredibly busy,
and suddenly have nothing to do, then you will really be in rough
shape.

Economic collapse is about the worst possible time for someone to
suffer a nervous breakdown, yet this is what often happens. The people
who are most at risk psychologically are successful middle-aged men.
When their career is suddenly over, their savings are gone, and their
property worthless, much of their sense of self-worth is gone as well.
They tend to drink themselves to death and commit suicide in
disproportionate numbers. Since they tend to be the most experienced
and capable people, this is a staggering loss to society.

If the economy, and your place within it, is really important to you,
you will be really hurt when it goes away. You can cultivate an
attitude of studied indifference, but it has to be more than just a
conceit. You have to develop the lifestyle and the habits and the
physical stamina to back it up. It takes a lot of creativity and
effort to put together a fulfilling existence on the margins of
society. After the collapse, these margins may turn out to be some of
the best places to live.

Slide [28] I hope that I didn’t make it sound as if the Soviet
collapse was a walk in the park, because it was really quite awful in
many ways. The point that I do want to stress is that when this
economy collapses, it is bound to be much worse. Another point I would
like to stress is that collapse here is likely to be permanent. The
factors that allowed Russia and the other former Soviet republics to
recover are not present here.

In spite of all this, I believe that in every age and circumstance,
people can sometimes find not just a means and a reason to survive,
but enlightenment, fulfillment, and freedom. If we can find them even
after the economy collapses, then why not start looking for them now?

Thank you.

.
Orlov has many penetrating insights, couched in his dark humor.
Particularly striking is the strong case he makes that the peoples of
the USSR were actually better prepared for a collapse because

* they had learned to be more self-reliant
* many crucial functions (like housing and transportation) were
taken care of by the state sector which was more stable than a private
sector would have been.

Orlov’s cynicism about the possibility of intelligent government
action was probably justified in the case of the Soviet Union, but I
think it would be a tragic mistake to abandon efforts to change the
direction of the U.S. The Soviets had little chance to make democratic
institutions work. We do have that chance.

UPDATE: Dmitri Orlov writes on March 4, 2007: You wrote that “The
Soviets had little chance to make democratic institutions work.”
That’s not entirely true. Perestroika and Glasnost were all about
democracy, and in my opinion it had the same chance of success as the
hopelessly gerrymandered system that passes for democracy in the US,
(although much less than any proper, modern democracy, in which the
Bush regime would have been put out of power quite a while ago, after
a simple parliamentary vote of no confidence and early elections). The
problem is that, in a collapse scenario, democracy is the least
effective system of government one can possibly think of (think
Weimar, or the Russian Interim Government) – a topic I cover in Post-
Soviet Lessons.

Lastly, I don’t think calling me a cynic is exactly accurate: I’ve
been in the US a long time, watching the system become progressively
more dysfunctional with each passing political season. It seems to me
that it is not necessarily cynical to be able to spot a solid trend,
but that it could be simply observant.

From the archive, originally posted by: [ spectre ]

http://www.internettrafficreport.com/europe.htm
http://www.internettrafficreport.com/samerica.htm
http://www.internettrafficreport.com/namerica.htm
http://www.internettrafficreport.com/asia.htm

BEST CONSPIRACY THEORY — IT’S BEING TAPPED
http://en.wikipedia.org/wiki/Operation_Ivy_Bells

SIC
“to start sorry spelling sorry gramma.
ok its like this i recon… cut cable leading to information u want…
move away from severed point to another point on same cabel… sever
same cable again buy splice in your own info stealing apparatus…
wait for rich fat corps to fix there own cable again… nobody knows
your info is being intercepted and stolen… vwalla. thanks for
comming have a nice day.”
Posted by: annon | Feb 6, 2008 5:12:56 PM

AND
“I got an anonymous IM from someone who works for Haliburton in the
mideast. He says there is 3 teams of techs that are installing taps on
the mideast internet backbones. They have to break the wire to install
the tap. Normally they synchronize their work so there’s no more than
one break every couple of days. What happened was they messed up the
dates. Someone wrote down the wrong dates, and they all broke cables
for taps right around the same time because they were rushing to get a
day off to watch the superbowl.”
Posted by: Johnny | Feb 6, 2008 6:10:52 PM

OH
it’s been done before.
Look up “Operation Ivy Bells”.
Posted by: knowledgeable | Feb 7, 2008 2:25:02 PM

http://www.networkperformancedaily.com/2008/02/hotter_under_the_water_a_look_1.html
http://www.energybulletin.net/12125.html

RUN YER OWN TRACEROUTE
http://howto.wired.com/wiki/Run_a_Traceroute
From Wired How-To Wiki

After two underwater cable cuts in the Middle East in early February
severely impacted countries from Dubai to India, alert netizens voiced
suspicions that someone — most likely Al Qaeda — intentionally
severed the cables for their own nefarious purposes, or that the U.S.
cut them as a lead-in to an attack on Iran.

Then two more cables failed in the same area, one in a segment
connecting Qatar to an island in the United Arab Emirates, and another
in a link between Oman and the UAE. The former wasn’t even a cut — it
was a power failure, but you can’t keep a good conspiracy theory down;
some news sites even began reporting incorrectly that Iran was cut off
from the internet.

So how to tell if your favorite Middle East country is still online?
Don’t believe the press — run a traceroute. This simple network
utility traces the hops internet packets take as they work their way
across the internet towards your destination. It also measures how
much time the journey from point A to point B takes, both in total and
for each hop between nodes. If your packets reach their intended
destination (which traceroute will tell you) then you’ll know if those
outage reports on Slashdot are legit or not.

What You’ll Need

* A live, unsevered internet connection
* Access to a command line tool on your computer (optional)
* A browser
* The address of a server somewhere in the destination country

Step 1: Find a Test Server

To do a proper traceroute, you’ll want to pick a server that’s
actually in the destination country. To check Iran, you could just use
a website with a .ir top level domain. Mahmoud Ahmadinejad’s blog, for
example. However, there’s no guarantee that any particular site is
hosted by a server in the country its domain name indicates.
Corporations especially tend to have servers spread out over several
countries. Official government sites are almost always a sure thing.
http://www.president.ir/en/

Step 2: Trace It!

On a Windows PC

1. Click on the Start button and choose Run.
2. In the text box, type cmd. This will bring up a command line
prompt.
3. Type tracert hostname, where “hostname” is the web address of the
server you want to test.
You can also use an IP address by typing tracert x.x.x.x, where the
“x.x.x.x” is replaced by the IP address of the server.
4. Watch the packets fly across the tubes.

On Mac OS X

You can use the same steps listed in the Windows section by typing the
commands into Mac OS X’s Terminal application. Alternatively, you can
use the Network Utility that’s installed on every Mac.

1. Go to Applications > Utilities > Network Utility.
2. Click on the Traceroute tab.
3. Enter the domain name or IP address of the destination server and
click Trace.
4. Watch the packets fly across the tubes.

Step 3: Analyze the Result

As your packets travel from point A to point B, you’ll see each hop
appear on its own line. Traceroute should display the address and name
of each server or router along the way and the amount of time
(measured in milliseconds) the packets take to travel between your
desktop and that particular node. Eventually, you’ll see your packets
reach their destination. Here’s an example of some raw traceroute
data:

5  peer-02-so-0-0-0-0.palo.twtelecom.net (64.129.248.19)  9.153 ms
8.324 ms  9.992 ms
6  ge-0-3-0-0.plapx-cr3.ix.singtel.com (203.208.168.113)  8.640 ms
ge-2-2-0-0.plapx-cr2.ix.singtel.com (203.208.171.125)  15.416 ms
ge-3-0-0-0.plapx-cr3.ix.singtel.com (203.208.168.133)  19.954 ms
7  so-3-0-1-0.sngtp-cr2.ix.singtel.com (203.208.182.113)  207.604 ms
ae0-0.plapx-cr3.ix.singtel.com (203.208.154.174)  17.331 ms
ae0-0.plapx-cr2.ix.singtel.com (203.208.154.173)  9.409 ms
8  GigabitEthernet2-1-0.sngtp-ar4.ix.singtel.com (203.208.183.74)
185.547 ms  196.288 ms GigabitEthernet1-1-0.sngtp-ar4.ix.singtel.com
(203.208.183.78)  214.908 ms
9  203.208.192.226 (203.208.192.226)  300.511 ms  295.637 ms  310.359
ms 10  217.218.155.201 (217.218.155.201)  299.642 ms  289.998 ms
289.825 ms
11  vlan625.orion.bb.noc.tehran.sinet.ir (62.220.96.113)  297.686 ms
302.144 ms  290.565 ms
12  62.220.101.109 (62.220.101.109)  308.476 ms  298.427 ms  299.402
ms
13  62.60.150.246 (62.60.150.246)  292.028 ms  292.011 ms  292.007 ms
14  * * *
15  213.176.75.3 (213.176.75.3)  307.571 ms  328.233 ms  327.580 ms

The times displayed are 3 pings from your desktop directly to that
node, not the time its taking between the previous node and the
current one.

Asterisks (* * *) indicate a timeout. If you see a line with just
asterisks on it, that means that the hop between nodes took longer
than 200ms. Several lines of timeouts mean the packets are being held
up, clogged or lost somewhere along the way. Blame the terrorist group
or national intelligence organization of your choice.

* Note some points on the traceroute will show a timeout because
administrators have restricted pings, and this may not necessarily
indicate a fail point. If the destination host is reachable at all,
then failures will typically be sporadic as in: * 200ms * (2 timeouts
and 1 successful). #14 above would indicate that the node is just
blocked for pings.

Tips

* To make sure your packets actually reached a server in the
intended country, you can look up the destination IP address to
determine its location. Consult the ARIN WHOIS database to dig up a
server’s location info.
http://www.arin.net/whois/

* Uri Raz’s webpage has several useful tips for determining the
geographic location of servers on the internet.
http://www.private.org.il/IP2geo.html

* You can also use tools like IP2Location or GeoBytes’ IP Locator
to find out where a server is physically located.
http://www.ip2location.com/demo.aspx
http://www.geobytes.com/IpLocator.htm

* Instead of verifying the location server after the fact, you can
start out by using one of the destination country’s domain servers. To
find one, visit the listing of Root-Zone Whois information maintained
by the Internet Assigned Numbers Authority and click on the country
you want to reach. Under the list of Domain Servers, look for the
server with the same top-level domain as the destination country.
http://www.iana.org/root-whois/

Portions of this how-to guide originally appeared in a post by Ryan
Singel on Wired’s Threat Level blog. Also, thanks to Kevin Poulsen for
the traceroute data and the inspiration.
http://blog.wired.com/27bstroke6/2008/02/iran-still-onli.html

SOME RESEARCH
http://www.ilovebonnie.net/2008/02/06/submarine-cables-subsidiares-and-subversion/

Submarine Cables, Subsidiares and Subversion

[UPDATE – 02/12/08 – The Complete Guide to the 2008 Internet Outage
has been finished. It contains the most up to date information
including detailed images and explanations to help unravel this cable
mess. Please check it out here]
http://www.ilovebonnie.net/2008/02/12/the-submarine-cables-a-complete-guide-to-the-2008-internet-outage/

First off, I want to thank everyone for the positive feedback that I
have received for my last post, which illustrated the locations of the
5 submarine cables that have been damaged over the past couple of
weeks. I’m glad to see that some news sites such as Slashdot featured
my post and that people are starting to take a critical look at what
is happening.
http://www.ilovebonnie.net/2008/02/06/apparently-ships-can-drag-anchors-from-egypt-to-malaysia/
http://it.slashdot.org/it/08/02/06/1431206.shtml

[UPDATE: this post was recently featured in the most recent Epic-Fu
video episode. Check out the video here, and join the discussion
here.]
http://epicfu.com/2008/02/web-attack-ghostface-killah-va.html
http://mix.epicfu.com/forum/topic/show?id=699622%3ATopic%3A96043

That being said, I’m sure that everyone is eager to read the results
of my findings on why these cables may have been damaged, who has to
gain from the damages, and where we, as concerned citizens, should
start to look for answers.

Before I begin, I would like to point out that these findings are from
my own research. I am not accusing anyone of anything here. I am
simply providing a resource for the rest of the internet so that
people can start to investigate what may really be happening over
there. There are some facts out there that are just too big to ignore.
While I may not be the person capable of asking the big questions to
the right people, I can still provide information for the people who
can.

First of all, I want to revisit the map of the cable damages that have
occurred over the past few weeks:
http://maps.google.com/maps/ms?ie=UTF8&hl=en&t=h&msa=0&msid=114145806823223770056.000445c72361c5f77354f&ll=23.563987,52.734375&spn=99.660056,166.992188&z=2&source=embed

We have been told by various organizations that these damages are
attributed to power failures or by an anchor being accidentally
dragged along the ocean floor during a storm. However, it doesn’t take
more than a 5th grade education to start to recognize that there may,
in fact, be a pattern to what we are seeing here. When something like
this occurs, it starts the mind roaming around the possibilities as to
why this may have occurred.

Well, there are a few possibilities. Here are the top 4 possibilities/
connections that this author was able to find in his research:

#4 – Big Telecom Companies

In talking to a network operations manager about the damages that have
been done to the cables, the first companies that he suggested, which
stand to gain from this type of damage, are the larger
telecommunications companies. Especially the land-based ones. Here’s
why: when a huge pipeline providing tons of information to a
particular area is damaged, re-routing almost always occurs before
repair. This means, that the companies which surround the outage or
are within the outage area stand to benefit from the sudden jump in
needed bandwidth.
http://www.pcworld.com/article/id,142068-page,1/article.html

So, which companies have some ties into this mess? Well, there are a
few companies that popped up while doing my research. However, for the
scope of this article, let’s look at Verizon Business. To start things
off, Verizon partially owns the SeaMeWe-4 (along with AT&T) cable that
was severed. According to them the repairs could take days but they
were going to offer an alternative network as quickly as possible.
Alternative meaning, routing through somewhere else. How else might
Verizon be involved with this deal? Verizon Business has ownership in
many of the submarine cables that have been in recent news. In
addition, they began work in 2007 on a new cable that will render
others obsolete. The construction for this is supposed to complete
this year. (source) By Verizon Business’ own admission, they’re all
about getting global:
http://www.networkworld.com/news/2006/121806-verizon-business.html?page=1
http://www.verizonbusiness.com/about/news/displaynews.xml?newsid=24313&mode=vzlong&lang=en&width=530

“Global Strategic Services Still Driving Solid Verizon Business
Growth…Global sales of strategic services such as IP, Ethernet and
managed services continued to accelerate dramatically during the past
quarter, exceeding declines in revenue on a year-to-date basis from
traditional core voice and data services. In the fourth quarter 2007,
strategic services generated $1.4 billion in revenue, up 25.1 percent
from the fourth quarter 2006.”

With all that said, it seems very likely that Verizon would very much
want these cables to be damaged. Whether it be to leverage their land-
based networks or to further increase the popularity of their new
cable, it’s hard to ignore the connections.
#3 – December 2007

In December of 2007, there were a few events that occurred related
directly to the damages that we have recently seen. While these events
may be unrelated and/or random, the correlation is hard to ignore.

December 1, 2007: Alcatel finished its merger with large U.S. telecom
company Lucent. Why does this matter? Alcatel provides hardware and
service to large telecommunications companies. In fact, according to
their Wikipedia entry they are a “leading provider of optical
transmission equipment, especially for submarine communications
cable.”
http://en.wikipedia.org/wiki/Alcatel

December 20, 2007: Reliance Communications (FLAG) finishes the multi-
million dollar acquisition of U.S. based company Yipes. (source) Why
is this weird? Well, Yipes provides solutions for data warehousing and
multimedia communications transfer. This acquisition would bring, yet
another U.S. based company, tons of pull in the global
telecommunications environment:
http://www.yipes.com/press/Reliance_Communications_Completes_Acquisition_of_US-based.shtml

“The combination of Yipes’ enterprise Ethernet services; the
private undersea cable system of FLAG Telecom, a subsidiary of
Reliance Communications; and Reliance’s commitment to expansion and
growth will enable the creation of a global service-delivery platform
with unmatched coverage and capability.”

December, 2007: Iran announced that they were freely trading oil
without the use of the U.S. dollar. More details about this a bit
later in the post.

While there were other notable events in the global telecommunications
field in 2007, December seemed to be particularly full of events that
could possibly be related to the recent submarine cable damages.

#2 – Reliance Communications and FLAG

First of all, you need to understand that Reliance Communications is
part of a large huge massive company that, grouped with Reliance
Telecom and Flag Telecom, makes up Reliance Communications Ventures.
They provide solutions for all kinds of telecommunication services for
India as well as other countries. As an example (and to tie them even
closer to the Middle East), in June of 2006, Reliance Communications
along with Orbit Communications Company launched RiTV in the Middle
East. This is an interactive multimedia solution including on-demand
entertainment and internet access.
http://www.digitalmediaasia.com/default.asp?ArticleID=15859

Reliance Communications is the leading broadband service provider in
India and part of another massive group of companies known as the Anil
Dhirubhai Ambani Group. Together, they are delivering service to over
19 million subscribers. One of the companies belonging to this group
is called Reliance Power Limited (RPL). Here again, we see a direct
tie into a large mostly-considered U.S. company. It’s a little company
called Chevron.
http://www.relianceadagroup.com/adportal/ADA/index.jsp
http://en.wikipedia.org/wiki/Reliance_Power

How big of a stake does Chevron have here? How about a 5% (that can
increase to 29%) stake in RPL? (source) Why would Chevron be
interested in an Indian energy company? Jamnagar. That link leads to
the Wikipedia entry for the Indian state. That link, however, does not
talk about how important a role RPL plays in that state — important
read as: 650,000 barrels per day. But that’s just the refinery that is
currently there. RPL is working on a new refinery that will have a
capacity of 580,000 barrels a day. That’s 1,230,000 barrels of oil
money that will be coming out of Jamnagar every day. It is expected
that this refinery will be completed this year.
http://news.moneycontrol.com/india/news/ipoissuesopen/relianceindustrieschevroncorporation/chevronpicks5stakerplcanincreasestaketo29/market/stocks/article/209751
http://en.wikipedia.org/wiki/Jamnagar
http://investor.chevron.com/phoenix.zhtml?c=130102&p=irol-newsArticle&ID=842179

The Anil Dhirubhai Ambani Group is far too large to try and track down
the various connections that they may have to the Middle East, but,
being that it is one of the companies most tightly knitted into this
knot of submarine cable woes, they deserve a mention.

This brings us to the number 1 reason that this author has found which
could explain the recent submarine cable damages.

#1 – The Iranian Oil Bourse

Through the research that I have exhaustingly done over the past few
days, this is the one that has struck me as the most likely reason for
the damages that have occurred to submarine internet cables.

First, a bit of background. A bourse is a, typically European, word
which refers to a stock exchange. Great, so Iran is going to have
their own “oil stock exchange,” but why does this matter? The Iranian
oil bourse was going to be a stock market for petroluem,
petrochemicals and gas. What’s the big catch here? The exchange
planned on being ran with currencies excluding the U.S. dollar. If you
remember from earlier in the post, Iran stopped allowing purchases of
their oil with the U.S. dollar in December of 2007. So, obviously, the
U.S. is not going to be happy about this. The biggest piece of
information linking this to the recent damages is the proposed
location of the bourse: the island of Kish. This is the island that is
RIGHT NEXT TO at least two of the cuts that have recently occurred:
http://en.wikipedia.org/wiki/Bourse
http://en.wikipedia.org/wiki/Iranian_Oil_Bourse

And the locations of the cable damages once more:
http://www.ilovebonnie.net/2008/02/13/google-maps-version-of-the-2008-submarine-cable-cuts/
http://www.ilovebonnie.net/kishisland.jpg
http://www.ilovebonnie.net/cable_cuts_new.jpg

To make matters even more interesting, the bourse was scheduled to
open this month.

Some of you may suddenly be thinking to yourselves that this sounds
familiar. That’s because the last person who decided to stop using the
U.S. dollar for trading oil was a man by the name of Saddam Hussein in
the fall of 2000.

[UPDATE: To further add to this argument, this would not be the first
time the U.S. would have disrupted submarine cables to further
themselves in times of war or conflict.]
(Operation Ivy Bells)
http://en.wikipedia.org/wiki/Operation_Ivy_Bells
(Previous NSA Submarine Wiretaps)
http://news.zdnet.com/2100-9595_22-529826.html?legacy=zdnn

As I said before, these are bits of information that hopefully others
can use as a resource to determine the true cause of these massive
internet outages that we have seen over the last couple weeks. I am
not blaming one source or the other. I am simply helping to increase
the awareness of what may really be happening right under our noses.

“Whoever undertakes to set himself up as a judge of Truth and
Knowledge is shipwrecked by the laughter of the gods.” – Albert
Einstein

If you have additional information or updates to this, please drop me
a line. My email address is writer at ilovebonnie.net.

MEANS, MOTIVE, OPPORTUNITY
http://blog.wired.com/27bstroke6/2008/02/who-cut-the-cab.html

Cable Cut Fever Grips the Web
Are underseas telecom cable cuts the new IEDs?
BY Ryan Singel  /  February 06, 2008

Stephan Beckert of TeleGeography Research says it’s all a bit much:

“I’m much more worried about terrorists blowing up people than
cables,” Beckert said. “If you cut a cable, all you are doing is
inconveniencing a lot of people.”

Only the first two cuts had any serious impact on the internet, says
Beckert. Those cables near Alexandria, Egypt account for 76 percent of
the capacity through the Suez canal — connecting Europe with the
Middle East, North Africa and the India sub-continent.

Once those failures sensitized a conspiracy-happy net, it was natural
that other cable failures would be found to feed the frenzy, because
they occur all the time.

“Cable cuts happen on average once every three days,” Beckert said.
There are 25 large ships that do nothing but fix cable cuts and bends,
Beckert adds.

While any severed cable is a “cut” in the parlance of telecom, most
often they’re the result of cables rubbing against sea floor rocks,
eventually cutting through the copper shielding and exposing the thin
fiber optics inside.

Normally, netizens have no idea when there are cable cuts since large
providers instantly re-route communications through other cables.

“These outages don’t usually affect end users,” Beckert said. “For
example, Verizon doesn’t just have one link across the Atlantic, they
have seven, eight or nine they can route capacity on.”

Professional terrorist fear monger Annie Jacobsen says Middle Eastern
governments are lying about the real reason for the cuts. 9/11
truthers suggested the cuts came in preparation for a U.S. government-
faked terrorist attack on the Super Bowl. Bloggers have suggested that
the cuts are cover for the NSA installing taps on the lines using the
U.S.S. Jimmy Carter. The commander, though, seems to have an alibi.

That said, even some security experts who early on dismissed
suggestions of intentional sabotage are starting to get a little
suspicious.

Take Columbia University Professor Steven Bellovin, a computer
security and networking expert, for one:

As a security guy, I’m paranoid, but I don’t understand the threat
model here. On the other hand, four accidental failures in a week is a
bit hard to swallow, too. Let’s hope there will be close, open
examination of the failed parts of the cables.

Last week Todd Underwood, a vice president at internet analysis firm
Renesys, told THREAT LEVEL that outages are to be be expected. But on
Wednesday, he sounded a more cautious note.

“There’s a little cause to be suspicious but there is no smoking gun,”
Underwood said.

If the cuts were deliberate, one has to answer the question of means,
motive and opportunity. Since it’s not that hard to sever an
unprotected cable, the real question is motive, according to
Underwood.

“Its difficult to tell what the motive would be: is it just to annoy
people?” Underwood said. “If it were targeted, the targeting is bad.
The loonies on the American left say this was us targeting Iran. If
this is us targeting Iran, we are much worse than I thought we were.”

“Are we really targeting India or Pakistan?” Underwood asked
incredulously.

The real answer will likely come once the repair ships begin pulling
up the cable from the sea floor to repair it in the coming days and
weeks, according to Underwood.

“Then we will know quite a bit more,” Underwood said. “Does it look
like an anchor hit or did someone take an acetylene torch to it?”

.

SEA MONSTERS? LIZARD PEOPLE?

SELECTED COMMENTS
http://blog.wired.com/27bstroke6/2008/02/who-cut-the-cab.html

Quoth the late, great Reverend Ivan Stang of the church of the
subgenius; Attributed and expanded…
“Of all conspiracy theories out there, there is one above them all.
All conspirators pay homage to it, be they the Yeti, the Men in Black,
the CIA, NSA, IRS, the Learned Elders of Zion and even the Reptillian
Overlords from Draco. This is known simply as “The Conspiracy”… What
is it? Simply put, the attack on Conspiracy theorists using the most
negative aspects of it. A person who compares the prices of three
‘competing’ phone companies and finds them similar becomes equated
with the person that calls the radio show and says that martians are
sending robots disquised as dogs but when you cut them open you see
blood and guts and stuff because of their ‘raydeo waves’…”
Posted by: Conspiracy! | Feb 6, 2008 2:45:52 PM

You wrote:
“There are not 8 confirmed cuts. Your type of “reporting” is exactly
why I had to write this post.”
YES THERE *ARE*. SEARCH THEM FOR YOURSELF. I JUST DID (again).
http://www.godlikeproductions.com/forum1/message500423/pg1
http://www.godlikeproductions.com/forum1/message500423/pg9#7716849

There are ***EIGHT*** (or nine if you count the “unreported one from
Jan. 23).
Two off of Alexandria, Egypt
One in the Suez, Egypt
One off of Marseille, France
One off of Dubai, in the Persian Gulf
One off of Bandar Abbas, Iran in the Persian Gulf
One between Qatar and the UAE, in the Persian Gulf
One near Penang, Malaysia

Here they are:
THREE IN EGYPT – one running through the Suez to Sri Lanka; two near
Alexandria:
“DUBAI (Zawya Dow Jones)–A third undersea fibre optic cable running
through the Suez to Sri Lanka was cut Friday, said a Flag official.
Two other fiber optic cables owned by Flag Telecom and consortium SEA-
ME-WE 4 located near Alexandria, Egypt, were damaged Wednesday leading
to a slowdown in Internet and telephone services in the Middle East
and South Asia.”
http://www.marketwatch.com/news/story/third-undersea-cable-reportedly-cut/story.aspx?guid=%7B1AAB2A79-E983-4E0E-BC39-68A120DC16D9%7D
Here’s number FOUR: “the other in the waters off Marseille, France,
telecommunications operators said.”
http://www.news.com/Two-telecom-cables-in-the-Mediterranean-are-cut/2100-1033_3-6228494.html
Here’s FIVE: Between Dubai and Oman
“Internet provider in UAE confirms undersea cable cut between Dubai,
Oman, cause unknown”
http://www.iht.com/articles/ap/2008/02/02/africa/ME-GEN-Mideast-Internet-Outages.php
Number SIX: near Bandar Abbas, Iran (being avoided by major media as
it’s in IRAN and will really stoke conspiracy “theories”???)
“FALCON near Bandar Abbas in Iran and SeaMeWe-4”
“FALCON Segment 7a – Fault 1st February between BND (Bandar Abbas,
Iran) and KWI (Kuwait), we are waiting for ship to go out and it maybe
fixed before going out the fault on 7b – to be confirmed.”
“FALCON Segment 7b (Bandra Abbas – Al Seeb) – E-Marine continues to
await the permit to enter the Iranian waters and current forecast for
the ship to start a work is around 19th February.”
http://www.merit.edu/mail.archives/nanog/msg05980.html
Number SEVEN: Between Qatar and the UAE:
“An undersea telecom cable linking Qatar to the UAE was reported
damaged on Friday”
“This is the third incident of its kind in the area since January 30
since the cables were first damaged in the Mediterranean and then off
the coast of Dubai, causing widespread disruption to Internet and
international telephone services in Egypt, Gulf Arab states and south
Asia.”
http://www.khaleejtimes.com/DisplayArticle.asp?xfile=data/theuae/2008/February/theuae_February115.xml&section=theuae
And, number EIGHT: near Penang, Malaysia
“SeaMeWe-4 (South East Asia-Middle East-Western Europe-4) near Penang,
Malaysia”
http://www.zawya.com/Story.cfm/sidZAWYA20080205041625/secIndustries/pagTelecoms%20&%20IT
Number NINE: “unreported”
“The first cut in the undersea Internet cable occurred on January 23,
in the Flag Telcoms FALCON submarine cable which was not reported.
This has not been repaired yet and the cause remains unknown,
explained Jaishanker.”
http://www.zawya.com/Story.cfm/sidZAWYA20080205041625/secIndustries/pagTelecoms%20&%20IT
So, there ya have it. At least EIGHT, if not NINE.
Posted by: EIGHT CUTS! – Search them! | Feb 6, 2008 3:23:24 PM

While we’re all throwing out wild causal speculations on events that
are themselves speculative in nature, mind if I put in my two cents?
Responding to Mr. Underwood’s (initial) skepticism, say its not a
prelude to a US attack. And in light of Sen. Rockefeller’s comments
today re: the NSA’s global operations, maybe the aim wasn’t to take
out certain cables. Just make sure that only the right ones are left
for traffic to be re-routed to.
Either that or, if not a Seawolf sub engaged in shenanigans on the
seabed (as laid out in “Blind Mans Bluff”) perhaps a less-capable,
less-skilled regional power might be attempting similar shenanigans
this time around. Its likely only their failed taps would be detected
as cable failure, and the successful taps would likely remain
undiscovered, no?
But it’s probably just a simple fact that the world is become more
wired and more unmanageable with each passing year, and accidents WILL
happen.
Posted by: SPD | Feb 6, 2008 3:34:46 PM

Easy to say that Iran has internets, but the facts beg to differ:
http://www.internettrafficreport.com/asia.htm
Let’s all just hope this is not in preparation for GWB’s last and
worst criminal offense- war with Iran.
Posted by: PluriMediaGroup | Feb 6, 2008 3:36:42 PM

Has anyone considered this as part of an elaborate man in the middle
known text cypher attack aimed at manipulating financial transactions
by altering timecode stamps? Cable splicing often involves the use of
buffers that store data and retransmit it time delayed. A tiny
fractional time variation in a financial transaction can translate
into huge amounts of money if applied many times.
Posted by: Bruce Surly, Counterpain | Feb 6, 2008 3:39:03 PM

This one has Bush bin Laden written all over it, six ways from Sunday.
Cheers,
Lori R. Price
Mgr., Citizens For Legitimate Government
http://www.legitgov.org/
“Hi, mom, this is Mark Bingham… you believe me, don’t you?” Mark
Bingham – Sept. 11, 2001
http://www.legitgov.org/9_1_1_oddities.html
Posted by: Lori Price | Feb 6, 2008 4:38:26 PM

Telegeography, Inc.? A division of Primetrica? WTF? Go to their
websites: http://www.telegeography.com/company/index.php and
http://www.primetrica-asia.com/ . Read their literature and tell me
they don’t look exactly like CIA front corporations or some such
Strategic, Analytic, Intelligence (all terms from their website)
organization.
Mr. Beckert, I think you are lying.
Posted by: Free | Feb 6, 2008 4:47:10 PM

@meltingface
They [Iran] haven’t had internet according to that webpage for a week.
(I’ve been watching too)
http://www.internettrafficreport.com/asia.htm
Posted by: Randy | Feb 6, 2008 4:56:25 PM

@ There are 8 –
You are counting the same cuts over and over. The 3 in the market
watch include the two from the Times article. The Times report on the
Marseille cut is very likely inaccurate and was really in Egypt as
every one else reported.
That takes 3 away from your count. No one will know how or why until
the cables get pulled up.
Posted by: Ryan Singel | Feb 6, 2008 5:00:30 PM

An unknown number of cables cut AND the Maharishi died today. What it
means, I don’t know but don’t speak to me of coincidence!
Posted by: Caesar Tjalbo | Feb 6, 2008 5:05:06 PM

to start sorry spelling sorry gramma.
ok its like this i recon… cut cable leading to information u want…
move away from severed point to another point on same cabel… sever
same cable again buy splice in your own info stealing apparatus…
wait for rich fat corps to fix there own cable again… nobody knows
your info is being intercepted and stolen… vwalla. thanks for
comming have a nice day.
Posted by: annon | Feb 6, 2008 5:12:56 PM

Connecting The Many Undersea Cut Cable Dots
http://www.cyberspaceorbit.com/ConnectingTheDots.htm
1) one off of Marseille, France
2) two off of Alexandria, Egypt
3) one off of Dubai, in the Persian Gulf
4) one off of Bandar Abbas, Iran in the Persian Gulf
5) one between Qatar and the UAE, in the Persian Gulf
6) one in the Suez, Egypt
7) one near Penang, Malaysia
8) initially unreported cable cut on 23 January 2008 ( Persian Gulf? )

Three things stand out about these incidents:
1) all of them, save one, have occurred in waters near predominantly
Muslim nations, causing disruption in those countries;
2) all but two of the cut/damaged cables are in Middle Eastern waters;
3) so many like incidents in such a short period of time suggests that
they are not accidents, but are in fact deliberate acts, i.e.,
sabotage.

The evidence therefore suggests that we are looking at a coordinated
program of undersea cable sabotage by an actor, or actors, on the
international stage with an anti-Muslim bias, as well as a proclivity
for destructive violence in the Middle Eastern region. The question
then becomes: are there any actors on the international stage who
exhibit a strong, anti-Muslim bias in their foreign relations, who
have the technical capability to carry out clandestine sabotage
operations on the sea floor, and who have exhibited a pattern of
violently destructive policies towards Muslim peoples and nations,
especially in the Middle East region? The answer is yes, there are
two: Israel and the United States of America.
Posted by: bernard shakey | Feb 6, 2008 5:17:02 PM

Ryan, I’m so glad to read an article that looks at both sides and
makes sense.
You’re correct; if it’s with motive, then the attackers’ are idiots.
Now, if I hear that an EMP goes off in Iran, then well…..well I’m
sure I’ll never hear the end of it.
Posted by: Flomaster ’95 | Feb 6, 2008 5:22:43 PM

I got an anonymous IM from someone who works for Haliburton in the
mideast. He says there is 3 teams of techs that are installing taps on
the mideast internet backbones. They have to break the wire to install
the tap. Normally they synchronize their work so there’s no more than
one break every couple of days. What happened was they messed up the
dates. Someone wrote down the wrong dates, and they all broke cables
for taps right around the same time because they were rushing to get a
day off to watch the superbowl.
Posted by: Johnny | Feb 6, 2008 6:10:52 PM

The cable cuts are designed to disrupt the Iranian Oil Bourse.
http://www.dissidentvoice.org/2008/02/irans-oil-bourse-could-topple-the-dollar/
Posted by: Richard | Feb 6, 2008 6:14:23 PM

The tally is in. Johnny is our runner up for second funniest post with
“‘Anonymous Haliburton IM.” The funniest goes to ….
dorkhero for “bite marks”! Congratulations to our winners the rest of
you need to try harder next time.
Posted by: Simon | Feb 6, 2008 6:49:50 PM

The last time a mid-east country threatened to start selling oil in
Euros (Saddam 2002) we got shock and awe. This time (Iran Oil Bourse)
the response is a little more sophisticated and probably as effective.
Thou shalt not attempt to kill the flaky greenback.
Posted by: Pat | Feb 6, 2008 9:25:36 PM

wires work two ways though. maybe nobody wants anyone to see what’s
going on inside somewhere.
Posted by: ian | Feb 7, 2008 12:16:08 AM

before we go to monsters inc. what are the physics of u/w cables?
pretty heavy some whale species might be able to yank away but you’d
have to be pretty mad to be able to cut this seems beyond me – however
there was a programme on uk tv recently where it was found that
dolphins were being murdered by their own kind
Posted by: peter | Feb 7, 2008 1:18:40 AM

it was me. i cut the cable.
Posted by: jorge | Feb 7, 2008 1:48:36 AM

Ok – assuming it was the EVIL US/Israel. Why? To prevent Iran from
communicating with its vast empire? Radio still works, Sat phones/
links still work, intra-country lines still work – communications have
only been impacted and not prevented. Plus it’s a huge signal of
intent if you cut cables, then wait weeks before actually attacking.
Heck, if we’re playing conspiracy theory – I’d bet it was the Mid-East
despots themselves who cut the cables. Why let your citizens view
western values and send pictures of what is actually happening? Better
to control them by limiting their communication with the outside
world.
Posted by: scott | Feb 7, 2008 5:28:57 AM

Here’s a variant on the conspiracy I really like! Assume the cuts were
deliberate and calculated. The effect of the cuts are to re-route
internet traffic between Northern Europe and Pakistan so
that it now traverses the USA. Who might want that?
Posted by: tinhat | Feb 7, 2008 5:34:08 AM

Israel is NOT cut off from the internet. Most people reading this
probably already know this, but I’ll explain it for the rest of you.
InternetTrafficReport.com makes it’s measurment by pinging ONE
specific address. For Iran, they use router1.iust.ac.ir. They haven’t
gotten a response from that ONE address for a few days, so they show
the ENTIRE country as offline, when really it’s just one router which
is offline or maybe just has a different address now. Check out http://www.iust.ac.ir
or rcit.iust.ac.ir, which have the same domain and are working fine.
Not only is Iran online, but the Iranian University with the bad
router address is also online.
Posted by: Stan | Feb 7, 2008 6:00:16 AM

You are all missing it! It is Diebold that is cutting the cables. That
way the Intraweb tubes won’t work and nobody will know about their
dastardly plan to re-elect ChimpyBusHitler by manipulating the votes
in Iran.
Posted by: Connect the dots! | Feb 7, 2008 6:04:23 AM

I like tinhat’s twist… Especially considering the CIA analyst’s
statement last month about cyber-hackers (OOOoooOOOOooohhhh…)
takingdown power grids in other countries.
http://www.cio.com/article/173950/CIA_Hackers_Pulled_Plug_on_Power_Grid
http://www.pcworld.com/article/id,141564-c,hackers/article.html
Which countries? He won’t say, but the CIA definitely needs to snoop
on all packets that enter and leave the US to protect us from…?
Posted by: manny | Feb 7, 2008 6:05:52 AM

I love how all these people insisting that the internet traffic report
site shows Iran really is completely offline and the people claiming
otherwise are liars have not taken the simple step of CHECKING AN
IRANIAN WEBSITE to see if it is reachable. Go on, give it a try. The
results may surprise you. Here are some links to get you started:
http://www.google.com/search?q=site%3A.ir
Posted by: Fearmonger | Feb 7, 2008 6:54:36 AM

I heard that they have found stingray barbs and saltwater crocodile
bites in the cables. Experts are theorizing that it could be a group
of rebel fish that have partnered up with a reptile militia.
Apparently, they have not liked the way they have been portrayed in
the world media over the past few years. They would have struck sooner
but travel time was longer than expected.
Posted by: getyourbone | Feb 7, 2008 7:01:02 AM

All the troother stuff aside, the USS Jimmy Carter is not the only
vessel capable of this sort of thing. and this is not the first time
this has been done. During the cold war, the US tapped a subsea cable
in the white sea that was used by the Soviets to communicate with
their missile sub bases. We tapped their communications for years
before they found the tap.
http://www.amazon.com/review/R34L8TMIW45AFC
We have a number of Navy “oceanographic vessels” with ROV and
Saturation Diving capability all over the world. Any of them would be
capable of doing this as well.
Posted by: Rorschach | Feb 7, 2008 7:22:12 AM

I used to work at Bellcore (and tellabs and other places) in the field
of Optical Networks and Fiber media and components. I regard the
possibility of 4 fiber cuts (ok, three and one power outage) in such a
small area of the world remote at best.
An undersea cable is designed to withstand enormous pressures and
physical conditions, and that’s why, throughout the world, there are
only 11 cuts over the millions of deployed route-miles.
The idea of isolating Iran through this is not, I think, particularly
credible, particularly seeing that it would do far more damage to
western economies than to Iran.
The four cuts appear to my eyes to be an uninformed attempt to break
the working and protect sides of undersea BLSR (or their SDH
equivalent) fiber rings. Given their proximity to one another in both
time and space I can not ignore the possibility that this is not an
accident, and the author’s assumption that any belief on the contrary
is way below the normal standard for Wired.
Posted by: Em | Feb 7, 2008 8:04:01 AM

Iran’s global oil bourse was due to open this week – trading oil & gas
for euros and yen. Iran has no Internet access atm – witness iran.com
and iran.net, both down. It’s pretty obvious what is happening. The
oil bourse was due to start in March 2006 originally but had lots and
lots of difficulties. Hrm, I wonder who would shutdown Iran’s oil
bourse… it’s so hard to conceive…
Posted by: GreyGhost | Feb 7, 2008 8:50:27 AM

This is what is actually happening:
A rich communications tycoon was killed, and his daughter inherited
the business. She’s building an overland fibre optic link across the
Middle East, and wants to make sure it will be a success. She got a
guy that once kidnapped her to hijack a Russian submarine, and
secretly they are going around the seas of the Middle East sabotaging
cables. I’m trying to stop it all, but my BMW got cut in half by a
helicopter while I was driving along a pier.
For the daughter of the communications tycoon, The World Is Not
Enough.
Posted by: JB | Feb 7, 2008 9:14:18 AM

I have never seen so many idiots posting in one spot. Iran has not
lost net connectivity. One router in Iran — the one that happens to
be used by Internet Traffic Report — is unreachable. As are dozens of
single points on the internet in many states in the region. By the
same metric, Columbia, Germany, and Florida are also now offline. A
quick perusal of, e.g., newspaper web sites in Iran finds every one I
have tried working fine, including all state-run media:
http://www.onlinenewspapers.com/iran.htm
As is the web site of the Government of Iran:
http://www.iran.ir
…and numerous other government and press web sites physically
located in Iran. See for yourself:
http://www.google.com/search?q=site:.ir
(And yes, I am aware that simply ending in .ir does not mean the site
is necessarily physically in Iran, but you can easily verify via ARIN
that nearly all of them are.) So the premise that Iran is “offline”
and its implication are inaccurate.

Also, to the last poor fool who said “iran.com” and “iran.net” are
offline:
1. iran.com and iran.net are both up.
2. iran.com and iran.net are not even in Iran.
And, on the Oil Bourse: Iran can still conduct the bourse WITHOUT
undersea cable connectivity. They have missed their own deadlines
three times for opening the bourse, and just because it opens with all
the rhetoric of not using the dollar doesn’t mean it will be
successful. When all you can come up with is links from Iran’s state
run press and “Dissident Voice”, you’re really reaching. You people
are an embarrassment, literally, to the notion that humans are
intelligent. Get a life, or at least a grip on reality.

Dave Schroeder
das [at] doit [dot] wisc [dot] edu
http://das.doit.wisc.edu
Posted by: Dave Schroeder | Feb 7, 2008 9:18:09 AM

“If you cut a cable, all you are doing is inconveniencing a lot of
people.'” You need to understand Muslim radicals’ motives. They are
isolationists. Their main motive for blowing up people in Iraq and
Israel (what they call Palestine) is not only hate, they want us to
get out. At the same time, they don’t want Western cultural
influences. When you have iTunes, cnn.com (and wired.com), and a ton
of other stuff that they view as filthy (ie SI.com’s upcoming swimsuit
issue) coming over these fiber-optic cables and a sea chart that says
“Don’t Drop Anchor Here! Fiber Optic Cable”, what do you expect?
(They’ll drop their anchor)
Posted by: Ed | Feb 7, 2008 9:20:34 AM

Well, if any ill-intending evil organizations (including, of course,
all of them everywhere) haven’t considered these ideas before, perhaps
they will now. Does speculating on cutting, tapping, fund rerouting,
etc…schemes that eventually leads to someone actually doing said
scheme result in treason or conspiracy? If terrorists read Wired, see
and use your idea, could you be held accountable? If the US is the one
to use it to great terrible deadly ends, do you get a medal?
While were at it, though, we could postulate a few more evil schemes.
Perhaps cutting the wires to convince the affected country that they
need a new infrastructure, resulting in billion dollar loans and
revenue to US/USbacked contracting organizations, who would then
rebuild the infrastructure, but leaving the country with
insurmountable debt. John Perkins type jackal and Economic HitMan
style.
Posted by: iZealot | Feb 7, 2008 9:26:06 AM

I think its part of the marketing campaign for Cloverfield.
Posted by: marcusjones | Feb 7, 2008 10:18:20 AM

The MQ-1B Predator is controlled from Las Vegas via underground and
underwater fiber-optic cables linking the ground-control stations to
Europe, where a satellite dish makes the connection directly to every
Predator in the air.
Posted by: mdubbleyou | Feb 7, 2008 10:20:26 AM

It’s not a conspiracy. It’s Godzilla.
Posted by: Ray Eston Smith Jr | Feb 7, 2008 10:54:13 AM

Ray Eston Smith Jr, it’s not Godzilla. Godzilla would be cutting
cables near Japan, not Egypt. It’s the Goa’uld.
Posted by: Dalkorian | Feb 7, 2008 12:54:22 PM

Because of the internet being cut in half, my face has eaten a yard of
sweetened bread!
Who will this madness pie?? I have links to webpages, so that proves
I’m right. PUNCH YOURSELVES IN THE FACE MANY TIMES PLEASE.
Posted by: Sirch | Feb 7, 2008 1:22:26 PM

A frantic young female CIA agent is strangled in the style of a
jihaidist who has been dead for many years. An American journalist
unearths a clue to the the crime. She discovers that she herself is
actually responsible for the cut of the cables!
Posted by: The Do-It-Yourself Conspiracy Generator | Feb 7, 2008
1:36:28 PM

An American agent has her throat cut in a mosque. A TSA employee
overhears a conversation about the crime; and he unravels the
complicated plot and leads the FBI to the cable cutter. Unfortunately,
he is mistaken, and soon the real cable cutter is on his internet.
Posted by: he Do-It-Yourself Conspiracy Generator | Feb 7, 2008
1:39:08 PM

There is also a great deal of information available here:
http://digg.com/world_news/FINALLY_Possible_Explanations_of_the_Submarine_Cable_Damages
Posted by: Taolf Sujat | Feb 7, 2008 1:56:10 PM

DEAR SIR,

CONFIDENTIAL BUSINESS PROPOSAL:

HAVING CONSULTED WITH MY COLLEAGUES AND BASED ON THE INFORMATION
GATHERED FROM THE IRANIAN CHAMBERS OF OIL BOURSE COMMERCE AND
INDUSTRY, I HAVE THE PRIVILEGE TO REQUEST FOR YOUR ASSISTANCE TO
TRANSFER THE SUM OF $47,500,000.00 (FORTY SEVEN MILLION, FIVE HUNDRED
THOUSAND UNITED STATES DOLLARS) INTO YOUR ACCOUNTS. THE ABOVE SUM
RESULTED FROM IRAN NO LONGER VALUING THE AMERICAN DOLLAR, AND
INVESTING WITH EURO SHORTLY BEFORE YOUR COUNTRY’S ECONOMY FELL APART.
THIS ACTION WAS HOWEVER INTENTIONAL AND SINCE THEN THE FUND HAS BEEN
IN A SUSPENSE ACCOUNT AT THE CENTRAL BANK OF IRAN APEX BANK.

WE WERE READY TO TRANSFER THE FUND OVERSEAS, BUT THAT IS WHERE YOU
COME IN. 4 UNDERSEA INTERNET CABLES HAVE BEEN CUT, WHICH PREVENTS US
FROM COMPLETING THE AFOREMENTIONED TRANSACTION. IT IS IMPORTANT TO
INFORM YOU THAT AS CIVIL SERVANTS, WE ARE FORBIDDEN TO OPERATE A
FOREIGN ACCOUNT; THAT IS WHY WE REQUIRE YOUR ASSISTANCE. THE TOTAL SUM
WILL BE SHARED AS FOLLOWS: 70% FOR US, 25% FOR YOU AND 5% FOR LOCAL
AND INTERNATIONAL EXPENSES INCIDENT TO THE TRANSFER.

BY USING THE REMAINING SATALITE COMMUNICATIONS WITHIN IRAN, THE
TRANSFER IS RISK FREE ON BOTH SIDES. I AM AN ACCOUNTANT WITH THE
IRANIAN NATIONAL OIL NETWORK (ANON). IF YOU FIND THIS PROPOSAL
ACCEPTABLE, WE SHALL REQUIRE THE FOLLOWING DOCUMENTS:

(A) YOUR BANKER’S NAME, TELEPHONE, ACCOUNT AND FAX NUMBERS.

(B) YOUR PRIVATE TELEPHONE AND FAX NUMBERS — FOR CONFIDENTIALITY AND
EASY COMMUNICATION.

(C) YOUR LETTER-HEADED PAPER STAMPED AND SIGNED.

ALTERNATIVELY WE WILL FURNISH YOU WITH THE TEXT OF WHAT TO TYPE INTO
YOUR LETTER-HEADED PAPER, ALONG WITH A BREAKDOWN EXPLAINING,
COMPREHENSIVELY WHAT WE REQUIRE OF YOU. THE BUSINESS WILL TAKE US
THIRTY (30) WORKING DAYS TO ACCOMPLISH.

PLEASE REPLY URGENTLY.

BEST REGARDS

Posted by: Fronz | Feb 7, 2008 1:57:25 PM

I told my professor that I did not do my homework cause the cables had
been sabotaged. Even she didn’t believe me… :(
Posted by: aloowalah | Feb 7, 2008 2:12:52 PM

it’s been done before.
Look up “Operation Ivy Bells”.
Posted by: knowledgeable | Feb 7, 2008 2:25:02 PM

Are we sure its not just cooper thieves?
Posted by: | Feb 7, 2008 2:49:32 PM

They have the internet on computers now?
Posted by: U.Pseudonym | Feb 7, 2008 5:18:03 PM

ok here it is again: ok its like this i recon… cut cable leading to
information u want… move away from severed point to another point on
same cabel… sever same cable again buy splice in your own info
stealing apparatus… wait for rich fat corps to fix there own cable
again… nobody knows your info is being intercepted and stolen…
vwalla. thanks for comming have a nice day.
Posted by: annon | Feb 7, 2008 6:51:15 PM

These events(4 to 8 cables being cut) highlight the fact that their
may, or may not be, a vast or minute conspiracy to effect some thing,
some where in the world for some purpose. I think that solves it. If
not conspiracy, then it must be the same guy who stole the cables from
the train station here in Gloucester Mass. Maybe copper thieves are
forming an international conspiracy!
Posted by: captinseafood | Feb 7, 2008 6:58:30 PM

and again so u can get in ur heads. coz its realy this simple. ok here
it is again. ok its like this i recon… cut cable leading to
information u want… move away from severed point to another point on
same cabel… sever same cable again buy splice in your own info
stealing apparatus… wait for rich fat corps to fix there own cable
again… nobody knows your info is being intercepted and stolen…
vwalla. thanks for comming have a nice day.
Posted by: annon | Feb 7, 2008 6:59:15 PM

so iran has still internet and we all just nuts tinfoil hats? good so
explain this :
http://www.internettrafficreport.com/asia.htm
Posted by: trustno1 | Feb 8, 2008 5:28:51 AM

Interview with a senior telecommunications analyst with his thoughts
on whether the cuts were intentional and the impact on global
networks:
http://www.networkperformancedaily.com/2008/02/hotter_under_the_water_a_look_1.html
Posted by: | Feb 8, 2008 9:10:02 AM

I don’t know why other Americans are making snarky comments about this
issue, especially on the Wall Street Journal or Wired.
If the Iran oil bourse is successful, others will follow. Americans
will then use $100 dollar bills to heat their homes, because they will
be worthless.
Posted by: wake up Americans | Feb 9, 2008 8:41:40 AM

trustno1,
The Internet Traffic Report page monitors ONE ROUTER at an academic
institution in Iran. That router is currently unreachable. It is ONE
ROUTER. Please go back and read my previous post. Every single
newspaper and other web site in Iran, including state controlled
media, universities, official government web sites, and even
Ahmadenijad’s personal “blog” are all up. Did you read nothing I said?
Iran has NOT lost connectivity, and never did. Therefore, your
ridiculous assertions based on this provably false claim are all
worthless.

Again, please read my Feb 7 post above, and see for yourself. Sorry to
burst your little conspiracy theory bubble. (I also can’t believe that
you’re using Internet Traffic Report as “proof” of anything when all
it does is use a SINGLE POINT in any nation as a point of reference
for whether the ENTIRE COUNTRY is up or down.

By Internet Traffic Report’s measures, here are some other things that
are down:

http://www.internettrafficreport.com/europe.htm
Germany
Africa

http://www.internettrafficreport.com/samerica.htm
Columbia

http://www.internettrafficreport.com/namerica.htm
Wisconsin

Oh well…at least reading comments from people like yourself provides
some good humor.

Dave Schroeder
das [at] doit [dot] wisc [dot] edu
http://das.doit.wisc.edu
Posted by: Dave Schroeder | Feb 9, 2008 9:07:18 AM

even if i was on pirpous ham radio would spred the word like we did
with cherinoble…hams will allwas tell the truth… no govermint can
stop us ..
Posted by: Peter | Feb 9, 2008 7:38:37 PM

It would be counterproductive for Al Qaeda, since they’re all about
the propaganda videos & they really do have their geeky side with
their websites etc, I would think these groups would be last to want
their propaganda pipelines cut. Wouldn’t you need a sub to do stuff
like this? That narrows it to a handful of countries – or former
countries with large, rich, erm… ‘business interests’ with access to
abandoned military gear. I’m still trying to grasp the ‘why’ of it
all. Extortion?
Posted by: punterjoe | Feb 10, 2008 5:36:23 AM

Consider the possibility that it is connected to Iran going off petro-
dollars to petro-euros. Consider the scheduled opening of the Iranian
oil bourse. Then ask yourself which government would most hate for
Iran to go off the dollar.
Posted by: Evelyn | Feb 11, 2008 11:35:44 AM

I found a really great guide with lots of detailed pictures and quotes
here:
http://www.ilovebonnie.net/2008/02/12/the-submarine-cables-a-complete-guide-to-the-2008-internet-outage/
Posted by: Taolf Sujat | Feb 12, 2008 9:38:39 PM

Ever since those cables have been cut, the number of spam messages I
have received has dropped to a fraction of what they used to be. Maybe
the cables should be left.
Posted by: vonbulow | Feb 13, 2008 5:04:20 PM