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Israel and Iran - Coming to a city near you?

July 10, 2008 · No Comments

Be very afraid, please

Reuters

AMERICA and Israel often hint at military action to stop Iran’s suspected nuclear-weapons programme. The latest rumblings, however, may be more serious. The atmosphere has been charged by a combination of factors: Iran’s expanding uranium-enrichment programme, faltering diplomatic efforts to halt it, a dying American administration and a nervous Israel. Throw in the latest war games by Israel, America and Iran—and Iran’s apparent rejection of the latest international incentives to halt its nuclear work—and some reckon the sparks could soon fly.

On July 9th Iranian television showed the test-firing of nine missiles (see picture), a day after an aide to the supreme leader, Ayatollah Ali Khamenei, threatened to “burn” Tel Aviv and American ships in the Gulf, and strike at America’s “vital interests around the globe”, if it were attacked. More tests took place on July 10th.

This was a response to Israel’s demonstration of its own long arm in June, when about 100 Israeli jets took part in exercises that appeared to rehearse the bombing of distant targets. Western officials were struck by helicopter sorties of more than 800 miles (1,290km), about the distance from Israel to Iran, to simulate the rescue of downed pilots. Israel conducted the exercise with Greece, rather than its traditional partner, Turkey, maybe because Greece has some of the Russian SA-20 anti-aircraft missiles Iran recently bought.

In the Gulf, meanwhile, American, British and Bahraini ships are involved in a joint exercise to protect gas and oil installations. This seems to be a reaction to Iran’s threats to retaliate against any attack by closing the Strait of Hormuz, the passage for roughly 40% of the world’s traded oil, and striking at neighbouring countries.

Does this public bellicosity really make military action more likely? Mahmoud Ahmadinejad, Iran’s president, dismissed the idea this week as a “funny joke”. And, yes, Israel could well be bluffing, waving its big stick in order to make the rewards the Europeans, Americans, Russians and Chinese are offering Iran in return for an end to uranium enrichment look more tempting. But whether or not Israel has frightened Iran, it has clearly rattled others.

France’s Total, an energy giant, said this week it was giving up plans to invest in Iran because of the risk. A top British government official puts the chance of an Israeli strike at 30%. Admiral Mike Mullen, chairman of America’s Joint Chiefs of Staff, was worried enough to say publicly that a third war (after Afghanistan and Iraq) would be “extremely stressful, very challenging, with consequences that would be difficult to predict”. As to whether Israel might act alone, he said: “This is a very unstable part of the world, and I don’t need it to become more unstable.”

One uncertainty is how close Iran is to being able to make a nuclear weapon (an aspiration it vehemently denies). America’s controversial National Intelligence Estimate, made public in December, said that Iran had indeed run a weaponisation programme but seemed to stop it in 2003. The Iranians continue (despite UN sanctions) to enrich uranium, but most Western experts think they have much to learn before being able to make the high-enriched variety for a bomb. America’s estimate is that the soonest Iran could make enough for one device would be the end of 2009, but that it could take five or more years longer.

Israeli officials are less sanguine. So far Iran has produced only a small amount of low-enriched uranium, but this could eventually be converted to the bomb-making sort. For all its sabre-rattling, Israel still says that diplomacy is preferable to war. But a number of political and military considerations may yet convince Israel to act alone—sooner rather than later.

One of these is the departure of the friendly Bush administration and the possible advent of a President Obama, who has promised to do “everything” to stop Iran getting a bomb but who is distrusted by many Israelis. Another is that Iran’s Russian-built reactor at Bushehr is due to start working in October. This is less worrying than the underground enrichment facility at Natanz. But if Israel intends to bomb it, it would be best to do so before it is loaded with nuclear fuel. Finally, it would be easier for Israel to act before Iran deploys its SA-20s, which may happen in early 2009.

That said, an effective attack against Iran’s buried and dispersed nuclear facilities would not be easy, even if Israel knew where all of them were. There will be no element of surprise, as when Israel bombed Iraq’s nuclear reactor in 1981, and a Syrian facility which America said afterwards was a secret reactor last September.

Another unknown is whether Israel would dare to strike Iran without a green or at least an amber light from the Americans. Without one, flying to Iran the direct way—through American-controlled Iraqi airspace—would be fraught with danger. An unauthorised Israeli strike that added to America’s miscellaneous woes in the Middle East would test even the closest alliance, jeopardising Israel’s relationship with its vital patron and armourer.

Against this must be weighed Israel’s visceral sense of vulnerability, sharpened not only by the Jewish state’s history but also by the implacability of Iran, whose government rules out any accommodation with the “Zionist regime” and repeatedly predicts its disappearance. Nobody can be quite sure that in a corner, confronting what it believed to be existential peril, Israel will not act—alone if necessary.

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Zooming In on Iran

June 5, 2008 · No Comments


Zoom in on Iran
Zoom out on the Middle East


Iran’s president, Mahmoud Ahmadinejad, made headlines again yesterday, with a speech calling for the downfall of both Israel and the United States. Of Israel, the Iranian leader said, “the criminal and terrorist Zionist regime . . . has reached the end of its work and will soon disappear off the geographical scene.”

Of the United States, he said, “the time for the fall of the satanic power . . . has come and the countdown to the annihilation of the emperor of power and wealth has begun.”

Amid such animosity, we decided it was time to zoom in on Iran. So today, we’ll measure the nation by the numbers and place it squarely on your mental map. Then, tomorrow and Thursday, we’ll retrace Iran’s history, from Alexander the Great to the rise of the current regime.

ran, By the Numbers

1935 - The year Iran asked the West to stop labeling the place “Persia” and to start using the name natives use: “Iran.” The language is still called Persian, though, or Farsi–from the modern province Fars (ancient Parsa, called Persis by the Greeks). Today, Persian is written in Arabic script, a holdover from medieval times, when Persian rulers fell to Islamic caliphs in Damascus and Baghdad.

1979 - The year an Islamic revolution forced Iran’s western-supported shah (”king”) into exile and Iranians voted overwhelmingly to establish an Islamic republic. In the republic, all adult citizens can vote, but clerics can veto laws and candidates deemed un-Islamic.

636,300 - Iran’s total area, in square miles (1,648,000 sq km). That’s slightly larger than the state of Alaska, and nearly four times the size of Iraq. The country sits on a vast waterless plateau, ringed by forbidding mountain ranges. Most of the population lives at the foot of these mountains.

70 million - Iran’s total population. That’s more than France or the United Kingdom, but less than Germany or Turkey. It’s a youthful country–about half of its people are under 25–and increasingly urban. In 1950, about a quarter of the population lived in cities. Now, more than 60 percent do.

7.7 million - The population of Tehran, Iran’s largest and capital city. More than 13 million people live in its metropolitan area, at the southern foot of the Elburz Mountains, not far from the Caspian Sea. More than half of the country’s growing industry is based there.

89 - Percent of the population that is Shi’a Muslim. Nearly everyone else is Sunni Muslim. The Shi’ite branch of Islam is the official state religion, and the nation’s post-revolution constitution guarantees Islamic principles of government.

85 - Percent of government revenues that come from oil. Only Saudi Arabia exports more crude than Iran, which is also one of the world’s leading natural gas exporters.

Iran, On the Map

Get a printable map of Iran’s mountainous geography:
http://knowledgenews.net/moxie/pdf/iran_physical.pdf

Get a printable map of Iran’s mixed ethnicity:
http://knowledgenews.net/moxie/pdf/iran_ethno.pdf

Get a printable map of Iran’s population centers:
http://knowledgenews.net/moxie/pdf/iran_pop.pdf

–Michael Himick

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Nepal’s Re-Return to Democracy

May 29, 2008 · No Comments


What’s new in Kathmandu


Nepal’s newly elected Constituent Assembly began meeting this week, bringing renewed hope for a democratic future to the Himalayan nation. The Constituent Assembly is charged with governing Nepal while it rewrites the country’s constitution–and hopefully, puts an end to more than a decade of intermittent civil war.

First up on the Assembly’s agenda: toppling Nepal’s 240-year-old monarchy and putting a republic in its place. Unfortunately, changing the government may prove easier than actually governing. Here’s a frame-by-frame replay of Nepal’s recent past to put its current events in perspective.

Instant Replay
Nepal’s Re-Return to Democracy

1990 - Leftist political parties join with the centrist Nepali Congress Party in the “Movement to Restore Democracy”–though democracy had previously existed in Nepal for just 18 months, from 1959 to 1960. Massive demonstrations and strikes compel King Birenda to give up absolute power and become a constitutional monarch.

1991 - Nepal holds parliamentary elections. The Nepali Congress Party carries the day, and Girija Prasad Koirala becomes prime minister.

1994 - Dissension within the Nepali Congress leads to the dissolution of parliament. New elections follow, but no party wins a majority of seats. A minority government led by the Communist Party of Nepal (United Marxist-Leninist) takes over, making Nepal, for a time, a communist monarchy.

1996 - The Communist Party of Nepal (Maoist) launches a violent insurgency. Its goal is to topple the monarchy altogether and establish a “people’s republic.” Over the next 10 years, the insurgency will claim more than 13,000 lives and assume de facto control over much of rural Nepal.

1999 - The Nepali Congress again wins a majority of seats in parliament, but party infighting again prevents stable governing. Early in 2000, Girija Prasad Koirala again takes over as prime minister, forming the ninth new government in 10 years. None lasted, and many were corrupt.

2001 - The Maoists spearhead a general strike that shuts down much of the country. King Birenda and other members of the royal family are murdered in a palace massacre. Birenda’s younger brother Gyanendra assumes the throne.

2002 - With more Maoist attacks and another nationwide general strike, King Gyanendra dissolves parliament. A few months later, he fires his council of ministers and calls off parliamentary elections. Instead, he appoints a royalist prime minister of his own.

2004 - In August, the Maoists blockade Kathmandu, preventing supplies from reaching the city for a week. Commentators argue that the Maoist insurgency has led to military stalemate. Nepal’s army doesn’t have the muscle to defeat the Maoists, but the Maoists can’t win either.

2005 - In February, King Gyanendra assumes direct power and suspends civil liberties, citing the need to defeat the Maoists. In September, the Maoists declare a unilateral ceasefire. In November, opposition political parties make a deal with the Maoists designed to restore democracy.

2006 - After three weeks of general strike, King Gyanendra gives up absolute power and reinstates Nepal’s parliament, which promptly strips much of the king’s remaining power. The hard work of putting Nepal back together then falls on a coalition of seven political parties–instigators of the largely peaceful uprising–and on the Maoists.

2008 - Nepalis go to the polls to pick a Constituent Assembly. More than 50 parties field candidates in the election. Maoist party candidates win the most seats, but not enough for a Maoist majority. Nepal’s new rulers will have to succeed where their elected predecessors have failed–in building and maintaining coalitions.

–Steve Sampson

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Humpback Comeback

May 24, 2008 · No Comments


A deep sea singer returns


Whale watchers worldwide got a bit of good news this week, with the release of a new study that says humpback whales are making a comeback in the North Pacific.

According to the study, the number of whales in the North Pacific may have reached 20,000 for the period between 2004 and 2006. That’s up from a total of fewer than 1,500 whales 40 years ago, when humpback hunting was banned.

Experts still worry that some humpback subgroups are taking longer to bounce back, but one described the news as “definitely very encouraging in terms of the recovery of the species.” It’s certainly enough to make us want to dive in for a closer look at one of the ocean’s marvelous mammals.

Uproarious Rorquals

Humpbacks hail from the family of whales called “rorquals,” which includes the fin whale, the sei whale, and the blue whale, the world’s largest animal. Blue whales can grow to 100 feet (30 meters) and weigh up to 330,000 pounds (150 metric tons), bigger than any dinosaur we’ve yet discovered.

At 45 feet (14 meters) and 80,000 pounds (36 metric tons), humpbacks aren’t nearly as big as cousin Blue. But they can really sing. In fact, according to a 2006 study, humpback whales sing grammatically, combining sounds into phrases, and phrases into songs, according to complex rules called a “hierarchical syntax.” It’s similar to our ability to combine words into clauses and clauses into sentences.

Humpbacks can dance, too. They are among the most acrobatic of whales, sometimes leaping entirely out of the water. Such breaching is common among males during mating season, when humpbacks migrate from polar feeding grounds to tropical breeding grounds. It’s also during mating season that humpback males sing their syntactically sophisticated songs, presumably in pursuit of humpback gals.

Straining for Snacks

Like all rorquals, humpbacks are baleen whales. They feed by taking huge mouthfuls of seawater–literally tons of it–then forcing the water out between hundreds of plates of baleen (a.k.a. “whalebone”) that hang from the roofs of their mouths. The baleen plates work like a sieve, letting water out but keeping krill and other munchable marine life in.

To catch that seafood dinner, humpbacks sometimes use a special technique called “bubblenetting.” First, one or more humpbacks swim in a circle beneath a school of fish, blowing bubbles that float up to form a wall around their prey. Then the humpbacks swim up through their “bubblenet,” slurping the fish-filled water as they go.

It’s clever, and tremendously effective. A humpback whale can catch, and eat, as much as 3,000 pounds (1,360 kg) of food in a day. But that’s not too surprising–coming from a creature smart enough to sing in syntax.

–Steve Sampson

Categories: California · Diving · Education · Government · Headlines · News · Ocean · Opinion · Politics · Science · The Blender · The Media · We the People

Americana - Does the Constitution Really Promise Privacy?

March 14, 2008 · No Comments


No peeking

Congress and the White House continue to wrangle over a new version of the law that covers the nation’s wiretapping program. The question of the moment is whether people should be able to sue private telecom companies who cooperated with the government after 9/11 and may, in the process, have violated their customers’ privacy rights.

The bigger question, though, is just how far the people’s right to privacy goes–and how to strike a balance between that right and the needs of national security. After all, privacy is every U.S. citizen’s constitutional right, right?

Well, maybe. The U.S. Constitution never specifically says that citizens have a right to privacy. Yet it does say they have rights that aren’t specifically mentioned in the Constitution–and the Supreme Court has ruled that privacy is among them.

Never Enumerate Your Rights

How can the Constitution protect rights it never names? Well, the framers were clever fellows. They realized people might read an enumerated list–like, say, the Bill of Rights–and assume the list was supposed to be exhaustive. So, to make sure their list wasn’t read that way, they wrote a rule against doing so and added it to the list. That rule is the Constitution’s Ninth Amendment, which reads:

The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

Some scholars read those words strictly as a prohibition that prevents the government from doing whatever it wants as long as it doesn’t violate your enumerated rights. Others argue they imply positive constitutional protection for one or more unenumerated, yet important, rights–such as the right to defend yourself, the right to move from one place to another, and the right to privacy.

Private Penumbras

Many of the Constitution’s amendments are privacy-related. The First Amendment preserves your right to practice your religion and speak your mind. The Fifth Amendment preserves your right to remain silent and your right to private property. The Fourth Amendment preserves “the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures.”

In a 1965 privacy rights case, Griswold v. Connecticut, the Supreme Court ruled that these “various guarantees create zones of privacy.” Striking down a Connecticut statute that forbade the use of contraceptives even by married couples, the Court held that “specific guarantees in the Bill of Rights have penumbras, formed by emanations from those guarantees that help give them life and substance.” (A penumbra is a partly shaded region at the edge of a shadow.)

Basically, the Court held that the spirit of one of the Constitution’s amendments, or several together, can cast shadows long enough to cover a right–such as marital privacy–that the Constitution doesn’t mention. And, under the Ninth Amendment, such rights are “retained by the people” without being enumerated. Future rulings extended Griswold’s notion of privacy beyond marriage, to strike down fornication and sodomy laws.

Penumbral Problems

Critics of Griswold argue that penumbral privacy rights are a fiction conjured from constitutional shadows. Even some privacy proponents stay away from penumbras, arguing instead that the Fourteenth Amendment guarantees privacy by promising not to “deprive any person of life, liberty, or property, without due process of law.” Privacy, they say, is essential to liberty.

In fact, the Supreme Court followed that line of reasoning in the most controversial privacy-related case of all: 1973’s Roe v. Wade. According to the majority opinion in Roe, “this right of privacy . . . founded in the Fourteenth Amendment’s concept of personal liberty . . . is broad enough to encompass a woman’s decision whether or not to terminate her pregnancy.” Clearly not everyone agrees with that argument, either.

–Steve Sampson

Categories: Congress · Congress and the White House · Freedom of Speech · Government · Headlines · Journalism · Law and Order · News · Opinion · Politics · Supreme Court · Technology · The Media · U.S. Constitution · Wiretapping · constitutional rights · law · privacy

NSA’s Domestic Spying Grows

March 11, 2008 · No Comments

Terror Fight Blurs

Line Over Domain;
Tracking Email

By SIOBHAN GORMAN
March 10, 2008; Page A1

WASHINGTON, D.C. — Five years ago, Congress killed an experimental Pentagon antiterrorism program meant to vacuum up electronic data about people in the U.S. to search for suspicious patterns. Opponents called it too broad an intrusion on Americans’ privacy, even after the Sept. 11 terrorist attacks.

But the data-sifting effort didn’t disappear. The National Security Agency, once confined to foreign surveillance, has been building essentially the same system.

The central role the NSA has come to occupy in domestic intelligence gathering has never been publicly disclosed. But an inquiry reveals that its efforts have evolved to reach more broadly into data about people’s communications, travel and finances in the U.S. than the domestic surveillance programs brought to light since the 2001 terrorist attacks.

Congress now is hotly debating domestic spying powers under the main law governing U.S. surveillance aimed at foreign threats. An expansion of those powers expired last month and awaits renewal, which could be voted on in the House of Representatives this week. The biggest point of contention over the law, the Foreign Intelligence Surveillance Act, is whether telecommunications and other companies should be made immune from liability for assisting government surveillance.

Largely missing from the public discussion is the role of the highly secretive NSA in analyzing that data, collected through little-known arrangements that can blur the lines between domestic and foreign intelligence gathering. Supporters say the NSA is serving as a key bulwark against foreign terrorists and that it would be reckless to constrain the agency’s mission. The NSA says it is scrupulously following all applicable laws and that it keeps Congress fully informed of its activities.

According to current and former intelligence officials, the spy agency now monitors huge volumes of records of domestic emails and Internet searches as well as bank transfers, credit-card transactions, travel and telephone records. The NSA receives this so-called “transactional” data from other agencies or private companies, and its sophisticated software programs analyze the various transactions for suspicious patterns. Then they spit out leads to be explored by counterterrorism programs across the U.S. government, such as the NSA’s own Terrorist Surveillance Program, formed to intercept phone calls and emails between the U.S. and overseas without a judge’s approval when a link to al Qaeda is suspected.

The NSA’s enterprise involves a cluster of powerful intelligence-gathering programs, all of which sparked civil-liberties complaints when they came to light. They include a Federal Bureau of Investigation program to track telecommunications data once known as Carnivore, now called the Digital Collection System, and a U.S. arrangement with the world’s main international banking clearinghouse to track money movements.

The effort also ties into data from an ad-hoc collection of so-called “black programs” whose existence is undisclosed, the current and former officials say. Many of the programs in various agencies began years before the 9/11 attacks but have since been given greater reach. Among them, current and former intelligence officials say, is a longstanding Treasury Department program to collect individual financial data including wire transfers and credit-card transactions.

It isn’t clear how many of the different kinds of data are combined and analyzed together in one database by the NSA. An intelligence official said the agency’s work links to about a dozen antiterror programs in all.

A number of NSA employees have expressed concerns that the agency may be overstepping its authority by veering into domestic surveillance. And the constitutional question of whether the government can examine such a large array of information without violating an individual’s reasonable expectation of privacy “has never really been resolved,” said Suzanne Spaulding, a national-security lawyer who has worked for both parties on Capitol Hill.

NSA officials say the agency’s own investigations remain focused only on foreign threats, but it’s increasingly difficult to distinguish between domestic and international communications in a digital era, so they need to sweep up more information.

The Fourth Amendment

In response to the Sept. 11 attacks, then NSA-chief Gen. Michael Hayden has said he used his authority to expand the NSA’s capabilities under a 1981 executive order governing the agency. Another presidential order issued shortly after the attacks, the text of which is classified, opened the door for the NSA to incorporate more domestic data in its searches, one senior intelligence official said.

[Michael Hayden]The NSA “strictly follows laws and regulations designed to preserve every American’s privacy rights under the Fourth Amendment to the U.S. Constitution,” agency spokeswoman Judith Emmel said in a statement, referring to the protection against unreasonable searches and seizures. The Office of the Director of National Intelligence, which oversees the NSA in conjunction with the Pentagon, added in a statement that intelligence agencies operate “within an extensive legal and policy framework” and inform Congress of their activities “as required by the law.” It pointed out that the 9/11 Commission recommended in 2004 that intelligence agencies analyze “all relevant sources of information” and share their databases.

Two former officials familiar with the data-sifting efforts said they work by starting with some sort of lead, like a phone number or Internet address. In partnership with the FBI, the systems then can track all domestic and foreign transactions of people associated with that item — and then the people who associated with them, and so on, casting a gradually wider net. An intelligence official described more of a rapid-response effect: If a person suspected of terrorist connections is believed to be in a U.S. city — for instance, Detroit, a community with a high concentration of Muslim Americans — the government’s spy systems may be directed to collect and analyze all electronic communications into and out of the city.

The haul can include records of phone calls, email headers and destinations, data on financial transactions and records of Internet browsing. The system also would collect information about other people, including those in the U.S., who communicated with people in Detroit.

The information doesn’t generally include the contents of conversations or emails. But it can give such transactional information as a cellphone’s location, whom a person is calling, and what Web sites he or she is visiting. For an email, the data haul can include the identities of the sender and recipient and the subject line, but not the content of the message.

Intelligence agencies have used administrative subpoenas issued by the FBI — which don’t need a judge’s signature — to collect and analyze such data, current and former intelligence officials said. If that data provided “reasonable suspicion” that a person, whether foreign or from the U.S., was linked to al Qaeda, intelligence officers could eavesdrop under the NSA’s Terrorist Surveillance Program.

The White House wants to give companies that assist government surveillance immunity from lawsuits alleging an invasion of privacy, but Democrats in Congress have been blocking it. The Terrorist Surveillance Program has spurred 38 lawsuits against companies. Current and former intelligence officials say telecom companies’ concern comes chiefly because they are giving the government unlimited access to a copy of the flow of communications, through a network of switches at U.S. telecommunications hubs that duplicate all the data running through it. It isn’t clear whether the government or telecom companies control the switches, but companies process some of the data for the NSA, the current and former officials say.

[Graphic]On Friday, the House Energy and Commerce Committee released a letter warning colleagues to look more deeply into how telecommunications data are being accessed, citing an allegation by the head of a New York-based computer security firm that a wireless carrier that hired him was giving unfettered access to data to an entity called “Quantico Circuit.” Quantico is a Marine base that houses the FBI Academy; senior FBI official Anthony DiClemente said the bureau “does not have ‘unfettered access’ to any communication provider’s network.”

The political debate over the telecom information comes as intelligence agencies seek to change traditional definitions of how to balance privacy rights against investigative needs. Donald Kerr, the deputy director of national intelligence, told a conference of intelligence officials in October that the government needs new rules. Since many people routinely post details of their lives on social-networking sites such as MySpace, he said, their identity shouldn’t need the same protection as in the past. Instead, only their “essential privacy,” or “what they would wish to protect about their lives and affairs,” should be veiled, he said, without providing examples.

Social-Network Analysis

The NSA uses its own high-powered version of social-network analysis to search for possible new patterns and links to terrorism. The Pentagon’s experimental Total Information Awareness program, later renamed Terrorism Information Awareness, was an early research effort on the same concept, designed to bring together and analyze as much and as many varied kinds of data as possible. Congress eliminated funding for the program in 2003 before it began operating. But it permitted some of the research to continue and TIA technology to be used for foreign surveillance.

Some of it was shifted to the NSA — which also is funded by the Pentagon — and put in the so-called black budget, where it would receive less scrutiny and bolster other data-sifting efforts, current and former intelligence officials said. “When it got taken apart, it didn’t get thrown away,” says a former top government official familiar with the TIA program.

Two current officials also said the NSA’s current combination of programs now largely mirrors the former TIA project. But the NSA offers less privacy protection. TIA developers researched ways to limit the use of the system for broad searches of individuals’ data, such as requiring intelligence officers to get leads from other sources first. The NSA effort lacks those controls, as well as controls that it developed in the 1990s for an earlier data-sweeping attempt.

Sen. Ron Wyden, an Oregon Democrat and member of the Senate Intelligence Committee who led the charge to kill TIA, says “the administration is trying to bring as much of the philosophy of operation Total Information Awareness as it can into the programs they’re using today.” The issue has been overshadowed by the fight over telecoms’ immunity, he said. “There’s not been as much discussion in the Congress as there ought to be.”

Opportunity for Debate

But Sen. Kit Bond of Missouri, the ranking Republican on the committee, said by email his committee colleagues have had “ample opportunity for debate” behind closed doors and that each intelligence program has specific legal authorization and oversight. He cautioned against seeing a group of intelligence programs as “a mythical ‘big brother’ program,” adding, “that’s not what is happening today.”

READ THE RULING

 

While the Fourth Amendment guarantees “[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures,” the legality of data-sweeping relies on the government’s interpretation of a 1979 Supreme Court ruling allowing records of phone calls — but not actual conversations — to be collected without a warrant. Read the ruling.1

The legality of data-sweeping relies largely on the government’s interpretation of a 1979 Supreme Court ruling allowing records of phone calls — but not actual conversations — to be collected without a judge issuing a warrant. Multiple laws require a court order for so-called “transactional’” records of electronic communications, but the 2001 Patriot Act lowered the standard for such an order in some cases, and in others made records accessible using FBI administrative subpoenas called “national security letters.” (Read the ruling.2)

A debate is brewing among legal and technology scholars over whether there should be privacy protections when a wide variety of transactional data are brought together to paint what is essentially a profile of an individual’s behavior. “You know everything I’m doing, you know what happened, and you haven’t listened to any of the contents” of the communications, said Susan Landau, co-author of a book on electronic privacy and a senior engineer at Sun Microsystems Laboratories. “Transactional information is remarkably revelatory.”

Ms. Spaulding, the national-security lawyer, said it’s “extremely questionable” to assume Americans don’t have a reasonable expectation of privacy for data such as the subject-header of an email or a Web address from an Internet search, because those are more like the content of a communication than a phone number. “These are questions that require discussion and debate,” she said. “This is one of the problems with doing it all in secret.”

Gen. Hayden, the former NSA chief and now Central Intelligence Agency director, in January 2006 publicly defended the activities of the Terrorist Surveillance Program after it was disclosed by the New York Times. He said it was “not a driftnet over Lackawanna or Fremont or Dearborn, grabbing all communications and then sifting them out.” Rather, he said, it was carefully targeted at terrorists. However, some intelligence officials now say the broader NSA effort amounts to a driftnet. A portion of the activity, the NSA’s access to domestic phone records, was disclosed by a USA Today article in 2006.

The NSA, which President Truman created in 1952 through a classified presidential order to be America’s ears abroad, has for decades been the country’s largest and most secretive intelligence agency. The order confined NSA spying to “foreign governments,” and during the Cold War the NSA developed a reputation as the world’s premier code-breaking operation. But in the 1970s, the NSA and other intelligence agencies were found to be using their spy tools to monitor Americans for political purposes. That led to the original FISA legislation in 1978, which included an explicit ban on the NSA eavesdropping in the U.S. without a warrant.

Big advances in telecommunications and database technology led to unprecedented data-collection efforts in the 1990s. One was the FBI’s Carnivore program, which raised fears when it was in disclosed in 2000 that it might collect telecommunications information about law-abiding individuals. But the ground shifted after 9/11. Requests for analysis of any data that might hint at terrorist activity flooded from the White House and other agencies into NSA’s Fort Meade, Md., headquarters outside Washington, D.C., one former NSA official recalls. At the time, “We’re scrambling, trying to find any piece of data we can to find the answers,” the official said.

The 2002 congressional inquiry into the 9/11 attacks criticized the NSA for holding back information, which NSA officials said they were doing to protect the privacy of U.S. citizens. “NSA did not want to be perceived as targeting individuals in the United States” and considered such surveillance the FBI’s job, the inquiry concluded.

FBI-NSA Projects

The NSA quietly redefined its role. Joint FBI-NSA projects “expanded exponentially,” said Jack Cloonan, a longtime FBI veteran who investigated al Qaeda. He pointed to national-security letter requests: They rose from 8,500 in 2000 to 47,000 in 2005, according to a Justice Department inspector general’s report last year. It also said the letters permitted the potentially illegal collection of thousands of records of people in the U.S. from 2003-05. Last Wednesday, FBI Director Robert Mueller said the bureau had found additional instances in 2006.

It isn’t known how many Americans’ data have been swept into the NSA’s systems. The Treasury, for instance, built its database “to look at all the world’s financial transactions” and gave the NSA access to it about 15 years ago, said a former NSA official. The data include domestic and international money flows between bank accounts and credit-card information, according to current and former intelligence officials.

The NSA receives from Treasury weekly batches of this data and adds it to a database at its headquarters. Prior to 9/11, the database was used to pursue specific leads, but afterward, the effort was expanded to hunt for suspicious patterns.

Through the Treasury, the NSA also can access the database of the Society for Worldwide Interbank Financial Telecommunication, or Swift, the Belgium-based clearinghouse for records of international transactions between financial institutions, current and former officials said. The U.S. acknowledged in 2006 that the CIA and Treasury had access to Swift’s database, but said the NSA’s Terrorism Surveillance Program was separate and that the NSA provided only “technical assistance.” A Treasury spokesman said the agency had no comment.

Through the Department of Homeland Security, airline passenger data also are accessed and analyzed for suspicious patterns, such as five unrelated people who repeatedly fly together, current and former intelligence officials said. Homeland Security shares information with other agencies only “on a limited basis,” spokesman Russ Knocke said.

NSA gets access to the flow of data from telecommunications switches through the FBI, according to current and former officials. It also has a partnership with FBI’s Digital Collection system, providing access to Internet providers and other companies. The existence of a shadow hub to copy information about AT&T Corp. telecommunications in San Francisco is alleged in a lawsuit against AT&T filed by the civil-liberties group Electronic Frontier Foundation, based on documents provided by a former AT&T official. In that lawsuit, a former technology adviser to the Federal Communications Commission says in a sworn declaration that there could be 15 to 20 such operations around the country. Current and former intelligence officials confirmed a domestic network of hubs, but didn’t know the number. “As a matter of policy and law, we can not discuss matters that are classified,” said FBI spokesman John Miller.

The budget for the NSA’s data-sifting effort is classified, but one official estimated it surpasses $1 billion. The FBI is requesting to nearly double the budget for the Digital Collection System in 2009, compared with last year, requesting $42 million. “Not only do demands for information continue to increase, but also the requirement to facilitate information sharing does,” says a budget justification document, noting an “expansion of electronic surveillance activity in frequency, sophistication, and linguistic needs.”

Categories: Baby Boomers · Dead Serious · George Bush · Government · Headlines · News · Opinion · Pentagon · Politics · Right Wing Wackos · Rule of Dumb · Spying · Talk Radio · The Blender · The Media · The Middle East · War · War on Terror · We the People · antiterrorism · privacy

How Viruses Steal Your Cells

March 10, 2008 · No Comments


Meet the influenza A virus–
but keep your cells away

Last month, we reported on the current U.S. flu season and witnessed the worst flu ever. This week, KnowledgeNews HQ has been invaded by some sort of virus, which doesn’t seem like the flu but isn’t pleasant either. Naturally, we’re fighting back with knowledge–specifically, an assault on viruses.

Viruses exist to nab your cells and use them for their own reproductive purposes. They have to, because a virus is nothing more than a few strands of rogue DNA (or rogue RNA, DNA’s single-stranded cousin) wrapped in a protein coat to keep out the draft.

They are not cells, and they have none of the internal structures that cells use to go about the business of life, which is, generally, to make more life. No, viruses are just genetic material looking for a free ride–looking to hijack a host cell and make its machinery do the virus’s bidding.

Rule for Viral Success #1:
Mutation, Mutation, Mutation

With so little to call their own, how have these biological pirates survived for so long? The answer lies in two traits that give viruses superb evolutionary advantages: superfast reproduction and genetic mutations.

Viruses live to reproduce. Although they must do this within host cells, once inside, viruses replicate with enough abandon to shame a rabbit. They quickly reprogram the machinery that cells use to copy their own DNA and use it to spit out copy after copy of themselves.

Genetic mutations add insult to injury. With so much reproduction going on, viruses can mutate almost as fast as they propagate. And massive mutation means that each new generation of viral invaders stands a good chance of gaining some new survival or targeting advantage.

Rule for Viral Success #2:
Pick a Likely Victim

Viruses invade all kinds of cells–plant cells, animal cells, fungi, even bacteria. Yet each virus tends to have a very specific M.O. Which cells look like likely victims to a virus depends on the unique proteins found on the virus’s protein coat and the protein receptors found on the poor target cell.

Some viruses recognize the general receptors that occur on many different kinds of cells. The virus for rabies, for example, can invade so many different kinds of cells that it can span species, infecting rodents, dogs, and humans.

Other viruses are more restricted and can invade only specific kinds of cells. The common cold virus, for example, can invade only the cells lining the human upper respiratory tract. It’s a picky thief.

Rule for Viral Success #3:
Make It an Inside Job

Viral entry mechanisms are as diverse as viruses themselves, which is why viruses often elude treatment. Some enter a target cell by binding to a specific receptor and passing through the host cell membrane to the cell interior. Others don’t need to enter the cell, but simply attach to the surface and use a needle-like structure to inject their DNA right in.

Once viral genes are inside, the virus begins its cycle of replication. It exploits the host cell’s supplies and machinery, forcing it to copy viral genes and synthesize more viral protein coats. Then, these two components come together to form copies of the virus that emerge from the host cell.

Sometimes they “bud” off the cell, like bubbles on top of a simmering stew. At other, more violent times, copies simply fill the cell until it can hold no more. It explodes, releasing its viral hoard into the surrounding area.

Either way, the viral progeny go on to infect new cells–and the cycle starts again. Disease symptoms can and do result from this cellular damage. Most often, though, the sickness you feel is the result of your immune system’s response to the foreign invader. And make no mistake, it will respond.

Rule for Viral Success #4:
Avoid the Cops

Your immune system’s first-responders act like beat cops on patrol 24/7. If they see anything amiss while walking the body’s beat, they make arrests. One kind of cellular cop, the phagocytes, will engulf strange viruses and digest them. Another kind, natural killer cells, recognizes suspect changes on the surface of infected cells and releases chemicals to disintegrate both virus and cell alike.

After spotting the infection, your body can launch a more specific and intensive attack. Proteins called antibodies surround, bind to, and neutralize viruses and other invaders in your bloodstream. Killer T cells mercilessly destroy infected cells and halt systemic infection. Both help your body remember the infection and mount a faster response to the same invader next time.

Still other players merit mention. When a cell does get infected with a virus, sometimes it manages to secrete small proteins called interferons that serve to warn neighboring cells of an imminent viral invasion. These “Paul Revere” proteins work by encouraging neighboring cells to synthesize proteins that can interfere with viral replication.

–Michael Himick and Christina Catron

Categories: Cells · Government · Headlines · Health Care · News · Science · Viruses · common cold · flu · influenza · sick · sickness

Somali Strikes

March 3, 2008 · No Comments


Not far from the Kenyan border
Zoom in | Zoom out

The U.S. military launched what it called “a deliberate, precise strike against a known terrorist and his associates” in Somalia on Monday. The attack destroyed at least one building in the remote southern town of Dobley, just a few miles from the Kenyan border.

The town had reportedly fallen into the hands of Islamic extremists–allies of the Islamic militias who seized much of southern Somalia in 2006, only to be driven back by Somali and Ethiopian forces.

That still-simmering conflict has helped bring Somalia to the brink of “the worst humanitarian crisis in the world,” according to the UN’s refugee agency–worse even than the crisis in Darfur. How has it come to this? Let’s review Somalia’s sad story, from the nation’s ancient origins to the start of the ongoing chaos nearly two decades ago.

Somalia is located on the Horn of Africa, just across the Gulf of Aden from the Arabian Peninsula. People have occupied its beachfront property for ages. Ancient Egyptians traded along the Horn’s shores. So did Greeks and medieval Arabs. In the 10th century, Chinese merchants arrived and reportedly took home exotic animals for the emperor’s menagerie.

Today’s Somalis claim descent from Arab immigrants who settled along the coast more than 1,000 years ago. Scholars debate when and how they actually arrived and moved inland, but there’s no question that Somali clans were well established in much of modern Somalia by the 16th century.

The clans are still central to Somali society. Each traces its ancestry to a single father figure, and each is divided into sub-clans that don’t always get along. Still, all the clans share a common language (Somali), religion (Islam), and culture. In fact, Somali culture extends beyond Somalia’s borders, which were largely drawn by Europeans.

The Scramble for Somalia

Europeans began arriving in force after the opening of the Suez Canal in Egypt in 1869. Suddenly, the Somali coast lay along a strategically important shipping route, and the British, Italians, and French arrived to promote their interests.

The French set up shop around the Somali port of Djibouti, in an area that later became the independent nation of that name. The British established “British Somaliland” in the northwest, while the Italians moved into the south. Not to be outdone, Ethiopia–then a regional power–assumed control in the Somali-inhabited Ogaden region in the west. Disputes followed, and borders were drawn without asking the locals.

Around the turn of the 20th century, Mohammed Abdullah Hassan–whom the British called the “Mad Mullah”–launched a rebellion against the colonizers. He and his followers, called “dervishes,” survived attacks by the British, the Italians, and the Ethiopians before finally falling to the Brits in 1920. Even then, pockets of Somali resistance continued.

Unscrambling Somalia

During World War II, the Italians briefly took British Somaliland, only to see the British return to retake “their” Somaliland, plus Italian Somaliland and Ogaden, too. In 1949, the Italians returned to administer Italian Somaliland as a UN trust territory, but not before many Somalis had begun longing for their own independent, pan-Somali state.

In 1960, the British and Italians left, and British Somaliland and Italian Somaliland joined to form the United Republic of Somalia. Almost immediately, the new nation became embroiled in border conflicts over Somali-inhabited lands in northern Kenya and eastern Ethiopia. A military buildup followed, even as internal tensions mounted between the former British and Italian regions.

In 1969, a bodyguard from a rival clan assassinated Somalia’s president, and the military assumed power. The commander of the army, Mohamed Siad Barre, became president–and, before long, dictator. The coup was restyled a “revolution,” as “Comrade Siad” announced his pursuit of an Islam-friendly version of “scientific socialism.” Yet socialism never really took root in Somalia, and rival clans and Islamic leaders soon resented the Comrade’s rule.

Somalia Rescrambled

In 1974, Ethiopia’s Emperor Haile Selassie fell. Three years later, Siad Barre retook the Somali-inhabited Ogaden region. At first, the Soviets tried to mediate the dispute. Then they shifted their support to Ethiopia (which has 77 million people to Somalia’s 9 million). Somalia’s Soviet arms shipments stopped, while Ethiopia got military advisors and Cuban troops. The United States shifted its support from Ethiopia to Somalia, but not before Ogaden was back in Ethiopian hands.

After the defeat in Ogaden, officers from a rival clan tried to topple Siad Barre. They failed, but the threat they posed prompted the dictator to start making government appointments based on perceived clan loyalty. The government and military became less competent, clan rivalries increased, and guerrilla attacks began. As the 1980s wore on, opposition groups became more powerful, and Siad Barre responded with increasingly repressive measures.

By the end of the decade, clan militias had seized much of the country. Last-ditch efforts at political reform failed to appease them, and in January 1991, a united opposition front captured the capital, Mogadishu. Siad Barre fled, and the militias turned on each other. In the next two years, 50,000 people died in factional fighting, and some 300,000 Somalis starved. Meanwhile, the former British Somaliland effectively seceded, calling itself, simply, “Somaliland.” Somalia hasn’t had a functional central government since.

Categories: Dead Serious · Government · Headlines · Mean Streets · News · Somalia · War on Terror

Kosovo Q&A

February 20, 2008 · 1 Comment


It used to be part of Yugoslavia.
Now it wants independence from Serbia.

Kosovo declared its independence on Sunday. Depending on whom you ask, it is now either a new nation in the Balkans or a renegade province that belongs within Serbia. The United States, the United Kingdom, and France were quick to recognize Kosovo as a country. Serbia, Russia, and China were quick to deny that it’s any such thing. Clearly, it’s time for us to ask some Kosovo questions.

A provisional government handles many of Kosovo’s daily affairs (and proclaimed its independence). But the region has been under UN administration since 1999, when a NATO bombing campaign forced Serbian security forces out. Those forces had been battling an armed revolutionary group, the Kosovo Liberation Army (KLA), since 1996.

While NATO’s bombs ended the Kosovo War, they didn’t resolve the underlying issue. Ethnic Albanians–the vast majority of Kosovo’s population–want independence from Serbia. The Serbs, however, insist that the Kosovars can’t just carve up Serbia to start their own country.

The news often says that Kosovo is “culturally important” to the Serbs. Why it that?

Eight centuries ago, Kosovo was the center of a Serbian empire–the heart of Serbia during what many Serbs consider a golden age. Ever since, the region has been home to important Serbian Orthodox religious sites, including the Decani Monastery, a UNESCO World Heritage site.

Still, for most of the intervening years, Kosovo was not a part of Serbia. In 1389, the Ottoman Turks defeated the Serbs and their allies at the “Battle of Kosovo.” Serbia did not retake Kosovo from the Ottomans until 1912.

How did the heart of an old Serbian empire become a home for mainly ethnic Albanians?

During the Ottoman era, ethnic Albanians–who are mainly Muslim but not Turks–began to migrate into Kosovo. As they moved in, many ethnic Serbs moved out.

Over the years, there was a good deal of ethnic ebb and flow, especially after Serbia retook Kosovo. Yet the overall demographic trend, even after 1912, saw the local Albanian population continue to grow. Today, ethnic Albanians account for about 90 percent of Kosovo’s people.

What’s Yugoslavia got to do with it?

At the end of World War II, many ethnic Albanian Kosovars wanted to unite with Albania. Instead, a new Balkan nation, the “Socialist Federal Republic of Yugoslavia,” absorbed Serbia and compelled Kosovo to remain within it as an “autonomous province.” The new nation didn’t last 50 years. In 1991, Yugoslavia began to disintegrate into its constituent republics (all the colorful states on the map above).

Ethnic Albanians in Kosovo again called for separation. But they crashed headlong into a tide of Serbian nationalism. Before long, the KLA formed and went to war against Serbian forces. Serb reprisals led to charges of ethnic cleansing and to the displacement of hundreds of thousands of ethnic Albanians. Eventually, NATO intervened, and after 11 weeks of bombing, Serbian forces withdrew from Kosovo.

What’s Russia got to do with it?

In addition to being a longtime ally of the Serbs, Russia is worried about the example an independent Kosovo might set for secessionists across the former Soviet Union–including the ones in Chechnya. It isn’t alone in this fear, either. Along with China, other countries facing separatist movements have also come out against Kosovo’s declaration of independence, including NATO members Spain and Greece.

Categories: Dead Serious · Economics · Government · Headlines · Journalism · Law and Order · News · Opinion · Politics · The Blender · War

Hezbollah 101

February 14, 2008 · No Comments


Hezbollah’s base is where Lebanon meets Israel

One of the FBI’s most wanted terrorists, Imad Mughniyeh, was killed by a car bomb in Damascus, Syria, on Tuesday. An early leader of the Islamic militant group Hezbollah, Mughniyeh stood accused of directing a long list of terrorist attacks–including the devastating attack on the U.S. Marines barracks in Beirut, Lebanon, in 1983.

Hezbollah blamed its old enemy, Israel, for Mughniyeh’s death. Israel denied any involvement. The U.S. State Department responded unequivocally, saying “the world is a better place without this man in it.”

So, if Mughniyeh was a terrorist, then just what is the group he helped lead? We’ll tell you. Hezbollah–Arabic for “Party of God”–was born out of the Arab-Israeli conflict, in Lebanon, with help from Iran. Today, some of its members officially serve in Lebanon’s government, while others charitably serve the fractured country’s Shi’ite community. But its military wing has never laid down its arms.

Hezbollah’s Roots

In the early 1970s, the Palestine Liberation Organization (PLO) established bases in southern Lebanon–a region bordering Israel that is occupied by large numbers of Palestinian refugees. From there, it launched operations against targets within Israel. So, in 1978 and again in 1982, Israeli forces invaded Lebanon, intending to root out the PLO.

Israel succeeded in driving the PLO out–but at a cost. In 1979, the Islamic revolution in Iran brought Ayatollah Khomeini to power. In 1982, he sent Iranian military advisors to Lebanon to help organize its Shi’ite people. As the Israeli occupation dragged on, the opposition gained strength. Ultimately, Hezbollah–a Shi’ite paramilitary organization–was founded to fight Israel and promote the goal of turning Lebanon into an Islamic republic like Iran.

Israel occupied parts of Lebanon for another 18 years, during which Hezbollah waged a violent campaign against the Israelis and their allies–a campaign that included kidnappings, hijackings, and car bombings. In 1983, Hezbollah sponsored a suicide bombing on the American embassy in Beirut that killed 63 people. That same year, a truck bomb devastated a U.S. Marines barracks in Beirut, killing 241.

Not all of Hezbollah’s attacks were in Lebanon. The group sponsored two attacks, in 1992 and 1994, on Jewish targets in Argentina–bombing the Israeli embassy and killing 29, and bombing a Jewish community center and killing 85. And in July 2006, Hezbollah militants seized two Israeli soldiers in northern Israel, sparking a month-long “Lebanon War.”

Hezbollah’s Branches

Israel, the United States, Canada, and the Netherlands all call Hezbollah a terrorist organization. The United Kingdom and Australia classify Hezbollah’s “external security organization” as “terrorist.” In the Arab world, though, polls show that Hezbollah is widely viewed as a legitimate resistance group.

Its civilian wing provides a variety of social services for Lebanese Shi’ites. It publishes a newspaper and monthly magazine, operates radio and TV stations, and runs hospitals, schools, and orphanages. And since 1992, the group’s political arm has put up candidates in parliamentary elections. In 2005, the “Party of God” hit an all-time political high, winning 14 of the Lebanese parliament’s 128 seats

Categories: Dead Serious · Government · Headlines · Hezbollah · Iran · Justice · Opinion · Politics · The Middle East · War · War on Terror

Stating the Union

January 28, 2008 · No Comments


In front of a half-tough crowd

President Bush will deliver his final State of the Union address tonight. Well, maybe not his final one. After all, nothing in the Constitution says the State of the Union has to be an annual affair. Article II, Section 3 just says the president “shall from time to time give to the Congress information of the state of the union, and recommend to their consideration such measures as he shall judge necessary and expedient.”

Nothing in there about doing it once a year. Nothing in there about making a speech, either. In fact, presidents from Thomas Jefferson to Woodrow Wilson put their statements in writing. So, how did the State of the Union address get to be the way it is? It all started with George Washington.

Precedents for Presidents

In 1790, President Washington delivered the first State of the Union speech to a joint session of Congress convened in New York City (then the nation’s capital). At 1,085 words, Washington’s address is among the shortest ever. After hearing the president’s proposals, Congress debated, drafted, and delivered a courteous reply promising its cooperation.

So such speeches went until 1801, when Thomas Jefferson became president. Jefferson thought Washington’s approach reeked of royalty. (In fact, the idea for the State of the Union address did derive from a British tradition in which the king opened Parliament with a “Speech from the Throne.”) What’s more, Jefferson thought the Congress had better things to do than debate replies to presidential speeches.

Rather than speaking, Jefferson submitted his message in writing–saving Congress from “the bloody conflict which the making an answer would have committed them.” The next 24 presidents followed Jefferson’s lead rather than Washington’s, delivering written “information” instead of speeches.

Memorable Moments

In 1823, James Monroe used his written message to Congress to lay out the Monroe Doctrine, which declared that “the American continents, by the free and independent condition which they have assumed and maintain, are henceforth not to be considered as subjects for future colonization by any European powers.”

In the midst of the Civil War, in 1862, Abraham Lincoln used his message to propose emancipation of the slaves. “The fiery trial through which we pass,” he wrote, “will light us down in honor or dishonor to the latest generation. In giving freedom to the slave we assure freedom to the free–honorable alike in what we give and what we preserve.”

Finally, in 1913, Woodrow Wilson decided to follow Washington’s lead and not Jefferson’s. He gave a speech to both houses of Congress–reestablishing, as he put it, that “the President of the United States is a person, not a mere department of the government hailing Congress from some isolated island of jealous power.”

Media Darlings

Ten years after Wilson’s speech, Calvin Coolidge delivered the first State of the Union address to be broadcast by radio. But most agree that the master of the radio address was Franklin Roosevelt, who in 1941 famously looked forward to a future founded on four freedoms: “The first is freedom of speech and expression. . . . The second is freedom of every person to worship God in his own way. . . . The third is freedom from want. . . . The fourth is freedom from fear.”

President Harry Truman delivered the first televised State of the Union speech in 1947, but he didn’t do it in prime time. The first president to take full advantage of the power of prime-time TV was Lyndon Johnson, in 1965. The following year saw the first televised opposition response immediately following the address. So much for carefully debated replies.

Categories: Congress · Dead Serious · Democrats · Economics · Education · George Bush · Government · Headlines · Health Care · Hillary Clinton · Interest Rates · Iran · Iraq · Journalism · Justice · Law and Order · Mean Streets · Money · Myths and Falsehoods · News · Opinion · Politics · Polls · Republicans · Right Wing Wackos · Rule of Dumb · Television · The Blender · The Media · The Middle East · Voting · War · War on Terror · We the People

French Bank Links Lone Futures Trader To $7 Billion Fraud

January 24, 2008 · No Comments

J¿r¿me Kerviel knew how to evade controls at Societe Generale.

J¿r¿me Kerviel knew how to evade controls at Societe Generale
PARIS, Jan. 24 — For five years, Jérôme Kerviel toiled in the back offices of Societe Generale, learning the intricacies of the six-layer security system that France’s second-largest bank used to protect its money, investors and customers from fraud, according to bank officials here.

Kerviel then made an unusual career move. He was promoted to trader — becoming one of the very employees the security systems are designed to oversee and keep honest.

Over the next several months, his chagrined employer alleged Thursday, Kerviel used his inside knowledge of the security system and his brazenness as a futures trader to pull off one of the largest banking frauds in history, ringing up losses of more than $7 billion for Societe Generale.

The trader hid the massive fraud “using extremely sophisticated and varied techniques,” Societe Generale Chairman Daniel Bouton told reporters Thursday. Bouton and other bank officials had little explanation for Kerviel’s motivation, except to say he appeared to have acted alone and to have made no personal profit, instead creating losses through successive transactions of buying dear and selling cheap.

There was no comment Thursday from Kerviel, whom the bank said it had fired along with several of his supervisors. The man described as a 31-year-old computer genius dropped out of sight, but Elisabeth Meyer, his lawyer, said on French television that he “is not fleeing” and is “available for judicial authorities.” She did not specify where he was; calls to a telephone number listed under his name went unanswered.

The disclosure of the losses was the latest shock to world financial markets as they struggle to recover from a massive sell-off earlier in the week linked to problems in the U.S. subprime mortgage market. Some analysts suggested that high-volume sales by Societe General on Monday as it secretly liquidated Kerviel’s tainted investments contributed to the global market drops that led the U.S. Federal Reserve to counter Tuesday with an interest rate cut of three-quarters of a percentage point.

The Fed was unaware Monday that the bank was making its sales, according to a Fed source who spoke on condition of anonymity, leading some analysts to charge that the central bank overreacted in its rate cut. Investors in futures markets are now betting there is less likelihood that the Fed will make another steep rate cut at its regularly scheduled meeting next week.

The case highlighted global distrust of the financial institutions that hold personal nest eggs and corporate wealth, and the regulators charged with keeping them honest. The Bank of France, the country’s banking regulator, conducted 17 investigations at Societe Generale during 2006 and 2007, but spotted no evidence of fraudulent activity, its chief reported Thursday.

“I don’t consider this a failure of our controls,” Christian Noyer, governor of the Bank of France, told reporters. “We can’t have a controller behind every trader at every bank in the country at every moment. Even the best laws and the best police can’t always stop someone who is determined to defraud the system.”

But analysts and banking experts said the statements by both institutions revealed troubling failures in oversight. “What guarantees do we have that this cannot happen again tomorrow with another trader?” asked Xavier Timbeau, director of analysis and forecasting at the French Economic Observatory. “None.”

If confirmed, the losses at the bank would be the largest ever caused by an individual trader. They are far higher than the $1.4 billion run up by trader Nick Leeson in the mid-1990s in Singapore. His fraud caused the collapse of the institution where he worked, Britain’s 233-year-old Barings Bank.

Leeson, now living in Ireland after serving a prison sentence in Singapore, told the BBC that he was not shocked such a fraud had happened again, but that “the thing that really shocked me was the size of it.”

Banking specialists said Societe Generale’s first misstep was catapulting an employee armed with the back-office secrets of the bank’s internal security monitoring system into the aggressive role of a futures trader.

Kerviel, who banking officials said was paid just under $146,500 a year in salary and bonuses, was tasked with trading in European equities futures, a speculative market that involves betting on the future performance of stocks.

The trader maintained two sets of books, one in which he kept accounts of his successful investments, and a secret parallel book where he was “voiding his losing positions,” Bouton said.

“He knew when controls were going to take place,” Bouton said, because “over the years he had become an expert in controls.” Bouton said Kerviel managed to outmaneuver six levels of controls and firewalls intended to detect and prevent fraud.

Kerviel “made a mistake in December which triggered our controllers,” Bouton said. But for reasons that remain undisclosed, bank officials did not discover the fraud until last Friday night, when markets began a precipitous slide and the losses in some of his speculative trades became more obvious.

Societe Generale officials hauled Kerviel into the office for a six-hour interrogation on Saturday. By Bouton’s account, the trader confessed to cooking the books to hide unauthorized trades. “His motivations were totally incomprehensible,” Bouton said. “It does not seem that he would have profited directly from this gigantic fraud.”

Bank officials spent last weekend and the early part of this week secretly selling many of Kerviel’s investments to try to mitigate the damage. But the worst collapse in world stock markets since the Sept. 11, 2001, terrorist attacks drove Kerviel’s losses higher and higher, eventually topping $7 billion.

“These losses could have been gains if the market had climbed on Monday, Tuesday and Wednesday,” Bouton told reporters.

Noyer of the Bank of France said that Societe Generale notified banking regulators of its investigation last weekend, before beginning its sales. But the Fed source said the U.S. central bank remained unaware of it on Monday, as markets abroad took their deep plunges. U.S. markets were closed for the Martin Luther King Jr. holiday.

“It does appear that the move to unwind those positions contributed to the stunning decline in stocks at the beginning of the week,” said Louis Crandall, chief economist at Wrightson ICAP, a bond market research firm. With U.S. markets closed, the price-depressing effects of sales in foreign markets would have been amplified, he observed.

“The Fed would have responded differently if the decline was because of a special situation rather than general systemic fragility,” he said.

“The Fed was duped,” said Axel Merk, manager of the Merk Hard Currency Fund. “It thought this was a widespread event. But it seems to have been just one trader.” The big interest rate cut was not “the right reaction,” he said.

Other