FBI probes White House officials’ leaking information about cyberattacks against Iran

WASHINGTON, June 6 (Xinhua) — The Federal Bureau of Intelligence has opened an investigation into possible White House officials’ leaks of classified information to the New York Times about U.S. cyberattacks against Iran, CNN reported on Wednesday.

U.S. Republican Senator Saxby Chambliss, vice chairman of Senate Intelligence Committee said he was informed that an FBI inquiry was underway.

Chambliss also called for appointment of a special counsel to investigate leaks of recent stories in the New York Times that detailed U.S. cyberattacks on Iran.

“Any suggestion that this administration has authorized intentional leaks of classified information for political gain is grossly irresponsible,” the White House spokesman Jay Carney said in a briefing aboard Air Force One en route California.

He stressed that the Obama administration takes all appropriate and necessary steps to prevent leaks of classified information or sensitive information that could risk ongoing counterterrorism or intelligence operations.

Senator John McCain, Obama’s 2008 presidential campaign rival, on Tuesday slashed some senior administration officials of leaking classified information to media to enhance Obama’s image for his re-election bid but undermine U.S. national security.

“… what is grossly irresponsible is U.S. officials divulging some of the most highly classified programs involving the most important national security priorities facing our nation today,” McCain said on Wednesday following Carney’s response.

Some of Obama’s Democratic allies in the U.S. Senate on Tuesday also stepped into the ongoing disputes over a report by New York Times on U.S. cyberattacks on Iran.

The New York Times reported last Friday that Obama ordered stepped-up cyberattacks on Iran’s nuclear program months after taking office, significantly expanding America’s first sustained use of cyberweapons.

Senator Dianne Feinstein, the Democratic chairwoman of the Senate Intelligence Committee on Tuesday expressed worry that leaks to press about U.S. cyber attacks on Iran authorized by the Obama administration could lead to a counter-attack on the United States.

She said the fact that the U.S. is launching cyber attacks against other countries could “to some extent” provide justification for cyberattacks against the United States.


Further Iran sanctions counterproductive: Russian FM [presstv.ir]

Russian Foreign Minister Sergei Lavrov has announced that further sanctions against Iran over its nuclear energy program would be “counterproductive.”

Russian Foreign Minister Sergei Lavrov

“Additional sanctions are completely counterproductive, they are already adopted not only by the Security Council, but by some states, which we think undermines our collective actions,” Lavrov said on Wednesday.

He made the comments during an official visit to China and after Russian President Vladimir Putin held talks with his Chinese counterpart Hu Jintao in Beijing.

The West led by the United States has imposed sanctions against Iran, accusing Tehran of pursuing military objectives in its nuclear energy program.

Iran has repeatedly dismissed the Western allegations, arguing that as a signatory to the nuclear Non-Proliferation Treaty (NPT) and member of the International Atomic Energy Agency (IAEA), it has every right to pursue nuclear technology for peaceful purposes.

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by Susanne Posel

Obama Hopes Cyber Attacks Against Iran will Lead to Nuclear Strikes

As soon as President Barack Obama took office in 2008, he ordered the continuation of cyber-attacks against Iran . The target was Iran’s nuclear enrichment facilities.

These cyber-attacks originated during the Bush presidency, under the code name “Olympic Games” (OG).

This information accidently escaped the programming in 2010, which lead to its leak into the public. OG was then released onto the internet after causing havoc at Iran’s Natanz plant.

OG, which was created by the US and Israel, has been renamed Stuxnet.

Once OG “escaped”, Obama realized that it would most certainly be tied back to his administration. He loosely directed his national security team to cover up the US involvement in Stuxnet.

OG was renamed once again by Kaspersky Labs, hired by the UN to investigate the worm. Flame was first thought to be super-secret software written in video game language.

Flame’s capabilities, such as remote control of PC microphones, compromises to data collection, makes it the perfect infiltrator for Iran’s most sensitive digital information.

The Obama administration’s use of Flame caused Iran’s nuclear plant digital infrastructure to crash.

As interviews over recent months reveal, the US and Israel came together to attack Iran; along with the European Union and a wide range of employed experts to guarantee that the worm would perform as planned.

Regardless of the lack of evidence that Iran was building nuclear weapons, the US continued to sabotage Iran’s progress. Experts came forward to assert that Iran’s enrichment levels were far below those necessary for the creation of a nuclear warhead.

Yet, the US government ignored these findings, using their assumption to justify their cyber-attacks and movements toward convincing the international community of Iran’s supposed guilt.

The UN jumped on the band wagon by declaring through UN nuclear inspectors that their satellite imagery indicated that some buildings were allegedly torn down as a assumed “clean up” at an Iranian military site that the UN expected to see.


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Chinese president invites Ahmadinejad for SCO summit [presstv.ir]

Chinese President Hu Jintao has invited Iran’s President Mahmoud Ahmadinejad to attend the 12th summit of Shanghai Cooperation Organization (SCO) in China due in early June.


The leaders of Tajikistan, Kyrgyzstan, Kazakhstan, Uzbekistan, Pakistan and Afghanistan have also been invited to the event, scheduled for June 6-7 in Beijing, China’s Foreign Ministry Spokesman Liu Weimin said in a Thursday news conference.

The participants in the SCO summit would discuss current regional and international developments during the meeting.

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Iran designs alternative system for SWIFT: CBI

Governor of the Central Bank of Iran (CBI) Mahmoud Bahmani says the country has designed and implemented a new system for conducting international transactions.

Head of the Central Bank of Iran (CBI) Mahmoud Bahmani

Bahmani said on Saturday the new system, which has already been activated, would replace Worldwide Interbank Financial Telecommunication (SWIFT)

On March 15, SWIFT CEO Lazaro Campos said in a statement that the society has decided to discontinue offering services to Iranian banks which are subject to financial sanctions imposed by the European Union.

On January 23, the EU foreign ministers approved new sanctions on Iran’s financial and oil sectors, which prevent member countries from importing Iranian crude or dealing with its central bank.

Experts believe that SWIFT’s new action is meant to fully enforce EU sanctions, as global financial transactions are impossible without using SWIFT.

Bahmani rejected reports about a Japanese bank freezing transactions with Iranian banks.

On May 17, the Reuters reported that Bank of Tokyo-Mitsubishi UFJ has frozen USD 2.6 billion of assets of Iranian banks under an order by the New York District Court earlier this month.

Pentagon encircles Iran: Victory would take 3 weeks [RT]

As the US beefs up its military presence in the Persian Gulf region, Pentagon strategists estimate that they would need less than a month to defeat Iranian forces should a military conflict take place.

US Central Command (CENTCOM) believes it can destroy or significantly degrade Iran’s conventional armed forces in about three weeks using air and sea strikes, a defense source told The Washington Post.

“We plan for any eventuality we can and provide options to the president,” Army Lt. Col. T.G. Taylor, a spokesman at CENTCOM told the newspaper. “We take our guidance from the secretary of defense and from our civilian bosses in [Washington] DC. So any kind of guidance they give us, that’s what we go off of [sic].”

The American military has been building up its presence in the region amid rising tension in the area.

The US Navy currently has two aircraft carriers deployed near Iran and is upgrading mine-detection and removal capabilities.

The US Air Force recently dispatched a number of F-22 Raptor strike fighters to a base in the United Arab Emirates. The move caused backlash from Tehran, which said Wednesday it threatened regional stability.

Deploying a “floating base” in the Persian Gulf – a converted transport ship that would serve as a semi-stationary base of operations for the US military – is also on the table. USS Ponce is expected to host mine-sweeping helicopters, speed boats and probably commando teams.

The Pentagon has also intensified training of elite troops of its allies in the region. The members of the Joint Special Operations Task Force-Gulf Cooperation Council commando team, who serve as instructors, may be ordered to go into the field as well, should such a need arise.

The measures are taken as contingency for possible attack by Iran on US troops or blocking of the Strait of Hormuz, the vital oil transit route, the US says.

CENTCOM says there are about 125,000 US troops in close proximity to Iran. The majority of them – 90,000 – are deployed in or around Afghanistan. Some 20,000 soldiers are ashore elsewhere in the Near East region; and a variable 15,000 to 20,000 serve on naval vessels.

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India not Caving to the U.S. on Iran [alphavn]

Unlike Turkey and Japan, who have played ball just enough to still be able to buy Iranian oil but avoid U.S. sanctions, India is pretty much moving ahead unilaterally, and publicly, flouting the American’s desire to isolate Iran.

Clearing the way for oil refiners to pay Iran in Indian rupee, the Union Budget has exempted the payments made for crude oil purchased from the Persian Gulf nation, from any local tax.

Iran had in January agreed to accept 45 percent of the value of its oil exports to India in Indian rupees but the scheme could not be implemented due to taxation issues.
It was feared that the money paid to National Iranian Oil Co (NIOC) may be considered as income generated by Iranian firm in the country and liable to be taxed. The withholding tax was up to 40 percent, which neither NIOC nor the Indian refiners wanted to pay.

Turkey continues to play both sides in this moving billions of dollars for the Indians to Iran as an intermediary.  For how long though, apparently is up to the U.S. State Department as Turkey has made it clear that once the pressure gets too high, they will cut India off.

Talks between the U.S. and India began on Monday with this issue front and center in the negotiations.  Given the current climate after the BRICS Summit and this latest move to allow refiners the tax exemption its pretty obvious that India’s stance is quite resolute, a stance the Americans do not generally tolerate from their allies.

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Barack Obama’s grovelling before the Russians is an embarrassment

By  on The Telegraph

Ronald Reagan, together with Margaret Thatcher, stood up to Moscow, and brought the Soviet Empire to its knees. In contrast, Barack Obama has gone on his knees to grovel before the Russians. The exchange between President Obama and his Russian counterpart Dmitry Medvedev in Seoul was a display of supplication before a major strategic adversary on an issue of great importance for US national security – missile defence. The private conservation was picked up on microphone, and relayed by ABC News correspondent Jake Tapper:

President Obama: On all these issues, but particularly missile defense, this, this can be solved but it’s important for him to give me space.

President Medvedev: Yeah, I understand. I understand your message about space. Space for you…

President Obama: This is my last election. After my election I have more flexibility.

President Medvedev: I understand. I will transmit this information to Vladimir.

The US President has tried to downplay the remarks, according to a report by The Wall Street Journalwhich quotes him as saying:

“I don’t think it’s any surprise that you can’t start that a few months before presidential and congressional elections in the United States, and at a time when they just completed elections in Russia,” Mr. Obama said Tuesday as he as sat down to meet with Mr. Medvedev and the president of Kazakhstan. “This is not a matter of hiding the ball.”

Barack Obama’s comments are disturbing on several levels. First, they display a willingness to placate America’s enemies, and cede ground over issues of national interest. Second, Obama is linking foreign policy decision-making to the timetable of the US presidential election, openly telling the Russians that he will deliver when he is no longer constrained by seeking re-election. This demonstrates contempt for the American people, suggesting that what he tells the Russians may be completely different to his message at home. Third, they reveal a dismissive approach towards America’s friends in eastern and central Europe, as well as US allies in the Gulf states, who must be wondering now if they will be sold out next.

President Obama’s remarks should be viewed against a backdrop of an astonishing surrender to Moscow over Third Site missile defence in September 2009, where he dropped plans for missile defence installations in Poland and the Czech Republic in the face of Russian opposition, a move that was seen as a betrayal of US allies.


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Iran, Oil, and the Strait of Hormuz – 2007 report dating from U.S. Center for Strategic and International Studies

The “Persian” or “Arabian” Gulf creates major strategic uncertainties for Iran, its neighbors, and the world. It is a 600-mile-long body of water that separates Iran from the Arabian Peninsula, and one of the most strategic waterways in the world due to its importance in world oil transportation. Incidents in the Gulf can escalate quickly in ways that neither Iran nor its potential opponents intend. Iran’s actions in Lebanon and in dealing with Hamas and the PIJ can provoke other unintended crises, and Iran is caught up in a broader, Sunni-dominated struggle for the future of Islam where some key Sunni Islamist extremist movements deny the legitimacy of Shi’ite beliefs. Military history is rarely determined by intentions and policy in peacetime, and crisis management often becomes an oxymoron as event spiral out of control, misperceptions dominate actions, and escalation becomes both asymmetric and an end in itself. Iran and the Importance of Gulf Oil The Gulf countries (Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the United  Arab Emirates) produce nearly 30% of the world’s oil, while holding 57% (715 billion barrels) of the world’s crude oil reserves. Iran alone is estimated to hold 11.1 percent of the world oil reserves (132.0 billion barrels of oil), and 15.3 percent of the world’s natural gas reserves (970.8 trillion cubic feet).1 Besides oil, the Persian Gulf region also has huge reserves (2,462 trillion cubic feet — Tcf) of natural gas, accounting for 45% of total proven world gas reserves. Iran’s coastline is particularly important because tanker and shipping routes pass so close to Iran’s land mass, the islands it controls in the Gulf, and its major naval bases. At its narrowest point (the Strait of Hormuz), the Gulf narrows to only 34 miles wide, with Iran to the North and Oman to the south. The key passages through the Strait consist of 2-mile wide channels for inbound and outbound tanker traffic, as well as a 2-mile wide buffer zone. Oil flows through the Strait of Hormuz account for roughly 40% of all world traded oil, and the 17 MMBD or more of oil that normally are shipped through the Strait of Hormuz goes eastwards to Asia (especially Japan, China, and India) and westwards (via the Suez Canal, the Sumed pipeline). Any closure of the Strait of Hormuz would require use of longer alternate routes. Such routes are now limited to the approximately 5-million-bbl/dcapacity East-West Pipeline across Saudi Arabia to the port of Yanbu, and the Abqaiq- Yanbu natural gas liquids line across Saudi Arabia to the Red Sea, although the GCC seems to have agreed to construct a new strategic pipeline through Oman to a port on the Gulf of Oman. Iran has long been involved in significant territorial disputes with its neighbors over control of the Islands in the Gulf and offshore oil and gas resources. It faced the Iran-Iraq War from 1980 to 1988, a “tanker war” with the U.S. over tanker movements through the Gulf from 1987-1988, and the risks posed by Iraq’s invasion of Kuwait in 1990-1991. Iran has long been involved in significant territorial disputes with its neighbors over control of the Islands in the Gulf and offshore oil and gas resources. It faced the Iran-Iraq War from 1980 to 1988, a “tanker war” with the U.S. over tanker movements through the Gulf from 1987-1988, and the risks posed by Iraq’s invasion of Kuwait in 1990-1991.Cordesman: Iran, Oil, Hormuz 3/26/07.

Ever since the time of the Shah, there has been a dispute between Iran and the UAE over ownership of three strategically important islands near key tanker routes to the Strait of Hormuz – Abu Musa, Greater Tunb Island, and Lesser Tunb Island. The three islands were first seized by the Shah after British withdrawal from the Gulf in the early 1970s, and were then occupied by Iranian troops in 1992. In 1995, the Iranian Foreign Ministry claimed that the islands were “an inseparable part of Iran.”

Iran has since rejected a 1996 proposal by the Gulf Cooperation Council (GCC) for the dispute to be resolved by the International Court of Justice, an option supported by the UAE. The GCC issued a statement reiterating its support for the UAE’s sovereignty over Abu Musa and the Tunbs on December 31, 2001, declared Iran’s claims on the islands as “null and void,” and backed “all measures [...] by the UAE to regain sovereignty on its three islands peacefully.” It has repeatedly attempted to persuade Iran to agree to refer the issue to the ICJ. Iran again refused the UAE’s offer of arbitration by the International Court of Justice in September 2006, and the risk of a future clash or conflict remains. In addition, Iran and Qatar have claimed ownership of the North field (where most of Qatar’s gas reserves are), and the issue has never been fully resolved. The strategic importance of the Gulf will also increase significantly with time. According to the reference case estimate in the Energy Information Administration’s International Energy Outlook 2006, Gulf oil production is expected to reach about 28.3 million barrels per day (MMBD) by 2010, 31.1 MMBD by 2020, and 36.8 MMBD by 2020; compared to about 18.7 MMBD in 1990, 21.7 MMBD in 2000, and 23.7 MMBD in 2003. This would increase Gulf oil production capacity to 3% of the world total by 2020 (107.6

MMBD and 36% by 2030 (123.3 MMBD), up from 28% in 2000.3 As Figure One shows, the Gulf’s importance as a percent of total world exports will most likely also increase, and the total volume of Gulf exports will increase from 22.5 to 34.3 MMBD. While much of this increase will go to Asia, it will also make a sharp increase in indirect U.S. and European dependence on the Gulf. Asia is so dependent on Gulf oil that a large amount of the energy Asia uses in producing goods for export to the U.S. and Europe comes from Gulf oil exports. The exact rise that will actually occur in Gulf exports is highly unpredictable, but parametric modeling of other price and economic growth cases shows that significant rises seem highly likely over the next two decades.

Continue reading: 070326_iranoil_hormuz.pdf

Iran developments

Oman warns on military confrontation with Iran

March 18, 2012 04:29 PMBy Martina Fuchs

MUSCAT: Oman, located strategically on the opposite side of the Strait of Hormuz from Iran, said the risk of military conflict between Tehran and the West was rising but there was still plenty of opportunity to negotiate peace.

Iran has repeatedly denied charges by Western nations it is developing the capability to build nuclear weapons, but the United States and European Union have recently imposed tougher sanctions in an effort to convince Tehran to curb its nuclear program.

“It is in the interest of both sides to come to the middle road,” Yousuf bin Alawi bin Abdullah, the sultanate’s minister responsible for foreign affairs, told Reuters at the Foreign Ministry in Muscat.

“We can see that the threat of an unfortunate flash of military confrontation is more possible rather than it is remote.”

Oman on several occasions has acted as an intermediary between Iran and the West.

Last year, Oman’s Sultan Qaboos bin Said facilitated the release of two U.S. hikers held by Tehran for spying, and three French aid workers held hostage by Yemeni tribesmen were freed in November after Oman negotiated their release.

Speculation has grown in recent months that Israel, with or without U.S. support, may launch some form of preemptive military strike against Iranian nuclear installations, which the Jewish state sees as a threat to its existence.

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‘Mossad, CIA agree Iran has yet to decide to build nuclear weapon’

New York Times report quotes senior American officials who believe there is little disagreement between Israeli and U.S. intelligence over Iran’s nuclear program, despite calls for a strike by Israeli officials.

Israel’s intelligence services agree with American intelligence assessments that there is not enough proof to determine whether Iran is building a nuclear bomb, according to a report published Sunday in the New York Times.

The newspaper said that senior American officials believe there is little disagreement between the Mossad and U.S. intelligence agencies over Iran’s nuclear program, despite the fact that Israeli political leaders have been pushing for quick action to block Iran from becoming what they describe as an existential threat.

The report further quoted one former senior American intelligence official who states that the Mossad “does not disagree with the U.S. on the weapons program,” adding that there is “not a lot of dispute between the U.S. and Israeli intelligence communities on the facts.”

According to the New York Times, the extent of the evidence the spy agencies have collected is unclear since most of their findings are classified. However, intelligence officials say they have been throwing everything they have at the Iranian program.

The United States and Israel share intelligence on Iran, American officials said. For its spying efforts, Israel relies in part on an Iranian exile group that is labeled a terrorist organization by the United States, the Mujahedeen Khalq, or M.E.K., which is based in Iraq, says the report.

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Iraq approves Hormuz oil exports contingency plan [Reuters]

Sun Mar 18, 2012 9:57am EDT By Ahmed Rasheed

BAGHDAD, March 18 (Reuters) – Iraq has approved a plan to expand its oil export routes by adding capacity from its northern fields and building a pipeline to ship oil from southern fields to Ceyhan in Turkey, a government spokesman said. The contingency plan was set by the government’s energy and economic committee to deal with any potential crisis should Iran close the Strait of Hormuz, which would halt about 80 percent of Iraq’s oil exports. Iran has threatened to close the Strait of Hormuz, used for a third of the world’s seaborne oil trade, if Western moves to ban Iranian crude exports crippled its energy sector. “Short and mid-term plans will be through boosting crude pumping and upgrading export capacity via Ceyhan port in Turkey. Also to increase the number of trucks that are shipping crude,” government spokesman Ali al-Dabbagh said on Sunday. Iraq exported 2.014 million barrels per day in February, including 1.711 million bpd from its southern oil hub of Basra and via exports terminal in the Gulf, and 375,000 bpd from its northern fields around Kirkuk to Ceyhan. Dabbagh said plans approved by the government were a short-term measure based on recommendations from the oil ministry, and said stepping up efforts to convince Iran and the United States of the need to avoid closing the Strait of Hormuz. “The oil ministry suggested accelerating work to complete building the north strategic pipeline and connect it to the Kirkuk-Ceyhan pipeline to export oil from Basra via Ceyhan port,” Dabbagh said. Iraq has also been moving ahead with building a 680 kilometre pipeline able to transport 1 million bpd of crude from southern oilfields around Basra to a main pumping station in Haditha in the west, an oil ministry spokesman said. “We managed to complete constructing 200 km of the pipeline with plans to finish all work in 2013. We will have the flexibility of shipping Basra crude to various destinations, including towards Ceyhan port,” Asim Jihad said. The Kirkuk-Ceyhan pipeline has come under sabotage attacks many times since the 2003 U.S.-led invasion, and frequently breaks down due to technical faults.

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Iran, USA reinforce Hormuz Strait defence with minehunters [AGI]

(AGI) Washington- The US navy has strengthened its flotilla in the Persian Gulf’s Strait of Hormuz with four more minehunters.
Alongside the fifth fleet in Bahrain, the Pentagon has readied the vessels and four CH-53 Sea Stallion with mine-detecting equipment for departure. The aim, admiral Jonathan W. Greenert explained, is to reinforce security in the narrow Strait of Hormuz between Iran and Oman, through which 20% of the world’s oil passes; a strategic point which Iran has repeatedly threatened to blockade in case of an attack on its nuclear facilities. In January Iran’s chief military official warned the U.S. to not send any more aircraft carriers to the Persian Gulf after the USS John C. Stennis traversed Hormuz.

Navy says it will add ships to Persian Gulf amid Iran threats [World Now]

by Tony Perry

REPORTING FROM SAN DIEGO — The U.S. Navy is upgrading its defensive and offensive capabilities in the Persian Gulf to counter threats from Iran to seize the Strait of Hormuz and block the flow of oil, the chief of naval operations said Friday.

Adm. Jonathan W. Greenert told reporters in Washington that the Navy will add four more mine-sweeping ships and four more CH-53 Sea Stallion helicopters with mine-detection capability. The Navy is also sending more underwater unmanned mine-neutralization units to the region.

Greenert said he plans to assign more patrol craft to the gulf, possibly armed with Mark 38 Gatling guns. The same kind of guns might be placed on ships that provide protection for U.S. aircraft carriers or perhaps on the carriers themselves.

U.S. ships have excellent long-range defenses but could use weapons for closer combat, Greenert said.

“It’s like being in an alley with a rifle and maybe what you need is a sawed-off shotgun,” he said.

The Iranians have boasted that they could “swarm” large U.S. ships with their smaller, fast-moving craft. They have also reportedly been laying mines along their coastline.

The narrow Strait of Hormuz is a key transit way for oil tankers. Any closure of the strait could send oil prices skyrocketing, officials say.

In January, the chief of the Iranian army warned the U.S. not to send another ship to the Persian Gulf after the aircraft carrier John C. Stennis departed. Another carrier, the Abraham Lincoln, entered the gulf weeks later without incident.

Greenert told reporters at the Defense Writers Group that he was aboard the John C. Stennis as it left the gulf through the Strait of Hormuz.

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Unjust Wars, Then and Now

Mises Daily: Monday, March 12, 2012 by George F. Smith

According to the Federation of American Scientists, nine countries account for the approximately 20,500 nuclear weapons known to exist, with the United States having 8,500 of these. Iran has none. Between 150–200 B61 nuclear bombs, the primary thermonuclear weapon in the United States, are deployed in Europe at six bases in five countries, one of which is Turkey, a border state of Iran.

By contrast, Iran has no known military bases in Canada or Mexico, nor has it imposed sanctions against the United States, as the United States and other countries have done to Iran. Yet, Iran is considered a threat to peace and stability because the International Atomic Energy Agencyissued a report last November saying it very definitely might or might not be building a nuclear device.

If the United States ends up at war with Iran, there arises the question of what it will cost and how to pay for it. Using recent history as a guide, the total financial cost of the Iraq invasion, including veterans’ support, is expected to reach $4 trillion. Yet in 2002, Bush economic advisor Lawrence Lindsey was fired for saying the Iraq war could cost as much as $200 billion, which was 3–4 times the Department of Defense estimate. Even if someone knew how much an Iran war would cost, no one would believe him. But it’s clear we do have an idea of how we would pay for it: more debt.

On Friday, August 5, 2011, S&P downgraded US debt from AAA to AA+, citing a failure of government to stabilize its “medium-term debt dynamics.” The previous Tuesday, Congress had voted to raise the debt ceiling by $2 trillion. S&P’s downgrade, as Gary North viewed it, was their way of saying, “Yes, the loud noise you heard on Tuesday really was what it sounded like.” It was a crack in the ice, a signal for smart skaters to head for shore.

Those pushing for more war and more debt are not smart skaters. How did we go from our core political principle of “live and let live” to the hegemonic “live the way we say, or we’ll bomb you back to the stone age!”? How did we reach the point where smart economists tell us the size of the government debt is irrelevant as long as we keep the tax slaves rowing faster and faster? Actually, it began right from the start.

Funding a “Just War” Unjustly

Unlike the various US invasions in the Middle East and Asia of the past several decades, there is strong conviction among many Americans about the legitimacy of the country’s founding war. A legitimate war, or what Murray Rothbard called a just war, “exists when a people tries to ward off the threat of coercive domination by another people, or to overthrow an already-existing domination.” Like all wars, a just war is laced with dangers beyond the inferno of the battles, especially if war funding relies to a significant degree on the printing press. The American Revolution is a case in point.

On June 22, 1775, the colonial delegates who were assembled in Philadelphia, under the inspiration of Gouverneur Morris,[1] decided to print $2 million in “bills of credit” called Continentals. The plan was to begin redeeming them in 1779, not with hard coin, but by levying taxes in the Continentals themselves, which would then be retired. So appealing was the idea of printing money that by 1779 a total of $227 million had been issued. The bills were everywhere, and everywhere despised. In a letter to John Jay, president of the Continental Congress, George Washington complained that “a wagon load of money will scarcely purchase a wagon load of provisions.” By December 1779 the Continental had fallen to 42:1 against specie, and by spring of 1781 the currency was virtually worthless.

Individual states were also printing money to finance the war, and the British too adopted the printing press as a war strategy, printing Continentals and using Tories known as “shovers” to shove the imitations into circulation and thus accelerate the currency’s depreciation.

Inflationists in Congress viewed depreciation as a clever way to impose the necessary taxes to pay for the war, though Gouverneur Morris thought it was too bad Washington’s soldiers would suffer the most from this tactic. As the value of the currency rapidly approached zero, the Continental army turned to direct theft (“impressment”) to acquire their provisions when merchants balked at trading goods for something worthless.

The Continental was allowed to die without redeeming it, but in 1779 Congress began emitting “loan certificates” that were also used as money. A big chunk of this money hung around after the war as a peacetime public debt. Robert Morris, the leader of the nationalist faction, pushed for its redemption at par in specie as a means of stuffing the pockets of associates who had purchased the certificates at highly depreciated prices.

Redemption was also a way of rallying support for taxing power in Congress. Under the Articles of Confederation and perpetual Union, which was ratified on March 1, 1781, the United States of America was considered a “league of friendship” rather than a central government, with each state retaining “its sovereignty, freedom, and independence.” Although the articles recognized the obligation of Congress to pay all debts incurred before ratification, they did not give Congress authority to coerce such payments from the states.

To the nationalists, the lack of taxing power and other alleged deficiencies made the Confederation government “the laughing stock of the Atlantic world,” as historian Leonard L. Richards notes in his masterpiece, Shays’s Rebellion: The American Revolution’s Final Battle.[2] Throughout the 1780s, they tried fruitlessly to get enough of them together to replace the Articles of Confederation. In modern parlance, what they needed was a “new Pearl Harbor,” a major crisis that could be propagandized for political ends. In 1786, Shays’s Rebellion provided the break they needed.


Continue on Mises.org

Another solid week of pro-war propaganda in the US


On January 25, the New York Times Sunday Magazine published alengthy article by Israeli journalist Ronen Bergman that conveyed the views of multiple Israeli officials about Iran in order to conclude that an Israeli attack is likely. That the entire article was filled with quotes from Israelis meant the piece served as a justification for such an attack while masquerading as a news story about whether the attack would happen. Indeed, the very first paragraph contained this bit of manipulative melodrama: “‘This is not about some abstract concept,’ [Israeli Defense Minister Ehud] Barak said as he gazed out at the lights of Tel Aviv, ‘but a genuine concern. The Iranians are, after all, a nation whose leaders have set themselves a strategic goal of wiping Israel off the map’.” Note that we are told that Barak uttered this article-shaping blatant falsehood “as he gazed out at the lights of Tel Aviv.” So solemn, contemplative and profound.

Yesterday, the NYT published an Op-Ed by Amos Yadlin, one of the Israeli Air Force pilots who attacked the Iraqi nuclear reactor in 1981 and then became chief of Israeli military intelligence, arguing for the necessity of an attack on Iran and warning that Israel will do it if President Obama does not give absolute commitments of his intent to do so. Today, the NYT has a news article by incoming Jerusalem Bureau Chief Jodi Rudoren summarizing the views of Israeli President Shimon Peres that an attack on Iran is imperative (“This is an unavoidable situation. It’s not exactly the Nazi situation, but my God, what a catastrophe”) and warning Obama that “if the White House [is] not resolute, Israel might have to go it alone.” Also today, the NYT has a news article by outgoing Jerusalem Bureau Chief Ethan Bronner summarizing the views of Netanyahu and other Israeli officials in advance of their meetings this week with Obama: “Israel will not outsource what it views as its vital security interests based on an American promise to take military action if sanctions fail. Israel’s goal is an American attack on Iran, but it seems unlikely to wait till it no longer can do it by itself.”

For months, Americans have been subjected to this continuous, coordinated, repetitive messaging from Israeli officials, amplified through the U.S. media. This is generally how the establishment American media conducts the debate over whether to attack Iran: here are Israeli officials explaining why an attack is urgent and why the U.S. must conduct it. Now here are American officials explaining why an attack can wait a little while longer but that it will happen if necessary to stop Iran from having a nuclear weapon.

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