Wednesday, November 28, 2007

Reviewing James Petras and Henry Veltmeyer's "Multinationals on Trial"

Reviewing James Petras and Henry Veltmeyer's "Multinationals on Trial" - by Stephen Lendman

James Petras is Binghamton University, New York Professor Emeritus of Sociology whose credentials and achievements are long and impressive. He's a noted academic figure on the left and a well-respected Latin American expert. He's also a prolific author of hundreds of articles and 64 books including his latest one titled "Multinationals on Trial: Foreign Investment Matters," co-authored with Henry Veltmeyer, and subject of this review.

Henry Veltmeyer has collaborated with Petras before on previous books. They include "Globalization Unmasked," "Social Movements and State Power," "A System in Crisis" and others. He's Professor of Sociology and International Development Studies at Saint Mary's University, Canada and Universidad Autonoma de Zacatecas, Mexico. He's also Editor-in-Chief of the Canadian Journal of International Development Studies and, like Petras, is a prolific author of many books and articles focused mainly on Latin American issues, globalized trade, alternative models and approaches and progressive social movements.

"Multinationals on Trial" deals with a core issue of our time - the economic power of giant corporations, their dominant role as agents and partners of imperialism, and the way they plunder developing nations. The book is a powerful indictment of unfettered "free market" capitalism and how foreign direct investment (FDI) is its main exploitive tool. Below is a detailed review of its compelling contents.

The authors state upfront how controversial corporate giants are, especially with regard to their "type of capital," how they use it operationally, and "the conditions associated with it." Specifically, the book deals with foreign direct investment (FDI) and debunks the following commonly held notions:

-- that it's "indispensable" to accessing essential financial resources;

-- that it brings with it "collateral benefits" like "technology transfers" and job creation; and

-- that overall it's a "catalyst of development" and thus an "indispensable" vehicle of growth and way for developing nations to integrate into the "new world economic order."

Rather than aiding these nations, the authors call FDI "a mechanism for empire-centred capital accumulation, a powerful lever for political control and for reordering the world economy." They offer an alternative approach in the final chapter, free from FDI imperial bondage.

Chapter 1 - Empire and Imperialism

The oldest empires go back centuries before the better known ones in ancient Rome, Persia and the one Alexander the Great built, but the authors deal only with the modern post-WW II era dominated by the US. Imperial Britain was shattered, colonialism was unraveling, Soviet Russia was devastated, and America stood alone as the world's preeminent economic, political and military superpower with every intention to keep it that way.

It did so going back to when US delegates dominated the Bretton Woods, NH UN Monetary and Financial Conference to establish a postwar international monetary system of convertible currencies, fixed exchange rates, free trade, the US dollar as the world's reserve currency linked to gold, and those of other nations fixed to the dollar. In addition, an institutional framework was designed to establish a market-based capital accumulation process that would ensure (post-war) that newly liberated colonial nations would pursue capitalist economic development beneficial to the victorious imperial powers that would soon include the Axis ones as well.

Post-war, the "US foreign policy establishment" began an unending debate on how America could stay preeminent and solidify its dominance. It began with NATO, OECD and other formal alliances with our western European partners that were "built on the foundation of the transnational corporation (as the) economic 'shock-troops' of the system." Tactics varied along the way, but the goals remained unchanged - "to enhance US hegemony and its domination of the new world order." This requires having supportive allies and the US public willing to go along with overseas adventurism like the Bush administration's foreign wars that became overreach and "a major impediment to empire building."

The authors state that wherever imperial power is projected in any form it generates diverse resistance in "every 'popular' sector of 'civil society.' " They also stress that its "omnipresence" can be a weakness, not a strength, and may lead to its impotence. This is the condition of America today under the Bush administration. Its plan for imperial dominance is in tatters, or as the authors put it, "wishful thinking or imperial hubris." It failed in the Middle East, Central Asia, Venezuela and may be unraveling in Pakistan under Musharraf's dictatorship. The country is a rogue nuclear state in unresolved turmoil that has a lot to do with deep social unrest and a very unpopular US alliance in the "war on terror."

Nonetheless, the US remains strong and resilient, and today's defeats don't spell its demise or even signal retrenchment. With its power and resources, it can blunder often as it has in the past, then rebound, and again go on the attack as its doing in Somalia, continues against Cuba, and against Hugo Chavez in Venezuela as it seeks a way to oust its Latin American nemesis despite past failed efforts.

So despite setbacks, America's imperial agenda persists, and here's how it functions:

-- through "unequal" bilateral and multilateral trade and other agreements;

-- with lots of help from willing "outside collaborators and subsidized clients;"

-- through a "divide and conquer" strategy that worked in Yugoslavia, did at first in Afghanistan (under tribal warlords) and apparently is the scheme in Iraq with the Kurdish North already separate;

-- - political destabilization, assassinations or coup d'etats to remove opposition regimes and install compliant ones; and

-- proxy or direct war as a last resort when others fail to accomplish regime change; but even conquest doesn't guarantee success as Iraq and Afghanistan prove; resistance builds, military costs mount, public support wanes, allies withdraw support and the whole effort may fail but not deter new ones at other times in other places.

Chapter 2 - Imperialisms, Old and New

The authors note that capital accumulation is the "fundamental driving force of economic growth," has been for over 100 years, and occurred in six phases:

-- capitalist industrialization in the 19th century up to around 1870;

-- the fusion of industrial and finance capital and emergence of monopolies and territorial divisions among imperial powers (the US, Europe and Japan) up to 1914;

-- imperial war, depression, Fordism-type mass production, "taming of capitalism" social reform and defeat of fascism to 1945;

-- the "golden age" of capitalist high growth, decolonization, nation-building and state-led "international development to 1973;"

-- transitional crisis and restructuring in the 1970s; and

-- the age of Washington Consensus neoliberalism, globalized trade, free market "reforms" and "neoimperialism" to the present.

The authors note that incomes across the world converged somewhat during the "golden age of capitalism" post-WW II up to 1970 after which things changed. Now after a generation under Washington Consensus neoliberalism, no such convergence exists and the Global North-South disparity keeps widening to the detriment of developing nations. North-based corporate giants have grown so huge and dominant that the largest of them represent half or more of the world's 100 largest economies. In addition, multinational corporations (MNCs) "as a global entity" account for over 90% of world trade with 30 - 40% of it being intra-firm. The authors argue that these institutions operate as "functional units and an agency of economic imperialism."

Post-WW II, the US alone held the "commanding heights" of the world economy. Compared to today, the authors cite statistics that are staggering. With 6% of world population, the US had over 59% of its developed reserves. It generated 46% of its electricity, 38% of its production, and it held half or more of world gold and currency reserves. Twenty-five years later all that changed, and by 1971 a dwindling supply of gold and growing trade deficit got Richard Nixon to close the gold window, abandon the Bretton Woods system, and let the US dollar float freely in world markets. Ever since, the greenback has been faith-based with no intrinsic value and no longer "good as gold." Since it's uncollateralized paper or fiat currency, it's strong when it's in demand but weak, like today, when it's out of favor.

During the troubled 1970s, the US manipulated exchange and interest rates to improve its export position, and in the Reagan era began a generational assault on labor that ended the long-standing practice of industry sharing productivity gains with its workers. Corporations also began relocating labor-intensive production abroad to low wage countries that in the 1980s "became a cornerstone of a new global economy." With it came foreign direct investment (FDI) with the rest of the book focusing on its harmful effects.

The authors point out that in 1970 a "triadic structure" (in the US, Europe and Japan) characterized the world economy. However, after two decades of restructuring, a different picture emerged with China and a group of newly industrialized countries in Southeast Asia becoming the most dynamic center of world growth with the US struggling to hang on to its economic dominance even while its major corporations continue to prosper because they operate worldwide.

A critical corporate issue is productivity growth and how to overcome its pronounced sluggishness. Solutions used embrace "technological conversion" that includes new production, communication and transportation technologies. It also involves an assault on labor that caused a sharp reduction in its share of national income (10% alone from 1974 - 1983). It means loss of jobs as well because businesses downsize and shift operations abroad to low wage markets where workers are usually unorganized and more easily repressed.

The authors point out that by the 1980s "a new international division of labour and a global production system were in place" in what emerged as a "new world order" of global capitalism. New governance rules were established that were embodied in the 1994-formed World Trade Organization (WTO). By 1990, Washington Consensus neoliberalism became the "new imperialism" with big demands that developing states privatize public assets, deregulate their markets and open them to allow free trade and financial flows.

Under this system, MNCs are the world capitalist system's "basic operating unit" and "key agents of US imperialism" that all too often involves the projection of military power in the form of war. Their success and profitability are vital to a healthy economy and a thriving imperial project. The authors explain that the "US state identifies the interests of corporate capital with the 'national interest,' " and it freely commits the state's resources on its behalf for that dual benefit.

Chapter 3 - Foreign Investment at Work

Until the 1980s, MNCs were constrained under host country rules. But the "new economic model" freed them to move almost at will as developing nations began opening their markets, deregulating them, and welcoming MNCs for the perceived benefits their capital and technological expertise could provide. The authors explained the process and what happened under it.

They began by noting capital flows are public and private. The former is between governments in the form of "foreign aid" gifts or most often loans from the US-dominated IMF, World Bank and Inter-American Development Bank that come with unpleasant strings. The private kind consists of three main types: foreign bank lending from commercial banks or international lending agencies, portfolio investment (PI) financial instrument purchases like stocks and bonds, and foreign direct investment (FDI) that itself comes in two forms.

FDI involves the purchase of at least 10% of a foreign business enterprise's assets. "Greenfield" FDI involves the creation of a new facility like a factory while the "Brownfield" type buys assets of existing firms through mergers or acquisitions. In Latin America in the 1990s, over half of FDI was the latter kind.

The subject of debt financing is then discussed with the authors noting at reasonable levels it's vital for enhancing growth. But not to excess that got developing countries in trouble for the past three decades. Even in the 1980s, it became clear that debt levels were so high in Latin America they made economic growth impossible. They also caused a debt crisis by mid-decade that especially affected Argentina, Brazil and Mexico.

The Global North thus needed Plan B to reduce the debt bomb to manageable proportions, avoid default and allow troubled countries to maintain their payment obligations. One measure taken was the so-called "Brady Plan," named for Ronald Reagan and GHW Bush's Treasury Secretary, Nicholas Brady. The scheme was to forgive a small part of the debt and convert the rest into Brady IOU Bonds repayable in the long term to make the burden less onerous. It worked as no heavily indebted nation defaulted, but they had to adopt fiscal discipline to do it: structural adjustment privatizations, cuts in social spending, deregulation and more. These nations also suffered zero economic growth, a sharp reduction of living standards for its working people and producers, increased social inequity and greater unemployment and poverty.

Along with burdensome debt levels, FDI has also been a repressive instrument, especially in Latin America with its investment-friendly climate. The amount of it (as well as PI) was small until the 1990s but then grew dramatically as part of a shift from debt to equity financing with the largest portion of it going to large developing countries like Brazil, Argentina and Mexico and to the eight largest ones in the world overall getting 84% of it, according to World Bank figures. China got the most attracting 22% of all FDI since 1989 while Sub-Saharan Africa got nothing except for South Africa. Post-2004, manufacturing in China, India and Mexico got the largest FDI amounts, but natural resources and especially energy are also important, and a trend toward investing in services (especially telecommunications) is growing as well.

Latin America became the most favored destination for FDI inflows in the 1990s that hit their peak in the 1997 - 2001 period because friendly regimes like Cardoso's Brazil "bent over backwards" to accomodate it, mostly through merger and acquisition privatizations. The authors review facts they call "startling" and show how the "imperial-centered neoliberal model has led to the long term, large-scale pillage of every country in Latin America." In dollar terms, it amounted to $585 billion in interest payments and profits remitted mostly to US-based MNCs. More revenue was gotten from royalty payments, shipping, insurance, other fees plus billions of illegal monetary transfers by Latin American elites to offshore accounts.

This explains the sluggish regional growth in the 1990s - 3% a year, then 0.3% in 2001 and 0.9% in 2002. It's because of exploitive resource transfers and capital flows large enough to have made Latin America "one of the economic pillars of the US empire." Some of the transfers are hidden, and the authors put them in two categories:

-- one-way neoliberal structured international trade with open Latin American markets for US exports and reciprocal controlled ones in the US; the formula the authors describe is to export capital to the region in the form of FDI and import raw materials in return.

-- structured capital-labor relations with workers very much on the short end; the authors note how the "organization and export of labour" is used to pillage a country's resources and transfer them north; they cite one 2003 study estimating the net gain for the US and corresponding loss to Mexico of about $29 billion a year because of migration - indirectly through repatriated maquillardora profits and directly through exported farm labor and educated Mexicans who represent 40% of the nation's migrants benefitting the US at Mexico's expense.

Chapter 4 - The Social Dimension of Foreign Investment

The authors cite the justification "development economists" give for keeping labor's share of national income low. They claim it's because economic growth depends on capital accumulation, and households have a "low capacity to save and invest" since they spend all they get. The rich, in contrast, have a high propensity to save and invest so the more income they have the greater the economic benefit. In the 1970s and 80s, this kind of reasoning led to a class war between capital and labor with wages in the US losing 10% of their value from 1974 to 1984 and in Latin America and Sub-Saharan Africa even more - 40% in Chile and Mexico and 50% in many other countries.

Then consider economic growth under the neoliberal economic model centered around FDI. It promised prosperity but delivered failure. After 20 years at the end of the 1990s, average per capita growth overall was cut in half from the earlier period of "state-led development." It was reduced to 1.5% from 3% in industrialized countries and in developing ones (excluding China and India) to 1.2% from 3.5%. For the poorest countries, it was even worse going from 1.9% to a negative 0.5% per year. The only exceptions were a group of eight Asian "rapidly growing countries" whose governments followed a policy of state intervention outside the neoliberal model and proved their way works best.

The authors cite data to show, aside from China and India, that the "neoliberal era of globalizing capital and neoimperialism" led to rising worldwide income inequality between richer and poorer countries and between higher and lower income classes within countries. They explained that "Of the countries with the highest indices of poverty, social exclusion, and income inequality 41 are in Africa; 10 in Asia; and six in the Americas," and per capital income in all developing regions (except South and East Asia) declined compared to industrialized OECD states. During the two decade neoliberal period, inequality between rich and poor nations nearly doubled. It proves how false the notion is that unfettered free market forces create a "trickle down" effect to the poor that lets them benefit from economic growth. Just the opposite happened and it continues.

The authors show how the "magnitude of the global income divide and associated problems is staggering" with the richest population quintile consuming 86% of all products and services and the poorest one only 1.3%. And the social inequality fallout is even worse - high unemployment, desperate poverty, malnutrition, untreated illnesses and low life expectancy with hundreds of thousands of needless daily children's deaths. And yet economists at the IMF and World Bank continue to tout the benefits of neoliberal "structural reforms" in spite of clear evidence they fail. In the pre-neoliberal 1950s, 60s and 70s, income inequality decreased overall but has increased in most countries since then. Again, the culprits are privatization, financial "liberalization," deregulation and downsizing with governments exploiting working people for capital.

Take Mexico, for example. It has 11 billionaires with combined incomes exceeding the total for the country's 40 million poorest. But the same thing is true everywhere with developing nations faring the worst. It affects 2.5 billion people in the world who are unable to meet their basic needs of food, shelter, clothing and medical care let alone education, clean water, adequate sanitation and other goods and services people in the West consider essential and take for granted.

Using Latin America as an example, the authors show how capitalists in the region sustained their profits by exploiting ordinary workers. During the neoliberal period, labor's share of national income was cut from 40% to less than 20%. Even today in countries like Venezuela (with all its social gains under Hugo Chavez since 1999) and Argentina, worker wages are still below their 1970 levels. It's because of market deregulation that give employers arbitrary power to fire workers, cut wages and hire temporary and casual labor. It's gotten bad enough to hit the middle class as well and cause a rising level of urban poor. A "new urban poor" has emerged who aren't simply "rural migrants" but include "socially excluded and downwardly mobile workers and the lower middle class (who've been fired) and have found (other) employment in the burgeoning (lower-paying, less secure) informal sector."

These people, the unemployed and "rural-to-urban migrants" constitute a reserve army of labor that keeps wages in the formal sector down and workers' bargaining power weak. Then there's the notion of "social exclusion" reflecting the condition of the poor with the authors identifying its six "major pillars:"

-- social production dispossession showing up in landlessness and rural outmigration;

-- no access to urban and rural markets or for wage employment;

-- no access to "good quality" employment;

-- reduced access to government social services;

-- no access to adequate income; and

-- no political power.

In contrast, 15 - 20% of Latin Americans enjoy a "First World" lifestyle with the authors citing their array of luxuries that are unimaginable to the poor and most middle income earners. And whatever the economic condition, they benefit from the imperial system regardless because neoliberalism works by taking from the exploited many and giving generously to the privileged few. Put another way, it's a hugely out of balance give and take, and it was set up that way despite its proponents denial.

The authors review the period when the World Bank discovered poverty and carried on its kind of three-decade war against it that was the equivalent of fighting fire by throwing fuel on it. Readers know the drill by now - governments getting out of the way and promoting unfettered free market policies, pro-growth, structural adjustments and the rest of the package favoring capital over people on the nonsensical claim they'll benefit eventually. By now Latin Americans know "manana" never comes, and even some World Bank economists like Joseph Stiglitz figured it out.

The authors sum up three decades of World Bank efforts saying we're "where we were in the 1970s and in a number of ways further back," especially with regard to greater poverty that's now hitting the middle class. Based on incontrovertible evidence, social inequality and poverty at the end of the 1990s stem from the "pro-growth, pro-poor" World Bank "imperialist policies" and the FDI regime along with deregulated, unfettered markets giving capital free reign to pillage for profit. But there's hope in the form of resistance with the authors stating "capitalist development in its neoliberal form is clearly on its last legs." For the poor of the world, it can't come soon enough.

Chapter 5 - Policy Dynamics of Foreign Investment

Here the authors examine the record of FDI since 1980 when markets were deregulated and capital flows were "liberated from control." Again they cite the notion that economic growth depends on the accumulation of capital, developing countries are deficient in it, and private multinational commercial and investment banks and MNCs will ride to the rescue with FDI. And while capital fuels growth, international trade is "one of its driving forces." Two models are considered. One gives the state an active role, and it worked during the 1940 - 1970 "golden age of capitalism" period. That's when "international development" meant per capita economic growth based on "industrialization, modernization and capitalist development."

That period came to an end in the troubled 1970s, and a "counter-revolution in development thinking and practice" took over. The scheme that became neoliberalism turned capital towards exports and induced governments to cut social benefits to raise levels of savings, productivity, profits and productive investments.

World Bank economists were tasked to create the new model that became its Structural Adjustment Program (SAP) with eight major components:

-- devalued currencies for stability;

-- privatizations;

-- capital market and trade "liberalization" meaning unfettered free market capitalism;

-- deregulation;

-- labor market "reform" meaning lower wages and loss of worker rights;

-- downsizing;

-- decentralizing policy formulation and decision-making; and

-- a free market for capital, goods and services meaning all benefits accrue to the Global North by pillaging developing nations.

Former World Bank economist and neoliberal critic, Joseph Stiglitz, called this package the "steps to hell" two years after he resigned his position in 2000. All the evidence to date proves it with the authors stating "the neoliberal model of capitalist development (is) unsustainable, (it's) both dysfunctional and politically destabilizing." Confirming data and examples are cited throughout the book, but in this chapter Mexico is featured in great detail from 1980 - 2005. It's covered under four presidents with each in his own way outdoing or at least matching the excesses of his predecessor with the people of Mexico the poorer for it.

This review can only touch on that period briefly beginning with Miguel De La Madrid (1982 - 1988) who was the first to begin reversing a state-led approach to relieve the "debt crisis" stemming from the 1976 - 1982 period of over-borrowing. It was IMF to the rescue with its usual package of "reform" measures to "liberalize" capital, encourage exports, deregulate markets, devalue the currency, and demand fiscal discipline and privatizations. De La Madrid obliged.

Next came Carlos Salinas de Gortari (1988 - 1994) who introduced a second round of structural reforms. It included over 1000 more privatizations that sold off the most important state enterprises like the banks and state telephone company, TELMEX. The international financial community loved him, but his term ended in tatters when the economy crashed in 1994.

Ernesto Zedillo Ponce de Leon (1994 - 2000) inherited the mess that broke out right after he took office. With help from a $52 billion US bailout, he responded with a "stabilization program" that included deep social spending cuts and a 43% peso devaluation that caused inflation to rise 52%, thousands of businesses to close, real wages to drop 25%, and two million people to lose jobs. Zedillo was also Mexico's first president under NAFTA that went into effect January 1, 1994. And he continued neoliberal "reforms" and even exceeded his predecessor's commitment to global capitalism.

So did Vincente Fox Quesdad (2000 - 2006) in his zeal to live up to his PAN party's rightest agenda compared to the more centrist PRI during its continuous 72 year rule. The PAN under Fox practiced fiscal conservatism and free market economics that maintained the neoliberal agenda of his predecessors even in the face of widespread opposition that constrained him from going further. The authors state that the Fox era "brought an end to a cycle of neoliberal policies." His administration failed to achieve sustainable growth and showed "the neoliberal model is economically dysfuntional and has exhausted its economic limits."

Chapter 6 - Foreign Investment and the State

The authors' dominant theme is how harmful FDI is to developing nations even as it pretends to be beneficial. Most of it is also "subsidized and risk-free" to investors, and "relies on securing monopoly profits (by buying) state enterprises (on favorable terms) and control(ing)....strategic markets." Much or most of it provides no new productive investment recipient countries need to grow, prosper and help their people.

The authors rightfully describe the process as pillage. State-owned assets are transferred to private hands, and revenues that once went to national treasuries now go to corporate coffers. Further, deals are justified on the false claim they increase competition. False. All they do is put existing enterprises under new management, and in the case of "natural monopolies" like public utilities, it allows private owners to hike prices substantially and price the country's poor out of the market, but that's just for starters.

Foreign investors make big demands, and host countries oblige - tax deferrals and exemptions, direct subsidies, infrastructure development, free or low cost land, deregulation, assumption of "transition" costs of the inevitable downsizing that follows, legal security protection through bilateral investment treaties (BITs), labor training, and more. Other schemes are in the form of Trade Related Investment Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs). And when nations balk during WTO trade talks, like in the faltering Doha Round, they're pressured to come around through bilateral deals with neighboring states.

With this kind of advantaging, local enterprises don't stand a chance, especially small ones. They nearly always lose and end up being bought, becoming a satellite supplier, or going bankrupt. Labor also loses out. Wages are frozen or cut, benefits slashed or ended, job protection ends, working conditions deteriorate, unions weakened, and inequality grows as the wealth gap widens substantially. In short, FDI works one-way - all for capital at the expense of developing economies and its workers. An alternative development strategy is needed, and it's readily available to states willing to buck the system, withstand the pressure to conform, and go another way.

Chapter 7 - Anti-Imperialism and Foreign Investment.

Here, the authors first identify the myths about foreign investment that are needed to sell this snake oil to developing states. Seven of them are briefly listed below:

-- Economic growth depends on FDI; false; in fact, FDI is attracted by economic growth;

-- FDI creates productive, competitive new enterprises; false; it mostly buys existing ones, transfers little new technology, does little or no new research, and crowds out local enterprises;

-- FDI provides links and access to foreign markets; false; it's often used to buy natural resources for export and to repatriate profits and eliminate jobs;

-- FDI provides tax revenues and hard currency earnings; false; revenues are repatriated, tax fraud abounds, and the impact on the balance of payments is negative;

-- Good financial standing and integrity of the system depends on maintaining debt payments; false; much past debt is odious and servicing it harms local economies and in the case of Argentina led to an economic collapse in 2001;

-- Developing nations need FDI for development for lack of local sources; false; most FDI is national savings borrowing to buy local enterprises; it doesn't inject new capital into economies; and

-- FDI provides an anchor for new investment; false again; the opposite is true as investors freely relocate to lower-wage countries creating a boom and bust environment when they arrive. Bottom line - FDI is poison unless used moderately and is tightly controlled.

The authors present arguments for and against FDI with the latter only considered below:

-- FDI strips states of their ability to control "investment decisions, pricing, production and future growth;"

-- FDI results in long-term capital outflows repatriated to corporate coffers;

-- FDI results in "unbalanced and overly specialized production," especially in commodity areas;

-- Tax, subsidy and other concessions to FDI deprive developing states of needed revenues;

-- FDI most often only puts existing enterprises under new management; it seldom creates new ones;

-- FDI creates "enterprise enclaves," imports technology linked to "outside production and distribution networks," and doesn't help local economies;

-- FDI often controls local banking that lets it "shape state credit and interest policy" and decide what industry sectors to favor and at what cost; and

-- With investors attracted to extractive industries and freed from regulatory constraints, environmental devastation results.

In sum - FDI endangers "national independence, popular sovereignty, and severely compromis(es)" developing states' ability to control their destiny and represent all their people. It's a "risky, costly and limiting (one-way) strategy." Developing nations need to minimize it because of its harmful economic, social and political costs.

Chapter 8 - Anti-Imperialist Regime Dynamics

Contrary to Margaret Thatcher's TINA dictum (there is no alternative), many others are better and the authors list them:

-- Reinvestment of profits into local production to stimulate a "multiplier" effect and increase local consumption;

-- Control foreign trade to retain foreign exchange earnings;

-- Invest pension funds in productive activities;

-- Create development banks for overseas workers' remittances home so funds can be used productively;

-- Place a moratorium on debt payments to stop servicing the odious portion of it:

-- Recover stolen treasury funds and property;

-- Recover unpaid taxes;

-- Establish land taxes and expropriate or buy underutilized land to be used for agrarian reform and greater agricultural productivity;

-- Liquidate overseas investments and reinvest them locally; and

-- Maximize employment and reduce underemployment.

In cases where a country's taxable resources and overseas earnings are limited, FDI can help if used moderately and constrained. Ways to do it include maximizing "strategic national ownership and control" and relying on short-term deals that include training workers and contracting with skilled advisers for whatever technical help is needed.

One successful model reviewed is WEPC - Worker-Engineer Public Control or worker-managed enterprises (WMEs). Salvador Allende used them in over 100 factories in Chile while he was in office. They attained greater productivity, higher worker motivation and achieved significant social, health and working conditions improvements while they remained in place. WEPCs aren't problem-free, however, and the main one is they're targeted by imperial states for destruction because their policies aren't corporate friendly. Nonetheless, their advantages greatly outweigh the negatives. They include:

-- Minimizing tax evasion to increase state revenues;

-- Social investment in lieu of repatriated profits;

-- Avoidance of capital flight;

-- Emphasizing long-term R & D over speculative investment;

-- Social welfare and betterment over savage capitalism; and

-- Fixed capital and upwardly mobile labor over mobile capital and fixed labor.

The authors persuasively show that FDI is a cancer. Once established, it spreads like a virus, "corrupt(ing) local officials, brib(ing) regulators (and) present(ing) a different 'role model' for state executives - one attuned to luxury living, big salaries, privileges, and, above all" a neoliberal ideological commitment. Another way is possible and vital to the health, welfare and growth of developing nations. It "puts the worker-engineer public sector-led model at the centre of development," and empirical evidence shows it works.

Stephen Lendman lives in Chicago and can be reached at

Also visit his blog site at and listen to The Steve Lendman News and Information Hour on Mondays at noon US Central time.

Monday, November 26, 2007

Tragedy and Travesty at Annapolis

Tragedy and Travesty at Annapolis - by Stephen Lendman

November 27 at Annapolis kicks off the latest Israeli-Palestinian Middle East peace process round that may be an historic first. It's the first time in memory the legitimate government of one side is excluded, and that alone dooms it. Like previous rounds, it's more pretense than peace, and as Jonathan Steele puts it in his November 16 Guardian column "The Palestinian path to peace does not go via what do....Palestinians do next....In their decades-long bid for justice, they have tried everything:" armed struggle to compromise, but nothing works and the reason is simple. Their sincerity isn't matched by Israel, the West, other Arab states and the US most of all with all the muscle in its hands to push or constrain Israelis to be serious and fair. That's the problem. How can one side negotiate in good faith without a willing partner.

Nothing new will be introduced this time; the conference is for one day; no peace negotiations will be held; Israeli Prime Minister Olmert calls the summit "a meeting, not a negotiating session;" respected Middle East correspondent Robert Fisk says Olmert "has no more interest in a Palestinian state than....Ariel Sharon;" no advance agreement of intentions or principles has been reached; and it's still not sure who's coming.

Further, Gaza remains under siege, the West Bank is also terrorized, settlements continue being built, Palestinian land keeps being taken, more lives in the Territories are being lost, suffering remains unbearable, and hope for the beleaguered people again will be dashed. Their message on the ground is clear, but no one's listening. They won't accept surrender for peace. They want nothing less than freedom and justice in their own unoccupied land. Israel won't give it to them, so the struggle continues.

But just in case, neoconservative hard-liners are taking no chances on something of substance from Annapolis reports Jim Lobe in his November 22 Electronic Intifada article. Skepticism or not about prospects this time has them united to assure Israel gives nothing away now or ever. Secretary Rice is their target because she's pushing for her kind of no state-two-state solution by January, 2009 when a new administration takes over. It doesn't matter how flawed it is as long as something resembling progress emerges.

But even that's too much for hard-liners like super-hawk Frank Gaffney who calls any type Palestinian state "a dagger pointed at the heart of Israel and a new safe-haven for terror aimed at the United States and other Western nations." Others like him agree and support continued Middle East war until the entire region is subdued under US-Israeli control. That means no concessions at Annapolis, defeating Hamas in Gaza, Hezbollah in Lebanon, no pullback from Iraq, and attacking Iran. A very scary scenario as another peace offensive gets underway with its participants pretending it's real.

Looking Back at Past Peace Process Futility

Until the late 1980s, the US and Israel were content to ignore regional and other calls for peaceful diplomacy, but that began to change with the outbreak of the first intifada mass uprising in 1987 when oppressed Palestinians fought back and caught the media's attention. The region exploded again when Saddam Hussein invaded Kuwait in August, 1990, and the Gulf war followed in 1991. When it ended, the US and Soviet Union jointly sponsored the watershed Madrid peace conference at which Israel negotiated face-to-face with Syria, Lebanon, Jordan and the Palestinians for the first time. They continued after its conclusion on two parallel tracks to resolve past conflicts and sign bilateral peace treaties along with multilateral negotiations on issues affecting the whole region.

Madrid promised hope and was the catalyst for the Oslo Accords and their Declaration of Principles that were signed on the White House lawn in September, 1993. They began secretly with a post-Gulf war weakened PLO and delivered betrayal. They established a vaguely-defined negotiating process, specified no outcome, and let Israel delay, refuse to make concessions, and continue colonizing the Occupied Territories. In return, Palestinians got nothing for renouncing armed struggle, recognizing Israel's right to exist, and leaving major unresolved issues for indefinite later final status talks. They included an independent Palestinian state, the right of return, the future of Israeli settlements, borders, water rights, and status of Jerusalem as sovereign Palestinian territory and future home of its capital.

Israel got more as well - the right to establish a new Palestinian Authority (PA) to police a restive indigenous population. Yasser Arafat and other PLO leaders were in exile in Tunis following the 1982 Lebanon war. They got to come home, take control of their people, and be rewarded for being Israel's enforcer.

Oslo I led to Oslo II that was signed in Taba, Egypt in September, 1995, countersigned in Washington four days later, and made things even worse with its complex document. It called for further Israeli troop redeployments beyond Gaza and major West Bank population centers and later from all rural areas except for Israeli settlements and designated military zones. The process divided the West Bank into three parts with each having distinctive borders, administration and security control rules - Areas A, B and C plus a fourth area for Greater Jerusalem. A complicated system was devised as follows:

-- Area A under Palestinian control for internal security, public order and civil affairs;

-- Area B under Palestinian civil control for 450 West Bank towns and villages with Israel having overriding authority to safeguard its settlers' security; and

-- Area C with its water resources under Israeli control and its settlements on the West Bank's most valuable land with them all connected by special by-pass roads for Jews only.

Israel has total control of the Territories and occupies most of the West Bank with its expanding settlements, by-pass roads, separation wall, military areas and no-go zones overall that are off limits to Palestinians in their own land.

The Sharm el-Sheikh Memorandum came next and was signed by Yasser Arafat and Israeli Prime Minister Ehud Barak on September 4, 1999. Its purpose was to implement Oslo II and all other agreements since Oslo I in 1993 that included the following:

-- a 1994 Protocol on Economic Relations;

-- a Cairo Agreement on Gaza and the Jericho Area the same year;

-- the 1994 Washington Declaration and Agreement on Preparatory Transfer of Powers and Responsibilities between the two parties; and

-- the 1995 Protocol on Further Transfer of Powers and Responsibilities. Both sides agreed to resume "permanent status" talks and discuss other elements of a peace plan relating to Israeli troops redeployments, land transfers, safe passage openings between Gaza and the West Bank, a Gaza seaport, prisoner releases and other issues related to security, normal civilian life activities, international donor community aid, and a timetable for final status talks on the toughest issues.

"Permanent status" talks followed in July, 2000 at Camp David where Bill Clinton hosted Yasser Arafat and Ehud Barak. Betrayal was again planned and delivered, but the major media called Barak's offer "generous" and "unprecedented" with Arafat spurning peace for conflict. Barak insisted Arafat sign a "final agreement," declare an "end of conflict," and give up any legal basis for additional land in the Territories. There was no Israeli offer in writing, and no documents or maps were presented.

All Barak offered was from a May, 2000 West Bank map dividing the area into four isolated cantons under Palestinian administration surrounded by expanding Israeli settlements and other Israeli-controlled land. They had no direct links to each other or to Jordan. The cantons consisted of: Jericho, the southern canton to Abu Dis, a northern one including Nablus, Jenin and Tulkarm, and a central one including Ramallah. Gaza was left in limbo as a fifth canton that was resolved when Israel disengaged from the Territory in August and September, 2005 but kept total control over it and right to reenter any time. The Barak deal was so duplicitous that if Arafat accepted it any hope for real peace would be dashed. He didn't and was unfairly blamed.

The Foundation for Middle East Peace (FMEP) analyzed the deal as follows:

-- Israel only proposed relinquishing control of from 77.5 - 81% of the West Bank excluding East Jerusalem and likely intended to keep the Jordan Valley;

-- Israel claimed sovereignty over all West Jerusalem, one-third of occupied East Jerusalem, and as later developments proved wants all Greater Jerusalem exclusively for Jews;

-- Israel wanted control of the Temple Mount that Palestianians call al-Haram al-Sharif or Noble Sanctuary and is the site of the sacred Dome of the Rock and al-Aqsa Mosque.

Barak's Camp David deal was all take and no give with no chance for reconciliation or resolution of the conflict's most intractable issues. It was all pretense by design, but when Ariel Sharon took over in February, 2001 he ended all further peace negotiations.

It stood that way until George Bush unveiled the Quartet's fake "road map" for peace in a June 24, 2002 speech. In it, he called for an independent Palestinian state along side Israel in peace by 2005 with good faith efforts on both sides to achieve it. The process was to be in three phases, but its prospects were doomed from the start. After the plan's launch, the region was beset by violence, Israel increased its land seizures and targeted assassinations, Palestinians responded in kind, and the humanitarian situation in the Territories became so dire it was impossible convincing either side that the road map was credible. It wasn't, and it failed like all previous efforts before it.

That's where things stood until Condoleezza Rice restarted the current Annapolis round to salvage a warmaking administration, reinvent it as a peacemaker, and manage to manipulate a fake outcome to prove it. The scheme is this, and George Bush spelled it out on November 21 when he spoke to Israeli, Palestinian and Egyptian leaders to lay the groundwork for Annapolis:

-- forty-nine countries were invited;

-- who's coming isn't sure, but Iran wasn't invited;

-- Saudi Arabia accepted with reservations; and

-- Syria was a maybe but AP reported November 25 it will now send its deputy foreign minister unlike other attendees sending foreign ministers; Syria will come because the occupied Golan is on the agenda, even though, like the Saudis, it has no formal relations with Israel.

Others listed are members of the Quartet, G-8, Arab League, permanent members of the Security Council along with Israel and the Palestinian Abbas quisling government with its legitimate one excluded that renders the process a sham.

Rice is pathetic saying "very clear signs" are evident, and "everybody's goal is the creation of a Palestinian state" with both sides on board for it. Israeli Prime Minister Olmert is just as bad claiming "Annapolis will be the jumping-off point for continued serious and in-depth negotiations (that won't) avoid any issue or ignore any division (in) our relations with the Palestinian people for many years." Nearly sixty to be exact and over 40 under occupation with no serious effort ever for resolution.

Snags still remain in the window dressing surrounding the conference with both sides so far unable to reach an acceptable joint statement to be presented in Maryland. If they're still apart when it starts, the conference will end with Rice's statement and not a joint Israeli-PA one. Either way matters little as once again fanciful language will substitute for substantive results. With Gaza under siege, Hamas uninvited, and an illegitimate government in its place, peace and any progress toward resolution can't happen. That's how it's always been and will remain until Israel begins negotiating in good faith. But that won't happen until the world community accepts nothing less because world public opinion and people of conscience demand it.

Stephen Lendman lives in Chicago and can be reached at

Also visit his blog site at and listen to The Steve Lendman News and Information Hour on Mondays at noon US Central time.

Monday, November 19, 2007

Coup D'Etat Rumblings in Venezuela

Coup D'Etat Rumblings in Venezuela - by Stephen Lendman

The Bush administration tried and failed three prior times to oust Hugo Chavez since its first aborted two-day coup attempt in April, 2002. Through FOIA requests, lawyer, activist and author Eva Golinger uncovered top secret CIA documents of US involvement that included an intricate financing scheme involving the quasi-governmental agency, National Endowment of Democracy (NED), and US Agency for International Development (USAID). The documents also showed the White House, State Department and National Security Agency had full knowledge of the scheme, had to have approved it, and there's little doubt of CIA involvement as it's always part of this kind of dirty business. What's worrying now is what went on then may be happening again in what looks like a prelude to a fourth made-in-Washington attempt to oust the Venezuelan leader that must be monitored closely as events develop.

Since he took office in February, 1999, and especially after George Bush's election, Chavez has been a US target, and this time he believes credible sources point to a plot to assassinate him. That information comes from Alimamy Bakarr Sankoh, president of the Hugo Chavez International-Foundation for Peace, Friendship & Solidarity (HCI-FPFS) in a November 11 press release. Sankoh supports Chavez as "a man of peace and flamboyant champion of human dignity (who persists in his efforts in spite of) growing US blackmail, sabotage and political blasphemy."

HCI-FPFS sources revealed the plot's code name - "Operation Cleanse Venezuela" that now may be unfolding ahead of the December 2 referendum on constitutional reforms. According to Sankoh, the scheme sounds familiar - CIA and other foreign secret service operatives (including anti-Castro terrorists) aiming to destabilize the Chavez government by using "at least three concrete subversive plans" to destroy the country's social democracy and kill Chavez.

It involves infiltrating subversive elements into the country, inciting opposition within the military, ordering region-based US forces to shoot down any aircraft used by Chavez, employing trained snipers with shoot to kill orders, and having the dominant US and Venezuelan media act as supportive attack dogs. Chavez is targeted because he represents the greatest of all threats to US hegemony in the region - a good example that's spreading. Venezuela also has Latin America's largest proved oil reserves at a time supplies are tight and prices are at all-time highs.

Sankoh calls Washington-directed threats "real" and to "be treated seriously" to avoid extending Bush's Middle East adventurism to Latin America. He calls for support from the region and world community to denounce the scheme and help stop another Bush administration regime change attempt.

More information on a possible coup plot also came from a November 13 Party for Socialism and Liberation article headlined "New US plots against the Venezuelan Revolution." It states Tribuna Popular (the Communist Party of Venezuela) and Prensa Latina (the Latin American News Agency) reported: "Between Oct. 7 and Oct 9, high-ranking US officials met in Prague, Czech Republic, with parts of the Venezuelan opposition (where they were) urged to convene social uprisings, sabotage the economy and infrastructure, destroy the food transportation chain and plan a military coup." It said Paul Wolfowitz and Madeleine Albright attended along with Humberto Celli, "a well-known coup-plotter from the Venezuelan party Accion Democratica."

The article further reported Tibisay Lucena, The National Electoral Council chairman, said the Venezuelan corporate media was "stoking a mood of violence amongst right-wing students" through a campaign of agitprop, and Hermann Escarra from the "pro-coup" Comando Nacional de la Resistencia openly incited "rebellion" last August and then called for constitutional changes to be stopped "through all means possible."

The Venezuelan news agency, Diaria VEA, also weighed in saying "anonymous students planned on committing acts of destabilization" as the December 2 vote approaches. Venezuelan Radio Trans Mundial provided proof with a recorded video of a youth dumping gasoline into an armored vehicle, ramming metal barricades into police on top of other vehicles, and knocking them from their roofs and hoods onto the ground.

The Threat of Street Protest Violence

For weeks, protests with sporadic violence have been on Venezuela's streets as anti-Chavistas use middle and upper class students as imperial tools to destabilize the government and disrupt the constitutional process. The aim is to discredit and oust the Chavez government and return the country to its ugly past with Washington and local oligarchs in charge and the neoliberal model reinstated.

Venezuela's Foreign Minister, Nicolas Maduro, weighed in on this on November 8. He accused Washington of meddling by staging violent Caracas street protests against proposed constitutional reforms to extend the country's participatory social democracy. Referring to a November 7 shootout at Caracas' Central University, he said: "We don't have any doubt that the government of the United States has their hands in the scheme that led to the ambush yesterday" that Chavez calls a "fascist offensive." Several students were wounded on the streets from a clash between pro and anti-Chavez elements.

"We know the whole scheme," Maduro added, and he should as it happened before in 2002, again during the disruptive 2002-03 oil management lockout, and most often as well when elections are held to disrupt the democratic process. These are standard CIA operating tactics used many times before for 50 years in the Agency's efforts to topple independent leaders and kill them. Chavez understands what's happening, and he's well briefed and alerted by his ally, Fidel Castro, who survived over 600 US attempts to kill him since 1959. He's now 81 and very much alive but going through a difficult recovery from major surgery 15 months ago.

Chavez has widespread popular support throughout the region and from allies like Ecuador's Raphael Correa and Nicaraguan President Daniel Ortega who expressed his "solidarity with the revolutionary people of Venezuela and our friend Hugo Chavez, who is being subjected to aggression from a counterrevolution fed by the traitors from inside the country and by the empire (referring to the US)." He compared the situation to his own country where similar efforts are being "financed by the United States Embassy" in Managua to support elements opposed to his Sandinista government even though it's very accommodative to Washington.

Even Brazil's Lula chimed in by calling Chavez's proposed reforms consistent with Venezuela's democratic norms, and he added: "Please, invent anything to criticize Chavez, except for lack of democracy."

Constitutional Reform As A Pretext for Protests

Washington's goal from all this is clear, but why now? Last July, Chavez announced he'd be sending Venezuela's National Assembly (AN) a proposed list of constitutional reforms to debate, consider and vote on. Under Venezuelan law, the President, National Assembly or 15% of registered voters (by petition) may propose constitutional changes. Under articles 342, 343, 344 and 345, they must then be debated three times in the legislature, amended if needed, and then submitted to a vote that requires a two-thirds majority to pass. Finally within 30 days, the public gets the last word, up or down, in a national referendum. It represents the true spirit of democracy that's unimaginable in the US where elitists control everything, elections are a sham, and the people have no say.

That was true for Venezuela earlier, but no longer. In its history, there have been 26 Constitutions since its first in 1821, but none like the 1999 Bolivarian one under Chavez that's worlds apart from the others. It created a model participatory social democracy that gave all citizens the right to vote it up or down by national referendum and then empowered them (or the government) later on to petition for change.

On August 15, Chavez did that by submitting 33 suggested amendment reforms to the Constitution's 350 articles and explained it this way: The 1999 Constitution needed updating because it's "ambiguous (and) a product of that moment. The world (today) is very different from (then). (Reforms are) essential for continuing the process of revolutionary transition" to deepen and broaden Venezuelan democracy. That's his central aim - to create a "new geometry of power" for the people along with more government accountability to them.

Proposed reforms will have little impact on the nation's fundamental political structure. They will, however, change laws with regard to politics, the economy, property, the military, the national territory as well as the culture and society and will deepen the country's social democracy.

The National Assembly (AN) completed its work on November 2 adding 25 additional articles to Chavez's proposal plus another 11 changes for a total of 69 articles that amend one-fifth of the nation's Constitution. The most important ones include:

-- extending existing constitutional law that guarantees human rights and recognizes the country's social and cultural diversity;

-- building a "social economy" to replace the failed neoliberal Washington Consensus model;

-- officially prohibiting monopolies and unjust consolidation of economic resources;

-- extending presidential terms from six to seven years;

-- allowing unlimited presidential reelections so that option is "the sovereign decision of the constituent people of Venezuela" and is a similar to the political process in countries like England, France, Germany and Australia;

-- strengthening grassroots communal councils, increasing their funding, and promoting more of them;

-- lowering the eligible voting age from 18 to 16;

-- guaranteeing free university education to the highest level;

-- prohibiting foreign funding of elections and political activity;

-- reducing the work week to 36 hours to promote more employment;

-- ending the autonomy of Venezuela's Central Bank to reclaim the country's financial sovereignty the way it should be everywhere; today nearly all central banks are controlled by private for-profit banking cartels; Republican presidential candidate Ron Paul wants to end that status in the US and correctly explains the Federal Reserve Bank is neither federal nor does it have reserves; it's owned and run by Wall Street and the major banks;

-- adding new forms of collective property under five categories: public for the state, social for citizens, collective for people or social groups, mixed for public and private, and private for individuals or private entities;

-- territorial redefinition to distribute resources more equitably to communities instead of being used largely by economic and political elites;

-- prohibiting sexual orientation discrimination and enacting gender parity rights for political candidates;

-- redefining the military as an "anti-imperialist popular entity;"

-- in cases where property is appropriated for the public good, fair and timely compensation to be paid for it;

-- protecting the loss of one's home in cases of bankruptcy; and

-- enacting social security protection for the self-employed.

The National Assembly also approved 15 important transitional dispositions. They relate to how constitutional changes will be implemented if approved until laws are passed to regulate them. One provision is for the legislature to pass 15 so-called "organic laws" that include the following ones:

-- a law on "popular power" to govern grassroots communal councils (that may number 50,000 by year end) that Chavez called "one of the central open, at the constitutional level, the roads to accelerate the transfer of power to the people (in an) Explosion of Communal (or popular) Power;" five percent of state revenues will be set aside to fund it;

-- another promoting a socialist economy for the 21st century that Chavez champions even though he remains friendly to business; and

-- one relating to the country's territorial organization; plus others on education, a shorter workweek and more democratic changes.

Under Venezuelan law, and in the true spirit of democracy, these proposed changes will be for citizens to vote up or down on December 2. The process will be in two parts reversing an earlier decision to do it as one package, yea or nay. One part will be Chavez's 33 reforms plus 13 National Assembly additions, and the other for the remaining 23 articles.

Coup D'Etat Rumblings Must Be Taken Seriously

Now battle lines are drawn, opposition forces are mobilized and events are playing out violently on Venezuela's streets. The worst so far was on November 7 when CNN falsely reported "80,000" anti-Chavez students demonstrated "peacefully" in Caracas to denounce "Hugo Chavez's attempts to expand his power." The actual best estimates put it between 2000 and 10,000, and long-time Latin American expert James Petras calls the protesters "privileged middle and upper middle class university students," once again being used as an imperial tool.

In their anti-government zeal, CNN and other dominant media ignore the many pro-Chavez events writer Fred Fuentes calls a "red hurricane" sweeping the country. An impressive one was held on November 4 when the President addressed hundreds of thousands of supporters who participated in an 8.5 kilometer Caracas march while similar pro-reform rallies took place at the same time around the country. They're the start of a "yes" campaign for a large December 2 turnout that's vital as polls show strong pro-reform support by a near two to one margin.

In an effort to defuse it, orchestrated opposition turned violent and officials reported eight people were injured in the November 7 incident. No one was killed, but one was wounded by gunfire when at least "four (masked) gunmen (who looked like provocateur plants, not students) fir(ed) handguns at the anti-Chavez crowd." In an earlier October demonstration, opposition students clashed with police who kept them from reaching the National Assembly building and a direct confrontation with pro-Chavez supporters that might have turned ugly.

It did on November 7 when violence erupted between pro and anti-government students, but it wasn't as reported. Venezuelan and US corporate media claimed pro-Chavez supporters initiated the attack. In fact, they WERE attacked by elements opposing the President. They seized this time to act ahead of the referendum to disrupt it and destabilize the government as prelude to a possible planned coup.

One pro-Chavez student explained what happened. She and others were erecting posters supporting a "yes" referendum vote when they were attacked with tear gas and crowds yelling they were going to be lynched. Avila TV had the evidence. Its unedited footage showed an opposition student mob surrounding the School of Social Work area where pro-Chavez students hid for safety. They threw Molotov cocktails, rocks, chairs and other objects, smashed windows, and tried to burn down the building as university authorities (responsible for security) stood aside doing nothing to curtail the violence. Another report was that corporate-owned Univision operatives posing as reporters had guns and accompanied the elements attacking the school in an overt act of complicity by the media.

The pattern now unfolding on Caracas streets is similar to what happened ahead of the April, 2002 aborted coup attempt, and Petras calls it "the most serious threat (to the President) since" that time. The corporate media then claimed pro-government supporters instigated street violence and fired on "unarmed" opposition protesters. In fact, that was later proved a lie as anti-Chavez "snipers" did the firing as part of the plot that became the coup. A similar scheme may now be unfolding in Caracas and on other campuses around the country as well.

In his public comments, Foreign Minister Maduro accused the major media and CNN of misrepresenting events and poisoning the political atmosphere. It's happening in Venezuela and the US as the dominant media attacks Hugo Chavez through a campaign of vilification and black propaganda.

US Corporate Media on the Attack

On November 12, The Venezuela Information Office (VIO) reported that growing numbers of "US print newspapers lodged attacks against Venezuela" using "outdated cold-war generalizations" and without explaining any of the proposed democratic changes. Among others, they came from the Houston Chronicle that claimed:

-- constitutional reforms will "eliminate the vestiges of democracy" in Venezuela when, in fact, they'll strengthen it, and the people will vote them up or down;

-- Chavez controls the electoral system when, in fact, Venezuela is a model free, fair and open democracy that shames its US equivalent. The Chronicle falsely said reforms will strip people of their right to due process. In fact, that's guaranteed under article 337 that won't be changed.

VIO also reported on a Los Angeles Times editorial comparing Chavez to Bin Laden. It compounded that whopper by claiming reforms will cause a global recession due to higher oil prices that, of course, have nothing to do with changes in law. In another piece, the LA Times inverted the truth by falsely claiming a public majority opposes reforms. Then there's the Miami Herald predicting an end to freedom of expression if changes pass and the Washington Post commenting on how high oil prices let Chavez buy influence.

The Post then ran an inflamatory November 15 editorial headlined "Mr. Chavez's Coup" if which it lied by saying November 7 student protesters "were fired on by gunmen (whom) university officials later 'identified' members of government-sponsored 'paramilitary groups' when, in fact, there are no such groups. The editorial went on to say Chavez wants to "complete his transformation into an autocrat (to be able to) seize property....dispose of Venezuela's foreign exchange reserves....impose central government rule on local jurisdictions and declare indefinite states of emergency" as well as suspend due process and freedom of information. Again, misinformation, deliberate distortion and outright lies from a leading quasi-official US house organ.

Rupert Murdock's Wall Street Journal weighed in as well with its lead anti-Chavez attack dog and all-round character assassin extraordinaire, Mary Anastasia O'Grady. This writer has tangled with her several times before and earlier commented how one day she'll have a serious back problem because of her rigid position of genuflection to the most extreme hard-right elements she supports. Her latest November 12 column was vintage O'Grady and headlined "More Trouble for Chavez (as) Students and former allies unite against his latest power grab."

Like most of her others, this one drips with vitriol and outrageous distortions like calling Chavez a "dictator" when, in fact, he's a model democrat, but that's the problem for writers like O'Grady. Absent the facts, they use agitprop instead. O'Grady writes: "Mr. Chavez has been working to remove any counterbalances to his power for almost nine years (and) has met strong resistance from property owners, businesses, labor leaders, the Catholic Church and the media." Now add opposition well-off students. Omitted is that the opposition is a minority, it represents elitist interests, and Chavez has overwhelming public support for his social democracy and proposed reform changes including from most students O'Grady calls "pro-Chavez goons."

Once again, she's on a rampage, but that's her job. She claims the absurd and people believe her - like saying the media will be censored, civil liberties can be suspended, and government will be empowered to seize private property. He's a "demagogue," says O'Grady, waging "class warfare," but opposition to reform "has led to increased speculation (his) days are numbered." Wishing won't make it so, and O'Grady uses that line all the time.

The New York Times is also on the attack in its latest anti-Chavez crusade. It's been a leading Chavez critic for years, and Simon Romero is its man in Caracas. On November 3, he reported "Lawmakers in Venezuela Approve Expanded Power for Chavez (in a) constitutional overhaul (to) enhance (Chavez's) authority, (allow) him to be reelected indefinitely, and (give) him the power to handpick rulers, to be called vice-presidents, (and) for various new regions to be created in the country....The new amendments would facilitate expropriations of private property (and allow state) security forces to round up citizens (stripped of their) legal protections" if Chavez declares a state of emergency - to make him look like Pakistan's Musharraf when he's mirror opposite.

Romero also quoted Jose Manuel Gonzales, president of Venezuela's Fedecamaras (chamber of commerce), saying "Venezuelan democracy was buried today" and anti-Chavez Roman Catholic church leaders (always allied with elitists) calling the changes "morally unacceptable." Then on November 8, Romero followed with an article titled "Gunmen Attack Opponents of Chavez's Bid to Extend Power" and implied they were pro-Chavez supporters. Again false. Still more came on November 10 headlined "Students Emerge as a Leading Force Against Chavez" in an effort to imply most students oppose him when, in fact, these elements are a minority.

His latest so far is on November 17 titled "Chavez's Vision Shares Wealth and Centers Power" that in fairness shows the President addressing a huge crowd of supporters in Maturin on November 16. But Romero spoiled it by calling his vision "centralized, oil-fueled socialism (with) Chavez (having) significantly enhanced powers." Then he quotes Chavez biographer Alberto Barrera Tyszka who embarrassed himself and Romero saying the President is seizing and redirecting "power through legitimate means (and this) is not a dictatorship but something more complex," the 'tyranny' of popularity." In other words, he's saying democracy is "tyranny." The rest of the article is just as bad with alternating subtle and hammer blow attacks against a popular President's aim to deepen his socially democratic agenda and help his people.

Romero's measured tone outclasses O'Grady's crudeness that's pretty standard fare on the Journal's notorious opinion page. He's much more dangerous, however, with a byline in the influential "newspaper of record" because of the important audience it commands.

One other notable anti-Chavez piece is in the November 26 issue of the magazine calling itself "the capitalist tool" - Forbes. It shows in its one-sided commentary and intolerance of opposing views. The article in question, headlined "Latin Sinkholes," is by right wing economist and long-time flack for empire, Steve Hanke. In it, he aims right at Chavez with outrageous comments like calling him a "negative reformer (who) turned back the clock (and) hails Cuba, the largest open-air prison in the Americas, as his model. His revolution's enemy is the marketplace." He then cites a World Bank report saying "Venezuela is tied with Zimbabwe as this year's champion in smothering economic freedom," and compounds that lie with another whopper.

Point of fact - Venezuela and Argentina have the highest growth rates in the region and are near the top of world rankings in recent years. Following the devastating oil management 2002-03 lockout, Venezuela's economy took off and grew at double digit rates in 2004, 05 and 06 and will grow a likely 8% this year. Hanke, however, says "Venezuela's economic performance under Chavez has been anemic (growing) at an average rate of only 2% per year. In the same article, he aims in similar fashion at Ecuador's Raphael Correa calling him "ruthlessly efficient (for wanting to) pull off a Bolivarian Revolution in Ecuador." Hanke and most others in the dominant media are of one mind and never let facts contradict their opinions. Outliers won't be tolerated even when it's proved their way works best.

There's lots more criticism like this throughout the dominant media along with commentators calling Chavez "a dictator, another Hitler (and) a threat to democracy." Ignoring the rules of imperial management has a price. This type media assault is part of it as a prelude for what often follows - attempted regime change.

Further Venezuela Information Office (VIO) Clarification of Facts on the Ground

On November 15, VIO issued an alert update to dispel media inaccuracies "about Venezuela's constitutional reforms and the student protests" accompanying them. They're listed below:

-- Caracas has a student population of around 200,000; at most 10,000 participated in the largest protest to date, and VIO estimates it was 6000;

-- the major media ignore how the government cooperates with students and made various accommodations to them to be fair to the opposition;

-- Venezuelan police have protected student protesters, and article 68 of the Constitution requires they do it; it affirms the right of all Venezuelans to assemble peacefully;

-- in addition, student protest leaders linked to opposition parties were granted high-level meetings with government officials to present their concerns;

-- on November 1, their student representatives met with directors of the National Electoral Council (CNE) and presented a petition to delay the referendum;

-- on November 7, they again met with National Tribunal of Justice officials and presented the same petition;

-- on November 12, Minister of Interior and Justice Minister, Pedro Carreno, met 20 university presidents to assure them the government respects university autonomy and their students' right to assemble peacefully;

-- VIO reported what really happened at another November 1 protest after students met with CNE officials; some of them then tried to chain themselves to the building while others charged through police lines and injured six officers; in addition, one student had 20 liters of gasoline but never got to use it criminally; after the incident, the CNE president, Tibisay Lucena, issued a public statement expressing his disappointment about this kind of response to the government's good faith efforts; and

-- VIO said students and university presidents from across the nation filed a document with the Supreme Court on November 14 supporting constitutional reform. Chief justice Luisa Estela Morales praised their coming and said the court's doors are open to anyone wanting to give an opinion. The dominant media reported nothing on this. It also ignored the government's 9000 public events throughout the country in past weeks to explain and discuss proposed reforms and that a hotline was installed for comments on them, pro or con.

-- finally, when protests of any kind happen in the US, police usually attack them with tear gas, beatings and mass arrests to crush their democratic spirit and prevent it from being expressed as our Constitution's First and most important amendment guarantees. In Venezuela, the spirit of democracy lives. It never existed in the US, and we want to export our way to everyone and by force if necessary.

Here's a November 15 breaking news example of our way in action. At 8:00AM, 12 FBI and Secret Service agents raided the Liberty Dollar Company's office in Evansville, IN and for the next six hours removed two tons of legal Ron Paul Dollars along with all the gold, silver and platinum at the location. They also took all location files and computers and froze Liberty Dollar's bank accounts in an outrageous police state action against a legitimate business. This move also seems intended to impugn the integrity of a presidential candidate gaining popularity because he defies the bellicose mainstream and wants more people empowerment.

Chavez champions another way and answered his critics at a November 14 Miraflores Presidential Palace press conference where he denounced them for lying about his reform package. He explained his aim is to strengthen Venezuela's independence and transfer power to the people, not increase his own. "For many years in Venezuela," he said, "they weakened the powers of the state as part of the neoliberal imperial weaken the economies of countries to insure domination. While we remained weak, imperialism was strengthened," and he elaborated.

He then continued to stress his most important reform "is the transfer of power to the people" through an explosion of grassroots communal, worker, student and campesino councils, formations of them into regional and national federations, and the formation of "communes (to) constitute the basic nucleus of the socialist state." Earlier Chavez stated that democratizing the economy "is the only way to defeat poverty, to defeat misery and achieve the largest sum of happiness for the people." He's not just saying this. He believes and acts on it, and that's why elitists target him for removal even though he wants equity for everyone, even his critics, and business continues to thrive under his government. But not like in the "good old" days when it was all one-way.

Venezuelan Business is Booming - So Why Complain?

Business in Venezuela is indeed booming, and in 2006 the Financial Times said bankers were "having a party" it was so good. So what's the problem? It's not good enough for corporate interests wanting it all for themselves and nothing for the people the way it used to be pre-Chavez. Unfair? Sure, but in a corporate-dominated world, that's how it is and no outliers are tolerated. Thus Hugo Chavez's dilemma.

Last June, Business Week (BW) magazine captured the mood in an article called "A Love-Hate Relationship with Chavez - Companies are chafing under the fiery socialist. But in some respects, business has never been better." Writer Geri Smith asked: "Just how hard is it to do business in Venezuela" and then exaggerated by saying "hardly a day passes without another change in the rules restricting companies." Hardly so, but what is true is new rules require a more equitable relationship between government and business. They provide more benefits to the people and greater attention to small Venezuelan business and other commercial undertakings like an explosion of cooperatives (100,000 or more) that under neoliberal rules have no chance against the giants.

Nonetheless, the economy under Chavez is booming, and business loves it even while it complains. It's because oil revenues are high, Chavez spends heavily on social benefits, and the poor have seen their incomes more than double since 2004 when all their benefits are included. The result, as BW explains: "Sales of everything from basics" to luxury items "have taken off....and local and foreign companies alike are raking in more money than ever in Venezuela." In addition, bilateral trade has never been higher, but American business complains it's caught in the middle of a Washington - Caracas political struggle.

The article continues to show how all kinds of foreign business is benefitting from cola to cars to computer chips. Yet, it restates the dilemma saying "As Chavez continues his socialist crusade, there are signs of rising discontent," and it's showing up now on the country's streets with the latest confrontation still to be resolved, one way or another.

Events Are Ugly and Coming to A Head

Through the dominant media, Washington and Venezuelan anti-Chavez elements are using constitutional reform as a pretext for what they may have in mind - "to arouse the military to intervene" and oust Chavez, as Petras notes in his article titled "Venezuela: Between Ballots and Bullets." He explains the opposition "rich and privileged (coalition) fear constitutional reforms because they will have to grant a greater share of their (considerable) profits to the working class, lose their monopoly over market transactions to publicly owned firms, and see political power evolve toward local community councils and the executive branch."

Petras is worried and says "class polarization....has reached its most extreme expression" as December 2 approaches: "the remains of the multi-class coalition embracing a minority of the middle class and the great majority of (workers) is disintegrating (and) political defections have increased (including 14) deputies in the National Assembly." Add to them former Chavez Defense Minister, Raul Baduel, who Petras believes may be "an aspirant to head up a US-backed right-wing seizure of power."

The situation is ugly and dangerous, and lots of US money and influence fuels it. Petras puts it this way: "Venezuelan democracy, the Presidency of Hugo Chavez and the great majority of the popular classes face a mortal threat." An alliance between Washington, local oligarchs and elitist supporters of the "right" are committed to ousting Chavez and may feel now is their best chance. Venezuela's social democracy is on the line in the crucial December 2 vote, and the entire region depends on it solidifying and surviving.

Stephen Lendman lives in Chicago and can be reached at

Also visit his blog site at and listen to The Steve Lendman News and Information Hour on Mondays at noon US Central time.

Sunday, November 18, 2007

Denial of Due Process to Muslims Disgraces Us All


By Katherine Hughes 

First published, November 2007, in "Guild Practitioner," Volume 64, No. 2:

“One cannot level one’s moral lance at every evil in the universe. There are just too many of them. But you can do something, and the difference between doing something and doing nothing is everything.” Daniel Berrigan

"We are apt to shut our eyes against a painful truth…. Is this the part of wise men, engaged in a great and arduous struggle for liberty? Are we disposed to be of the number of those, who having eyes, see not, and having ears, hear not..? For my part, whatever anguish of spirit it might cost, I am willing to know the whole truth; to know.. it — now."  Patrick Henry
Since the events of September 11, 2001, the U.S. Government has pursued its “war on terror” on two fronts. The obvious one is the military front, which has taken American soldiers to battle in places like Afghanistan and Iraq; less obvious is the financial front. The government has instituted a strategy of tracking and freezing money internationally as a way to stem the flow of the “terror-dollar” which it sees as the “lifeblood” of terrorist operations.1 

Thomas Naylor, a McGill University professor and author of Satanic Purses: Money, Myth and Misinformation in the War on Terror, accuses the U.S. government of fueling the myth of “coordinated global terror” by providing local groups across the world with an “Al Qa’idah brand name” that gives these groups a global significance they don’t deserve.2 He challenges the idea of “great terror treasuries” and “huge sums of terror-dollars” washing through global financial systems.3 Using the 1993 World Trade Center attack as an example, Naylor shows that enormous sums of money are not required to commit horrendous acts. Materials for this attack, which killed six people and did $500 million in damage, cost only around $400.4 Even the spectacular 9/11 attacks needed a relatively small amount of money: funds for accommodation in cheap motels and airline tickets. What was crucial to the attack was “four committed individuals with some basic knowledge of how to fly, fifteen dupes who were just along for the ride, so to speak, and publicly accessible airline schedules, plus the freak occurrence of airlines actually running on time,”5 not a huge cash reserve.
This notion has been used to justify targeting Muslim charities in the U.S. and since September 11, 2001, six major U.S. Muslim charities and several smaller Muslim charities have been shut down.6 Naylor compares this strategy to someone “furiously throwing lethal punches in the air and hoping there are not too many innocent bystanders, or at least no independent witnesses, in the general vicinity.”7, 8
 In Satanic Purses, he explores the reasons that Islamic charities have suffered this fate. Although bigotry and political opportunism play a significant role, Naylor finds this is not the whole story. The problem is compounded by a profound ignorance of Islamic culture and the Qur’an.
 In many ways, the Qur’an lays out an early blueprint for a welfare state. Prosecuting attorneys and “national security experts” often have no basis for understanding an economic ideology so contrary to the one prevalent in the West; this in turn leads to both misinterpretation and misrepresentation. According to Naylor:
Part of the West’s confusion over Islamic charities arises because the Qur’an supports an economic ideology very different from the canons of savage capitalism so beloved of today’s bond brokers and televangelists. Islamic ethic imposes on Muslims as their primary duty the creating of a just society that treats the poor with respect. It favors equity over economic hierarchy, cooperation over unscrupulous competition, and charitable redistribution over selfish accumulation.9
The first wave of attacks on U.S. Muslim charity came in December 2001 when the government closed down the three largest charities, Holy Land Foundation (HLF), Global Relief Foundation (GRF) and Benevolence International Foundation (BIF), accusing each of supporting terrorism. In each of these cases, the charities’ assets were frozen and their principals imprisoned without bail.10
 In its report “Muslim Charities and the War on Terror,” OMB Watch voices its concerns about the treatment of Muslim charities and the people involved with them, along with the questionable evidence used to shut them down. The closures have resulted in blocking humanitarian assistance to people who desperately need it, denying these charities the right to due process, and holding the individuals associated with their humanitarian work “guilty until proven innocent.”  The report concludes that, despite their expanded investigative powers, the authorities have failed to produce evidence of terror financing by U.S.-based charities.11
The government assault on U.S.-based Muslim charities has left many Muslim communities with some of their most esteemed members behind bars. Associates of charities are often held without bail and subjected to smear campaigns by the government and press long before their cases come anywhere near a court of law.12 They are denied the most basic rights of due process: the right to liberty, to be secure in their persons from unreasonable search and seizure, to a speedy trial by an impartial jury, to be informed of the nature and cause of the accusations, and to be presumed innocent until and unless proven guilty.13 Many Muslims have been virtually forced to accept plea agreements, either because they did not believe they could get fair trials in the post-9/11 climate and the consequences of losing at trial under present draconian federal sentencing laws was too big a gamble to take, or because they were threatened with being declared “enemy combatants” and stripped of their rights under the Geneva Conventions and the U.S. Constitution. 
Those few who chose to go to trial, trusting in the integrity of the U.S. legal system, faced gross impediments to achieving even a measure of justice. In addition to being held without bail, they were bankrupted, denied access to their own records and counsel, and subjected to trials that were not really about what they were ostensibly about.14 Where no link to terrorism could be found, the government prosecuted for routine white-collar crimes and then declared successes in the “war on terror.”15
When Attorney General John Ashcroft announced his resignation in November of 2004, he gave as evidence of success in the war on terror 211 criminal prosecutions, 478 deportations, and $124 million in frozen assets.16 A 2006 publication, “Terrorist Trial Report Card” (NYU School of Law’s Center on Law and Security) lists many of the cases he cited.17 But what Ashcroft neglected to mention, and the Center on Law and Security failed to address, was that almost none of these cases involved any actual terrorism convictions. Indeed, at the time of Ashcroft’s resignation there had been only one bona fide terrorism conviction, that of the British shoe-bomber, Richard Reid.18
Naylor points out that the government is aware of the discrepancy between what people are convicted of and what they are sentenced for:
When reporters queried these oddities, a federal prosecutor responded: “Bona fide terrorism is a matter of semantics. I don’t think you can draw conclusions based on what a person is convicted of.” Indeed. In a further explanation of the inner workings of the justice system, he noted: “We charge them with readily provable offenses … rather than what they might actually have done.”19


That the government is set on a “terrorist” prosecution from the outset in many of these cases is illustrated clearly in a 2003 “Terrorist Financing” paper by Jeff Breinholt, Deputy Chief of the Department of Justice’s Counterterrorism Section.20 Under a section titled, “’clean money’ cases” Breinholt listed not only people who had already signed a plea agreement, but many who had yet to have their days in court. In other words, regardless of the defense strategy, whether plea agreement or trial, the result would be heralded as a “win” for the government in its “War on Terror.”
At the time the article was published, July 2003, Enaam Arnaout, of Benevolence International Foundation (BIF), had been held without bail for more than a year and had already accepted a plea agreement to a charge that had nothing to do with supporting terrorism.21
Others named in the 2003 report, more recently arrested, included: Dr. Rafil Dhafir, of Help the Needy (HTN); Sami Omar Al-Hussayen, associated with the Islamic Assembly of North America (IANA); and Dr. Sami al-Arian, a Palestinian professor from Florida,22 who had been held without bail for four months. They had not accepted plea agreements and none of the cases had come to court.23
Arnaout accepted a plea deal after being held for 16 months of solitary confinement in 23-hour lockdown. He and his lawyer believed this was his best option, given the political climate. Furthermore, going to trial would have been very costly and carried the risk of a 90-year prison term.24 For pleading guilty to a single count of “racketeering conspiracy,” in which he admitted using BIF donations to provide boots, tents, uniforms, and an ambulance to units of the Bosnian army at a time when Muslims in Bosnia were attempting to defend themselves against Serbian atrocities, he received a sentence of more than 11 years – over and above the 16 months he had already spent in solitary confinement.25
 Dr. Rafil Dhafir, founder of the charity Help the Needy, was arrested along with other HTN associates in a high-profile operation on February 26, 2003.26 His charity had a history of collecting donations and sending aid to starving Iraqi civilians during the brutal embargo on that country. The government exerted great pressure on Dhafir, including its refusal to release HTN money to pay for wheelchairs for handicapped Iraqis, to persuade him to accept a plea bargain.27 Despite all the pressure and the possibility of a 250-year prison sentence, Dhafir chose to go to trial. He was subjected to a show trial that lasted four months and resulted in his conviction for conspiring to violate the embargo on trade with Iraq and for “money laundering” (forwarding the charitable contributions), as well as multiple counts of submitting inaccurate Medicare billings and of “tax evasion” (deducting his own generous contributions to HTN). Any mention that the government had prosecuted on these charges only after trying unsuccessfully to tie him to terrorist groups was strictly forbidden. After being held without bail for 31 months, he was sentenced to 22 years in prison. His appeal to the Second Circuit is pending.
 Writing about Dhafir’s case and the money-laundering charges in Satanic Purses, Professor Naylor says: “Yet all the money he had sent went not in cash but first by check to a local bank, then by cashiers’ check to Jordan, where it was used to buy emergency supplies. Not only was it completely open, but Dhafir kept a careful ledger, which the government seized and used as evidence. This is strange behavior for a dedicated money-launderer.”28
 Meanwhile, Sami Omar Al-Hussayen, a graduate student from Saudi Arabia, was arrested on an unrelated matter in Boise, Idaho, on February 26, 2003, the same morning that associates of the Help the Needy (HTN) charity were arrested in Syracuse, New York. Yet his name appears on the same press release in which the DOJ announced “funders of terrorism” had been arrested.29 After being held without bail under 23-hour lockdown for 17 months, Al-Hussayen was cleared of all charges at trial – which focused on his maintenance of the Islamic Assembly of North America (IANA)30 website -- and deported to Saudi Arabia on July 21, 2004.31
 Regarding the case of Sami Omar Al-Hussayen, Naylor writes,
      â€œOn the surface that might seem another embarrassing failure [for the government].  But it succeeded in demonstrating to Muslim males that the Justice Department had the power to destroy lives.  Prior to his legal vindication, al-Hussayen’s wife and children were deported; his friends were scared off; his reputation was ruined; and of course, he had spent eighteen months under lock and key.  Ultimately the government agreed to drop the immigration charge, too, if he in turn agreed not to appeal his deportation order.”32
Professor Sami al-Arian, a Palestinian, was arrested on February 20, 2003, and held without bail for 28 months prior to a 6-month trial that included 80 government witnesses. The verdict, on December 7, 2005, was “not guilty” on the most serious charges of abetting terrorism, and the jury was hung on other lesser charges because the judge interrupted deliberations.33 The government refused to release him. Last year, believing it was the only way he could secure his release, Al-Arian accepted a plea agreement that included a few extra months in jail and his deportation upon release. Despite this agreement he was given a maximum 57-month sentence. He is currently being held in contempt of court for refusal to testify in front of a Grand Jury. While he is held on “contempt” charges his original criminal sentence is not running.34
Unfortunately these four cases are not unique; rather, they are just a sampling of how these prosecutions – even when unsuccessful – have wrecked so many people’s lives.35

The assault on Muslim charities and their principals has had enormous detrimental psychological and financial impact on Muslim communities. Not only do many Muslims live in fear of a knock at the door, but their communities are also burdened with the financial support of those families with breadwinners in prison and with colossal legal bills for defending their members against a government with unlimited finances, a government unwilling to let facts get in the way of its pursuit of success stories in the “war on terror.”36
Dr. Dhafir, mentioned above, is a founding member of the mosque in Syracuse, New York, and an esteemed member of that community. An Iraqi-born oncologist, he had been a U.S. citizen for almost 30 years when he was indicted. He and his American wife were very active in the local community and Dhafir often spoke at events and on local TV and radio about cancer care. In the early 1990s, in direct response to the humanitarian catastrophe created by the U.S. and U.K.-sponsored UN sanctions on Iraq, he founded the charity HTN and for 13 years openly sent food and aid to starving civilians who were the sanctions’ victims.37,38
A devout man, he devoted much of his life to prayer and charity and, according to the government, donated half his income to charity each year. In his oncology practice he treated those without medical insurance for free, paying for expensive chemotherapy medicine out of his own pocket and telling patients to pay whatever they could whenever they could.39,
      As he was arrested on his way to work, just weeks before the U.S. invasion of Iraq,40 other agents broke down the door of his home and held guns to Mrs. Dhafir’s head. Both Ayman Jarwan, Executive Director of HTN, and Osameh Al-Wahaidy, were arrested the same morning, agents having awakened their families, including young children.41 At the same time, between the hours of 6:00 and 10:00 a.m., 150 Muslim families who had donated to the HTN were interrogated.42, 43 It was later that same day that Attorney General Ashcroft made his announcement about “funders of terrorism” having been arrested.44
In a statement handed to the press on the day of his sentencing, Dhafir said:
What was the result of Feb 26, 2003 besides imprisoning of innocent people? Scores of innocent elderly American cancer patients died needlessly, innumerable tens of thousands of Iraqi needy (children, women and men) died, and more than that suffered malnutrition and the humiliation of poverty. An entire segment of our society here was treated as criminals, intimidated, interrogated and threatened. Never in the history of the Islamic Society of Central New York had we had so many cases of depression and suicide that the mosque had to engage the services of a psychiatrist to help out. The dream of this Republic being a sanctuary for the oppressed was shattered on that day and a new sad reality was erected in its place.45
 Although not under arrest, Mrs. Dhafir spent much of the day in her nightclothes and was not allowed to go to the bathroom without an escort. Meanwhile, approximately 85 agents collected “evidence” at the Dhafir home.46 
After his arrest, Al-Wahaidy was taken to the Justice Center in Syracuse and spent all day in his pajamas handcuffed to a wall bar.47 
 Jarwan was held without bail for two weeks and then released when the judge granted him bail. Prosecutors tried to deny bail to Jarwan because he had a degree in nuclear physics and suggested that he was capable of making a “dirty bomb,” but the judge, fortunately, agreed with Jarwan’s lawyer that this was a ludicrous suggestion.48
The government did eventually press a charge against Mrs. Dhafir and she accepted a plea bargain, pleading guilty to lying to a government agent because she had said in a claim for Medicare reimbursement that her husband was physically present in the office of his oncology practice when he was not.49 She received two years’ probation and a $10,000 fine. In addition she had to pay Medicare $62,000 and do 150 hours of community service.
Dr. Dhafir’s associate Osameh Al-Wahaidy, a math instructor at Oswego State University, was initially told that there was no problem with his job because “he hadn’t been arrested on a sexual harassment charge.” The following day he was fired. The judge did not allow him to return to work at Auburn Prison, where he had a position as imam; yet the prison guard union supported him and he was put on paid leave and thus could continue to support his family.
Al-Wahaidy, like all the other HTN defendants except for Dr. Dhafir, accepted a plea bargain.50 He pled guilty to conspiracy to violate the International Economic Emergency Powers Act (IEEPA, commonly known as the Iraq sanctions) but reserved the right to challenge the legality of the Presidential Proclamation imposing sanctions against Iraq. 51 Two co-workers from Auburn Prison testified on his behalf at his sentencing and he received two years’ probation, a $5,000 fine and 100 hours of community service. On appeal, the Second Circuit upheld the validity of the Proclamation and thus of Al-Wahaidy’s sentence.
Ayman Jarwan’s attorney, Jim McGraw, advised him to accept a plea bargain; although he was “facing substantial prison time for something he was not guilty of,” the anti-Muslim climate made a fair trial unlikely.52 Jarwan pled guilty to violation of IEEPA and cooperated fully with the government, traveling the country to educate the FBI and other government agencies about Muslim culture. Yet he was unexpectedly sentenced to 18 months, and McGraw felt that the government had gone back on its part of the bargain.53 Jarwan’s wife and children returned to Jordan just after his sentencing; after serving 15 months, Jarwan was released on December 22, 2006. He was then held in county jail in immigration custody until February 2007 when he was finally deported to Jordan, where he now lives with his family. Apart from Dhafir, Jarwan was the only other HTN defendant to get prison time. 
As a consequence of Dr. Dhafir’s refusal to accept a plea bargain the government piled on charges, and when his case came to trial 19 months after his arrest, he faced a 60-count indictment of white-collar crime charges. The government employed many tools to impair his ability to defend himself. Despite the facts that the Muslim community in Syracuse put up $2.3 million in bond money and that Dhafir offered to wear an electronic tag, he was never granted bail. His assets were frozen, making it more difficult to secure defense counsel, 54 and while being held, he was denied access to both his own records55 and, at one point, to his counsel.56
Just prior to the start of the trial, New York Governor Pataki – who of course had no official interest in the matter -- denounced Dhafir’s activities as a “money laundering case to help terrorist organizations.”57 And while state and national level officials smeared Dhafir in the press, local prosecutors successfully petitioned Judge Norman Mordue, the presiding judge who had denied Dhafir bail on four occasions, to prevent the accusation of terrorism from being part of the trial. This ruling turned into a brick wall that the defense kept hitting; throughout the trial the government could hint at more serious charges but the defense was never allowed to address them.58 
Although he was not convicted of any terrorism-related crime, the government continues to tout Dhafir’s case as yet another success in its “war on terror.”59 In the sentencing phase, where the rules of evidence do not apply, he was labeled a “national security threat” because he had violated IEEPA,60 and a government pre-sentencing memorandum linked him with people who, although at the time were allies of the U.S., later became enemies: 
In the 1980s Rafil Dhafir traveled repeatedly to Pakistan where he worked as a volunteer doctor in the mujihadin refugee camps on the border of Afghanistan. Photographs and videotapes seized from his home show that, during that time, he met and interviewed Abdalla Azzam, the founder of Al Queda, and Gulbuddin Hekmatyar, the future Taliban Prime Minister of Afghanistan. At the same time, Rafil became more involved in Salafism in the United States, becoming the Vice President of the Islamic Assembly of North America (IANA), which styled itself as an umbrella organization for Salafists in North America.61 
The government neglected to mention that the reason Dhafir went repeatedly to Pakistan during the 1980s was as a volunteer for Doctors Without Borders, although it did acknowledge in a footnote that at the time Dhafir met these people, it was “U.S. policy to support the mujihadin who were engaged in jihad against the Soviet Union.” 62
Barrie Gewanter, Executive Director the American Civil Liberties Union, Central New York Chapter, issued a statement on Dhafir’s case the day after he was sentenced. She expressed deep concern about selective prosecution, questioning whether Muslims in the U.S. could truly receive a fair trial. She reiterated an ACLU concern about impediments that denial of bail placed on the legal defense and criticized his unequal treatment under the law. She stated that Dhafir “was presumed guilty long before the trial began, and of much more than indicated in the charges against him.” The statement continued:
The federal government has repeatedly tried to pitch this as a case with national security implications. Both the US Attorney General and the NY State Governor referred publicly to this case in the context of a terrorism prosecution. However, federal prosecutors never filed any charges related to terrorism nor did they prove any link to terrorists. Instead, this turned out to be a case of white-collar crime; the trial process was filled with descriptions of financial statements and details of financial transactions. The government should not have engaged in inflammatory publicity before the trial, nor introduced highly prejudicial allegations of terrorist links through the back door of sentencing.63
Within weeks of Dhafir’s sentencing Jeff Breinholt, author of the article on “Terrorist Financing,” mentioned supra, and Greg West, one of the prosecutors in the HTN case, presented a lecture to faculty and students at Syracuse University Law School entitled “A Law Enforcement Approach to Terrorist (sic) Financing,” in which they talked about this case.64
Breinholt asserted that Dhafir’s case had been “under-prosecuted.”65 In the context of the lecture’s title, his implication was clear. Although prosecuted for “money laundering” of voluntary charitable contributions, tax evasion, and Medicare fraud, Breinholt insinuated Dhafir’s real offense was money laundering for terrorist organizations. He compared the government’s strategy towards Muslim charities with its prosecution of the early 20th Century Mafia boss Al Capone for tax evasion when everyone knew that was not his “real” crime, that he was guilty of much more serious things, although those could not be easily proven. 
 Addressing this shopworn comparison in Satanic Purses, Naylor suggests that: “A better analogy would be if the U.S. decided to curb bootlegging in the 1920s by charging everyone with an Italian surname with vagrancy, then locking them up on Ellis Island.”66
 Dhafir was recently sent to the federal “correctional” institution in Terre Haute, Indiana and is being held in a new program there, the Communications Management Unit (CMU). Most of his fellow CMU residents are other Arab and Muslim prisoners who were not convicted of any serious terrorism offense.67 In a recent letter, Dhafir wrote about the nationally coordinated plan, ordered by the Attorney General himself, to put all these Muslims/Arabs in one place.68 Prisoners are held completely segregated from the general population and all communication is heavily monitored. All ingoing and outgoing mail is screened and inmates are allowed one 15-minute phone call per week, in English, and one four-hour non-contact visit a month.69 (Ordinarily, medium-security federal prisoners have extensive contact visits, regular access to the mails, and 300 minutes each month for telephone use.)

Today in the U.S., Muslims and Arabs are being subjected to an ad hoc redefinition and contraction of their basic freedoms.71 It is obvious that Dhafir and the others mentioned in Breinholt’s “Terrorist Financing” paper were not afforded the protections the Bill of Rights guarantees to all, and yet there is little outcry against, or public debate about, such blatant aberrations. What happened in Nazi Germany and Europe during the 1930s did not happen overnight; there was a gradual erosion of freedoms from the late 1920s through to 1945. Afterwards, people looked back in horror at what had been done in their name.
 In his new book Nemesis: The Last Days of the American Republic, Chalmers Johnson decries the lack of political will to confront the grave threats facing our democratic republic. He likens the United States of today to a cruise ship on the Niagara River: upstream from the falls a few people on board have begun to detect a slight hiss in the background, and notice a faint haze of mist in the air and on their glasses, and a slightly faster current in the river, but none has realized that it’s almost too late to head for the shore.72 Whether we are a society willing to struggle to regain the protection of our freedoms and the equitable application of the law remains to be seen.
The government still hounds Dhafir; it recently demanded reconsideration of an appeals court order allowing Dhafir copies of his trial transcripts at the expense of the court.73 Completely unverifiable insinuations of personal wealth persuaded the court to place some $15,000 in additional costs on the defense. As a result, the Dr. Dhafir Support Committee was forced to raise these additional funds, at risk of seeing the appeal dismissed before it could even be briefed. Fundraising continues in order to repay the most dedicated donors who borrowed most of the amount needed to pay the court reporter and for the anticipated high costs of printing the brief and appendix. Dr. Dhafir is now represented by nationally respected criminal appeals attorneys Barry Boss, of Cozen & O’Connor in Washington, DC, and Peter Goldberger, who is also a longtime member of the NLG Military Law Task Force.
If you care about the Constitution’s guarantee of civil liberties, please help by sending a donation in any amount to: Dr. Dhafir Appeal Fund, c/o Peter Goldberger, Esq., Attorney at Law, 50 Rittenhouse Place, Ardmore, PA 19003. Make checks payable to “Dr. Dhafir Appeal Fund.” Please note that donations are not tax deductible.
For more information go to:
Katherine Hughes is a student at Syracuse University. She attended almost every day of the seventeen-week Dhafir trial, taking notes for five hours each day. For the last three years she has tried to educate people about the Help the Needy case and the plight of Islamic charities in the U.S.

1 Thomas Naylor, “Satanic Purses: Money, Myth and Misinformation in the War on Terror” (hereafter Naylor, Purses), McGill-Queens University Press, 2006, p.5

2 Naylor, Purses, p.6

3 Naylor, Purses, p. 337.

4 Naylor, Purses, p. 339.

5 Naylor, Purses, p.338.

6 L. Al-Marayati, “American Muslim Charities: Easy Targets in the War on Terror,” presented on December 3, 2004 at Pace University Law Symposium, Anti-Terrorist Financing Guidelines: The Impact on International Philanthropy (hereafter Al-Marayati, Easy Targets):

7 Naylor, Purses, pp. 8 & 337

8 Naylor, Purses, p. 168

9 L. Al-Marayati and B. Abdelkarim, “The Crime of Being a Muslim Charity” (hereafter Al-Marayati, Crime), Washington Post, March 12, 2006:

10 OMB Watch, “Muslim Charities and the War on Terror” (hereafter OMB Watch Report), revised March 2006:

11 Naylor, Purses, p. 339; OMB Watch Report

12 “The Bill of Rights Defense Committee (BORDC) is creating a Human Rights Abuse Database with the stories of hundreds of individuals whose lives have been harshly affected or ruined entirely by U.S. government policies since 9/11.” See information on this Database in the Bill of Rights Defense Committee newsletter, November 2006:

13 Naylor, Purses, p.339 and The Bill of Rights:

14 See Michael Powell’s Washington Post article where he describes the government’s approach to this case as “shadow boxing” for a description of the arrest. “High-Profile N.Y. Suspect Goes on Trial: Arrest Was Called Part of War on Terrorism, but Doctor Faces Other Charges” (hereafter Powell, Washington Post), The Washington Post, October 19, 2004:

15 Dr. Rafil Dhafir, an upstate New York oncologist, was charged for white-collar crimes but sentenced to 22 years as a national security threat.

16 Naylor, Purses, p. 332

17 The Center on Law and Security at the NYU School of Law “Terrorist Trial Report Card: US Edition,” September 11, 2001 – September 11, 2006:

18 Naylor, Purses, p. 332

19 Naylor, Purses, p.332

20 Jeff Breinholt, “Terrorist Financing,” U.S. Attorney Bulletin, July 2003, Volume 51, number 4 (hereafter Breinholt);

21 To one count of racketeering conspiracy:

22 Al-Arian’s involvement with charity organizations was prior to 1992. Listen to Amy Goodman’s interview of Al-Arian from prison. Democracy Now, February 2007:

23 Dhafir’s case went to court in October 2004; Al-Arian’s case went to court in July 2005.

24 All other HTN defendants accepted plea bargains for the same reason. A video interview with Ayman Jarwan’s lawyer, Jim McGraw, is available (15 minutes in two parts): PART 1: 
(Hereafter, McGraw Video.)

25 A statement issued after the plea agreement was made stated, “The plea agreement entered into today is an acknowledgment by the government that neither Mr. Arnaout nor BIF ever provided any support to al Qaeda, Osama bin Laden, or any other terrorist organization.  The agreement further demonstrates that Mr. Arnaout and BIF never supported any activity that was contrary to the interests of the United States.” Statement of Enaam Arnaout:

26 For a description of the arrest see Powell, Washington Post.

27 HTN’s lawyer Scott Porter offered a deal whereby all of HTN’s assets would go to buy wheelchairs (the vendor offered two for one price) for handicapped Iraqis. The prosecution blocked this because Dhafir would not enter a guilty plea. The money was dispersed to other charities unrelated to the donors’ intentions after Dhafir was sentenced. See

28 Naylor, Purses, p. 229. 

29 Powell, Washington Post.


31 Al-Hassayen’s defense lawyer, David Nevin, said he asked a pool of about 150 potential jurors to raise their hands if they had ever known a Muslim. Only about four or five raised their hands and they were all vetoed as jurors by the prosecution. Nevin compared the trial that followed to the “Far Side” cartoon in which a dog faces a jury of cats. From Amy Waldman’s “Prophetic Justice:” Atlantic Monthly, October Issue: (hereafter Waldman, Prophetic).

32 Naylor, Purses, p.333. Here Naylor also contrasts treatment of Muslim males with a case involving a non-Muslim male.

33 Listen to a February 2005 interview of Professor Sami Al-Arian by Amy Goodman of Democracy Now: Al-Arian spoke by telephone from prison.

34 Peter Erlinder, “The Ordeal of Dr. Sami Al-Arian: Despite Acquittal on Terrorism Charges, No Prospect of Release for Dr. Al-Arian,” Washington Report On Middle East Affairs, April 2007:

35 See this author’s correspondence with John O’Brien, the local reporter on the Dhafir trial:

36 It is estimated that the prosecution cost of Sami Al-Arian’s case is somewhere in the region of $80 million:

37 See A. Arnove, “Iraq Under Siege: The Deadly Impact of Sanctions and War,” South End Press, 2002 and R. Clark, “The Impact of Sanctions on Iraq: The Children Are Dying,” a report by the UN Food and Agriculture Organization. World View Forum, Inc. 1996.

38 At trial the defense showed that a 1990 New York Times article had mentioned humanitarian exception to the sanctions. Susan Hutner of the Office of Foreign Assets Control said in her testimony that mosques and Iraqis were not targeted for education about the sanctions, although she personally gave lectures to members of the oil and banking industries. From this author’s witness of the proceedings. (Hereafter, Hughes Witness.)

39 See Kristen Hinman, “The Iraqi Doctor: Patients Revere Him, the Government Wants to Put Him Away:” Hinman’s grandmother was a patient of Dhafir.

40 This was part of a government operation ahead of the Iraq war. Code named “Imminent Horizon,” its stated purpose was to “disrupt and rattle” potential terrorist operations ahead of the invasion of Iraq. Reported by ABC news March 5, 2003, see news

41 Hughes Witness. A detailed description of the arrests can be found in court transcripts. 

42 See R. Gadoua, “Up to 150 Questioned; Doctor Is Denied Bail; Muslims Afraid to Speak Out Publicly,” The Post-Standard (Syracuse, NY), March 1, 2003, available here: and McGraw Video

43 The ACLU-CNY expressed concerns about how the interrogations had been handled among other questions, families were asked how often they prayed and whether they celebrated Christmas: At one meeting I attended, a man recounted that the government had gone back 20 years in his bank records because he had donated $150 to HTN.

44 See the government press release from that day:

45 Dr. Dhafir’s sentencing statement:, p. 36.

46 Hughes Witness. 

47 Hughes Witness.

48 Hughes Witness. Fuller descriptions of the arrests of Jarwan and Al-Wahaidy are available in court transcripts. 

49 The whole Medicare part of the case, 25 counts, revolved around the “incident to” rule, which decided how billing should be handled “incident to” the doctor’s treatment. For coverage of this part of the trial see, Katherine Hughes, “Dr. Dhafir’s trial concluded today, Wednesday, January 26, 2005:”

50 Other defendants in the case include William Hatfield, Dhafir’s accountant and Ahmed Yusef Ali, head of Somali Relief Network, the charity that had shared its tax-exempt status with HTN. On the day of the arrests government agents went to Hatfield’s office in Oneida, New York, blocked the street at both ends and entered the office where he and his secretary worked. He was told that it would be better for him if he did not call a lawyer but cooperated with government agents. Hatfield accepted a plea agreement, pleading guilty to helping Dhafir file a false statement to the IRS; he received 2 years probation, a $15,000 fine, and 150 hours community service. 
Ahmed Ali accepted a plea agreement and pleaded guilty to impeding IRS collection; he received 2 years probation and a $10,000 fine. Two others arrested on the morning of February 26, 2003 are former HTN associate, Walid Smari, of Idaho, and Danya Wellmon, Dhafir’s laboratory technician at his medical practice. Both accepted immunity in exchange for their testimony at Dhafir’s trial. Jean Karp, a former Catholic nun and Dhafir’s nurse for many years, had left Dhafir’s practice to start a free clinic for the poor. She was grandfathered into a new Medicare program and received her own Medicare number that meant she could bill Medicare directly. She was not charged with any crime by the government, but when Dhafir was arrested her Medicare number was taken from her; as a consequence the free clinic closed. She had no idea why it had been taken and it had not been reinstated when she testified at Dhafir’s trial.

51 See a New York Times article mentioned in the cross testimony of Susan Hutner, the Office of Foreign Asset Control (OFAC), which the defense cited as an example of information suggesting that humanitarian aid was exempt from the sanctions on Iraq. P. Lewis, “The Iraqi Invasion; U.N. Expected to Approve Iraq and Kuwait Trade Ban,” New York Times, August 6th, 1990. Hutner stated that in an effort to educate the public, OFAC had contacted the press, the banking and oil industries and that she had given presentations to these industries. OFAC did not notify mosques and Hutner could not remember if she had taken any calls from mosques or Muslim charities. Susan Hutner’s testimony O3-CR-64, volume XII, filed on January, 11, 2005. Executive order 13224, issued on September 23, 2001, changed the guidelines for humanitarian aid. For a more detailed description of the effects of these new regulations, see Al-Marayati, Easy Targets.

52 Mike McAndrew “Fund-Raiser for Iraq Now Helps Iranians: Man Involved in Help the Needy Case Urges People to Aid Earthquake Victims,” Syracuse Post Standard,

53 McGraw Video.

54 The government presented its case in minute detail, spending days and days following checks from bank to bank, followed by days and days of people from Dhafir’s office verifying their signatures on Medicare forms. Because Dhafir had been bankrupted in the course of seeking justice, the defense was able to call one witness for 15 minutes. The defense lawyers felt that they had successfully defended the case using government witnesses. Having sat through almost all of the 17-week trial, I agree and do not understand the jury verdict. At the very least, the defense gave cause for reasonable doubt on each of the charges. There was a core group of about 12 court watchers, several of whom attended almost every day of the trial, who also felt the defense had successfully defended the case.

55 Dhafir was charged with only white-collar crime. In his sentencing statement, he said, “My computers were confiscated, my documents were seized, my bank records hid from me, my personal library was ransacked; books which have nothing to do with the allegations were taken. To this date I am denied to see for myself what was actually taken so that I can retrieve evidences that will refute all the allegations beyond the shadow of the doubt:”

56 See ACLU-CNY Chapter Statement on Dhafir Case, 10/28/05:

57 See Naylor, Purses, p. 229

58 Hughes, Witness.

59 Department of Justice Examples of Terrorism Convictions Since Sept. 11, 2001:

60 See J. Van Bergen, “How Government Forfeitures are Shutting Down U.S.-Based Muslim Charities: Going After Terrorism Financiers Is the Right Strategy, But the Law Needs Reform.” Findlaw, May 1, 2006: She discusses the fact that many forfeiture laws were reformed in 2000 because they have always been constitutionally and ethically problematic, but this was not the case with IEEPA.

61 Sentencing Memorandum Of The United States. Criminal Action No. 03-CR-64 (NAM), p.3 (Hereafter, Sentencing Memo.) That Dr. Dhafir followed the Salafi tradition did not play any part in the trial. However, during the proceedings the government did made the jury aware that Osama bin Laden was also a Salafi.

62 Sentencing Memorandum, p.3

63 To read the full statement go to, ACLU-CNY Chapter Statement on Dhafir Case, 10/28/05:

64 This author attended the lecture. The other two Help the Needy prosecutor’s, Michael Olmsted and Steve Green, also attended.

65 In July 2007, Jeff Breinholt joined the International Assessment Strategy Center (IASC) as a Senior Fellow and Director of National Security Law for a one-year assignment from the Department of Justice, National Security Division. Until June 2007, he served as Deputy Chief of the Counterterrorism Section at the U.S. Department of Justice:

66 Naylor, Purses, p. 333

67 J. Van Bergen, “Documents show new secretive US prison program isolating Muslim, Middle Eastern prisoners,” 

68 Prisoners across the country were awakened at 7:00 a.m. on December 7, held in the “hole” for two days, and then transported to Terre Haute, Indiana. Rafil Dhafir, letter from prison, written between December 17, 2006 and January 18, 2007: 

69 Id. Government documentation
It is likely that the program as it now stands grew out of the program mentioned here in a “Coalition Letter to Bureau of Prisons Re: Suppression of Prisoner Contacts,” See also D. Eggen, Washington Post, February 25, 2007, “Facility Holding Terrorism Inmates Limits Communication:”

70 C. Johnson, Nemesis: The Last Days of the American Republic, Metropolitan Books (2007), p.17. (Hereafter, Johnson, Nemesis). Johnson says, “It is not clear who first spoke these immortal words—Patrick Henry, Thomas Jefferson, or the anti-slavery abolitionist Wendell Philips—but during the Cold War and its aftermath, Americans were not particularly vigilant when it came to excessive concentration of power in the presidency and its appendages, and we are now paying a very high price for that.”

71 A. Waldman, “Prophetic Justice,” The Atlantic Monthly, October 2006: p.13

72 Johnson, Nemesis, p.13

73 At the same time government lawyers challenged the appeal court decision, they put a lien against the Dhafir family home so, even if they wanted to, the Dhafir’s could not put up their house as a guarantee for a loan against money for transcripts.