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Clintonians Flock With Vultures Over Argentina July 24, 2014

Posted by rogerhollander in Africa, Argentina, Congo, Economic Crisis, Latin America, Peru.
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Roger’s note: I confess to an intense dislike of the Clintons and their retinue.  Whereas right wing ideologues and bigots make no secret of where they stand, the Clinton crowd pose as progressives as they and their close friends and supporters become millionaires whilst enacting and promoting policies that are damaging to the constituencies they claim to represent.  From Bill the president we had drastic welfare reductions camouflaged as “reforms,” and the deregulation that led to the 2008 economic crisis that resulted in thousands losing their homes.  From Hillary the Secretary of State we had super hawk foreign policy, a continuation of the Monroe Doctrine in Latin America, and support for military coup d’etat in Honduras, Egypt and now the Ukraine —  all in the service of US corporate and geopolitical interests.  A pox on their house.

 

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By OpEdNews Op Eds 7/24/2014 at 15:16:53

It is no surprise that right-wing Republican and hedge fund billionaire Paul Singer should be trying to wring hundreds of millions of dollars out of Argentina for a debt that Buenos Aires doesn’t really owe him. He screwed tens of millions of dollars out of poverty-stricken Peru and the Republic of Congo using the same financial sleight of hand. What may surprise people, however, is that key leaders in the administration of former President Bill Clinton are helping him do it.

Singer, who owns Elliot Management, a $17 billion hedge fund, is the leading “vulture investor” — a financial speculator who buys up the bonds of debt strapped nations for pennies on the dollar and then demands payment in full. When Argentina defaulted on its foreign debt in 2001, Singer moved in and bought up $48 million in bonds. He is now demanding that those bonds be paid at full-face value — $1.5 billion — plus interest and fees. It is a move that could derail Argentina’s long climb back into solvency, as well as undermine debt settlements worldwide.

A recent decision by federal District Judge Thomas Griesa in Manhattan may not only force Argentina to pay the vultures, it could unravel a 2006 debt deal between Buenos Aires and other creditors. Under the highly controversial principle of “pari passu” (“equal ranking among creditors”), if the vultures are compensated, so must all the other creditors, even those who settled back in 2006. That bill could reach $15 billion. Given that Argentina has only about $28 billion in foreign reserves, the tab could send Buenos Aires into a recession or force the country into bankruptcy.

The “sleight of hand” involves the fact that the countries the vultures prey on are not really in debt to creditors such as Singer and Eric Hermann of FH International Asset Management LLC. The hedge funds look for distressed countries, then buy their debt at bargain basement prices and sit on it. In the meantime, other creditors cut a deal to take a reduced payment on their bonds, which in turn helps improve the debtor’s economy and allows it to emerge from default.

That’s when the vultures sue, threatening to shut down outside aid programs, seize assets and freeze debtor nations out of international finance if they don’t pay up. Recent examples involving Singer include the Republic of Congo being forced to pay him $90 million on a $10 million investment. Singer’s investment of $48 million in Argentina’s debt would net him a 1,608 percent profit if Buenos Aires pays in full. Peru was similarly plundered.

It is more than dollars and cents at stake in all this. As journalist Greg Palast points out, “In Congo-Brazzaville [the capital of the Republic of Congo] last year, one-fourth of all deaths of children under five were caused by malnutrition.” That $90 million might have made a difference.

Singer’s rap sheet is consistent with hard-nosed vulture tactics. He is a leading Republican fundraiser, and a member — along with former Vice President Dick Cheney and Iraq War designer Richard Perle — of the right-wing Jewish Institute for National Security Affairs. He helped bankroll Swift Boat Veterans for Truth and is a bitter critic of “unpayable” social welfare programs, including Social Security, Medicare and Medicaid.

But the people who head up the main lobbying organization behind Singer’s current campaign, the American Task Force Argentina (ATFA), sit on the high councils of the Democratic Party and would likely be part of any Hillary Clinton administration.

The task force is essentially a front for several vulture funds, conservative and libertarian business groups, and agricultural organizations, like the U.S. Cattlemen’s Association, which would like to damage Argentina’s cattle export business. And its executive director is Robert Raben, former counsel for liberal Congressman Barney Frank, Democratic counsel for the House Subcommittee on the Constitution and assistant attorney general in the Clinton administration.

ATFA’s two co-chairs are Clinton’s former undersecretary of commerce, Robert Shapiro, and Clinton appointee to the United Nations Nancy Soderberg. Shapiro was an adviser to Bill Clinton’s 1992 presidential campaign and a senior adviser to Al Gore’s 2000 run for the White House. Soderberg, who served as a senior foreign policy adviser to Sen. Edward Kennedy, was also a member of Clinton’s National Security Council and an alternative representative to the U.N. with the title of ambassador. She is currently a Democratic Party activist in Florida and a member of the Council on Foreign Relations.

Raben, Soderberg and Shapiro have written numerous opinion pieces on Argentina using their Clinton administration credentials and, depending on the publication, have not always disclosed their lobbying ties. The three snookered the progressive Huffington Post into running opinion pieces until journalists Christina Wilkie and Ryan Grim uncovered their ties to ATFA. HuffPo subsequently removed the articles from its website.

Because of the huge debt burdens borne by nations from Latin America to Europe, the Griesa decision has opened up a Pandora’s box of trouble. A number of financial institutions and countries — including the International Monetary Fund and organizations representing 133 nations — have condemned the vultures or filed amici curiae briefs on behalf of Argentina, fearing that the decision could chill future debt negotiations and threaten economies trying to work themselves out of the red.

Given the ongoing hangover from the 2007-08 international meltdown, there is a lot of vulture food out there.

The key role being played by important Democratic Party activists in this cruel business — for there is no other word to describe taking money from countries struggling to emerge from debt and recession — may seem contradictory. And yet it was the Clinton administration that deregulated national and international finance and fought so hard for policies that ended up impoverishing some of the countries the vultures are now preying on.

In the 1990s, the Clinton administration pushed Argentina to privatize its state-owned industries, tie its currency to the dollar and institute the “Washington Consensus” of combining tax cuts with austerity. The result was economic disaster. From 1998 to 2002 Argentina’s economy shrank 20 percent and half the population fell below the poverty line.

Buenos Aires defaulted on its $100 billion debt in order to staunch the hemorrhage and pull the country out of an economic death spiral. In 2006, it negotiated a deal with 92.4 percent of its debt holders to pay 30 and 50 cents on the dollar. It was that deal that drew the vultures, which swooped in, scooped up some of the debt and then refused to accept the settlement.

The 2001 default blocked Argentina from tapping into international finance to tide it over until the economy recovered, but policies to end austerity and increase government spending eventually did the job. The economy grew at an average rate of 6 percent from 2002 to 2012 and Argentina paid off the IMF in 2006 and the Paris Club countries (representing the world’s 20 largest economies) in 2014.

But the vultures now threaten to undo much of this.

The Obama administration has come down on the side of Argentina because it is worried that financial institutions will shift their business to London if “pari passu” is allowed to stand. Hillary Clinton, however, has been quiet on the subject of international debt and Argentina. Given that her husband’s administration helped push Argentina off the cliff, that is hardly a surprise.

What is disquieting is that Clinton and people such as Raben, Shapiro and Soderberg have an economic philosophy that many times marches in step with that of Wall Street.

According to The New York Times, the financial sector was the second largest contributor to Hillary Clinton’s 2008 run for the White House. She is also close to the center-right Third Way think tank that advocates cutting Social Security and tends to be allergic to financial regulations. It is hard to imagine a Hillary Clinton administration stacked with Wall Street insiders and hedge fund lobbyists coming down on the vultures.

Clinton’s most recent comment on the debt crisis was to complain that she and Bill were “dead broke” when they left the White House in 2001, rhetorically putting herself in the same boat as tens of millions of indebted people in the U.S. and around the world. “Dead broke” in Chappaqua, N.Y., is not quite the same as “dead broke” in Brazzaville, or in the growing number of homeless encampments around the U.S.

Argentina is currently negotiating a compromise with the vultures, who have Buenos Aires over a barrel. The country desperately needs outside financing to exploit its huge Vaca Muerta gas reserves and to underwrite agricultural exports. “These hedge funds are equipped with an instrument [the New York court decision] that forces struggling countries into submission,” saysEric LeCompte, executive director of the anti-poverty religious organization Jubilee USA Network.

Countries are wising up to the hedge funds. Many of them now require that a debt agreement include a collective action clause (CAC), in which a majority or two-thirds vote by creditors is binding on all and would block a handful of vultures from tying up agreements. Because they signal economic fragility however, the CACs will string out negotiations and may result in higher interest rates.

In the meantime, the vultures have backed Buenos Aires against the wall. At a minimum, Democratic candidates for the presidency should make it clear that they stand with Argentine President Cristina Fernandez de Kirchner. One way would be to endorse campaigns by organizations such as Oxfam and Jubilee to forgive foreign debt, and to make it clear they will also press for financial regulations to block vulture speculation.

In the world, vultures are estimable creatures. There is a “yuck” factor, but at least they wait until their prey are dead before making a meal of them, and they do clean up after themselves. The vultures of Wall Street prey on the living and leave behind an unspeakable mess.

Read more of independent journalist Conn Hallinan’s work at his blog, Dispatches from the Edge.

Conn M. Hallinan is a columnist for Foreign Policy In Focus, “A Think Tank Without Walls, and an independent journalist. He holds a PhD in Anthropology from the University of California, Berkeley. He oversaw the (more…)

Book Review: Empire’s Ally: The U.S. and Canada February 3, 2014

Posted by rogerhollander in Canada, Foreign Policy, Imperialism, Iraq and Afghanistan, War.
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Roger’s note: to some degree Canada has always been a subservient servant to U.S. economic and geopolitical interests.  But when I arrived here in 1968 as a Vietnam war resister, it was a different country politically than it is today.  Of course, for that matter, so is the United States.  I never romanticized Canada as the perfect peace loving nation.  Few do any more.  But there was a time when the Canadian government at least did not “go along” with American imperial adventures.  Stephen Harper and what my friend Charlie calls the suposi-TORIES have changed all that.  Today, more than ever Canada is the 51st state, politically, economically, culturally, and with respect to Orwellian surveillance.  Nothing less than a tragedy for peace an justice loving Canadians.

 

By  (about the author)OpEdNews Op Eds 1/31/2014 at 17:44:38

Source: Dispatches From The Edge


(image by Amazon)

Book Review
Empire’s Ally: Canada and the War in Afghanistan
Edited by Jerome Klassen and Greg Albo
University of Toronto Press
Toronto Buffalo London 2013

Americans tend to think of Canadians as politer and more sensible than their southern neighbors, thus the joke: “Why does the Canadian chicken cross the road? To get to the middle.” Oh, yes, bit of a “muddle” there in Afghanistan, but like Dudley Do Right, the Canadians were only trying to develop and tidy up the place.

Not in the opinion of Jerome Klassen and a formidable stable of academics, researchers, journalists, and peace activists who see Canada’s role in Central Asia less as a series of policy blunders than a coldly calculated strategy of international capital. “Simply put,” writes Klassen, “the war in Afghanistan was always linked to the aspirations of empire on a much broader scale.”

“Empire’s Ally” asks the question, “Why did the Canadian government go to war in Afghanistan in 2001?” and then carefully dissects the popular rationales: fighting terrorism; coming to the aid of the United States; helping the Afghans to develop their country. Oh, and to free women. What the book’s autopsy of those arguments reveals is disturbing.

Calling Canada’s Afghan adventure a “revolution,” Klassen argues, “the new direction of Canadian foreign policy cannot be explained simply by policy mistakes, U.S. demands, military adventurism, security threats, or abstract notions of liberal idealism. More accurately, it is best explained by structural tendencies in the Canadian political economy — in particular, by the internationalization of Canadian capital and the realignment of the state as a secondary power in the U.S.-led system of empire.”

In short, the war in Afghanistan is not about people failing to read Kipling, but is rather part of a worldwide economic and political offensive by the U.S. and its allies to dominate sources of energy and weaken any upstart competitors like China, and India. Nor is that “broader scale” limited to any particular region.

Indeed, the U.S. and its allies have transformed the North Atlantic Treaty Organization (NATO) from a European alliance to contain the Soviet Union, to an international military force with a global agenda. Afghanistan was the alliance’s coming-out party, its first deployment outside of Europe. The new “goals” are, as one planner put it, to try to “re-establish the West at the centre of global security,” to guarantee access to cheap energy, to police the world’s sea lanes, to “project stability beyond its borders,” and even concern itself with “Chinese military modernization.”

If this all sounds very 19th century — as if someone should strike up a chorus of “Britannia Rules the Waves” — the authors would agree, but point out that global capital is far more powerful and all embracing than the likes of Charles “Chinese” Gordon and Lord Herbert Kitchener ever envisioned. One of the book’s strong points is its updating of capitalism, so to speak, and its careful analysis of what has changed since the end of the Cold War.

Klassen is a Postdoctoral Fellow at the Massachusetts Institute of Technology’s Center for International Studies, and Greg Albo is an associate professor of political science at York University in Toronto. The two authors gather together 13 other academics, journalists, researchers and peace activists to produce a detailed analysis of Canada’s role in the Afghan war.

The book is divided into four major parts dealing with the history of the involvement, its political and economic underpinnings, and the actual Canadian experiences in Afghanistan, which had more to with condoning war crimes like torture than digging wells, educating people, and improving their health. Indeed, Canada’s Senate Standing Committee on National Security concluded that, in Ottawa’s major area of concentration in Afghanistan, Kandahar, “Life is clearly more perilous because we are there.”

After almost $1 trillion dollars poured into Afghanistan — Canada’s contribution runs to about $18 billion — some 70 percent of the Afghan population lives in poverty, and malnutrition has recently increased. Over 30,000 Afghan children die each year from hunger and disease. And as for liberating women, according to a study by TrustLaw Women, the “conflict, NATO airstrikes and cultural practices combined” make Afghanistan the “most dangerous country for women” in the world.

The last section of the book deals with Canada’s anti-war movement.

While the focus of “Empire’s Ally” is Canada, the book is really a sort of historical materialist blueprint for analyzing how and why capitalist countries involve themselves in foreign wars. Readers will certainly learn a lot about Canada, but they will also discover how political economics works and what the goals of the new imperialism are for Washington, London, Paris, and Berlin.

Klassen argues that Canadians have not only paid in blood and gold for their Afghanistan adventure, they have created a multi-headed monster, a “network of corporate, state, military, intellectual, and civil social actors who profit from or direct Canada’s new international policies.”

This meticulously researched book should be on the shelf of anyone interested in the how’s and why’s of western foreign policy. “Empire’s Ally” is a model of how to do an in-depth analysis of 21st century international capital and a handy guide on how to cut through the various narratives about “democracy,” “freedom,” and “security” to see the naked violence and greed that lays at the heart of the Afghan War.

The authors do more than reveal, however; they propose a roadmap for peace in Afghanistan. It is the kind of thinking that could easily be applied to other “hot spots” on the globe.

For this book is a warning about the future, when the battlegrounds may shift from the Hindu Kush to the East China Sea, Central Africa, or Kashmir, where, under the guise of fighting “terrorism,” establishing “stability,” or “showing resolve,” the U.S. and its allies will unleash their armies of the night.

Honduran Coup: The US Connection August 6, 2009

Posted by rogerhollander in Foreign Policy, Honduras, Latin America.
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Published on Thursday, August 6, 2009 by Foreign Policy in Focus by Conn Hallinan
While the Obama administration was careful to distance itself from the recent coup in Honduras — condemning the expulsion of President Manuel Zelaya to Costa Rica, revoking Honduran officials’ visas, and shutting off aid — that doesn’t mean influential Americans aren’t involved, and that both sides of the aisle don’t have some explaining to do.The story most U.S. readers are getting about the coup is that Zelaya — an ally of Venezuelan President Hugo Chavez — was deposed because he tried to change the constitution to keep himself in power.

That story is a massive distortion of the facts. All Zelaya was trying to do is to put a non-binding referendum on the ballot calling for a constitutional convention, a move that trade unions, indigenous groups, and social activist organizations had long been lobbying for. The current constitution was written by the Honduran military in 1982, and the one-term limit allows the brass-hats to dominate the politics of the country. Since the convention would have been held in November, the same month as the upcoming presidential elections, there was no way Zelaya could have remained in office in any case. The most he could have done was to run four years from now.

And while Zelaya is indeed friendly with Chavez, he is at best a liberal reformer whose major accomplishment was raising the minimum wage. “What Zelaya has done has been little reforms,” Rafael Alegria, a leader of Via Campesina, told the Mexican daily La Jornada. “He isn’t a socialist or a revolutionary, but these reforms, which didn’t harm the oligarchy at all, have been enough for them to attack him furiously.”

One of those “little reforms” was aimed at ensuring public control of the Honduran telecommunications industry, which may well have been the trip-wire that triggered the coup.

The first hint that something was afoot was a suit brought by Venezuelan lawyer Robert Carmona-Borjas claiming that Zelaya was part of a bribery scheme involving the state-run telecommunication company Hondutel.

Carmona-Borjas has a rap-sheet that dates back to the April 2002 coup against Chavez. He drew up the notorious “Carmona decrees,” a series of draconian laws aimed at suspending the Venezuelan constitution and suppressing any resistance to the coup. As Chavez supporters poured into the streets and the plot unraveled, Carmona-Borjas fled to Washington, DC. He took a post at George Washington University and brought Iran-Contra plotters Otto Reich and Elliott Abrams to teach his class on “Political Management in Latin America.” He also became vice-president of the right-wing Arcadia Foundation, which lobbies for free-market policies. Weeks before the June 28 Honduran coup, Carmona-Borjas barnstormed the country accusing Zelaya of collaborating with narco-traffickers.

Carmona-Borjas’ colleague, Reich, a Cuban American with ties to right-wing factions all over Latin America and former assistant secretary of State for hemispheric affairs under George W. Bush, has been accused by the Honduran Black Fraternal Organization of “undeniable involvement” in the coup.

This is hardly surprising. Reich was nailed by a 1987 congressional investigation for using public funds to engage in propaganda during the Reagan administration’s war on Nicaragua. He is also a fierce advocate for Orlando Bosch and Luis Posada Carriles, both implicated in the bombing of a Cuban airliner in 1973 that killed all 73 on board.

Reich is also a ferocious critic of Zelaya. In a recent piece in the Weekly Standard, he urged the Obama administration not to support “strongman” Zelaya because it “would put the United States clearly in the same camp as Cuba’s Castro brothers, Venezuela’s Chavez, and other regional delinquents.”

One of the charges that Reich levels at Zelaya is that the Honduran president is supposedly involved with bribes paid out by the state-run telecommunications company Hondutel. Zelaya is threatening to file a defamation suit over the accusation.

Reich’s charges against Hondutel are hardly happenstance, as he is a former AT&T lobbyist and served as Senator John McCain’s (R-AZ) Latin American advisor during the senator’s 2008 presidential campaign. McCain has deep ties with telecom giants AT&T, MCI, and Qualcomm and, according to Nikolas Kozloff, author of Hugo Chavez: Oil, Politics and the Challenge of the United States, “has acted to protect and look out for the political interests of the telecoms on Capitol Hill.”

AT&T, McCain’s second largest donor, also generously funds the International Republican Institute (IRI), which has warred with Latin American regimes that have resisted telecommunications privatization. According to Kozloff, “President Zelaya was a known to be a fierce critic of telecommunications privatization.”

When Venezuelan coup leaders went to Washington a month before their failed effort to oust Chavez, IRI footed the bill. Reich, as then Secretary of State Condoleezza Rice’s special envoy to the Western Hemisphere, met with some of those leaders.

Republicans in Congress have accused the Obama administration of being “soft” on Zelaya. Sen. Jim DeMint (SC) protested the White House’s support of the Honduran president holding up votes for administration nominees for the ambassador to Brazil and an assistant secretary of state. Meanwhile, Zelaya’s return was unanimously supported by the UN General Assembly, the European Union, and the Organization of American States.

But meddling in Honduras is a bipartisan undertaking.

“If you want to understand who is the real power behind the [Honduran] coup, you need to find out who is paying Lanny Davis,” says Robert White, former U.S. ambassador to El Salvador and current president of the Center for International Policy. Davis, best known as the lawyer who represented Bill Clinton during his impeachment trial, has been lobbying members of Congress and testifying before the House Foreign Affairs Committee in support of the coup.

According to Roberto Lovato, an associate editor at New American Media, Davis represents the Honduran chapter of CEAL, the Business Council of Latin America, which strongly backed the coup. Davis told Lovato, “I’m proud to represent businessmen who are committed to the rule of law.”

But White says the coup had more to do with profits than law. “Coups happen because very wealthy people want them and help to make them happen, people who are used to seeing the country as a money machine and suddenly see social legislation on behalf of the poor as a threat to their interests,” says White. “The average wage of a worker in free trade zones is 77 cents per hour.” According to the World Bank, 59% of Hondurans live below the poverty line.

The United States is also involved in the coup through a network of agencies that funnel money and training to anti-government groups. The National Endowment for Democracy (NED) and the U.S. Agency for International Development (USAID) contribute to right-wing organizations that supported the coup, including the Peace and Democracy Movement and the Civil Democratic Union. Many of the officers that bundled Zelaya off to San Jose were trained at the Western Hemispheric Institute for Security Cooperation, the former “School for the Americas” that has seen torturers and coup leaders from all over Latin America pass through its doors.

The Obama administration condemned the coup, but when Zelaya journeyed to the Honduran-Nicaragua border, U.S. Secretary of State Hillary Clinton denounced him for being “provocative.” It was a strange statement, since the State Department said nothing about a report by the Committee of Disappeared Detainees in Honduras charging 1,100 human rights violations by the coup regime, including detentions, assaults, and murder.

Human rights violations by the coup government have been condemned by the Inter-American Commission for Human Rights, the International Observer Mission, Human Rights Watch, Amnesty International, the Committee to Protest Journalists, and Reporters Without Borders.

Davis claims that the coup was a “legal” maneuver to preserve democracy. But that’s a hard argument to make, given some of its architects. One is Fernando Joya, a former member of Battalion 316, a paramilitary death squad. Joya fled the country after being charged with kidnapping and torturing several students in the 1980s, but he has now resurfaced as a “special security advisor” to the coup makers. He recently gave a TV interview that favorably compared the 1973 Chilean coup to the June 28 Honduran coup.

According to Greg Grandin, a history professor at New York University, the coup makers also included the extremely right-wing Catholic organization, Opus Dei, whose roots go back to the fascist regime of Spanish caudillo Francisco Franco.

In the old days, when the United States routinely overthrew governments that displeased it, the Marines would have gone in, as they did in Guatemala and Nicaragua, or the CIA would have engineered a coup by the local elites. No one has accused U.S. intelligence of being involved in the Honduran coup, and American troops in the country are keeping a low profile. But the fingerprints of U.S. institutions like the NED, USAID, and School for the Americas — plus bipartisan lobbyists, powerful corporations, and dedicated Cold War warriors — are all over the June takeover.

Copyright © 2009, Institute for Policy Studies

Conn Hallinan is a columnist for Foreign Policy In Focus.

Disturbing Idea of Expelling Arabs from Israeli Territory Gains Ground March 4, 2009

Posted by rogerhollander in Israel, Gaza & Middle East, Racism.
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By Conn Hallinan, AlterNet. Posted March 4, 2009.

There is a growing consensus among Israelis that it would acceptable to expel its Arab citizens to either a Palestinian state or to Jordan and Egypt.

One of the more disturbing developments in the Middle East is a growing consensus among Israelis that it would acceptable to expel — in the words of advocates “transfer” — its Arab citizens to either a yet as unformed Palestinian state or the neighboring countries of Jordan and Egypt.

Such sentiment is hardly new among Israeli extremists, and it has long been advocated by racist Jewish organizations like Kach, the party of the late Rabbi Meir Kahane, as well as groups like the National Union, which doubled its Knesset representation in the last election.

But “transfer” is no longer the exclusive policy of extremists, as it has increasingly become a part of mainstream political dialogue. “My solution for maintaining a Jewish and democratic state of Israel is to have two nation-states with certain concessions and with clear red lines,” Kadima leader and Israeli Foreign Minister Tzipi Livni told a group of Tel Aviv high school students last December, “and among other things, I will be able to approach the Palestinian residents of Israel, those whom we call Israeli Arabs, and tell them, ‘ your national solution lies elsewhere.'”

Such talk has consequences.

According to the Israeli Association for Civil Rights, anti-Arab incidents have risen sharply. “Israeli society is reaching new heights of racism that damages freedom of expression and privacy,” says Sami Michael, the organization’s president. Among the Association’s findings:

* Some 55 percent of Jewish Israelis say that the state should encourage Arab emigration;

* 78 percent of Jewish Israelis oppose including Arab parties in the government;

* 56 percent agree with the statement that “Arabs cannot attain the Jewish level of cultural development”;

* 75 percent agree that Arabs are inclined to be violent. Among Arab-Israelis, 54 percent feel the same way about Jews.

* 75 percent of Israeli Jews say they would not live in the same building as Arabs.

The tension between Israeli democracy and the country’s Jewish character was the centerpiece of Avigdor Lieberman’s Yisrael Beiteinu Party’s campaign in the recent election. His party increased its Knesset membership from 11 to 15, and is now the third largest party in the parliament.

Lieberman, who lives in a West Bank settlement near Bethlehem, calls for a “loyalty oath” from Arab-Israelis, and for either expelling those who refuse or denying them citizenship rights. During a Knesset debate last March, Lieberman told Arab deputies, “You are only temporarily here. One day we will take care of you.”

Such views are increasing, particularly among young Jewish Israelis, among whom a politicized historical education and growing hopelessness about the future has fueled a strong rightward shift.

In a recent article in Haaretz, Yotam Feldman writes about a journey through Israel’s high schools, where students freely admit to their hatred of Arabs and lack of concern about the erosion of democracy.

“Sergei Liebliyanich, a senior, draws a connection between the preparation for military service in school and student support for the Right” Feldman writes, “‘ It gives us motivation against the Arabs. You want to enlist in the army so you can stick it to themI like Lieberman’s thinking about the Arabs. Bibi [Benjamin Netanyahu, leader of the rightwing Likud Party] doesn’t want to go as far.”

Feldman polled 10 high schools and found that Yisrael Beiteinu was the most popular party, followed by Likud. The left-wing Meretz Party came in dead last.

In part, the politicalization of the education system is to blame.

Mariam Darmoni-Sharviot, a former civics teacher who is helping implement the 1995 Kremnitzar Commission’s recommendations on education and democracy, told Feldman, “When I talk to a civics class about the Arab minority, and about its uniqueness in being a majority that became a minority, my students argue and say it’s not true that they [Arabs] were a majority.” She said when she confronted teachers and asked why students didn’t know that Arabs were a majority in 1947, the teachers become “evasive and say it’s not part of the material.”

In part, students reflect the culture that surrounds them.

“Israeli society is speaking in two voices,” says Education Minister Yuli Tamir. “We see ourselves as a democratic society, yet we often neglect things that are very basic to democracy. If the students see the Knesset disqualifying Arab parties, a move that I’ve adamantly opposed, how can we expect them to absorb democratic values?”

All the major Israeli parties voted to remove two Arab parties, United Arab List-Ta’al and Balad, from the ballot because they opposed the Gaza war. Balad also calls for equal rights for all Israelis. Kadima spokesperson Maya Jacobs said, “Balad aims to exterminate Israel as a Jewish state and turn it into a state for all its citizens.” Labor joined in banning Balad, but not Ta’al.

The Israeli Supreme Court overturned the move and both parties ended up electing seven Knesset members in the recent election.

“The ultimate aim here,” says Dominic Moran, INS Security Watch’s senior correspondent in the Middle East, “is to sever the limited ties that bind Jews and Arabs, to the point that the idea of the transfer of the Arab-Israeli population beyond the borders of the state, championed by Yisrael Beiteinu, gains increasing legitimacy.”

This turn toward the Right also reflects an economic crisis, where poverty is on the rise and the cost of maintaining the settlements in the Occupied Territories and Israel’s military is a crushing burden. Peace Now estimates that the occupation costs $1.4 billion a year, not counting the separation wall. Israel’s military budget is just under $10 billion a year. According to Haartez, the Gaza war cost $374 million.

Some 16 percent of the Jewish population fall below the poverty line, a designation that includes 50 percent of Israeli Arabs.

“The Israeli reality can no longer hide what it has kept hidden up to now — that today no sentient mother can honestly say to her child: ‘ Next year things will be better here,'” says philosophy of education professor, Ilan Gur-Ze’ev. “The young people are replacing hope for a better future with a myth of a heroic end. For a heroic end, Lieberman fits the bill.”

Intercommunity tension manifests itself mainly in the Occupied Territories, where the relentless expansion of settlements and constant humiliation of hundreds of Israeli Army roadblocks fuels Palestinian anger.

This past December, settlers in Hebron attacked Palestinians after the Israeli government removed a group of Jewish families occuping an Arab-owned building. In response, the settlers launched “Operation Price Tag” to inflict punishment on Palestinians in the event the Tel Aviv government moves against settlers. Rioters torched cars, desecrated a Muslim cemetery, and gunned down two Arabs.

Settler rampages on the West Bank are nothing new, even though they receive virtually no coverage in the U.S. media. But a disturbing trend is the appearance of extremist settlers in Israel. Late last year Baruch Marzel, a West bank settler and follower of Kahane, threatened to lead a march through Umm al-Fahm, a largely Arab-Israeli town near Haifa.

“We have a cancer in our body capable of destroying the state of Israel,” Marzel told The Forward, “and these people are in the heart of Israel, a force capable of destroying Israel from the inside. I am going to tell these people that the land of Israel is ours.”

Arab-Israelis charge that settlers — some of them extremists re-settled from Gaza three years ago — played a role in last year’s Yom Kippur riots in the mixed city of Acre and forced Arab families our of their houses in the east part of the city. Arabs make up about 14 percent of Acre and 20 percent of Israel.

Rabbi Dov Lior, chair of the West Bank Rabbinical Council, has decreed, “It is completely forbidden to employ [Arabs] and rent houses to them in Israel.”

The Adallah Legal Center for Arab Minority Rights is urging Israeli Attorney General Mernachem Mazuz to investigate “Wild incitement to racism against Arabs in general and the [Arab] residents of Acre in particular.”

On Oct. 15, three days after the Acre riots, two Arab apartments in Tel Aviv were attacked with Molotov cocktails. Seven Jewish men were arrested. The Arab residents of Lod and Haifa charge that they too are being pressured to move.

In the case of Lod, municipal authorities are open about their intentions. Municipal spokesman Yoram Ben-Aroch denied that the city discriminates against Arabs, but told The Forward that municipal authorities want Lod, to become “a more Jewish town. We need to strengthen the Jewish character of Lod and religious people and Zionists have a big part to play in this strengthening.”

However, the growing lawlessness of West bank settlers and Jewish nationalists has begun to unsettle the authorities in Tel Aviv. After rightwing extremists tried to assassinate Peace Now activist Professor Zeev Sternhell, Shin Bet chief Yuval Diskin said the intelligence organization was “very concerned” about the “extremist right” and its willingness to resort to violence.

Even Prime Minister Ehud Olmert said “We are not willing to live with a significant group of people that has cast off all authority,” and called Operation Price Tag a “pogrom.”

So far, however, the government and Shin Bet have done little to rein in the rising tide of rightwing terror, which is aimed at Jews as well as Arabs.

Ahmad Tibi of the Arab Ta’al Party says that while Arab Israelis feel threatened by what Ben Gurion University political scientist Neve Gordan calls a “move toward xenophobic politics,” Tibi warns that, “It is the Jewish majority that should be afraid of this phenomenon.”