Monday, July 30, 2012

Canada's Insolvent Seniors

In recent postings, I've been hitting on the world's pension problems fairly heavily, probably because, like all Baby Boomers, I'm getting close to "my time".  I found this study entitled "The Current State of Canadian Family Finances 2011 - 2012" on the website of the Vanier Institute of the Family, a Canadian institution whose mission it is "to create awareness of, and provide leadership on, the importance and strengths of families in Canada and the challenges they face in their structural, demographic, economic, cultural and social diversity.".

In this report, the 13th annual of its type, the author, Roger Sauve, studies the impact of Baby Boomers on Canada, the Canadian economy and how they/we are impacting the ability of the next generation to work.  As well, the study examines how household debt has risen and how family net worth has declined.  For this posting, I'm going to focus on the impact of the Boomers and the issues that they are facing.

As we have seen with recent data releases from Statistics Canada, the job picture in Canada is not really improving, particularly for young Canadians between the ages of 15 to 24.  During the post-Great Recession downturn, this age group saw 229,500 jobs disappear, more than half of all jobs lost during the downturn.  Since the worst of the recession in July 2009 (the official "end"), youth unemployment has improved very slightly with the addition of only 1300 net jobs.  Let's compare these statistics to those for Canadians 55 years of age and older.  During the period of time when younger Canadians saw 229,500 jobs disappear, employment among those 55 and older rose by 83,100!  As well, while young Canadians have only seen a net addition of 1300 jobs since the end of the Great Recession, older Canadians saw employment rise by 350,000, representing more than half of all the net jobs created since the bottom of the recession.

As well, the participation rate for Canadians aged 55+ surpassed the 36 percent mark in mid-2010 where it remains, a rate not seen since 1976.  This means that more Boomers are either remaining in the workforce for longer or are re-entering the job market.  This shouldn't surprise anyone that has been in a Home Depot, Walmart or what remains of Zellers in recent years.  A poll taken on behalf of CIBC suggests that most Canadians still expect to retire at age 63, however, only 21 percent of 55 to 64 year olds believe that they can retire based on their savings alone and that among retired Canadians, 54 percent hold some form of debt.  The poll found that, as time passed and retirement approached, older Canadians are feeling less positive about reaching their savings goals and eliminating their debt as shown on this graph:

Let's go back to the Vanier study.  What I found particularly interesting is the data on bankruptcy levels for Canadian seniors aged 65 years and older and near-seniors aged 55 to 64 years of age.  While the total number of insolvencies for all age groups fell by 11 percent in 2010, the number of insolvencies of those aged 55 to 64 fell by only 4 percent and actually rose by 6 percent for those 65 years of age and older.

Here is a graph showing the historical insolvency rate (the number of insolvencies per 100,000 people) from 1990 to the present for the entire population over 18 years of age, seniors and near-seniors:

Over the two decades, the total insolvency rate rose by 139 percent.  In sharp contrast, the insolvency rate for Canadians aged 55 to 64 rose by 597 percent and the insolvency rate for those aged 65 and older rose by an astonishing 1747 percent.  My suspicion is, that with our current near-zero interest rate environment, many seniors are finding that they are digging deeply into their saved capital to make ends meet.  With no end in sight to low interest rates, the insolvency situation is likely to get worse before it gets better.

One issue that is facing Canada's aging population is the current frothy housing market.  Most of the increase in household net worth is due to increases in the net worth of housing; real estate now comprises 50 percent of the net worth of Canadian households, up from 36 percent in 2000 and is now at the highest level since data collection began in 1990.  Housing prices as a multiple of disposable income have risen from a multiple of 3.2 in 2000 - 2001 to its current multiple of 5.1 and is well up from its 22 year average multiple of 3.8.  The combination of price instability and high household net worth based on housing valuation is particularly dangerous for senior Canadians who are looking to cash out of the housing market to fund their retirements.  As shown on this graph, should the disposable income to housing price multiple decline to the 22 year average, the price of an average home would decline from $363,300 to $269,800, a $93,500 or 25.7 percent haircut:

This would be a pretty severe cut in the value of household assets for most seniors and could make the difference between solvency and insolvency, particularly in some of the most overheated real estate markets in Toronto and Vancouver.

Baby Boomers are not likely to experience the peaceful golden retirement years of their parent's generation.  Fortunately, for the most part, Boomers are a relatively healthy lot and working into their seventies should not pose a particular problem...unless you happen to be young and looking to enter the pool of employed workers.  Unfortunately, these young Canadians will be competing with a large and growing cohort of experienced senior citizens who are more than willing to do what it takes to stave off the creditors.

Friday, July 27, 2012

Using Basic Economics to Predict the 2012 Presidential Election Results

Updated November 3rd, 2012

Now that America is into the final days of the two party Presidential election cycle, I thought that it was time to take a look at a tool that may well predict the winner of the 2012 election, keeping in mind that the data used has nothing to do with polling and everything to do with the economy with  emphasis on GDP growth levels, particularly when they are above the 3.2 percent level.  This is key after the recent 2.0 percent annual growth rate data release.

The Presidential and Congressional Vote Share Equation, developed by Dr. Ray C. Fair at Yale University, uses three economic variables that are significant to both the end result of the Presidential and Congressional elections, although the impact of the variables on the vote share derived from the House equation is somewhat smaller than it is for the Presidential equation.  For the purposes of this posting, I won't get into detail about the equations themselves since they look something like this:

Interesting, isn't it?

Rather than going through the details, I will take a brief look at the economic variables that impact the outcome of both elections and the results of the latest analysis.

Here are the three economic variables that impact the vote share calculation:

1.) G - The annual economic growth rate of real per capita GDP in the first three quarters of the election year.

2.) P - The absolute annual inflation rate in the first 15 quarters of the administration.

3.) Z - The number of quarters in the first 15 quarters of the administration in which the growth rate of per capita GDP exceeded an annual growth rate of 3.2 percent.

Notice that one of the variables (G) covers a short time horizon while the other two (P and Z) cover the entire period of the administration up to the time of the election.  The last variable, the number of quarters of high growth is the "good news" variable because it measures the number of extreme (in this case, extremely positive economic growth) outcomes that people tend to remember.

Here is a look back at elections from 1916 to 2004 showing the actual vote share received by the Presidential candidate (Vp), the calculated vote share (Vp with accent over top) and the difference between the two (Up):

You can see that, in general, the predictions are historically quite accurate with the difference between the calculated vote share and the actual vote share ranging from +0.3 percentage points to -4.3 percentage points.  Out of all 23 elections, only five (21.7 percent of the total) have an error of 3.0 percentage points or greater and sixteen (69.6 percent of the total) have an error of 2.0 percentage points or less.  I'd say that the accuracy of Dr. Fair's model is rather stunning.

Now, let's go forward and look at Dr. Fair's forecasts for both the Presidential and Congressional over the time period from November 2010 to October 2012.  Here is a chart showing his analysis:

Notice that the value Z, the number of quarters in the first fifteen of the Obama Administration with an annual growth rate greater than 3.2 percent sits at a measly one.  That's not much for voters to remember, is it?

Keeping in mind that Dr. Fair states that the margin of error is plus or minus 2.5 percentage points, notice that as the months have passed since the mid-term elections of 2010, the vote share of the incumbent President (Vp) and Congress (Vc) show dropping values with President Obama currently showing a dropping vote share and, for the second quarter since the mid-term elections, a minority of votes.  The drop over from July to October 2012 is related to the drop in G, the annual economic growth rate of real per capita GDP in the first three quarters of the election year.  

From Dr. Fair's fascinating analysis, we can see that the election will be very, very close.  His analysis suggests that it is quite possible that the final vote count will show the incumbent losing the popular vote but winning the necessary electoral votes to take the prize.

Tuesday, July 24, 2012

China's Insatiable Thirst for Foreign Oil Companies

Now that another one of China's major national oil companies, China National Offshore Oil Corporation or CNOOC has solidified its overseas assets through the purchase of Canada's Nexen, I thought that it was time to review China's oil production and consumption statistics and perhaps give us some background information to help us better understand why China is making deals with foreign-based oil producers.  

From the International Energy Agency's (IEA) website, here is a graph showing the quarterly oil product demand for China:

By the fourth quarter of 2012, China's oil demand is expected to reach the 10 million BOPD mark, resulting in an average consumption rate of 9.7 million BOPD over the entire year.  This is up 26 percent from 7.7 million BOPD in 2008.

Again, from the IEA's website, here is a graph showing the quarterly domestic oil supply from China:

For all of 2012, China's domestic oil supply will average 4.2 million BOPD, up very slightly from both 2010 and 2011 when China produced 4.1 million BOPD and up only 10.5 percent from 2008 when China produced 3.8 million BOPD.

According to BP's Statistical Review of World Energy for 2012, China's proven oil reserves at the end of 2009 were 14.7 billion barrels or 0.9 percent of the world's total (China has nearly 20 percent of the world’s total population).  At 2011 consumption levels, China's reserve life index was only 9.9 years, down from 10.7 years in 2009.  If we compare this to two other nations, we find that Canada has 175.2 billion barrels of proven oil reserves (10.6 percent of the world’s total) and a reserve life index of more than 100 years and the United States has proven oil reserves of 30.9 billion barrels (1.9 percent of the world’s total) and a reserve life index of 10.8 years.  With both China and the United States having very similar reserve life indices, it will be interesting to see where the struggle to meet growing oil demand leads the world, won't it?

According to the Energy Information Administration, in 2010, China was the world's second largest importer of oil as shown here:

Here is another graph showing the growing gap between domestic consumption and domestic production, showing where China's problems lie and why it is driven to make international acquisitions:

Let's take a look at China's oil consumption on a per capita basis.  With 1.344 billion people consuming 10 million BOPD over a year, each person will consume 2.72 barrels of oil.  If we compare that to the United States, 312 million people consume 20 million BOPD which results in each American consuming 23.4 barrels of oil over a year, nearly 9 times as much on a per capita basis.  As China modernizes, it is likely that their per capita consumption level will rise, just as consumption rose during the 20th century for the advanced economies of the world. 

Obviously, the level of oil consumption in China is rising at a far faster rate than the level of domestic oil production, leaving a growing shortfall that has to be filled using imports.  What better place to make up the difference than Canada, particularly since it has massive reserve base of non-conventional oil and natural gas and is currently considering building the Northern Gateway pipeline that will bring liquid hydrocarbons from the oil sands production facilities to the coast of British Columbia.

Let's take a brief look at Nexen for a moment.  Here is a summary of Nexen's value from the perspective of CNOOC:

Nexen's proven reserves of 900 million barrels of oil equivalent and their proven and probable reserve base of 2.022 billion barrels of oil equivalent are obviously of strategic interest to CNOOC, particularly since most of these reserves are in the very stable political environment of Canada; the Long Lake heavy oil project with 1.027 billion barrels proved and probable, Syncrude (7.23 percent working interest) and the Horn River non-conventional oil project.  Also note that the proven reserves for Nexen alone are nearly 6 percent of China’s total proven oil reserves.  Canada is of particular interest to CNOOC since many of China's multi-billion dollar investments in oil infrastructure are located in relatively risky jurisdictions including Iran and several African nations.

As China's population strives to reach the middle class, buy automobiles and otherwise increase their purchases of consumer goods that use energy, the nation will require additional sources of oil since their own domestic production level has stalled at just over 4 million BOPD despite huge investments in domestic offshore exploration and exploitation.  The world's new reality is that China is more than likely going to find ways to invest in the world's oil industry whether we like it or not.  It is a matter of survival for China's economy.  

The Cost of Partisan Politicking in America

Updated October 3, 2013

Now that we're stuck in the middle of yet another debt impasse, its time to review a study released by the U.S. Government Accountability Office (GAO) entitled "Debt Limit - Analysis of 2011 - 2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs".  This study takes an interesting look at how much the debt ceiling machinations of August 2011 actually cost American taxpayers through the impact on the Treasury's borrowing costs.

The delays in raising the debt limit in August 2011 and again in January 2012 made it difficult for the U.S. Treasury to manage its burgeoning debt load which, effective July 20th, has reached:

In case you've forgotten, the Budget Control Act of 2011 resulted in a three phase increase in the debt ceiling; on August 2, 2011 ($400 billion increase), after the markets closed on September 21, 2011 ($500 billion increase) and again after the market close on January 27, 2012 ($1,200 billion increase).  These actions raised the debt limit to its current level of $16.394 trillion.  

Here is a graph showing the rise in the debt limit since 1996:

Largely because of the childish behaviour of Congress last year, the U.S. Treasury found itself in a situation where it had to take extraordinary actions to avoid exceeding the debt limit.  Here is a chart showing what measures the U.S. Treasury can take when delays in raising the debt limit occur, most of which were used during the “crisis”:

Basically, the Treasury is forced to creatively "juggle" accounting items from one government account to another to prevent pushing the debt beyond its mandated ceiling.

While all of this fun and games was entertaining, particularly to those living inside the Beltway, delays in raising the debt limit created uncertainty in the Treasury market, resulting in an increased "risk premium" since, in bond market transactions, as prices drop, yields rise.  The GAO's analysis suggests that the delays in raising the debt limit in 2011 resulted in increased borrowing costs on certain securities.  This increased cost is measured using a multivariate regression analysis of the spread between the yields on private securities (i.e. corporate bond yields which are deemed more risky) and the yields on Treasuries over the period of time between the debt limit event timeframe and the previous three months.  A decrease in the spread indicates that the market perceives the risk of Treasuries to be closer to that of the more risky private securities, resulting in an increasing cost to the Treasury and, most importantly, to American taxpayers.  Here is a graph showing the result of the GAO's analysis:

Notice that the spread on 5 year Treasuries decreased by 0.33 percentage points, a rather large risk premium.  The GAO analysis shows that there was a premium on Treasuries with a maturity longer than two years.  Applying that to all of the debt issued by the Treasury during the 2011 debt ceiling stalemate results in an increase in borrowing costs of $1.3 billion for fiscal 2011 alone.  Since many of the Treasury instruments issued during that time have multi-year maturities (ranging from 2 to 30 years), the increase in borrowing costs arising from the Congressional boondoggle will far exceed the $1.3 billion mark and will be with American taxpayers for decades to come.

On top of that, during the stalemate, the actions taken by the Treasury Department to creatively manage the debt resulted in the accrual of an estimated 5750 hours of additional work, including overtime, which also comes at a cost to taxpayers.

While last year's debt ceiling tussle looked like partisan game-playing from the viewpoint of the Democrats and Republicans residing in Congress, as our mothers were fond of saying, someone's going to get hurt and it's going to end in tears.  Sadly, it's taxpayers that are the ones who are crying.

Monday, July 23, 2012

Fun and Games With Corporate Taxes

A recent article making the rounds in the mainstream media discusses the use of tax havens by the ultra-wealthy, an issue that has made headline news in the United States, particularly as Mitt Romney is making a mad dash for the Oval Office.  As I have posted before, it is not just individuals that are trying to avoid taxes with the use of overseas tax havens, corporations have a long history of doing the same thing in a desperate attempt to avoid paying America's 35 percent corporate marginal tax rate.

As shown in this paper by Citizens for Tax Justice (CTJ) entitled "Corporate Taxpayers & Corporate Tax Dodgers 2008 - 10", out of the 280 large and highly profitable corporations in the study, one quarter paid an effective tax rate of less than 10 percent and an equal number actually paid something close to the 35 percent official rate on total pretax U.S. profits of $1.4 trillion.  Here is a chart showing a summary of the three year tax rates for the 280 companies in the report:

Seventy-eight of the companies paid zero or less in federal income taxes in at least one year between 2008 and 2010 with a total of 108 no-tax years while earning a total of $156 billion in pretax United States profits which, without loopholes, would have generated $55 billion in corporate income taxes.  In fact, many of these companies actually generated enough deductions to warrant a negative tax situation, resulting in Americans who actually pay taxes, forking over a total of $21.8 billion in tax refunds.  Here is a chart showing the 30 corporations that paid no total income tax over the three year period:

Notice the presence of major household-name American corporations including General Electric (home of CEO Jeffrey Immelt, President Obama's choice for his job czar), Corning, Pacific Gas and Electric, Verizon, Boeing, Mattel and Honeywell among others.  These 30 tax avoiding companies generated $160 billion in profits in the three years between 2008 and 2010 and yet paid an average negative effective tax rate of 6.7 percent and actually received a total of $10.74 billion in tax rebates.

Here is a chart showing the 25 companies with the largest total tax subsidies between 2008 and 2010:

You have to love seeing companies like ExxonMobil, Duke Energy, Devon Energy and Chesapeake Energy among the crowd that got subsidized by taxpayers, don't you?  These four companies alone received tax subsidies totalling $11.094 billion.   Think about that the next time you pay $30 to top up your gas tank.

Now that we've put to rest the myth that American corporations actually pay the 35 percent corporate tax rate, here is a chart showing the average effective corporate tax rate for various industries over the three-year period:

On total profits of $1.353 trillion over the three-year period, the 280 companies in the study paid a total of $250.8 billion in taxes, yielding an average effective tax rate of 18.5 percent.  The effective tax rate varied from -13.5 percent for corporations involved in Industrial Machinery to a high of 30.4 percent for Health Care corporations.  Oil, gas and pipeline companies paid an effective rate of 15.7 percent and financial companies (i.e. the banking industry) paid an effective rate of 15.5 percent.

How do American corporations get such low effective tax rates?  Here are the four mechanisms by which the corporate tax rate is reduced:

1.) Accelerated depreciation of capital investments.
2.) Stock options, primarily for executives.
3.) Industry-specific tax breaks.
4.) Offshore tax sheltering allows corporations to shelter their profits into their foreign subsidiaries.

Here's one last graph showing how federal corporate taxes as a percentage of GDP has dropped over the five decades from 1960 to the present:

In the 1960s, corporate taxes covered one-quarter of total federal spending.  In the 1990s, the average dropped to 11 percent and, by fiscal 2010, corporate tax revenue covered a tiny 6 percent of federal government spending.

In closing, here is a quote from Susan Ford, Vice President of Tax at Corning Incorporated who recently testified before the House Committee on Ways and Means about the competitive disadvantages to America's high corporate tax rate:

"American manufacturers are at a distinct disadvantage to competitors headquartered in other countries. Specifically, foreign manufacturers uniformly face a lower corporate tax rate than U.S. manufacturers, and virtually all operate under territorial systems which encourage investment both abroad and at home." 

I think that she forgot to mention that, according to CTJ, between 2008 and 2011, Corning was one of 26 companies that paid no American income taxes despite earning nearly $3 billion in profits during that time and that her employer is sheltering profits earned in overseas subsidiaries.

One has to admit that something needs to change when most individual Americans are paying more taxes than Verizon, Wells Fargo, General Electric, Boeing and DuPont combined.  This is something that all of us need to remember when our elected elite insist that, in order to remain competitive, corporate taxes simply must be lowered.

Sunday, July 22, 2012

An Insider's Look at the IMF

A recently released internal letter from the International Monetary Fund gives the masses that sweat for a living an inside look at the politics in the organization that is largely responsible for bailing out the world's debtor nations.  In this resignation letter, Peter Doyle, a former Division Chief in the European Department of the IMF, indicts the organization for its incompetence and failings.

Mr. Doyle opens by stating that, "...after twenty years of service, (he) is ashamed to have had any association with the Fund at all.".  Apparently, there's nothing like burning your bridges on the way out of the door, is there?  I guess it is not his intention to return.

Mr. Doyle goes on to note that there are several issues that created the conditions that caused him such shame:

1.) The Triennial Surveillance Report (TSR) which reviews the effectiveness of the IMF's economic analysis and policy advice every three years.  The latest report, released in August 2011, noted that surveillance had improved since 2008, however there were still gaps in how the IMF assesses risks and prospects for the world's economy and how the policy advice given by the IMF with "...a view to reducing the likelihood of next crises...", particularly as it applies to Europe.  The TSR noted that, while the fund did issue pertinent policy recommendations for several Eurozone member states, important issues were left untouched.  Mr. Doyle states that the Fund failed to issue warnings in a timely fashion and that, as a consequence, Greece suffered and the world's second reserve currency is "...on the brink...", forcing the Fund to play catch-up in a last-ditch effort to save the euro.

2.) The report from the Office of Internal Audit (OIA) chronicled the incompetence of the IMF in the lead-up to the global crisis in 2008 - 2009.  

3.) The European bias that is deeply entrenched at the Fund as evidenced by the appointments for Managing Director which he notes have been particularly disastrous over the past decade as shown on this listing:

In case you were wondering, Ms. Lagarde's appointment on June 29th, 2011 is for a five-year term.  Her salary is $467,940 annually, net of taxes (i.e. she pays no taxes on the amount) and, in addition, she receives an annual allowance of $83,760 per year, once again, not taxed.  Her salary will be adjusted on an annual basis, based on the Consumer Price Index increase in the Washington metropolitan area.  On top of all of these goodies, she is eligible to receive a pension for the remainder of her life.

Mr. Doyle notes that the entire Managing Director selection process is illegitimate, leading to a corporate culture of ineffectiveness.

Mr. Doyle might have added the following two items to his missive:

1.) The Independent Evaluation Office (IEO) released an Evaluation Report in 2011 entitled "IMF Performance in the Run-Up to the Financial and Economic Crisis" in which they found that:

"...the IMF’s ability to identify the mounting risks was hindered by a number of factors, including a high degree of groupthink; intellectual capture; and a general mindset that a major financial crisis in large advanced economies was unlikely. Governance impediments and an institutional culture that discourages contrarian views also played important roles."

2.) The Independent Evaluation Office released an Ongoing Project Issues Paper looking at the "Role of the IMF in Argentina, 1991 - 2002" in which the IMF admitted that:

"While ultimate accountability for a member country's economic policy must rest with its national authorities, since the crisis, a number of observers have raised questions about the effectiveness and quality of financing and policy advice provided by the IMF. Some critics have argued that the IMF's main fault lay in providing too much financing without requiring sufficient policy adjustment, while others have alleged that the policies recommended by the IMF actually contributed to the crisis. In either case, the eventual collapse of the convertibility regime and the associated adverse economic and social consequences for the country have, rightly or wrongly, had a reputational cost for the IMF."

Please keep in mind that the taxpayers of the IMF’s member nations are funding this organization.  The IMF is funded by "quotas" assigned to each of its 188 member countries based on the size of their economy; weighted 50 percent to their GDP, 30 percent to their openness, 15 percent to their economic variability and 5 percent to their international reserves.  The size of the quota is directly related to the number of votes that each nation has within the organization.  The quotas are denominated in Special Drawing Rights (SDRs), the IMF’s unit of account.  The largest member of the IMF is the United States with a current quota of $68 billion.  Here is the link to a listing of the quotas of all national members.  The IMF has total quotas of $364 billion and has committed $1 trillion of resources.  Currently, the biggest borrowers from the IMF are Greece, Portugal and Ireland.

What I find particularly perturbing is that, in light of Mr. Doyle's letter, we see that it is pretty much business as usual within the IMF.  Despite a history of ineffectiveness and self-admitted incompetence as shown in the Fund's internal assessments, it is still a recipient of our tax dollars that the organization seems incapable of using wisely.  On top of that, rather than predicting where the world's economy is heading, it seems to be reactive, moving like a sluggish bureaucracy after world shattering events have already transpired.  What, pray tell, good is that to any of us?

Friday, July 20, 2012

How to Justify a War in a Few Easy Steps

Updated August 2013

Now that the Obama Administration is considering its Syrian options, I thought that it would be interesting to take a look back at how the previous Bush II Administration justified its invasion of Iraq and how we were deliberately duped into believing that such a move was mandated by the circumstances in Iraq.

A very interesting Freedom of Information Act (FOIA) Department of Defense document was recently released by the Secretary of Defense.  In reading through the document, I found that there were a lot of interesting parallels between Iraq and Syria and how the Bush Administration used some of these issues to justify their force to unseat a brutal dictator in Iraq.  Before I get to the details, I'd like to post a video showing President George W. Bush addressing Congress et al, making the case for the Iraq War:

As an aside, if you watch the entire video, the President recites a list of torture methods used by the Hussein regime.  As I posted here, this is very similar to the list of methods of torture used by the al-Assad regime in Syria right down to the use of an electric drill.  The President then goes on to state that "...if this is not evil then evil has no meaning..." referring to the use of torture by the Iraqi leadership.  In the end, I guess the presence of billions of barrels of exportable oil makes all of the difference, doesn't it? 

This declassified document from September 12th, 2002 makes the case for war.  Here are screen captures of the first three pages showing the justification for war:

Please notice a few key points:

1.) The DoD was looking at Iraq through the lenses of the failure of intelligence on 9/11 stating that America's intelligence community has more information now than they did in the previous year about what Saddam Hussein might do and how he might use his stockpile of weapons of mass destruction (WMD) to achieve his goals.  I particularly found the line "...experience tells us that what we have found is only a small part of what actually is there." and "...isn't it reasonable to conclude that Iraq's WMD programs are continuing, if not accelerating?".  History proved their "experience" to be sadly off base.  The presentation goes on to note that Iraq was a totalitarian regime led by a megalomaniacal tyrant.  While true, the same could be said for many other regimes including Egypt, Syria, Libya, Iran et al and actions were only "warranted" on one of them, coincidentally, another major oil producing nation.

2.) The document attempts to connect al Qaeda and Iraq, stating that "...In addition, numerous contacts over past decade between senior Iraqi and al Qaida officials, including there (sic) are many intelligence reports showing connections between Iraq and al Qaida, over a decade.".  The document also goes on to provide a link between an Iraqi senior intelligence officer and Osama Bin Laden (UBL).  The key sentence is:

And, in the end, how did that bit of history turn out for the Poles and their beloved homeland?

3.) The Bush Administration was seeking the support of the United Nations, noting that Iraq has flouted the will of the U.N. Security Council for more than a decade.  Looking at the present, how is U.N. finger-waggling working out for Syrian civilians?  Is it just me or are those in power very, very slow to learn from the lessons of the past?

4.) It was interesting to note that the Bush Administration was preparing itself and Americans for the impact of aggression against Iraq on the world's oil markets as shown here:

Once again, how has that worked out for all of us?  In case you've forgotten, in 2003, oil was under $40 a barrel.

5.) The document goes on to question the impact of the precedent being set by the onset of aggression. Unfortunately, part of the document is redacted here.  The four justifications given for setting the precedent were (i) that the Bush Administration was not claiming the right to intervene in any regime that they didn't like, (ii) that Iraq had ties to terrorism and possessed WMD, (iii) that Saddam Hussein was particularly vicious with respect to the treatment of its own population and (iv) that it has violated U.N. Security Council resolutions many times.  Excluding, perhaps, the presence of WMD, can we say the word "Syria"?

6.) Lastly, the document concludes by looking at the effect of the looming war on Middle East peace negotiations, a subject that seems to consume most American Presidents at one time or another during their tenure.  As shown here, the Bush Administration actually thought that regime change in Iraq would have an impact on the Israeli - Palestinian peace process:

Again, how has that turned out for Israelis and Palestinians?

I'd like to close this posting by looking at how the Bush Administration felt that war with Iraq would impact their ongoing war on terrorism in Afghanistan.  Here is the screen capture of that part of the document:

Isn't it interesting to see that the Bush Administration was already suspecting that the positive benefits and "goodwill" generated by the "victory" in Afghanistan was wearing off in the international community, less than one year after the war had started?  The document concludes by stating that the justification for a war with Iraq does not need a link to 9/11 since any actions in Iraq would be about self-defense, not revenge.  I guess it is just a coincidence that, according to a survey taken by the Program on International Policy Attitudes a decade after 9/11, 38 percent of Americans still believe that the United States found clear evidence that Saddam Hussein was working closely with al Qaeda and 16 percent still believe that the United States found Iraqi weapons of mass destruction.  I guess there's nothing like a government-induced self-fulfilling prophesy.  

It is interesting to look back at recent history and see how governments can use "propaganda" to convince the voting public that the actions that they are taking are justifiable.  As someone who looks for consistency, I also find it interesting how governments can, in at least one case (Syria), ignore the plight of a tormented civilian population that is experiencing a lack of freedom under the leadership of a despot while using the same issue to justify military action in another.

Wednesday, July 18, 2012

The Use of Torture in Syria

With actions in Syria making the news on a nearly daily basis, I thought it was time to take a quick look at the recent coverage of the use of torture in Syria by Human Rights Watch followed by  examples of how the nation treats its dissidents from the country report on Syria by Amnesty International.

Through reports given by over 200 former Syrian detainees and defectors, Human Rights Watch has revealed the locations of torture centres located throughout the country and published them in a report entitled "Torture Archipelago".  This report looks at the arrests, torture and disappearances in Syria's detention system since March of 2011. 

Here is a map showing the locations and number of detention centres in the six major urban areas of Syria:

Reports show that, since the beginning of the anti-government uprising in March 2011, Syrian authorities have arrested and detained tens of thousands of people, holding them in a network of at least 27 military and intelligence agency-run detention centres.  These facilities are operated by Syria's four main intelligence agencies; the Department of Military Intelligence, the Political Security Directorate, the General Intelligence Directorate and the Air Force Intelligence Directorate.  All four agencies are collectively referred to as the mukhabarat, the Arabic term for "intelligence" or what we in the West would refer to as the "secret police".

To cope with the huge numbers of arrests, the authorities have established a network of temporary holding facilities in stadiums, schools, hospitals and military bases.  In these over-crowded facilities, inadequate amounts of food are often provided and medical assistance is denied.  In one case, 70 detainees were squeezed into a 4 by 5 metre (13 by 16 foot) cell, roughly the size of an average living room.  As well, more than 20 different overt methods of torture are used including beatings with batons, burning with car battery acid,  the use of stress positions, the pulling of fingernails, insertion of staples and nails, sexual assault and humiliation, the use of electricity and mock executions.

One of the detention centres is located at the Mezzeh military airport in Damascus shown on this Google Earth screen capture:

Here, in the words of a former intelligence officer, are the methods used to torture detainees at the Mezzeh location:

"The mildest form of torture is hitting people with batons on their arms and legs and not giving them anything to eat or drink.  Then they would hang the detainees from the ceiling by their hands, sometimes for hours or days....They used electric stun-guns and an electroshock machine, an electric current transformer.  It is a small machine with two wires with clips that they attach to nipples and a knob that regulates the current.  In addition, they put people in coffins and threatened to kill them and close the coffin....They pour hot water on people and then whip them.  I've also sen drills there, but I've never seen them being used...The put pins under your feet and hit you so that you step on them.  I also heard them threatening to cut off the detainees' penises."

From the report, here is a listing of detention centres where detainees are being abused:

Most of the former detainees interviewed for the Human Rights Watch report were young men in their 20s and 30s, however, local activists throughout Syria have recorded the detention of 635 children as young as eight years of age and 319 women by as of June 22, 2012.  Children in their early teen years are tortured as well, using electrocution and the pulling of nails using pliers among other methods.  Thirteen year old Hamza Ali al-Khateeb was tortured and killed while in custody, causing an international outcry.  As well, elderly Syrians are not immune from detention and torture.

According to Amnesty International's Country Report for Syria for the year 2011, at least 200 detainees are reported to have died while in custody under suspicious circumstances.  While, on one hand, President Bashar al-Assad lifted the national state of emergency that had been in force continuously since 1963 and granted five separate amnesties for prisoners of various types including prisoners of conscience, he introduced a law that allows detention without charge or trial for up to two months.  As well, he introduced a Peaceful Assembly Law that forces demonstrators to properly licence protests.

One of the problems with government use of lethal force appears to be the use of snipers on crowds of demonstrators or against Syrian civilians attending funeral processions of those killed in the preceding days.  On June 4th, 2011, up to 25 mourners were shot by security force snipers while attending the funeral of Basel al-Masri, a villager from Jisr al Shughour.

Security forces also appear to be targeting health care workers who have been killed for the act of treating wounded protestors or supporting the protests.  One physician who may have been targeted because he signed a petition that called for all physicians to be able to treat all injured Syrians, Dr. Sakher Hallak, was held at the Criminal Security Department in Aleppo for two days in May 2011.  When his body was returned to his family, he had broken ribs, arms and fingers along with gouged eyes and mutilated genitals. 

I think that's enough of that.  I would suggest that you take a few moments to go through the "Torture Archipelago" report.  It goes into more detail than I can cover in this short posting and may give you a sense of why it is rather urgent that something be done to help Syria's innocent civilian population.

Despite mounting evidence of what has amounted to decades of abuse of Syrian civilians under the al-Assad clan, the international community seems to have its hands tied.  While the international community was quick to act in the case of Muammar Qadafi and Libya, for some reason, actions against the despotic regime in Syria seem to be very slow in coming.  Is it possible that the reason for inaction is Syria's strategic lack of a dark-coloured liquid substance that is critical to keeping the world's economy humming along?  Oh yes, that and the billions of dollars worth of Russian MiG fighters, tactical missiles and other air defence systems along with Russia's use of the Syrian port of Tartus as its only naval base outside of the borders of the old USSR?