Policy

The presidential election is plagued with scandal and large monetary expenditures. William McKinley (R-OH) is the recipient of some $16 million in spending, a lavish amount for the time. The campaigns of both McKinley and his opponent, William Jennings Bryan (D-NE), are accused of bribery and poor ethical conduct. Mark Hanna, McKinley’s chief fundraiser and the chair of the Republican National Committee (RNC), devises a system of quotas for large corporations. Hanna raises between $6-7 million in donations from corporations through this quota system, in return for strong support of a big-business agenda. McKinley promises to oppose the establishment of silver coinage, supports protective tariffs, and other pro-corporate positions. The campaign is so fraught with controversy that the public begins demanding regulation and oversight of campaign funding practices. [Campaign Finance Timeline, 1999]

A 1902 portrait of President Roosevelt. [Source: Library of Congress]In a speech given to an audience in Providence, Rhode Island, later entitled “The Control of Corporations,” President Theodore Roosevelt gives a passionate warning about the dangers of the nation’s prosperity being concentrated in the hands of the few, and particularly under the control of a few large corporations. Roosevelt says: “One of the features of the tremendous industrial development of the last generation has been the very great increase in private, and especially in corporate, fortunes.… Where men are gathered together in great masses it inevitably results that they must work far more largely through combinations than where they live scattered and remote from one another.… It is not true that the poor have grown poorer; but some of the rich have grown so very much richer that, where multitudes of men are herded together in a limited space, the contrast strikes the onlooker as more violent than formerly. On the whole, our people earn more and live better than ever before, and the progress of which we are so proud could not have taken place had it not been for the up building of industrial centers, such as this in which I am speaking. But together with the good there has come a measure of evil.… Under present-day conditions it is as necessary to have corporations in the business world as it is to have organizations, unions, among wage-workers. We have a right to ask in each case only this: that good, and not harm, shall follow. Exactly as labor organizations, when managed intelligently and in a spirit of justice and fair play, are of very great service not only to the wage-workers, but to the whole community, as has been shown again and again in the history of many such organizations; so wealth, not merely individual, but corporate, when used aright is not merely beneficial to the community as a whole, but is absolutely essential to the upbuilding of such a series of communities as those whose citizens I am now addressing.… The great corporations which we have grown to speak of rather loosely as trusts are the creatures of the state [the federal government], and the state not only has the right to control them, but it is in duty bound to control them wherever the need of such control is shown. There is clearly need of supervision—need to possess the power of regulation of these great corporations through the representatives of the public wherever, as in our own country at the present time, business corporations become so very powerful alike for beneficent work and for work that is not always beneficent. It is idle to say that there is no need for such supervision. There is, and a sufficient warrant for it is to be found in any one of the admitted evils appertaining to them.” Such government controls are rightfully difficult to put in place, Roosevelt says, because of the constitutional guarantees afforded both individuals and corporate entities, and because of the disparity of laws enacted in the various states. However, “I believe that the nation must assume this power of control by legislation; if necessary by constitutional amendment,” he says. “The immediate necessity in dealing with trusts is to place them under the real, not the nominal, control of some sovereign to which, as its creatures, the trusts shall owe allegiance, and in whose courts the sovereign’s orders may be enforced.” Such government regulation and oversight must be enforced with caution and restraint, he warns, but nevertheless, it must be enacted. [Theodore Roosevelt (.com), 8/23/1902; ed., 2003, pp. 20-21] Roosevelt’s position is ironic considering the vast corporate contributions he will accept to win the presidency in 1904 (he ascended to the presidency in 1901 after President William McKinley was assassinated). Roosevelt will accept large donations from railroad and insurance interests, and will make a personal appeal to steel baron Henry Clay Frick and other industrialists. Frick will later recall: “He got down on his knees to us. We bought the son of a b_tch and then he did not stay bought.” During his second term, Roosevelt will strive to pass significant campaign finance reform legislation that would ban some of the techniques he will use to regain office. [New Yorker, 5/21/2012]

President Theodore “Teddy” Roosevelt, in a speech given to the US Congress, proposes that corporations be expressly forbidden by law from contributing money “to any political committee or for any political purpose.” Neither should corporate directors be permitted to use stockholders’ money for political purposes. Roosevelt does not say that corporate owners should be so restricted. Roosevelt also says federal campaigns should be publicly financed via their political parties. Roosevelt’s proposal is made in part because he was accused of improperly accepting corporate donations for his 1904 presidential campaign. [Miller Center, 12/5/1905; Center for Responsive Politics, 2002 ; Moneyocracy, 2/2012] Roosevelt, who has made similar statements in the past (see August 23, 1902), will echo these proposals in additional speeches. [Connecticut Network, 2006 ] Two years later, Roosevelt will sign into law a bill proscribing such donations (see 1907).

Senator Benjamin Tillman, an ardent segregationist who once said, ‘My Democracy means white supremacy.’ [Source: Black Americans in Congress]President Theodore “Teddy” Roosevelt signs the Tillman Act into law. The Act prohibits monetary contributions to national political campaigns by corporations and national banks. Roosevelt, dogged by allegations that he had accepted improper donations during his 1904 presidential campaign, has pushed for such restrictions since he took office (see August 23, 1902 and December 5, 1905). [Federal Elections Commission, 1998; Center for Responsive Politics, 2002 ; Moneyocracy, 2/2012] Senator Benjamin Tillman (D-SC), later described by National Public Radio as a “populist and virulent racist,” sponsored the bill. [National Public Radio, 2012] In 1900, Tillman was quoted as saying about black voters: “We have done our level best. We have scratched our heads to find out how we could eliminate every last one of them. We stuffed ballot boxes. We shot them. We are not ashamed of it.” [Atlas, 2010, pp. 205] Unfortunately, the law is easily circumvented. Businesses and corporations give employees large “bonuses” with the understanding that the employee then gives the bonus to a candidate “endorsed” by the firm. Not only do the corporations find and exploit this loophole, they receive an additional tax deduction for “employee benefits.” The law will be amended to cover primary elections in 1911 (see 1911). [Campaign Finance Timeline, 1999]

The Federal Corrupt Practices Act (FCPA), also called the Publicity Act, is passed. It will remain the backbone of American campaign finance regulation until expanded in 1925 (see 1925). It expands upon the Tillman Act’s prohibition against corporate and bank donations to federal election campaigns (see 1907) by enacting campaign spending limits on US House election campaigns. It also requires full disclosure of all monies spent and contributed during federal campaigns. In 1911, the FCPA will be amended to cover Senate elections as well, and to set spending limits on all Congressional races. However, the bill fails to provide for enforcement and verification procedures, so the law remains essentially useless. [Federal Elections Commission, 1998; Campaign Finance Timeline, 1999; Center for Responsive Politics, 2002 ; Moneyocracy, 2/2012] The law is rendered even less powerful after the Supreme Court overturns its provision limiting House and Senate candidate spending. [Pearson Education, 2004]

Ayn Rand in her youth. [Source: Heritage American]“Objectivist” philosopher and burgeoning novelist Ayn Rand writes admiringly of one of her heroes, serial killer William Edward Hickman. She admires Hickman’s stated credo, “What is good for me is right.” In her journals, Rand writes in response, “The best and strongest expression of a real man’s psychology I have heard.” Rand is planning a novel, The Little Street, to feature a character based on Hickman, who she considers her “ideal man.” In her journals, Rand writes that Hickman “is born with a wonderful, free, light consciousness—[resulting from] the absolute lack of social instinct or herd feeling. He does not understand, because he has no organ for understanding, the necessity, meaning, or importance of other people.… Other people do not exist for him and he does not understand why they should.” Later in her journals, she clarifies her idealization of Hickman: “[My hero is] very far from him, of course. The outside of Hickman, but not the inside. Much deeper and much more. A Hickman with a purpose. And without the degeneracy. It is more exact to say that the model is not Hickman, but what Hickman suggested to me.” (Rand will never complete The Little Street.)
Torturer and Killer - According to author and biographer Michael Prescott, in 1928, Hickman is one of the most notorious criminals in America, a forger, armed robber, child kidnapper, and multiple murderer. As a child, he enjoyed torturing and killing small animals. As a young man, he engaged in a crime spree beginning in the Midwest and ending in California, robbing gas stations and drug stores, allegedly murdering a girl in Milwaukee, and murdering the grandfather of his crime partner in Pasadena. That partner later told police that Hickman often talked about his desire to kill and dismember someone someday. In 1927, he kidnapped a 12-year-old girl, Marion Parker, from her school and began taunting her wealthy father with ransom notes. (He called himself “a master mind” and “not a common crook” in those notes, and signed himself “The Fox,” writing, “Fox is my name, very sly you know.” After days of exchanging letters, Hickman accused the father of lying about his intention of paying the ransom and strangled Marion Parker with a towel. After she was dead, he dismembered the body with a pocket knife, wrapped up the separate remains, packed the remains into a car, and drove to meet the father, tossing body parts out of the car along the way. The father, believing his daughter to still be alive, gave $1,500 to Hickman. In return, Hickman threw the girl’s head and upper torso out of the car at the father’s feet and sped off. Hickman fled to Oregon, where he was arrested. He quickly confessed to the murder, at least one more murder, and the robberies. After failing to pin his crimes on another man (presumably his former partner), and unsuccessfully claiming his innocence by reason of insanity, Hickman will be executed at San Quentin Prison. Prescott will write of Hickman, “Hickman reportedly ‘died yellow’—he was dragged, trembling and fainting, to his execution, his courtroom bravado having given way at last.”
Idealizing a Sociopath? - In 2005, Prescott will ask if Rand’s “ideal man” was, in reality, a criminal sociopath, and if so, what that says of Rand’s own values and judgment. In 1928, Prescott notes, Rand is still in her twenties and heavily influenced by the egocentric philosophies of Friedrich Nietzsche. Rand writes of Hickman that he represents “the amazing picture of a man with no regard whatsoever for all that a society holds sacred, and with a consciousness all his own. A man who really stands alone, in action and in soul.… Other people do not exist for him, and he does not see why they should.” Hickman, she writes, is “a brilliant, unusual, exceptional boy” filled with “immense, explicit egotism.” (Some newspaper writers at the time compare Hickman to Nietzche’s “Superman,” writing that Hickman twisted Nietzsche’s teachings to suit his own ends.) Her defenders might argue, Prescott will write, that as Rand matures, she will grow out of her fascination with Nietzsche, and, by extension, Hickman, and evolve a more rational outlook. [Michael Prescott, 2005; AlterNet, 2/26/2010]
Anti-Social, Amoral Characters in Later Books - However, Prescott uses quotes from Rand’s later novels to show her ongoing fascination with amoral, self-centered characters and the philosophies that inform their worldviews. She will write in her notes for The Fountainhead: “One puts oneself above all and crushes everything in one’s way to get the best for oneself. Fine!” Her notes on her novel’s hero, Howard Roark, say that Roark “has learned long ago, with his first consciousness, two things which dominate his entire attitude toward life: his own superiority and the utter worthlessness of the world.… He was born without the ability to consider others.” In the original version of her first novel We the Living, the character Kira, whom Prescott characterizes as “Rand’s stand-in,” says, “What are your masses [of humanity] but mud to be ground underfoot, fuel to be burned for those who deserve it?” Prescott notes that the statement will be altered in subsequent publications. In her journals, Rand will write that man “is man only so long as he functions in accordance with the nature of a rational being. When he chooses to function otherwise, he is no longer man. There is no proper name for the thing which he then becomes.… When a man chooses to act in a sub-human manner, it is no longer proper for him to survive nor to be happy.” In her longest novel, 1957’s Atlas Shrugged, she will refer to a crowd of poor and starving people as “savages,” “refuse,” “inanimate objects,” and “imitations of living beings,” all patently beneath the heroes and heroines of her story. In the novel, a wealthy citizen striking against progressive taxation causes a train crash, and Rand will make it clear that the people who die in the crash deserve it because they supported the taxation policies that triggered the attack. Rand will continue to write admiringly of the Nietzschean concept of the “Superman” throughout her career. Columnist Johann Hari will write: “Her heroes are a cocktail of extreme self-love and extreme self-pity: They insist they need no one, yet they spend all their time fuming that the masses don’t bow down before their manifest superiority.” [Michael Prescott, 2005; Slate, 11/2/2009; AlterNet, 2/26/2010]
Rand Admired by Many Modern Republicans - In 2010, liberal columnist Mark Ames will go farther than either Prescott or Hari and label Rand “a textbook sociopath,” adding: “In her notebooks Ayn Rand worshiped a notorious serial murderer-dismemberer, and used this killer as an early model for the type of ‘ideal man’ she promoted in her more famous books. These ideas were later picked up on and put into play by major right-wing figures of the past half decade, including the key architects of America’s most recent economic catastrophe—former Fed Chair Alan Greenspan and SEC Commissioner Chris Cox—along with other notable right-wing Republicans such as Supreme Court Justice Clarence Thomas, Rush Limbaugh, and South Carolina Gov. Mark Sanford.” Ames will note that many politicians aligned with the “tea party” movement, such as Representatives Paul Ryan (R-WI) and Michele Bachmann (R-MN) are outspoken Rand admirers. [AlterNet, 2/26/2010] Hari will ask: “What I do find incomprehensible is that there are people—large numbers of people—who see her writing not as psychopathy but as philosophy, and urge us to follow her. Why?” [Slate, 11/2/2009]

Testifying to Congress on his opposition to raising taxes on the wealthy, millionaire financier J. P. Morgan Jr. says: “If you destroy the leisure class, you destroy civilization. The leisure class can be defined by people who can afford to hire a maid.” [Hunt, 9/1/2009, pp. 4]

The government of Yugoslavia introduces agrarian land reform. By decree, landholders lose their land to the government unless they have Yugoslav deeds. However, most Albanian landowners lack such deeds and lose their land. [Vickers, 1998, pp. 105-108; Kola, 2003, pp. 21]

Koch Industries logo. [Source: Koch Industries / Wikipedia]Oil magnate Fred Koch co-founds Wood River Oil and Refining Company, later renamed Koch Industries. The firm will grow to become one of the largest energy conglomerates in the US, and Koch will become an influential backer of right-wing politics. Koch is a virulent anti-Communist who will be one of the first members of the John Birch Society (JBS—see March 10, 1961 and December 2011), a far-right organization that reflects his hatred of Communism (he believes both the Republican and Democratic parties are irretrievably infilitrated by Communists) and opposes almost every aspect of governance in general. Koch will write glowingly of Italian dictator Benito Mussolini’s murderous suppression of Communists during World War II. Both Koch and the JBS have little use for minorities; of African-Americans, Koch will write, “The colored man looms large in the Communist plan to take over America,” and he will say that government welfare programs were designed to attract large numbers of blacks to the cities, where they would foment “a vicious race war.” In 1963, using language that reporter Jane Mayer will later say “prefigures the Tea Party’s talk of a secret socialist plot,” Koch will warn that Communists would “infiltrate the highest offices of government in the US until the president is a Communist, unknown to the rest of us.” Koch’s two sons, David and Charles, will have their father’s political views deeply ingrained into them (see August 30, 2010). In 2007, David Koch will tell a reporter: “He was constantly speaking to us children about what was wrong with government.… It’s something I grew up with—a fundamental point of view that big government was bad, and imposition of government controls on our lives and economic fortunes was not good.” Gus diZerega, once a close friend of Charles’s, will later say that the brothers transfer their father’s hatred of Communism to the US government, which they will come to view as a tyranny. DiZerega will write that the Kochs, like many other hard-right conservatives, redefine “socialism” as almost any form of government which taxes citizens and regulates businesses. [New Yorker, 8/30/2010]

The Kingdom of Yugoslavia and Greece sign an agreement to coordinate their foreign policy, defense, and economies after World War II. Britain supports the plan, and Foreign Secretary Anthony Eden advocates including Albania and Bulgaria. Britain will oppose the plan by late 1944, because of the success of communist-led partisan armies in the region. [Kola, 2003, pp. 83-84]

The Communist Party of Albania (CPA) organizes a conference in Peza, near Tirana, including nationalists, local leaders, Abaz Kupi representing former King Zog, the Communist Youth Organization, and female youth delegates. The conference elects a non-sectarian (Provisional) General National Liberation Council, and local councils to carry out government functions in liberated areas and organize guerrilla activities are planned. Nationalist guerrillas agree to fly the CPA’s red and black flag with a red star, as well as the Albanian double-headed eagle flag. Two months later, Yugoslav communist leader Josip Broz Tito will write to the CPA for the first time, saying the National Liberation Front should be re-formed with “different urban groups and tendencies” to broaden it. According to a Yugoslav source, in 1944 CPA leader Enver Hoxha will refer to the letter as “an historic event,” but in his 1982 memoir, The Titoites, he says the letter was too late to matter. [Kola, 2003, pp. 27-28]

The Balli Kombetar (National Front) party is created under Mit’hat Frasheri and advocates a united Albania, including the Kosovars. A British representative to Albania during WWII, Julian Amery, will say the Ballists are “for ideological reasons, inclined towards the Western democracies, but their enthusiasm for the allied cause was severely constrained both by hatred of communism and by fears that an allied victory might once again deprive them of Kosovo as well as their southern provinces.” The Balli Kombetar includes former government members, and the Communist Party of Albania will later accuse it of being a cover for the parliamentarians who had agreed to offer Albania to Italy’s Emmanuel III after it was invaded, among other charges. [Kola, 2003, pp. 29-31]

The Central Committee of the CPA convenes at Berat for its Second Plenum, along with CPY representative Velimir Stoinic. Sejfulla Maleshova and Pandi Kristo become CC members just before the meeting, apparently in a way that violates party rules. Along with organizational secretary Koci Xoxe, they are later accused of conspiring with Stoinic to attack the CPA. Some charges are that the CPA is not communist and that it acts both sectarian and opportunist. Liri Gega is removed from the Central Committee “for sectarianism and pronounced adventurism,” and those individual charges are said to come from the entire party’s policy. Maleshova says the CPA is becoming a terrorist “band of criminals,” for actions like the execution of Mustafa Gjinishi, one of the CPA’s representatives at the Mukje meeting. Xoxe says “a gang of four,” starting with Miladin Popovic, lead the CPA. Stoinic also criticizes the CPA and says: “You are small, a good bite for imperialism. You can’t hold power without Yugoslavia, especially present-day Yugoslavia.” Therefore, the two countries should have close links: “Their exact shape cannot be revealed at this conference, but let the link be confederal or closer than that. This is your perspective, this is what you should inculcate in people’s minds.” This is the first time the CPY’s wish to join the two countries is mentioned in public. Stoinic also says Tito should be praised more. Relying on documents published after capitalism is restored in Albania, Paulin Kola will later say that Hoxha and the rest of the CPA completely accepted the criticisms, and that Hoxha also blamed Popovic and Dusan Mugosa of the CPY, but Hoxha’s memoirs say that he rejected the charges against the CPA. The Central Committee is also enlarged by 18 at the Berat Plenum. [PLA, 1971, pp. 227-231; Kola, 2003, pp. 58-61]

Velimir Stoinic, Yugoslavia’s envoy to Albania, tells provisional Yugoslav leader Josip Broz Tito that British envoy General D. E. P. Hodgson has expressed surprise that Enver Hoxha’s Albanian government is silent on Kosova, which Stoinic concludes is an attempt to raise the issue. Britain requests entry for 1,500-1,700 additional personnel of the Military Liaison to distribute aid prior to deployment of the UN Relief and Rehabilitation Administration (UNRRA), but Albania only allows 80 to enter. Albania will later refuse to allow the UNRRA to send officials to distribute $26 million of aid, and expels all UN staff as saboteurs. [PLA, 1971, pp. 248; Hoxha, 1975, pp. 82; Kola, 2003, pp. 72]

The 1946 Yugoslav constitution and the 1947 Serb constitution give Vojvodina more self-rule than Kosovo. Serbia, under articles 90 and 106, allows Vojvodina, but not Kosovo, to have separate courts, including a supreme court, with elected judges, and more control over what are called businesses with “provincial importance,” as well as cultural and educational institutions. Each has an assembly that elects its executive committee and can create laws, but the laws have to be ratified by the Serb legislature, while republics can make laws without needing higher approval. Each autonomous area has 20 representatives in the Yugoslav parliament, while the six Yugoslav republics each have 30. [Kola, 2003, pp. 65]

In Belgrade, Nako Spiru, Albania’s economy minister, and Boris Kidric, Yugoslavia’s minister of industry, sign a 30-year treaty unifying Albania’s economy with Yugoslavia. They agree to coordinate economic planning, make the value of Albania’s lek dependent on the value of Yugoslavia’s dinar, equalize prices (not based on international market prices), and create a customs union under Yugoslavia’s rules. According to author Paulin Kola, Albanian communist leader Enver Hoxha praises the treaty highly, while Hoxha will later say he had many reservations. According to the Albanian communists’ official history, the Albanian government and Hoxha think economic conditions make currency parity impossible to achieve on Yugoslavia’s schedule and they say Yugoslavia sets parity “on an altogether arbitrary basis to the advantage of the dinar.” Albania also has reservations about unifying prices. It says the customs union is set up to benefit Yugoslavia, later causing shortages and inflation in Albania. Joint companies are later set up based on the convention, and Albania will complain that it is providing the capital it promised, while Yugoslavia provides not “even a penny in the original funds” but still “appropriated half of the profits.” A joint commission to coordinate the economies is created, and the Albanian government says Yugoslavia tries to “turn it into a super-government above the Albanian government.” Yugoslavia is supposed to provide two billion leks of credit in 1947, but reportedly does not provide even one billion, and credit in goods is overvalued by two to four times more than their prices in international trade. Yugoslavia provides four factories, which Albania considers too small and decrepit. The Albanian government subsequently says that the withholding of promised credit hinders the economic plan for 1947, and Albania says that the 1948 credits are also lacking. [PLA, 1971, pp. 306-309; Kola, 2003, pp. 78-79]

According to Albanian communist leader Enver Hoxha, Yugoslavia is very worried when a cultural delegation, including Economy Minister Nako Spiru and Nexhmije Hoxha (Enver Hoxha’s wife), visits the USSR. As soon as they arrive in Moscow, the Yugoslav ambassador to the USSR seeks out his Albanian counterpart. Hoxha will say the Yugoslavs “stuck like glue” to their Albanian counterparts, including the wives of diplomats and students, and sought information. The Yugoslavs think Albania has signed an economic agreement with the USSR. A few days after the trip is over, the Yugoslav ambassador to the USSR files a complaint with Albania, saying: “We do not understand how at a time when we are linked economically in this way you seek to make other economic and trade agreements with other countries, we cannot understand how you could take such actions without consulting us and reaching prior agreement with us.… These actions are not good, must not be done in this way again, these things are incompatible with our agreement.” [Hoxha, 1982, pp. 345-346]

Yugoslavia’s envoy to Albania Savo Zlatic tells the Albanian leadership that, while the Central Committee of the CPA is dealing properly with Yugoslavia, there is another anti-Yugoslav position in Albania. Hoxha will later recount in The Titoites, “Whenever we raised any opposition, [the Yugoslavs] immediately thought that the Soviets ‘had prompted us,’ although, without denying their merits, in 1946 and even 1947 the Soviets regarded us mostly through the eye of the Yugoslavs.” He will specifically mention that Zlatic complains to him that an Albanian has insulted Yugoslavia by disagreeing with a Yugoslav adviser on cotton in front of Albanian farmers, with the implication that the Albanian was repeating Soviet advice, because Albanians are ignorant about cotton farming. Hoxha will write that he says, “Leave the specialists to get on with their discussions, Comrade Zlatic, because this does not impair your prestige or ours or even that of the cotton!” Hoxha will say that two or three days later, Economy Minister Nako Spiru reports that Zlatic said, “there are two economic lines in our country: the line of the Central Committee, which is correct in principle, and, parallel with this, the concretization of a second line in practice, contrary to that of the Central Committee,” which Spiru sees as an attack on him. According to Paulin Kola, only Spiru publicly opposes the economic integration, and he is the highest ranking official in close contact with Soviet officials. Zlatic objects to the slow pace of economic integration and what Yugoslavia sees as Albanian appeals to the Soviets. Specifically, the unification of prices in the two countries is supposed to be done in May, but takes until late June, and rates of pay issues in late May are not resolved until July. On June 20 or 21, Hoxha sends Spiru and Koci Xoxe, who is close to Zlatic, to meet with Zlatic about the Yugoslav concerns. Xoxe believes the accusation should be investigated, and there is tension between him and Spiru. The Albanian leadership rejects the charge of two lines, and Xoxe does not put up opposition. [Hoxha, 1982, pp. 327-335; Kola, 2003, pp. 87-88]

Yugoslavia’s envoy to Albania Savo Zlatic requests a meeting with Albanian Prime Minister Enver Hoxha and Interior Minister Koci Xoxe regarding the views of the Central Committee of the Communist Party of Yugoslavia (CPY) on relations between the two countries. According to Hoxha’s later account, Zlatic starts by saying, “A general decline in our relations is being observed, and especially in the economy our relations are quite sluggish.” The Yugoslavs say disputes in joint enterprises are constantly being taken to an arbitration commission, that there is an improper attitude towards the Yugoslav advisers, and that Albanians are accusing the Yugoslavs of not fulfilling their obligations while being lax about fulfilling their own commitments.
Plans for a Balkan Federation - Zlatic says Yugoslav relations with Hungary, Romania, and Bulgaria are advancing much more than relations with Albania. Further, Zlatic says Albania’s draft five-year plan is autarchic, in going beyond grain growing and light industry, when the Yugoslavs can provide the products of heavy industry. Hoxha will later say that the Albanian leadership never intended to make their economy “an appendage of the Yugoslav economy” in the way Zlatic is suggesting, although perhaps Albanian Economy Minister Nako Spiru did when he signed an Economic Convention in Belgrade (see November 27, 1946). Hoxha says Spiru kept silent about any concerns he had. Hoxha will also later claim that Xoxe knew of plans for union between Yugoslavia and Albania, but he did not. Zlatic says “The present-day Yugoslavia is its embryo, the nucleus of the federation [of Yugoslavia, Albania, and Bulgaria],” and “In practice the ‘economic union’ is the federation itself.” The Yugoslav plan is to form joint military, culture, and foreign policies later, and include additional countries. The leadership should only talk about economic unification for the time being, Zlatic says, but “this is the best way for the rapid development of the relations of our joint economies,” which is a necessity for Albania. Therefore, Zlatic says, this is not Yugoslav “pressure” to unify. Zlatic says Spiru “put his trust in the advice of the Soviets” regarding the five-year plan, creating a “wrong, unrealistic, anti-Yugoslav and anti-Albanian” plan. Hoxha will later recount saying that the Albanian leadership sent Spiru to consult the Soviets and backs the plan. Yugoslavia calls for a strengthened Co-ordination Commission, as “a kind of joint economic government,” but Zlatic cannot give Hoxha details. The Yugoslavs have not allocated funds for Albania’s five-year plan, so Zlatic says there should only be a one-year plan for 1948. Scholar Paulin Kola will later write that Zlatic says Albania receives more aid than a republic of Yugoslavia and that Zlatic repeats the Yugoslav demand that Albania not make economic agreements with other countries without Yugoslavia’s approval.
Yugoslavs Accuse Spiru of Treason - Zlatic blames all of the problems on Spiru and his allies, while Hoxha expresses doubt and says Spiru is not in control. Zlatic says Spiru lied about Yugoslavia promising 21 billion dinars to Albania. Hoxha will later say that the Vice-President of the State Planning Commission, Kico Ngjela, verifies that the Yugoslavs promised the funding. Spiru is allegedly an “agent of imperialism” sabotaging Yugoslavia’s relations with Albania and the USSR. Hoxha requests Zlatic’s statements in writing, and Zlatic is evasive. Hoxha will later say the Yugoslavs’ real attack was on him, and that the allegations were a signal to Xoxe to try to replace him. [PLA, 1971, pp. 312; Hoxha, 1974, pp. 750 -753; Hoxha, 1982, pp. 353-373; Kola, 2003, pp. 89-90]

Yugoslav representative Savo Zlatic meets with Albanian Prime Minister Enver Hoxha, Koci Xoxe, and Pandi Kristo and lays out the Yugoslav plan for a commission to coordinate the Yugoslav and Albanian economies. As Zlatic puts it, “Our governments should not quarrel with each other through the fault of a few directors or specialists of the economy.” The Yugoslavs appoint Sergej Krajger to chair the Commission, and Xoxe says Kristo should be the Albanian liaison. Hoxha is still concerned whether it will be “an organ above our governments.” Zlatic denies this, and says “…the commission will be engaged with the problems which have to do with common plans, with the most effective ways for the co-ordination of plans, with the definition and detailing of the budgets, investments and income, with checkup on the accomplishment of tasks and measures which will be allocated, hence with all the major problems in [the economic] field. After that let the government decide about the economy.” He also says “We came with the idea that the time was over when doubts and frictions began over every issue” and that Hoxha should trust Yugoslavia. Hoxha later recounts that the Commission did become “a kind of government over the government,” duplicating the Albanian government’s departments and allowing Yugoslavia to legally rob Albania. [Hoxha, 1974, pp. 760-762; Hoxha, 1982, pp. 421 - 427]

At the Eighth Plenum of the Communist Party of Albania’s Central Committee, Yugoslavia’s criticism of the CPA and the Yugoslav plan to accelerate unification are endorsed. Koci Xoxe, as interior minister and the CPA’s organizational secretary, uses his power to threaten, remove, or arrest people. Mehmet Shehu is barred from the meeting. In an unusual turn, there is no report to the Plenum, other than what Prime Minister and CPA General Secretary Enver Hoxha will call “a so-called conclusion of a meeting of the Political Bureau,” presented by Xoxe. According to Hoxha, Xoxe conspires with Xhoxhi Blushi, Nesti Kerenxhi, Pellumb Dishnica, Tahir Kadare, Gjin Marku, and others, who turn the meeting from questions of substance to reviewing alleged misconduct by the recently deceased Economy Minister Nako Spiru and others. Hoxha does accept some of the criticisms of Spiru, Liri Belishova (Spiru’s wife), and Shehu; many years later Belishova and later Shehu will be charged with treason. At the Plenum, it is implied that Hoxha allowed Spiru to act. Xoxe and Pandi Kristo urge the Plenum to expand its criticism of the leadership, but Hoxha will later say his clean record prevented attack, and he makes few comments. According to Hoxha, Xoxe comes close to accusing him of leading a faction with Spiru. Nonetheless, Hoxha later says that he thinks the majority in the CPA and Albania do not approve of the Plenum’s conclusions. The Political Bureau is enlarged. A committee is formed to draft a resolution to be approved at a later Plenum.
Results of the Plenum - According to the official party history, Xoxe uses intimidation and surveillance to control the party and plans to execute opponents, weakens mass organizations such as the unions, and wants to abolish the Communist Youth Organization, formerly headed by Spiru. Yugoslav advisers become unquestionable. The Co-ordination Commission becomes “almost a second government,” and joint companies come under Yugoslav control. Fraternization is encouraged to make unification look like a popular demand. Hoxha prevents Xoxe from expelling all Soviet advisers, merging the Albanian military with the Yugoslav military, and unifying the countries. Subsequently Savo Zlatic, Xoxe, Kristo, and Themelko will say the Soviet advisers are generally no longer needed, but Hoxha, Hysni Kapo, and Gogo Nushi are able to keep them in the country. Yugoslavia wants Albania to request unification, and the Political Bureau decides to ask for clarification from Yugoslavia and the USSR leadership.
Varying Accounts - According to Albanian academic Paulin Kola, Hoxha will endorse federation at a Political Bureau meeting on March 14 and say that was the plan from the beginning, and is ready for formal announcement. Kola will portray both Hoxha and Xoxe as pro-Yugoslav and pro-Soviet. [PLA, 1971, pp. 314-317; Hoxha, 1982, pp. 446-469; Kola, 2003, pp. 92]

In response to a March letter from the Albanian government to Yugoslavia, Yugoslav representative to Albania Savo Zlatic meets with Albanian Prime Minister Enver Hoxha, Interior Minister Koci Xoxe, leading Albanian communists Hysni Kapo and Pandi Kristo, and Yugoslav economic planner Sergej Krajger. In what Hoxha sees as a retreat, the Yugoslavs focus on economic unification and say that Albania and Yugoslavia should coordinate their policies, but not unify politically at this point. Yugoslavia proposes coordination of foreign policy, economic planning methodology, trade, finance, laws, passports, education, and open borders. It says coordination commissions should be created in each country, the one in Albania having an Albanian minister and a Yugoslav deputy minister, and vice versa in Yugoslavia, as “the beginning of the future joint government.” Zlatic says they should draft a joint protocol at the meeting, and Hoxha asks why the Yugoslavs refuse to commit their proposals to paper. He says Albania wants to know why they should unify, not start working on it. Kraejger says the unification only covers economic matters, but Hoxha counters that the coordination commission has not streamlined things. Kraejger says Albania is making unreasonably large requests for tweezers, boot polish, and nails, pen nibs, beverage essence, etc., but Kristo says the Yugoslavs suggested it, because they had stock to get rid of. Hoxha demands that the Yugoslavs present a document. He will later recount that Albania still had not been informed of Soviet-Yugoslav tensions, and only receives a copy of a key March 27, 1948 letter from the Central Committee of the Communist Party of the Soviet Union to the Communist Party of Yugoslavia two or three days after this meeting. [Hoxha, 1982, pp. 477-484; Kola, 2003, pp. 93-94]

The multilateral Communist Information Bureau (Cominform) condemns the leadership of the Communist Party of Yugoslavia on June 28, 1948. The declaration is published on July 1 in Albania, following the Ninth Plenum of the Central Committee of the CPA on June 27-30. The Albanian legislature, the People’s Assembly, will subsequently cancel all treaties with Yugoslavia, other than the July 1946 Treaty of Friendship and Mutual Aid. The CPA leadership refuses an invitation to send a delegation to the CPY’s Fifth Congress. [Hoxha, 1982, pp. 501-502]

The Nixon administration revamps the Bureau of the Budget into the Office of Management and Budget (OMB). In 2007, author Charlie Savage will describe the first OMB as “a brain trust of political loyalists who helped the president to manage the sprawling federal bureaucracy so that he would bend its work to his agenda.” By President Nixon’s second term, his top officials are dissatisfied with the results, and decide to take stronger steps. According to administration memos, the new strategy is, as Savage will write, “to politicize the bureaucracy by purging it and then restocking it with ‘Nixon loyalists’ who would ‘retake the departments.’ Agency heads were to send regular reports to Nixon’s chief of staff, H. R. Haldeman, about their progress in ‘gaining control of the bureaucracy.’” The efforts will bear little fruit after the Watergate scandal derails the idea. [Savage, 2007, pp. 304] The Reagan administration will revive the scheme (see February 1981 and After).

The federal government enacts the Revenue Act as a companion, and precursor, to the omnibus Federal Election Campaign Act (FECA—see February 7, 1972). The Revenue Act creates a public campaign fund for eligible presidential candidates, beginning with the 1976 presidential election, through the provision of a voluntary one-dollar checkoff box on federal income tax returns. (This provision was actually introduced into law by the 1968 Long Act.) The law also allows for a $50 tax deduction for individual filers for contributions to local, state, or federal candidates, a provision that will be eliminated in 1978. It provides a $12.50 tax credit for the same purpose, a provision that will be raised to $50 in 1978 and eliminated in 1986. [Federal Elections Commission, 1998; Campaign Finance Timeline, 1999; Center for Responsive Politics, 2002 ]

President Nixon officially announces the end of the gold standard system of monetary policy for international exchange of gold deposits in an evening address to the country. Nixon’s move to sever the link between the dollar’s value and gold reserves effectively ends the Breton Woods system of monetary exchange and changes the dollar to a “floating” currency whose value is to be determined largely by market influences. Nixon’s decision results from a run on gold exchanges and rampant speculation in gold markets in Europe, and he changes the US monetary policy after receiving advice from Treasury Secretary John Connally, Under Secretary for Monetary Affairs Paul A. Volcker, and others in a special working group. The dollar becomes a fiat currency, causing a brief international panic before other countries follow suit and also allow their currencies to “float.” [New York Times, 8/16/1971, pp. 1]

On a two day tour of Europe stopping in London and Paris to meet with finance ministers, Undersecretary of the Treasury for Monetary Affairs Paul A. Volcker meets with the finance ministers of both Britain and France to reassure their governments that the end of the gold standard is in the best interests of both governments and maintain that the United States is in no position to prevent other governments from “floating” their currencies. [New York Times, 8/18/1971]

Edward M. Bernstein, former director of research for the International Monetary Fund (IMF) and attendee to the Breton Woods conference, calls on international governments to handle all reserve exchange transactions in a reserve settlement account whereby “countries would earmark their gold, SDR’s (Special Drawing Rights), dollar, and other foreign exchange” for the account. In doing so the countries would have the opportunity to settle all reserve transactions through the account, thereby eliminating excess reserve accruals and violent market influences. [New York Times, 8/26/1971]

Senator J. William Fulbright (D-AR) of the Foreign Relations Committee warns of further turmoil in the Middle East due to dependence of foreign oil and the US stance on Israel. He states his assertion that forcible acquisition of Middle East oil rights and supplies is imminent given the current course he sees. He proceeds to outline a vision for a political solution amenable to all sides recognizing Israel’s security interests, the need for stability in the region to guarantee oil exports, as well as recognizing Arab state economies. Senator Henry “Scoop” Jackson (D-WA) immediately replies to Fulbright’s statements, calling them “irresponsible” and goes to support Israel in the debate. Fulbright responds with his plan for keeping a calm Middle East, but also warns of the possibility of terrorist actions perpetrated by Middle Eastern powers and individuals stemming from current policy stances taken by the US and Israel. He also cautions on the possibility of an oil embargo should the current policy proceed unabated. [New York Times, 5/22/1973, pp. 5]

Organization of Arab Petroleum Exporting Countries (OPEC) announces five percent cutbacks for all members on oil exported to the United States and the Netherlands in a meeting held in Kuwait. This event ushers in the era of “oil as a weapon” in foreign policy utilized by Arab powers. Protesting the US and the Netherlands’ support of Israel in the on-going Yom Kippur War, OPEC sets the tone for other Arab and Muslim nations. [New York Times, 10/18/1973, pp. 1]

In the aftermath of the Watergate scandal (see August 8, 1974), amendments to the Federal Election Campaign Act (FECA—see February 7, 1972) provide the option for full public financing for presidential general elections, matching funds for presidential primaries, and public expenditures for presidential nominating conventions. The amendments also set spending limits on presidential primaries and general elections as well as for House and Senate primaries. The amendments give some enforcement provisions to previously enacted spending limits on House and Senate general elections. They set strict spending guidelines: for presidential campaigns, each candidate is limited to $10 million for primaries, $20 million for general elections, and $2 million for nominating conventions; Senatorial candidates are limited to $100,000 or eight cents per eligible voter, whichever is higher, for primaries, and higher limits of $150,000 or 12 cents per voter for general elections; House candidates are limited to $70,000 each for primaries and general elections. Loans are treated as contributions. The amendments create an individual contribution limit of $1,000 to a candidate per election and a PAC (political action committee) contribution limit of $5,000 to a candidate per election (this provision will trigger what the Center for Responsive Politics will call a “PAC boom” in the late 1970s). The total aggregate contributions from an individual are set at $25,000 per year. Candidates face further restrictions on how much personal wealth they can contribute to their own campaign. The 1940 ban on contributions from government employees and contract workers (see 1940) is repealed, as are the 1971 limitations on media spending. Perhaps most importantly, the amendments create the Federal Election Commission (FEC) to oversee and administer campaign law. (Before, enforcement and oversight responsibilities were spread among the Clerk of the House, the Secretary of the Senate, and the Comptroller General of the United States General Accounting Office (GAO), with the Justice Department responsible for prosecuting violators (see 1967).) The FEC is led by a board of six commissioners, with Congress appointing four of those commissioners and the president appointing two more. The Secretary of the Senate and the Clerk of the House are designated nonvoting, exofficio commissioners. [Federal Elections Commission, 1998; Campaign Finance Timeline, 1999; Center for Responsive Politics, 2002 ] Part of the impetus behind the law is the public outrage over the revelations of how disgraced ex-President Nixon’s re-election campaign was funded, with millions of dollars in secret, illegal corporate contributions being funneled into the Nixon campaign. [Campaign Finance Timeline, 1999; Connecticut Network, 2006 ]

President Ford fires a number of Nixon holdovers and replaces them with “my guys… my own team,” both to show his independence and to prepare for a bruising 1976 primary battle with Ronald Reagan. The wholesale firings and reshufflings are dubbed the “Halloween Massacre.” Donald Rumsfeld becomes secretary of defense, replacing James Schlesinger (see November 4, 1975). George H. W. Bush replaces William Colby as director of the CIA. Henry Kissinger remains secretary of state, but his position as national security adviser is given to Brent Scowcroft. Dick Cheney, Rumsfeld’s deputy chief of staff, moves up to become the youngest chief of staff in White House history. Perhaps the most controversial decision is to replace Nelson Rockefeller as Ford’s vice-presidential candidate for the 1976 elections. Ford’s shake-up is widely viewed as his cave-in to Republican Party hardliners. He flounders in his defense of his new staffers: for example, when Senator Barry Goldwater (R-AZ) asks him why he thinks Rumsfeld is qualified to run the Pentagon, Ford replies, “He was a pilot in the Korean War.” The ultimate winner in the shake-up is Rumsfeld, who instigated the moves from behind the scenes and gains the most from them. Rumsfeld quickly wins a reputation in Washington as a political opportunist, gunning for the vice presidency in 1976 and willing to do whatever is necessary to get it. Rockefeller tells Ford: “Rumsfeld wants to be president of the United States. He has given George Bush the deep six by putting him in the CIA, he has gotten me out.… He was third on your [vice-presidential] list (see August 16-17, 1974) and now he has gotten rid of two of us.… You are not going to be able to put him on the [ticket] because he is defense secretary, but he is not going to want anybody who can possibly be elected with you on that ticket.… I have to say I have a serious question about his loyalty to you.” Later, Ford will write of his sharp regret in pushing Rockefeller off the ticket: “I was angry at myself for showing cowardice in not saying to the ultraconservatives: It’s going to be Ford and Rockefeller, whatever the consequences.” [Werth, 2006, pp. 340-341] “It was the biggest political mistake of my life,” Ford later says. “And it was one of the few cowardly things I did in my life.” [US Senate, 7/7/2007]

An amendment to a Congressional appropriations bill is signed into law. The amendment, sponsored by Representative Henry Hyde (D-IL), prohibits the use of certain federal funds to fund abortions, and primarily affects Medicaid payments. It will quickly become known as the Hyde Amendment and will be renewed every year thereafter. The amendment is a response to the 1973 legalization of abortion by the US Supreme Court’s Roe v. Wade decision (see January 22, 1973), and represents the first major victory by anti-abortion forces to restrict the availability of abortions in the US. Many abortion advocates say the amendment unfairly targets low-income women, effectively denying them access to abortions, and restricts abortions to women who can pay for them. A 2000 study will show that up to 35 percent of women eligible for Medicaid would have had abortions had public funding been available to them; instead, they carried their pregnancies to term against their own wishes. The American Civil Liberties Union (ACLU) will call the amendment “discriminatory.” In 1993, the wording of the Hyde Amendment will be modified to read, “None of the funds appropriated under this Act shall be expended for any abortion except when it is made known to the federal entity or official to which funds are appropriated under this Act that such procedure is necessary to save the life of the mother or that the pregnancy is the result of an act of rape or incest.” The wording will remain the same for the next 17 years. As the amendment covers only federal spending, some states, including Hawaii and New York, cover abortions. Court challenges will result in the forcible coverage of abortions in other states. [American Civil Liberties Union, 7/21/2004; National Abortion Federation, 2006; National Committee for a Human Life Amendment, 3/2008 ]

The US Foreign Intelligence Advisory Board recommended in 1970 that “economic intelligence be considered a function of national security” equal to that of other intelligence. In 1977, the NSA, CIA, and Department of Commerce forms a joint “Office of Intelligence Liaison” (later renamed the “Office of Executive Support”) specifically authorized to handle “foreign intelligence” of interest to the Commerce Department, much of it provided by the NSA. The other countries using Echelon, the NSA’s satellite surveillance program, which include Britain, Canada, Australia, and New Zealand, all operate similar programs. President Bill Clinton will extend this operation in 1993. In 1993, the European company Panavia will be specifically targeted over aircraft sales to the Middle East. In 1994, US companies will be given NSA and CIA intelligence intercepts that help them win contracts in Indonesia. Other information that will be provided by US intelligence to US and allied corporations include information about the emission standards for Japanese automobiles, 1995 trade negotiations over the US importing of Japanese luxury cars, France’s participation in the GATT trade negotiations of 1993, and the 1997 Asian-Pacific Economic Conference. [Science and Technology Assessments Office, 8/15/2000]

Ben Klassen, the founder and leader of the Church of the Creator (COTC—see 1973), mails unsolicited copies of his booklet, “The Brutal Truth About Inflation and Financial Enslavement—The Federal Reserve Board—The Most Gigantic Counterfeiting Ring in the World,” to people and organizations he feels might be interested in his views. The essay alleges that “the Federal Reserve banks are owned, lock, stock, and barrel, by a criminal gang of ‘International Bankers,’” and claims, “The Federal Reserve owns the US government and manipulates it like a puppet, solely for the interests of this avaricious international gang of Jewish jackals, who control the world, its money, and its economy.” The essay concludes, “Now that you understand the Jewish program of piracy, looting, and enslavement by means of the Federal Reserve and money manipulations, now get the rest of the story and the program of the Church of the Creator by reading their White Man’s Bible: Nature’s Eternal Religion” (see 1981). [Anti-Defamation League, 1993]

The US Federal Reserve, under recent Carter appointee Paul Volcker, declares that it will begin a major policy shift by tightening the money supply. Its main method of doing so will be significant increases in the interest rate. [Campbell, 2005, pp. 194-195]

Reagan administration officials decide to revive the Nixon-era scheme to use the Office of Management and Budget (OMB) to purge the federal bureaucracy of “dissidents” and replace them with loyal conservatives (see 1970 and After). As part of the plan, President Reagan issues an executive order requiring all agencies to submit proposed new policies to the OMB for review before they can be put into effect. [Savage, 2007, pp. 304-305]

Pristina University students begin protesting over dormitory and dining hall conditions at the school. The protest grows and hundreds of protesters go off campus, where they are blocked by police. The police try to detain the alleged organizers, which brings out more people overnight, and begins to radicalize their demands. In coming weeks and months, the government and media will blame many groups and countries for the demonstrations, but in interviews years later with Albanian scholar and diplomat Paulin Kola, Kosovan nationalist Xhafer Shatri will say that he thinks the events were unplanned. On the morning of March 12, the crowd is dispersed with tear gas. More demonstrations will erupt in a week.
The Students of Kosovo - Because unemployment is high in Kosovo, many Kosovars turn to further education, making Kosovo’s ratio of students to population the greatest in Yugoslavia—274.7 out of 1,000, while Yugoslavia’s national ratio is 194.9. One in three Kosovars is a student of some kind, yet educational facilities for Albanians are underfunded. Pristina University has 36,000 full-time and 18,000 extension program students, two-thirds more than planned when the university was created, forcing some students to share beds. About 80 percent of the students are in programs such as Islamic art, Albanian history, or folklore, graduating more students than there are available jobs in these fields. Their professors are generally poorly qualified, more than half lack PhDs, and they generally produce little new research and are not well regarded by their colleagues elsewhere in Yugoslavia. The student body is generally disaffected. Many ignore Rilindja, an Albanian language newspaper in Pristina, which covers university news on Wednesdays, and prefer TV and radio from Albania rather than Yugoslavia’s Albanian stations.
Economic Conditions - Kosovo is the poorest part of Yugoslavia, and Albanians are generally poorer than Slavs—for example, in 1980 67,000 Kosovars were unemployed, over 10 percent of the population and the highest rate in Yugoslavia. Out of every 1,000 people newly employed in Kosovo in the early ‘80s, 258 are Montenegrin, 228 Serb, and 109 Albanian, though the majority of Kosovars are Albanians. By 1988, Serbs will be 23.6 percent of the population and have 36 percent of the jobs, and Montenegrins will be 2.5 percent of the population and have 9.3 percent of the jobs. Mahmut Bakalli, president of the Kosovo Provincial Committee of the League of Communists of Yugoslavia, is unable to change Kosovo’s economic relations with the rest of Yugoslavia, which pays very little for natural resources obtained from Kosovo. [Vickers, 1998, pp. 196-197, 199-200, 216; Kola, 2003, pp. 156-157]

Rep. Fernand J. St. Germain (D-RI), with 28 co-sponsors, introduces HR 6267, the “Net Worth Guarantee Act” officially entitled “A bill to revitalize the housing industry by strengthening the financial stability of home mortgage lending institutions and ensuring the availability of home mortgage loans.” [Library of Congress, 5/19/2008] As introduced, the bill would create a fund for loans to those troubled banks and savings and loans institutions that would have to be put into receivership if their condition deteriorates to a small degree from the bill’s qualifying requirements. The provisions are as follows:
Amendments to the Federal Deposit Insurance Act (which regulates the Federal Deposit Insurance Corporation, FDIC), the National Housing Act (which regulates the Federal Home Loan Bank Board, FHLBB), and the Federal Credit Union Act (the National Credit Union Administration Board, NCUAB) so that the regulated bodies can guarantee the net worth of qualified insured institutions.
Requirements that a qualifying depository institution be one that is threatened with insolvency, as measured by very low net worth and a recent trend of losses; that the institution be one that mainly serves the residential mortgage industry, as measured by the share of its loans or other assets that are held in or collateralized by residential mortgages or real estate; and that it continue in this service under the net worth guarantee, as measured by the share of its new deposits that it devotes to certain types of mortgages.
Rules for determining the initial amount of the guarantee, and for either extending or phasing out the assistance to a given institution. Extensions after two years are to be contingent upon a showing that “certified continued earnings losses are caused by general market conditions and not by the actions of the institution.”
Creation of a Net Worth Guarantee Account in the US Treasury in the amount of $8.5 billion to cover the payment of any guarantees.
A sunset date for new extensions of guarantees.
An oversight process in which the three bank regulating bodies report quarterly to Congress on their activities in granting guarantees, and the comptroller of the currency provides semiannual audits. [Library of Congress, 5/14/2008; Library of Congress, 5/14/2008]
Fate in the House - The Net Worth Guarantee Act passes the House of Representatives on May 20, 1982, with amendments that extend the coverage to qualifying State-chartered commercial banks, and qualifying national banks whether or not they are members of the FDIC; that add investment in residential housing co-operative stock and mortgages on multifamily rental projects to the qualifying activities for sustaining the guarantee; that alter the exit path from the program; that add compliance with community credit provision requirements under the Community Reinvestment Act of 1977; that make the Treasury senior to holders of existing subordinated debt of any guaranteed bank that later winds up in receivership; and that clearly give the sunset date as September 30, 1984. [Library of Congress, 5/14/2008; Library of Congress, 5/14/2008; Library of Congress, 5/14/2008]
Eventual Fate - With substantial amendments that address other banking regulatory issues besides the net worth of depository institutions, the bill finally passes the Senate under several short titles, of which the primary is “Depository Institutions Amendments of 1982,” superseding S.2879 sponsored by Sen. E.J. “Jake” Garn. The bill is enacted with the signature of President Ronald Reagan on October 15, 1982 as the Garn-St. Germain Depository Institutions Act of 1982. [Library of Congress, 5/14/2008]

The Capital Assistance Act of 1982 is introduced by Sen. E.J. (Jake) Garn (R-UT) and three co-sponsors under the title, “A bill to provide flexibility to the Federal Savings and Loan Insurance Corporation and the Federal Deposit Insurance Corporation to deal with financially distressed institutions.” [Library of Congress, 5/20/2008; Library of Congress, 5/20/2008] The bill provides the following:
Amendments to the National Housing Act and the Federal Deposit Insurance Act so that the Federal Savings and Loan Insurance Corporation (FSLIC) and the Federal Deposit Insurance Corporation (FDIC) may buy capital certificates from institutions that they regulate, for the purpose of either increasing or maintaining the capital of those institutions.
Criteria that qualifying institutions must meet to receive this assistance. The criteria differ from those required by the Net Worth Guarantee Act importantly in requiring a prior net worth of three percent of assets, instead of two percent in the House version.
Parameters of the initial capital certificates, and provision for the subsequent modification of those parameters at the discretion of the FSLIC and FDIC.
Restriction of aid to cases in which this course of action is less costly than liquidation of the institution would be. [Library of Congress, 5/20/2008] The most important difference between the Capital Assistance Act (CAA) and the Net Worth Guarantee Act (NWGA) is that the CAA is meant to avoid the need for a Congressional appropriation of funds. Instead of establishing a Treasury account to be drawn on to fund the assistance, as does the NWGA, the CAA would permit the assisting agencies, FSLIC or FDIC, to give the thrifts promissory notes in exchange for the thrifts capital certificates. [New York Times, 5/15/1982] The Capital Assistance Act of 1982 is evidently the bill that Rep. Wylie promised several days previously would be introduced into the Senate, on the occasion of the approval by the House Banking Committee of the Net Worth Guarantee Act without the amendments that Wylie had offered for that bill. The new bill in the Senate has several features of Wylie’s amendments. [New York Times, 5/12/1982] According to Sen. Garn, Treasury Secretary Donald T. Regan also contributed to the new bill.
Eventual Fate - On August 19, while under consideration in the Senate Banking Committe, the key provisions of S.2531 will be incorporated into S.2879 and passed to the floor of the Senate the next day. Bill S.2879 will be passed by the Senate on September 24, and ultimately incorporated into H.R.6267, the Garn-St Germain Depository Institutions Act of 1982. [Library of Congress, 5/20/2008; Library of Congress, 5/20/2008]

The International Monetary Fund approves of a $3.9 billion to the Mexican government. As a condition for receiving the loan, the Mexican government is expected to engage in a series of free market reforms. Such reforms include: fiscal austerity, privatization of state-owned companies, reductions in trade barriers, industrial deregulation, and foreign investment liberalization. [New York Times, 12/24/1982, pp. D4; Global Exchange, 9/2001, pp. 3 ]

The IMF’s recommended reforms are widely viewed to have a negative effect on the earnings of the average Mexican. For example:
In the period between 1983 and 1988, per capita income falls at a rate of about 5 percent per year.
In the same period, the value of workers’ real wages falls from 40 to 50 percent.
The share of national income received by workers declines from 49 percent in 1981 to 29 percent in 1990.
Adjusted for inflation, the Mexicans’ real wages fall by 75 percent throughout the 1980s. [Global Exchange, 9/2001, pp. 4 ; Harvey, 2005, pp. 100]

The Mexican government, in 1984, controls about 1,212 firms and entities. By December of 1988, this number will be reduced to 448 through a massive privatization program. [Hart-Landsberg, 12/2002]

US banker Douglas McDermott says of the US-backed Venezuelan dictator Marcos Perez Jimenez, “You have the freedom here to do what you want with your money, and to me, that is worth all the political freedom in the world.” [Hunt, 9/1/2009, pp. 9]

Financial sources inform media outlets that the Mexican government’s failure to cut its budget deficit in accordance with an IMF austerity program may jeopardize its access to $908 million worth of assistance. This news comes at about the same time as an earthquake hits Mexico that will require the government to spend even more on reconstruction, thereby increasing the deficit. The IMF says that it will not make any exception as a result of Mexico’s fiscal needs following the earthquake. [New York Times, 9/20/1985, pp. A6]

A draft memorandum of the Serbian Academy of Arts and Sciences (SANU), the most prominent academic body in Yugoslavia, arguing that Serbs have been oppressed in Yugoslavia and are the subject of genocide in Kosovo, is leaked. This is the first policy document to include Serb grievances throughout Yugoslavia, not just in Kosovo. The SANU memorandum says that Yugoslavia’s government is “increasingly contradictory, dysfunctional, and expensive,” citing Serbia’s inability to pass a single law in the past decade as an example. The academics say that this was caused by the international communist body Comintern’s labeling of Serbia as an oppressor of other nations, before World War II. The Yugoslav leadership is accused of fomenting Serb guilt, to keep Serbs from opposing “the political and economic subordination to which they were constantly subjected.” The memorandum says Serbia’s economy has been weakened, citing the poverty of Kosovo, with per capita national income 30 percent below that of Macedonia, Montenegro, and Bosnia-Herzegovina, the poorest Yugoslav republics. It calls the March-April 1981 demonstrations a declaration of “open war” on Serbs, “as the finale to a legally prepared administrative, political, and constitutional reform.” The result is said to be “physical, political, legal, and culture genocide” in Kosovo. The academics blame the 1974 Federal Constitution for dismembering the Serb nation three ways, and demand “complete national and cultural integrity” for the Serb nation. Specifically, the authors of the memorandum want the government of Serbia to declare that the federalization of Serbia and the creation of the autonomous provinces was forced. They advocate a constitutional amendment to remove provincial autonomy, as well as settlement of Serbs and Montenegrins in Kosovo to give the area Slavic majority. The lead author is Dobrica Cosic, a writer. Vaso Cubrilovic, author of Serb nationalist policy documents before and during WWII, expresses “senile satisfaction” regarding the SANU memorandum. Subsequently, Serbian President Ivan Stambolic publicly denounces the memorandum, but Slobodan Milosevic, leader of the Serbian branch of the League of Communists of Yugoslavia, keeps party opposition hidden. In January 1987, the Federal Presidency is forced to prepare the requested amendments, with only the Slovenian leadership in opposition. Slavs will also subsequently be encouraged to move to Kosovo. [Vickers, 1998, pp. 221-222; Kola, 2003, pp. 171-173]

The IMF grants Haiti a $24.6 million loan under its Structural Adjustment Facility (SAF). As a condition, Haiti is expected to cut public spending, close “inefficient public enterprises”, and liberalize its trade policy. [Inter Press Service, 12/30/1986]

One of the conditions for Haiti obtaining the IMF loan it previously received (see December 30, 1986) was a lowering of tariffs on rice and an end to support for domestic rice farmers. This has the effect of putting much of Haiti’s rice farmers out of business. [Washington Post, 4/13/2000; Global Exchange, 9/2001, pp. 13 ]

During a symposium hosted by the US-Iraq Business Forum, Assistant Secretary of State Peter Burleigh encourages US companies to do business in Iraq. The business forum reportedly has strong ties to Baghdad. [Jentleson, 1994, pp. 84-85]

Yugoslavia’s National Assembly passes amendments allowing Serbia to change its constitution. The changes are based on an endorsement by Serbia’s Assembly of a working group report that found the 1974 Yugoslav Constitution was unconstitutional in allowing the socialist autonomous provinces of Kosovo and Vojvodina to block amendments to the Serb constitution and that the 1974 constitution was a violation of the Anti-Fascist Council of the National Liberation of Yugoslavia’s plan to form a Yugoslavia with six equal republics after World War II. Under the new constitution, Serbian laws have precedence over provincial laws; Serbia controls judicial appointments and firings; provincial economic and educational policies are coordinated with Serbia; and the provinces lose their diplomatic role, their military power, and much of their police power. The amendments to Serbia’s constitution violate the 1974 constitution, which will remain the law of the land until 1992. [Kola, 2003, pp. 178, 183]

President George H. W. Bush places Vice President Dan Quayle in charge of the “Council on Competitiveness,” whose job is to review proposed agency regulations that arrive at the White House (see January 1985). Quayle’s council bottles up rules that industry opposes, and sometimes blocks them entirely by claiming that they post an excessive burden on businesses. [Savage, 2007, pp. 305]

The League of Communists of Yugoslavia (LCY)‘s Eighteenth Plenum does not approve Slobodan Milosevic’s proposal that the Central Committee be purged; Milosevic, the leader of the LCY’s Serbian branch, retains his post. National LCY leader Stipe Suvar, a Croat, and Milan Kucan, leader of the Slovenian LCY, criticize Milosevic. Suvar proposes a confidence vote in the Politcal Bureau, but Milosevic rejects the idea, because he is a regional leader and the Plenum represents the entire Yugoslav party. Milosevic also ignores the Plenum’s vote to fire his aide, Dusan Ckrebic. The Slovenian leadership is willing to consider Serbia’s demand for constitutional amendment in exchange for more capitalistic economic policies. Milosevic says the recent Serb demonstrations show the high level of civil liberties in Yugoslavia, while Kosovar LCY leader Azem Vllasi, an ethnic Albanian and target of Serb demonstrations, says they are one aspect of “a well-disguised attempt to change the policy of national equality in Yugoslavia and the country’s foundations.” [Kola, 2003, pp. 175-176]

The Mexican government, with technical assistance from the World Bank, sells off a profitable phone company called Telmex. In the months preceding the sell-off, the Mexican government increases the rate of calls by local users from 16 pesos per minute to 115 pesos per minute in order to make the company more attractive to potential buyers. This makes the privatization of the phone system detrimental to consumers. In a 1992 report, The World Bank will admit that “the privatization of Telmex, along with its attendant pricetax regulatory regime, has the result of ‘taxing’ consumers—a rather diffuse, unorganized group—and then distributing the gains among more well-defined groups, shareholders, employees, and the government.” [Global Exchange, 9/2001, pp. 4 ]

Around $91 billion flows into the Mexican economy from foreign investors, allowing for a certain degree of economic growth. This growth slows down in 1992, however, as trade and current account deficits increase sharply. The deficits suggest a large deterioration in the country’s economic base during the 1980s. [Hart-Landsberg, 12/2002]

King Fahd (left) with Bakh bin Laden (right), a brother of Osama bin Laden, in the mid-1990s. [Source: Agence France-Presse] (click image to enlarge)Beginning in the 1920s, Mohammed Awad bin Laden rose from relative obscurity by creating a construction company favored by the Saudi royal family. He had 54 children before he was killed in a plane crash in 1968. His son Osama bin Laden was born in 1957. The bin Laden family’s companies continued to grow until they became the second wealthiest family in Saudi Arabia, behind only the Saudi royal family. In May 1990, the bin Laden family registers a new parent company for its business activities called the Saudi Binladin Group. Bakr bin Laden, one of Mohammed’s sons, is running the company by this time. By 9/11, the company will employ 36,000 people in 30 countries. The company has been branching out from construction to many other endeavors. However, it will keep a low profile internationally, as most of its business is still in Saudi Arabia. It has business ties with major international corporations such as General Electric, Unilever, Motorola, Schweppes, Citigroup, and HSBC Bank. [Ha'aretz, 12/18/2002]

On the eve of the election victory by presidential candidate Bill Clinton (D-AR), the Wall Street Journal publishes an op-ed titled “Dracula Liberalism,” which sardonically portrays liberals as vampires and Clinton as their prey. “The Clinton campaign, if you choose to believe, has driven a stake through the heart of American liberalism,” it writes. But the “dead” liberals may yet rise: “Like [famed actor] Bela Lugosi, the liberals possess great, destructive strength. They have the power of hypnosis.… (Has anyone checked the necks recently of [Supreme Court] Justices [David] Souter and [Anthony] Kennedy?)” If Clinton wins the presidency, the Journal writes, “the liberal undead would produce a great many fitful pre-dawn hours for a young President Clinton.… [I]f Bill Clinton wins, don’t bother to fax your congratulations to the White House. Send cloves of garlic instead.” [Jamieson and Cappella, 2008, pp. 61] Editorialist Otis Pike will write two days later that the Journal editorial concluded “what has seemed a daily barrage predicting a dreadful fate for the nation under a Clinton presidency,” even though the Journal’s own reporters were simultaneously running stories with headlines such as “Post-Election Investment Environment Is Seen as Little Changed by Who Wins.” [Newhouse News Service, 11/4/1992]

In preparation for the North American Free Trade Agreement (NAFTA), Mexico opens up its financial services to foreign ownership. By 2000, 85 percent of the banking system will be owned by foreign entities and lending to Mexican businesses will have dropped from 10 percent of the GDP to 0.3 percent. [Jones, 3/2007, pp. 3]

A still from the original ‘Harry and Louise’ TV commercial. [Source: American Environics]Neoconservative publisher and pundit William Kristol writes a five-page memo explaining why and how Republicans can ensure the Clinton administration’s health care proposal fails. The memo warns that if the Clinton health care plan is implemented, and actually improves the lives of Americans, the success of the program would badly damage the Republican Party by improving Americans’ relationship with government. Therefore, the plan must be stopped before it can begin. The memo’s strategy will be used in the powerful “Harry and Louise” media campaign, based on TV commercials featuring an older couple who worry that the program would destroy their relationships with their family doctor. Kristol writes in part: “Passage of the Clinton health care plan, in any form, would guarantee and likely make permanent an unprecedecented federal intrusion into and disruption of the American economy—and the establishment of the largest federal entitlement program since Social Security. It’s [sic] success would signal a rebirth of centralized welfare-state policy at the very moment we have begun rolling back that idea in other areas.… The long term political effects of a successful Clinton health care bill will be even worse—much worse. It will relegitimize middle-class dependency for ‘security’ on government spending and regulation. It will revive the reputation of the party that spends and regulates, the Democrats, as the generous protector of middle-class interests. And it will at the same time strike a punishing blow against Republican claims to defend the middle class by restraining government.… Its rejection by Congress and the public would be a monumental setback for the president, and an incontestable piece of evidence that Democratic welfare-state liberalism remains firmly in retreat.” In 2009, Washington Post columnist Greg Sargent will note: “Here’s what’s striking about this. Kristol repeatedly says defeating Clinton on health care would deal a death knell to something that at the time already appeared on its way towards extinction—the ‘welfare-state,’ or the idea that government can improve the lives of the middle class. Kristol describes this idea as ‘firmly in retreat,’ in the process of being ‘rolled back,’ in need of ‘re-legitimizing.’ At the time the defeat of health care was viewed as a potential final victory over liberalism.” [Plum Line, 3/2/2009; Politico, 3/2/2009; Plum Line, 3/2/2009]

A 15-year period begins during which most trade barriers between the US, Canada, and Mexico will be dismantled in accordance with NAFTA. The New York Times comments: “The government has taken few steps, however, to prepare smaller and medium-sized companies, poor farmers, and inefficient industries for the new competition. Even after a wave of industrial restructuring that cost half a million Mexican jobs, worker re-training programs are almost nonexistent.” [New York Times, 1/1/1994]

Sarah Palin during her tenure on Wasilla’s City Council. [Source: Sarah Palin Truth Squad (.com)]Wasilla, Alaska, City Council member Sarah Palin, a 32-year-old former sportscaster and current housewife, challenges three-term incumbent John C. Stein for mayor. Wasilla is a small town of less than 5,000 residents; Palin is popular among residents for her success in beauty pageants and for her history as a point guard on the 1982 Wasilla High School state basketball championship team. Before the Palin campaign, mayoral elections have focused relentlessly on local issues, such as paving dirt roads and putting in sewers. Personal campaigning revolved around who went hunting with who. [Anchorage Daily News, 10/23/2006; New York Times, 9/2/2008; Anchorage Daily News, 9/2/2008] Instead, Palin, guided by advisers such as Mark Chryson of the Alaskan Independent Party (AIP—see October 10, 2008), runs an unusually negative campaign against Stein. Her campaign slogan is “Positively Sarah.” Palin emphasizes her stance against abortion, her membership in the National Rifle Association (NRA), and her church work. She runs as an outsider against what she calls an “old boy network” that has controlled Wasilla’s government long enough. She vows to replace “stale leadership” and a “tax-and-spend” mentality with “fresh ideas and energy,” and, in campaign literature, complains that citizens asking city leaders for help routinely encounter “complacency, inaction, and even total disregard.” The Alaska Republican Party runs advertisements on Palin’s behalf, a first in Wasilla politics as Alaska municipal politics are officially nonpartisan. Palin also mounts a stinging negative campaign against Stein, including insinuations that he, a Lutheran, is a secret Jew. “Sarah comes in with all this ideological stuff and I was like, ‘Whoa,’” Stein will later recall. “But that got her elected: abortion, gun rights, term limits, and the religious born-again thing. I’m not a churchgoing guy, and that was another issue: ‘We will have our first Christian mayor.’” Of the Jewish campaign theme, Stein will recall: “I thought: ‘Holy cow, what’s happening here? Does that mean she thinks I’m Jewish or Islamic?‘… The point was that she was a born-again Christian.” Stein, who is pro-choice, remembers a “national anti-abortion outfit sen[ding] little pink cards to voters in Wasilla endorsing her.” Victoria Naegele, the managing editor of the local Mat-Su Valley Frontiersman newspaper and herself a conservative Christian, will later recall: “[Stein] figured he was just going to run your average, friendly small-town race. But it turned into something much different than that.… I just thought, ‘That’s ridiculous, she should concentrate on roads, not abortion.’” Palin wins with 638 votes, a 58 percent majority. A local TV station calls her Wasilla’s “first Christian mayor,” though Stein is a Christian as well. [Anchorage Daily News, 10/23/2006; New York Times, 9/2/2008; Time, 9/2/2008; Seattle Times, 9/7/2008; Washington Post, 9/14/2008] Palin has a tumultuous first term as mayor (see Late 1996 - 1999).

A new international alliance of culture ministers “to promote and protect cultural diversity” is formed at the conclusion of the two-day International Meeting on Culture Policy held in Ottawa, Canada. Attending culture ministers from Armenia, Barbados, Brazil, Canada, Croatia, Greece, Iceland, Italy, Ivory Coast, Mexico, Morocco, Poland, Senegal, South Africa, Sweden, Switzerland, Trinidad and Tobago, Tunisia, Ukraine, and the United Kingdom—dubbed the Ottawa Group of Ministers—agree to set up the International Network on Cultural Policy (INCP). Both the ministers’ meeting and the formation of the new alliance were launched at the initiative of Canada, largely through its Heritage Minister Sheila Copps. An initial “contact group” consisting of Sweden, Mexico, Greece, and Canada is formed to coordinate activities of the new network. Canada provides the first secretariat for INCP. The ministers agree to set the next meeting to be held the following year in Mexico, and the meet after that, in 2000, in Greece. Canadian Heritage Minister Sheila Copps says, in the light of the network’s formation, “Canadians are delighted that we’ve found so many other countries that share our determination to put culture front and centre on the global stage and to promote cultural diversity for everyone in the world.” [International Network on Cultural Policy, 6/30/1998]

The US routinely denies that its satellite surveillance program, Echelon, provides any information to corporations, noting that the law clearly prevents such transactions. But former CIA director James Woolsey confirms that the US does indeed conduct economic espionage against its European allies, though he does not specifically mention Echelon. Woolsey, a well-known neoconservative, justifies such actions by accusing European companies of using bribery to gain unfair advantages against US corporations. “We have spied on you because you bribe,” he writes in the Wall Street Journal. “[European] products are often more costly, less technically advanced or both, than [their] American competitors’. As a result [they] bribe a lot.” [BBC, 7/6/2000]

Joseph Kelliher, a top political appointee on Vice President Cheney’s energy task force (see January 29, 2001) e-mails natural gas executive Dana Contratto with the following question: “If you were King or Il Duce, what would you include in a national [energy] policy, especially with respect to natural gas issues?” The e-mail is never intended to become public knowledge. Kelliher will later become President Bush’s appointee to head the Federal Energy Regulatory Commission (FERC). [Savage, 2007, pp. 86]

Nicky Hager. [Source: Rotorua District Council]New Zealand journalist Nicky Hager appears before a European Parliament investigative committee to testify about the US’s satellite surveillance program, Echelon (see July 11, 2001). Hager has discovered information about Echelon’s use by the New Zealand equivalent of the NSA, the Government Communication Security Bureau (GCSB). In researching Echelon’s use by the USA, Canada, Britain, Australia, and New Zealand, Hager learned of the extent of the system’s “capability to monitor the whole of governments, regional and international organizations, non-government organizations, companies and individuals throughout Europe.” Although Hager warns the committee not to focus exclusively on Echelon’s use for corporate benefits, he gives several examples of such uses in the South Pacific, including monitoring “deals to do with Japan… collecting intelligence on meat sales, which is very important for New Zealand… intelligence to do with oil prices… [and] a particularly large Japanese development project in the South Pacific where there was potential for New Zealand companies to win contracts. In other words, there were both macro-level and micro-level economic intelligence being collected.” Corporate executives routinely received such information, Hager testifies, and tells about “the fantastic amount of intelligence that was arriving, for example, monitoring international trade meetings.… From my sources, they said that whenever there was a GATT meeting or another major international meeting, there were hundreds of reports of the monitoring of the different delegations which were arriving in New Zealand and being shared between [British]/USA partners, and I have absolutely no doubt about that, because I have talked to people who saw it coming from the NSA.” [European Parliament, 4/24/2001]

House Democrats Henry Waxman (D-CA) and John Dingell (D-MI) write to Andrew Lundquist, the executive director of the Cheney energy task force (see January 29, 2001), asking for access to the task force’s records. Waxman and Dingell ask with whom the task force met and what had been said at those meetings. They base their request on the 1972 Federal Advisory Committee Act (FACA), an open-government law that states when nongovernment officials, such as energy company officials or lobbyists, help craft public policy, the government must ensure that a balance of viewpoints is represented and such meetings must be open to the press and the public. Two weeks later, Cheney’s chief counsel, David Addington, replies, denying Waxman and Dingell any information. Addington says that FACA does not apply to the task force, and attaches a memo from Lundquist asserting that while nongovernmental officials have been part of the task force’s deliberations, since they were not official members of the task force, their participation does not count. “These meetings… were simply forums to collect individuals views rather than to bring a collective judgment to bear,” Addington writes. Addington then advises the representatives that they need to show “due regard for the constitutional separation of powers,” claims that the White House can assert executive privilege over the task force’s records, and finishes with the assertion that Congress is not even entitled to the information Addington has provided—he has done so, he writes, “as a matter of comity between the executive and legislative branches.” [General Accounting Office, 8/25/2003 ; Savage, 2007, pp. 87-88]

The General Accounting Office (GAO), the nonpartisan investigative arm of Congress, sends David Addington, the chief counsel to Vice President Cheney, a letter declaring that it intends to review the composition and activities of Cheney’s energy task force (see January 29, 2001). Addington is the one who issued the flat refusal to allow members of Congress to see any of the minutes or documents generated by the task force (see April 19 - May 4, 2001); in response, the members of Congress who requested the information asked GAO chief and comptroller general David Walker for help in investigating the task force. Walker is quite bipartisan, having worked for the Reagan and Bush-Quayle administrations before being appointed to the chairmanship of the GAO by President Clinton. [Savage, 2007, pp. 88] Addington will reply to Walker, denying that the GAO has any authority to investigate the task force (see May 16 - 17, 2001). In 2007, author Charlie Savage will call the Cheney-Addington battle with the GAO an early instance of the Bush administration’s fight to claim ever-widening presidential powers at the expense of Congress (see January 21, 2001).

The General Accounting Office (GAO) tries five times to arrange a meeting with David Addington, the chief counsel for Vice President Cheney, regarding the GAO’s request for information about Cheney’s secret energy task force (see January 29, 2001). Addington rebuffs all attempts to meet with GAO officials, and instead sends a letter refusing to comply with the GAO’s request (see May 16 - 17, 2001). On May 17, Addington leaves a voicemail on a GAO telephone saying that he is not authorized to meet with officials to discuss the task force, but that his letter is complete and “self-explanatory.” [General Accounting Office, 8/25/2003 ]

In response to a General Accounting Office (GAO) demand for information about the energy task force chaired by Vice President Cheney (see May 8, 2001), Cheney’s chief legal adviser, David Addington, rebuffs the GAO, claiming that the agency has no authority under the Constitution to investigate the task force. The task force is a creature of the executive branch, Addington argues, and as an arm of the legislative branch, the GAO cannot “inquire into the exercise of authorities committed to the executive by the Constitution.” The president can keep any such government deliberations entirely secret from Congress and the public, Addington asserts, in order to guarantee the “candor” of the advice he receives. GAO chief David Walker replies to Addington, rejecting his interpretation of the Constitution. Addington will, in the words of author Charlie Savage, “follow… injury with insult,” responding to Walker’s request for information by conceding that Congress might have the right to know about the direct costs incurred by the task force, and sending 77 pages of mundane expense reports (see June 21, 2001). The highlight of those reports: task force chair Andrew Lundquist’s ordering of a pizza on his own credit card. Walker will not be cowed by Addington’s flip rejoinder. [Savage, 2007, pp. 88-89]

Vice President Cheney’s top aide, David Addington, begins attending meetings of the Cheney energy task force, further emphasizing the White House’s refusal to cooperate with the General Accounting Office (GAO—see April 19 - May 4, 2001, May 8, 2001, and May 16 - 17, 2001). White House lawyer Bradford Berenson, the legal liaison on the case, is puzzled by the White House’s refusal to cooperate. Most of the information about the task force has already come out in the media, particularly the fact that almost all of the task force’s meetings have been with fossil fuel and nuclear energy corporate executives. But the White House seems willing to weather the controversy in order to keep withholding information from the GAO. In 2007, author Charlie Savage will write, “The long-term payoff was an opportunity to establish a high principle of presidential power: Communications involving the office of the presidency should be secret, whatever a law passed by Congress and signed by some previous president might say.” Addington further enforces the doctrine during the regular morning meetings at the White House counsel’s office, even though he does not work for senior White House counsel Alberto Gonzales. [Savage, 2007, pp. 90-91]

The general counsel for the General Accounting Office (GAO) sends a letter to Vice President Cheney’s chief counsel, David Addington, explaining that the GAO believes its attempt to investigate Cheney’s secret energy task force (see January 29, 2001, May 16, 2001, and May 16 - 17, 2001) is right and proper under US law. [General Accounting Office, 8/25/2003 ]

David Addington, the chief counsel to Vice President Cheney, writes another letter rebuffing the General Accounting Office (GAO)‘s attempt to secure information about Cheney’s secret energy task force (see January 29, 2001 and May 16, 2001). This time, Addington writes that the GAO lacks the authority to obtain the requested information. He reasons that in statute 31 USC 717, which requires the GAO’s chief, the comptroller general, to “evaluate the results of a program or activity the government carries out under existing law,” the words “existing law” do not include the US Constitution. Under statute 31 USC 712, which requires the comptroller general to investigate “all matters related to the receipt, disbursement, and use of public money,” the task force is only required to inform the GAO of financial cost information—hence Addington’s previous letter informing the GAO about the task force’s mundane expenses (see May 16 - 17, 2001 and June 21, 2001). [General Accounting Office, 8/25/2003 ]

Pursuant to his letter to the General Accounting Office (GAO—see June 7, 2001), David Addington, the chief counsel for Vice President Cheney, sends the GAO 77 pages of financial information relating to Cheney’s secret energy task force. The documents cover little more than mundane expenses by the task force, including a pizza bought by task force chief Andrew Lundquist. The GAO will characterize the documents as “virtually impossible to analyze, as they consisted, for example, of pages with dollar amounts but no indication of the nature or the purpose of the expenditure. Nor did the materials reflect any apparent expenses in connection with the work of the six assigned [task force] staff.” [General Accounting Office, 8/25/2003 ; Savage, 2007, pp. 88-89]

Judicial Watch logo. [Source: Judicial Watch]The conservative government watchdog organization Judicial Watch sends a letter to Vice President Dick Cheney demanding to see the records of his secret energy task force (see January 29, 2001 and May 16, 2001). Chris Farrell, the organization’s director of investigations and research, saw a May 2001 Newsweek article about the task force. Farrell later says he was struck by the similarities between Cheney’s energy task force and the 1994 health care task force chaired by then-First Lady Hillary Clinton. “The government can’t operate in secret,” Farrell will later say. “They are answerable to the people. There are appropriate times for secrecy on military and intelligence matters, but the notion that national policy on a matter like energy or health care can be developed in secret is offensive and counter to the Constitution.” Farrell, along with Judicial Watch chairman Larry Klayman and president Thomas Fitton, agreed that the task force violates core conservative principles, and made the decision to challenge Cheney’s office. Their letter notes that the rules governing the task force are clear: if the executive branch chooses to solicit outside advice while writing policy, then the Federal Advisory Committee Act (FACA) is triggered, requiring the government to make the details of those meetings public (the same argument made by the General Accounting Office—see May 8, 2001). “Judicial Watch respectfully requests that, in light of the questionable legal and ethical practices, negative publicity, and public outrage surrounding Hillary Rodham Clinton’s 1994 national health-care policy development group, you direct the [energy task force] to abide by the FACA. [Such openness] will instill public trust and confidence in the operations of the [task force] and insure that the national policy is formulated, discussed, and acted upon in a manner consistent with the best traditions of our Constitutional Republic.” [Savage, 2007, pp. 91-92] Cheney’s office will refuse the request (see July 5, 2001). In return, Judicial Watch will sue for the documents’ release (see July 14, 2001).

David Addington, the chief counsel to Vice President Cheney, refuses to accept any more communications from the General Accounting Office (GAO) regarding the GAO’s attempt to learn about the doings of Cheney’s secret energy task force (see January 29, 2001 and May 16, 2001). Addington directs GAO officials to contact a lawyer at the Department of Justice with any further inquiries. [General Accounting Office, 8/25/2003 ]

David Addington, the chief counsel for Vice President Dick Cheney, writes a three-sentence letter to the government oversight organization Judicial Watch, rejecting its request for the records of Cheney’s secret energy task force (see June 25, 2001). Addington uses the same argument he used to reject the General Accounting Office’s request for records of the task force (see June 7, 2001): since open-government laws do not apply to the task force, in his opinion, there will be “no disclosure of the materials you requested.” Judicial Watch will file a lawsuit demanding the task force’s records be made available to the public (see July 14, 2001). [Savage, 2007, pp. 92]

Glyn Ford. [Source: British Labour Party]The European Parliament releases its final report on its findings about the secretive US surveillance program known as Echelon. The report, two years in the making, exhaustively details many of Echelon’s surveillance capabilities, and lists many of Echelon’s surveillance stations around the world. One of the more interesting sections of the report concerns its apparent use on behalf of US corporations. According to the report, Echelon—operated by the NSA as a highly classified surveillance program ostensibly for tracking terrorist threats and activities by nations hostile to the West—is also being used for corporate and industrial espionage, with information from the program being turned over to US corporations for their financial advantage. The report gives several instances of Echelon’s use by corporations. One is the use of Echelon to “lift… all the faxes and phone calls” between the European aircraft manufacturer Airbus and Saudi Arabian Airlines; that information was used by two American companies, Boeing and McDonnell Douglas, to outflank Airbus and win a $6 billion contract. The report also alleges that the French company Thomson-CSF lost a $1.3 billion satellite deal to Raytheon the same way. Glyn Ford, the MP who commissioned the report, says he doesn’t have a problem with Echelon itself, but in the way it is being used. “Now, you know, if we’re catching the bad guys, we’re completely in favor of that… What we’re concerned about is that some of the good guys in my constituency don’t have jobs because US corporations got an inside track on—on some global deal.” [Washington Post, 11/14/1999; CBS News, 2/27/2000; BBC, 7/6/2000; European Parliament, 7/11/2001] In 1977, the US government began providing Echelon-based intelligence to US corporations (see 1977). In April 2001, New Zealand journalist Nicky Hager testified about Echelon’s use by US allies for corporate and economic purposes (see April 2001), and former CIA director James Woolsey confirmed that US surveillance programs were used to benefit US corporations (see March 2000).

The conservative government watchdog organization Judicial Watch files a lawsuit demanding the release of documents pertaining to Vice President Cheney’s energy task force (see January 29, 2001 and May 16, 2001). Judicial Watch had requested that Cheney voluntarily turn over the records, a request his office denied (see July 5, 2001). [Savage, 2007, pp. 92]

The General Accounting Office, repeatedly rebuffed by Vice President Cheney’s office in its attempt to secure information about Cheney’s secret energy task force (see May 8, 2001, May 10-17, 2001, May 16 - 17, 2001, June 7, 2001, June 21, 2001, and July 3, 2001), sends a letter written by its head, Comptroller General David Walker, to Cheney. Walker notes the repeated rebuffs from Cheney’s chief counsel, David Addington, and others in his office, and once again lays out his request for information regarding the task force’s participants, minutes of meetings, and other relevant information. When Walker follows up his letter with a phone call to Cheney on July 30, Cheney will fail to take the call. [General Accounting Office, 8/25/2003 ]

The General Accounting Office (GAO)‘s chief, David Walker, backs down from his initial request for all pertinent documents and records of Vice President Cheney’s energy task force (see May 8, 2001). Instead, Walker modifies his request to ask for just the names of the lobbyists at the task force meetings, the dates of the meetings, the general topic(s) of discussion, and the cost of the meetings. Cheney will also refuse this request, and will escalate his rhetorical war against Walker and the GAO in defense of “executive privilege” (see July 26, 2001 and August 2, 2001). [General Accounting Office, 8/25/2003 ; Savage, 2007, pp. 92-93]

Vice President Cheney’s chief counsel, David Addington, responds to the General Accounting Office (GAO)‘s offer to scale back its request for information regarding Cheney’s energy task force (see July 31, 2001) with another blanket refusal. Addington again asserts that the GAO has no authority to make such a request (see June 7, 2001). [General Accounting Office, 8/25/2003 ]

Vice President Cheney sends a letter to Congressional leaders demanding that they order the General Accounting Office (GAO)‘s chief, David Walker, to immediately withdraw his request for records pertaining to Cheney’s secret energy task force (see July 18, 2001). Walker has already scaled back his initial request (see July 31, 2001), but Cheney asserts that even the limited information Walker is requesting would violate “the confidentiality of communications among a president, a vice president, the president’s other senior advisers, and others.” Cheney also rails against “actions undertaken by an agent of the Congress, the comptroller general [Walker], which exceeded his lawful authority and which if given effect, would unconstitutionally interfere with the functioning of the executive branch.” [Savage, 2007, pp. 93] The GAO notes that Cheney’s letter does not cite the specific information requested by the GAO, as required by law. [General Accounting Office, 8/25/2003 ]

The General Accounting Office (GAO)‘s chief, Comptroller General David Walker, issues a report detailing the history of the GAO’s request for information regarding Vice President Cheney’s secret energy task force, and reiterating its request (see July 31, 2001). The report is sent to President Bush, Cheney, Congress, the attorney general, and the Office of Management and Budget (OMB). It reads in part: “In communications with the vice president’s counsel… we offered to eliminate our earlier request for minutes and notes and for the information presented by members of the public. Even though we are legally entitled to this information, as a matter of comity, we are scaling back the records we are requesting to exclude these two items of information.… The GAO as an institution, and the comptroller general as an officer of the legislative branch, assist the Congress in exercising its responsibilities under the Constitution to oversee, investigate, and legislate. In order to help members of Congress carry out their role and evaluate the process used to develop the National Energy Policy, GAO needs selected factual and non-deliberative records that the vice president, as chair of the NEPDG [National Energy Policy Development Group, the formal name for Cheney’s task force], or others representing the Group, are in a position to provide GAO. The records we are requesting will assist the review of how the NEPDG spent public funds, how it carried out its activities, and whether applicable law was followed.” [David Walker, 8/17/2001 ; National Review, 2/20/2002]

Vice President Cheney’s office responds to repeated requests by the General Accounting Office (GAO) for information about Cheney’s secret energy task force (see August 17, 2001) by sending it a list of the task force’s office support staff, and nothing more. The GAO now considers itself empowered by law to file a lawsuit seeking the requested information, and the next day will issue a statement to that effect. [General Accounting Office, 8/25/2003 ]

American Airlines initiates the “lockout” procedure to protect information about Flight 77. This standard procedure acknowledges an emergency on the flight and isolates information about it, so the airline’s top leadership can manage the case. A lockout safeguards information against being altered or released, and protects the identities of the plane’s passengers and crew. FAA air traffic controllers first alerted American Airlines about their loss of contact with Flight 77 at 8:58 (see 8:58 a.m. September 11, 2001), and called the airline again about the flight at 9:02 (see 9:02 a.m. September 11, 2001). [9/11 Commission, 8/26/2004, pp. 12-13 and 30 ]

United Airlines headquarters. [Source: United Airlines]Just before 9:22, United Airlines headquarters, located outside Chicago, begins the “lockout” procedure to restrict access to passenger and crew information about Flight 175. [9/11 Commission, 8/26/2004, pp. 26 ] This procedure is standard for airlines in safety and security incidents. As the 9/11 Commission will later describe, “It acknowledges an emergency on the flight and isolates information so that the case can be managed by top leadership at the airlines in a way that protects information from being altered or released, and also protects the identities of the passengers and crew.” [9/11 Commission, 8/26/2004, pp. 12-13 ] This procedure begins almost 40 minutes after Flight 175 was hijacked (see (Between 8:42 a.m. and 8:46 a.m.) September 11, 2001), and about 35 minutes after the plane’s transponder signal changed (see 8:46 a.m.-8:47 a.m. September 11, 2001). [9/11 Commission, 7/24/2004, pp. 7]

According to President Bush, al-Qaeda has “targeted our economy” in the 9/11 attacks. Congress has already passed $40 billion in emergency appropriations for security and recovery, and another $15 billion in aid for the airline industry. Bush says the attacks make it paramount that his tax cut plan—largely targeted at wealthy Americans and corporations—be passed as soon as possible. “There ought to be more” tax cuts, Bush will later say, “to make sure that the consumer has got money to spend, money to spend in the short term.” [Roberts, 2008, pp. 89]

At a rally in New York City, President Bush is asked whether the federal government will ask the average American to do anything else besides spend money to help battle terrorism and assist the country in recovering from the 9/11 attacks. Bush replies: “Well, I think the average American must not be afraid to travel. We opened Reagan Airport yesterday for a reason—we think it’s safe, and that people ought to feel comfortable about traveling around our country. They ought to take their kids on vacations. They ought to go to ball games.… But people ought to—listen, we ought to be aware in America—we are aware; how can you not be aware that we’ve entered into a new era. The imagery is vivid in people’s minds. But nevertheless, Americans must know that their government is doing everything we can to track down every rumor, every hint, every possible evildoer. And, therefore, Americans ought to go about their business. And they are beginning to do so. The load factors were up on the airlines, which means more people will be going to hotels and restaurants.” [White House, 10/3/2001; Roberts, 2008, pp. 91] Not only has Bush been exhorting Americans to spend their money on airline tickets and amusement parks (see September 27, 2001), he will take part in a marketing campaign designed to boost the travel industry (see Early 2002). New York Mayor Rudolph Giuliani adds his voice to Bush’s, asking the rhetorical question, “What can you do to help in this crisis?” and answering, “Spend, spend, spend.” Time magazine columnist Margaret Carlson writes that while consumer spending is indeed essential to the country’s economic recovery, it “strike[s] a sour note” for Bush, Giuliani, and other leaders to tell Americans that they can best help their country by spending money on themselves. “In the aftermath of one awful moment, we’ve finally come to understand what our parents meant by a cause larger than ourselves,” she writes. “We’re hungry for a way to help the war effort, honor the dead, and help the survivors. We’re not shunning the perfect marbled steak at Morton’s for want of a tax break but because it feels wrong with planes being shot at in Afghanistan. The fact is there’s going to be no grand mobilization for which we can sacrifice. It’s not our parents’ war, with its visible monsters, quantifiable victories, and necessary sacrifices. The Greatest Generation got to save old tires, dig a Victory Garden, and forgo sugar. The Richest Generation is being asked to shop.” [Time, 10/15/2001]

The Canadian government overrides Bayer’s patent for the anthrax antibiotic Cipro and orders a million tablets of a generic version from another company. The US government says it is not considering a similar move. Patent lawyers and politicians state that adjusting Bayer’s patent to allow other companies to produce Cipro is perfectly legal and necessary. [New York Times, 10/19/2001] The New York Times notes that the White House seems “so avidly to be siding with the rights of drug companies to make profits rather than with consumers worried about their access to the antibiotic Cipro,” and points out huge recent contributions by Bayer to Republicans. [New York Times, 10/21/2001]

The press reports that the US has put together a multi-billion dollar aid package for Pakistan that includes “sweeping debt rescheduling, grants stretching over many years and trade benefits as a reward for its support against terrorism.” Critics such as Representative Jim McDermott (D-WA) complain the aid is a “blank check” that could go towards supporting the Pakistani military and Islamic militants fighting in India. [New York Times, 10/27/2001]

The Travel Industry Association of America (TIA) coordinates its effort with the Bush administration to sell America’s airlines and hotel chains to consumers after the 9/11 attacks (see September 27, 2001). According to the TIA, “Travel was also linked to patriotic duty with expressions, such as ‘A return to travel is normal. Restoring travel is restoring our country’s economy.’” President Bush, apparently unaware that sitting presidents do not normally appear in industry ad campaigns, appears in “public service” ads created by TIA. The ads are part of a $20 million advertising campaign steered by, among others, J. W. “Bill” Marriott of Marriott International, one of the world’s largest hotel chains. Marriott personally solicited Bush’s participation in the television advertisements, which run throughout the US and in a number of foreign countries for four weeks. According to TIA polls, the Bush ad campaign reaches 70 percent of Americans, and most understand it as an appeal to travel and spend money. In 2008, author and public policy professor Alasdair Reynolds will write, “Many Americans appreciated that there was something strangely out of kilter about the president’s prominent role in boosting consumption in a moment of crisis.” [Association of Travel Marketing Executives, 2002; Roberts, 2008, pp. 90]

Senator Carl Levin (D-MI), the chairman of the investigations subcommittee of the Senate Governmental Affairs Committee, and fellow senators Byron Dorgan (D-ND), Ernest Hollings (D-SC), and Joseph Lieberman (D-CT) ask the General Accounting Office (GAO) to evaluate the process by which the Bush administration’s energy policy has been developed (see May 16, 2001). The senators’ request is apparently in support of the GAO’s long-blocked investigation of Vice President Cheney’s energy task force (see January 29, 2001). [General Accounting Office, 8/25/2003 ]

Anthony Gamboa, the general counsel for the General Accounting Office (GAO), reiterates the GAO’s modification of its original request for documents and records pertaining to Vice President Cheney’s energy task force (see January 29, 2001 and May 16, 2001). In a letter to the editor of the Wall Street Journal, Gamboa writes: “The GAO long ago dropped its request for the minutes and notes of the vice president’s meetings with people outside the government, as well as requests for any materials those individuals have given to Mr. Cheney (see July 31, 2001). The GAO simply seeks the names of those he met in his capacity as head of the energy policy task force, when and where he met them, the subject matter of the meetings, and an explanation of the costs incurred.” Cheney responds during an appearance on the late-night talk show The Tonight Show. He explains his continued refusal to cooperate with the GAO: “What’s at stake here is whether a member of Congress [Henry Waxman (D-CA), whom Cheney has accused the GAO of working for] can demand that I give him notes of all my meetings and a list of everybody I met with. We don’t think that he has that authority.” [National Review, 2/20/2002] The GAO’s chief, Comptroller General David Walker, will later call Cheney’s statements “disinformation.” [Savage, 2007, pp. 100]

The Oil and Energy Working Group, one of 17 such groups working under the US State Department’s “Future of Iraq” project (see April 2002-March 2003), meets to discuss plans for the oil industry in a post-Saddam Hussein Iraq. The only known member of the 15-member group is Ibrahim Bahr al-Ulum, who will become Iraq’s oil minister after the invasion. Other people likely involved include Ahmed Chalabi of the Iraqi National Congress, Sharif Ali Bin al Hussein of the Iraqi National Congress; recently defected personnel from Iraq’s Ministry of Petroleum; the former Iraqi head of military intelligence; Sheikh Yamani, the former Oil Minister of Saudi Arabia; and unnamed representatives from the US Energy Department. The responsibilities of this working group include: (1) developing plans for restoring the petroleum sector in order to increase oil exports to partially pay for a possible US military occupation government. (2) reconsidering Iraq’s continued membership in the Organization of Petroleum Exporting Countries (OPEC) and “whether it should be allowed to produce as much as possible or be limited by an OPEC quota.” (3) “consider[ing] whether to honor contracts made between the Hussein government and foreign oil companies, including the US $3.5 billion project to be carried out by Russian interests to redevelop Iraq’s oilfields.”] [Oil and Gas International, 10/30/2002; Observer, 11/3/2002; US Department of State, 12/19/2002; Financial Times, 4/7/2003; Financial Times, 9/5/2003; Muttitt, 2005] By April 2003, the working group will have met a total of four times. One of the policies they agree on is that Iraq “should be opened to international oil companies as quickly as possible after the war” and that development of Iraq’s oil fields should be done through the use of Production Sharing Agreements (PSAs). Under a typical PSA, oil ownership remains with the state, while exploration and production are contracted to the private companies under highly favorable terms. [Muttitt, 2005; Los Angeles Times, 12/8/2006]

The Bureau of Labor Statistics announces that it will no longer publish its monthly Mass Layoffs Statistics Report, which details factory closings around the country. The administration says the reports are too costly. Labor unions say the government is attempting to conceal negative economic news. [Savage, 2007, pp. 104]

Ahmad al Mukhtar is appointed as director of foreign relations in Iraq’s Ministry of Trade. One of his tasks will be to push for Iraq’s inclusion into the World Trade Organization. Al Mukhtar, who has no background in economics and whose previous job was reading the English-language news on television, shares Washington’s view that Iraq needs a market-based economy and that Iraqis need to be weaned from their dependence on the state. According to Al Mukhtar, Iraqis “are lazy. The Iraqis by nature, they are very dependent…. They will have to depend on themselves, it is the only way to survive in the world today.” [Harper's, 9/24/2004]

The Bush administration announces that it will no longer publish an annual report that details how much money each state receives from each federal program. The announcement coincides with heavily critical reports that federal budget cuts are creating huge shortfalls in state budgets. Without the annual report, it is now much harder to track how the budget cuts affect individual states. An administration spokesman says the information is still available, albeit in “a different mode,” from individual information releases from the separate agencies, but Congressional Democrats accuse the administration of trying to hide the damages caused by the budget cuts. [Savage, 2007, pp. 104-105]

The US Agency for International Development asks BearingPoint, Inc to bid on a sole-sourced contract for “economic governance” work in Iraq. The contract document, which USAID says will eventually be opened up to a select pool of additional companies, was written by Treasury Department officials and reviewed by financial consultants. The confidential 100-page request, titled “Moving The Iraqi Economy From Recovery to Sustainable Growth,” states that the contractor will help support “private sector involvement in strategic sectors, including privatization, asset sales, concessions, leases and management contracts, especially in the oil and supporting industries.” The bid request lays out a plan to, among other things, rapidly replace Iraq’s currency; identify industries for consolidation, liquidation, and privatization; “rationalize” and “modernize” Iraqi banking and financial sectors; develop taxation, legal, and regulatory regimes to compliment a new market-based economy; devise a plan to turn Iraq’s rudimentary stock market into a “world-class exchange” for trading the shares of newly privatized companies; and create a public relations campaign to promote these changes to the public. Summarizing US objectives for the economic reorganization, the document states, “It should be clearly understood that the efforts undertaken will be designed to establish the basic legal framework for a functioning market economy; taking appropriate advantages of the unique opportunity for rapid progress in this area presented by the current configuration of political circumstances.” [Wall Street Journal, 5/1/2003]

Jay Hallen, a 24-year old Yale graduate, is bored with his job at a real-estate firm. He is fascinated with the Middle East, and has taken some Arabic classes and read some history books about the region. He contacts Reuben Jeffrey, an adviser to CPA head L. Paul Bremer whom Hallen had met in 2002 when trying to land a job at the White House, and asks if there is a job for him in Baghdad.
'I Don't Have a Finance Background' - Three weeks later, Hallen is in Baghdad, and meets with Thomas Foley, the CPA official in charge of privatizing Iraq’s state-owned enterprises. Foley, a former classmate of President Bush and a major Republican donor, says he is putting Hallen in charge of Baghdad’s stock exchange. Hallen is shocked. “Are you sure?” Hallen asks. “I don’t have a finance background.” No problem, Foley responds. He will be the project manager; his subordinates will do the actual work. Before the invasion, Baghdad’s stock exchange was primitive by American standards; author Rajiv Chandrasekaran will describe it as loud, boisterous, and, despite all appearances, quite functional. After the invasion it was looted to the bare walls and ignored by the first wave of US economic reconstruction specialists. But Iraqi brokers and businessmen want it reopened, so the CPA acquiesces.
Revamping the Exchange - Hallen launches an ambitious, if almost entirely ignorant, plan to modernize and upgrade the stock exchange to make it the most technologically sophisticated exchange in the Arab world. He also wants to implement a new securities law that would make the exchange independent of the Finance Ministry. The Iraqi brokers and businessmen who clamored for the exchange to reopen are horrified at Hallen’s plans. “People are broke and bewildered,” broker Talib Tabatabai—a graduate of Florida State’s business department—tells Hallen. “Why do you want to create enemies? Let us open the way we were.” Tabatabai, like other brokers, believes Hallen’s plan is ludicrously grandiose. “It was something so fancy, so great, that it couldn’t be accomplished,” he will later recall. But Hallen is unmoved.
Hallen's View - “Their laws and regulations were completely out of step with the modern world,” Hallen will later say. “There was just no transparency in anything. It was more of a place for Saddam and his friends to buy up private companies that they otherwise didn’t have a stake in.” To just reopen the exchange the way it was, Hallen will insist, “would have been irresponsible and short-sighted.” Hallen recruits a team of American volunteers, most with no more experience or knowledge of finance than he has, to rewrite the securities laws, train the brokers, and purchase the necessary computers. By the spring of 2004, CPA head Bremer approves the new laws and appoints nine Iraqis hand-picked by Hallen to become the exchange’s board of governors.
No CPA Role - The new exchange board names Tabatabai as its chairman. The new laws have no place for a CPA adviser as a decision-maker; immediately a conflict between Hallen and the board arises. Hallen wants to wait several more months for the new computer system to arrive and be installed; unwilling to wait, Tabatabai and the board members buy dozens of dry-erase boards for the exchange floor, and two days after Hallen’s tour ends, the exchange is open for business. Without CPA oversight, the exchange quickly begins functioning more or less as it did before the invasion. When asked what would have happened had Hallen not been assigned to reopen the exchange, Tabatabai will answer: “We would have opened months earlier. He had grand ideas, but those ideas did not materialize.… Those CPA people reminded me of Lawrence of Arabia.” [Washington Post, 9/17/2006]

Author Rajiv Chandrasekaran, holding a copy of his 2006 book, ‘Imperial Life in the Emerald City.’ [Source: Daylife (.com)]Americans who want to work for the Coalition Provisional Authority (CPA) in the so-called “Green Zone,” the fenced-off area of Baghdad also called “Little America” and the hub of US governmental and corporate activities, are routed through Jim O’Beirne, a political functionary in the Pentagon whose wife is prominent conservative columnist Kate O’Beirne.
Focus on Ideology, Not Experience or Expertise - O’Beirne is less interested in an applicant’s expertise in Middle Eastern affairs or in post-conflict resolution than he is in an applicant’s loyalty to the Bush administration. Some of the questions asked by his staff to applicants: Did you vote for George W. Bush in 2000? Do you support the way the president is fighting the war on terror? According to author Rajiv Chandrasekaran, two applicants were even grilled about their views on abortion and Roe v. Wade (see January 22, 1973). While such questions about political beliefs are technically illegal, O’Beirne uses an obscure provision in federal law to hire most staffers as “temporary political appointees,” thus allowing him and his staff to skirt employment regulations that prohibit such questioning. The few Democrats who are hired are Foreign Service employees or active-duty soldiers, and thus protected from being questioned about their politics.
Unskilled Applicants - The applicants chosen by O’Beirne and his staff often lack the most fundamental skills and experience. The applicant chosen to reopen Baghdad’s stock exchange is a 24-year old with no experience in finance, but who had submitted an impressively loyalist White House job application (see April 2003 and After). The person brought in to revamp Iraq’s health care system is chosen for his work with a faith-based relief agency (see April 2003 and After). The man chosen to retool Iraq’s police forces is a “hero of 9/11” who completely ignores his main task in favor of taking part in midnight raids on supposed criminal hangouts in and around Baghdad (see May 2003 - July 2003). And the manager of Iraq’s $13 billion budget is the daughter of a prominent neoconservative commentator who has no accounting experience, but graduated from a favored evangelical university for home-schooled children.
Selection Process - O’Beirne seeks resumes from the offices of Republican congressmen, conservative think tanks, and Republican activists. He thoroughly weeds out resumes from anyone he deems ideologically suspect, even if those applicants speak Arabic or Farsi, or possess useful postwar rebuilding experience. Frederick Smith, currently the deputy director of the CPA, will later recall O’Beirne pointing to one young man’s resume and pronouncing him “an ideal candidate.” The applicant’s only real qualification is his job working for the Republican Party in Florida during the 2000 presidential recount.
Comment by Employee - A CPA employee writes a friend about the recruitment process: “I watched resumes of immensely talented individuals who had sought out CPA to help the country thrown in the trash because their adherence to ‘the president’s vision for Iraq’ (a frequently heard phrase at CPA) was ‘uncertain.’ I saw senior civil servants from agencies like Treasury, Energy… and Commerce denied advisory positions in Baghdad that were instead handed to prominent RNC (Republican National Committee) contributors.”
Result: Little Reconstruction, Billions Wasted or Disappeared - In 2006, Chandrasekaran will write: “The decision to send the loyal and the willing instead of the best and the brightest is now regarded by many people involved in the 3 1/2-year effort to stabilize and rebuild Iraq as one of the Bush administration’s gravest errors. Many of those selected because of their political fidelity spent their time trying to impose a conservative agenda on the postwar occupation, which sidetracked more important reconstruction efforts and squandered goodwill among the Iraqi people, according to many people who participated in the reconstruction effort.” Smith will later say: “We didn’t tap—and it should have started from the White House on down—just didn’t tap the right people to do this job. It was a tough, tough job. Instead we got people who went out there because of their political leanings.” The conservative ideologues in the CPA will squander much of the $18 billion in US taxpayer dollars allocated for reconstruction, some on pet projects that suit their conservative agenda but do nothing for Iraqi society, and some never to be traced at all. “Many of the basic tasks Americans struggle to accomplish today in Iraq—training the army, vetting the police, increasing electricity generation—could have been performed far more effectively in 2003 by the CPA,” Chandrasekaran will write.
Projects - Instead of helping rebuild Iraq—and perhaps heading off the incipient insurgency—CPA ideologues will spend billions on, among other things, rewriting Iraqi tax law to incorporate the so-called “flat tax,” selling off billions of dollars’ worth of government assets, terminating food ration distribution, and other programs.
Life in Green Zone - Most spend almost all of their time “cloistered” in the Green Zone, never interacting with real Iraqi society, where they create what Chandrasekaran later calls “a campaign war room” environment. “Bush-Cheney 2004” stickers, T-shirts, and office desk furnishings are prominently displayed. “I’m not here for the Iraqis,” one staffer tells a reporter. “I’m here for George Bush.” Gordon Robison, then an employee in the Strategic Communications office, will later recall opening a package from his mother containing a book by liberal economist Paul Krugman. The reaction among his colleagues is striking. “It was like I had just unwrapped a radioactive brick,” he will recall. [Washington Post, 9/17/2006]

The World Bank and the International Monetary Fund announce that they will send their economists to Iraq to assess needs for reconstruction as soon as it is safe to do so. The decision was made “with strong pressure from the United States,” the New York Times reports. [New York Times, 4/14/2004]