Update: The event, co-hosted with the New America Foundation, has already concluded. Thank you to everyone who attended, asked questions and participated. Below is a video recording of the event for your convenience.

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Just a few selected comments on this weekend’s newspaper reading, as it were.

First, in the New York Times “Week in Review” section under the headline “Our Decade of Deluded Thinking,” an unsigned author makes some astonishing comments, one astonishingly good but most astonishingly bad. First the good: the article admits that Mossadegh did not fall in 1953 owing mainly to the intrigues of U.S. intelligence. That’s of course right, and the same can be rightly said about Allende in Chile in the early 1970s. It’s nice to see this in the NYT, and it may come in handy one day when the common reverse view shows up there, as it certainly will. But the piece starts, “It is not often that large-scale crises are due to intellectual error…” Oh yes they are: They are more than often so; they are almost invariably so. Thus Auguste Comte: “Intellectual confusion is at the bottom of every historical crisis.” Score one for Comte; the NYT is wrong. And last, at the bottom of the second paragraph, Francis Fukuyama is once again, for the umpteenth time, vulgarized into holding the view, twenty years ago, of the very modernization theorists with whom he has always disagreed—that all modernization is of a piece and leads to Westernization. That’s not what he meant by the phrase “end of history”, but it’s his own fault for using a philosophical concept and expecting that most people—journalists certainly not excepted—would ever understand what he meant. If a typical Washington-beat journalists ever sits down and actually reads Hegel, I am sure the world will suddenly come to an end. But I am not worried about that happening

Second, Joshua Kurlantzick, in the “Outlook” section of the Washington Post, front page, under the title “A Nobel Winner who went wrong on rights,” takes the President to task for deemphasizing democracy and human rights. He contrasts the Nobel speech, the best speech by far the Preisdent has given while in office, with the Administration’s prior policy choices, as best he can make them out. The Administration is right; Kurlantzick, and all the other people who like to wear human rights on their sleeves—and who have no understanding at all of Samuel Huntington’s “democracy paradox”—are wrong. The best way to advance human rights and democracy is slowly, steadily, in the context of other dimensions of policy, and with full understanding of the opportunities and limits afforded by political culture. It is not by sounding like the mother-in-law of the world. And it is not by presuming the ridiculous argument that realism and its interests—like preventive mass violence, preserving civil and interstate order and the principles that order enables to become reality, and so forth—have no moral implcations. The President was channeling Reinhold Niehbur in Oslo. He could do a lot worse, and Kurlantzick should do some reading.

Third, Ed Begley’s new book, Why the Dreyfus Affair Matters (Yale), reviewed in this week’s New York Times Book Review, carries a thesis that sounds very much overstated but that is, in any case, not original: that the sins of the French government against Dreyfus resembled the “crimes” of the George W. Bush Administration. I can prove it isn’t original. Just read the AI essay by the historian Paul Schroeder, “Mirror, Mirror on the War,” Spring 2006—that’s more than three years ago. I commissioned that essay, and while I do not agree with parts of it (and did not at the time, either), I think it’s a brilliant essay. I wonder if Begley’s book is as good. Naturally, I also wonder, but cannot expect to ever find out, where he got his idea.

Tensions flared Friday at the UN climate change conference in Copenhagen as China’s Vice Foreign Minister He Yafei, using unusually blunt language, described U.S. Chief Negotiator Todd Stern as “irresponsible”, according to an AP report. The Chinese official was responding to comments Stern made at the conference yesterday regarding the possibility of Western aid to the developing world as a form of reparations for the developed world’s historically higher carbon emissions.

In the January-February 2007 issue of The American Interest, Stern, along with co-author William Antholis, proposed the creation of an environmental E-8 to parallel the existing, economics-focused G-8.

I found President Obama’s speech on Afghanistan policy remarkable. The speech itself, looked at as an object of art, is brilliant. Some of the formulations in it, not just rhetorical but also conceptual, are among the best presidential speechmaking I’ve heard in my lifetime—far superior to anything that we’ve heard in the last three administrations. You really have to go back all the way to President John F. Kennedy (and Mr. Ted Sorensen), to find conceptual and rhetorical arts of this caliber–remarkable stuff. I don’t know who wrote it—how much the president had to do with it, how much his chief speechwriter had to do with it—but they’ve finally turned the corner. This is, again, just in terms of the arts of speechwriting, qualitatively better than anything they’ve done before, including the Cairo speech.

Once you get past the soaring rhetoric, however, there are some serious problems with the underlying policy assumptions.

I’ve taken the liberty of annotating a full text copy of the speech and posting it here. I’ve highlighted certain phrases and passages, and if you mouse over them my annotation will pop up in a gray box. While some of my gripes are stylistic, others are substantive. I think it’s a good exercise to go through a speech like this carefully, line-by-line. It focuses the mind on the matters being discussed in a way that merely talking about it doesn’t.

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President Barack Obama’s speech of 1 December 2009, delivered at West Point

Good evening. To the United States Corps of Cadets, to the men and women of our armed services, and to my fellow Americans: I want to speak to you tonight about our effort in Afghanistan—the nature of our commitment there, the scope of our interests, and the strategy that my Administration will pursue to bring this war to a successful conclusion.Note the absence of the word victory anywhere in this speech. To some, this is a flaw, because that is what the U.S. military fights to achieve, and without a sense that the Command-in-Chief seeks victory and is dedicated to achieving it, morale flags. To others, this is a virtue, because no reasonable definition of victory is achievable at reasonable cost and in a reasonable and politically sustainable timeframe in Afghanistan. Better not to raise expectations that cannot be met. I am of the latter view. It is an honor for me to do so here—at West Point—where so many men and women have prepared to stand up for our security, and to represent what is finest about our country.Amen, and well said.

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I am probably the only person in the United States who actually likes the fact that President Obama set an 18 month timetable for the beginning of a drawdown of US forces in Afghanistan in his speech on Tuesday night.  Republicans have been attacking it because they say that it sends a signal of weak resolve, and that the Taliban now know that they only have to wait us out.  Opponents of our engagement ask why the drawdown can’t begin immediately, and wonder whether the deadline isn’t just a sop to them to make the escalation decision more palatable.  It has all the hallmarks of a political compromise rather than a thought-out strategy.

I think that setting a date for the beginning of a withdrawal actually sends a good signal, but to very different audiences than either the Taliban on the one hand, or to dovish Americans on the other.  The two most important targets are the US commanders on the ground, and the Afghan government.

The whole problem with the US approach to counterinsurgency, not just in Afghanistan but stretching all the way back to Vietnam and before, was the fact that the US has never sufficiently emphasized training indigenous forces as the core of what they are to do in a military intervention.  There are a number of reasons for this, most importantly the fact that no US commander will ever want to fight an enemy with poorly trained and resourced indigenous forces when he could use American troops.  But in the end, no counterinsurgency war will ever be won with foreign forces taking the lead. Nor will there ever be an exit for the US from the conflict other than humiliating defeat unless there is an indigenous government and army to eventually carry the burden.

One of the reasons that we are in our current Afghan pickle is the fact that we never invested enough in training high quality Afghan forces from the moment we toppled the regime in Kabul back in 2001.  The Afghan National Army (ANA) is by all accounts reasonably well trained, but is ridiculously small in comparison to the job they must shoulder.  The police on the other hand have been a disaster from the beginning.  Police training was first delegated to the Germans, and then to contractors like Dyncorp, and greatly under-resourced.   Most Afghans run the other way when they see a policeman coming, such is their reputation for corruption and brutality.  We now have commanders in the theater who understand the importance of training, but they will still have incentives to rely on American forces if the latter are readily available.

Setting a timetable for the withdrawal of US forces puts both US commanders and the Afghan government under the gun (so to speak) to get sufficient indigenous forces in place to fill in behind departing US troops.  It will also motivate them to get very creative in persuading as many Pushtun tribesmen as possible to switch sides, or to at least cease supporting the Taliban.  The Afghan government has been less than serious about shouldering its part of the burden as well, because it has been able to take US backing for granted.

During the civil war in El Salvador during the 1980s, the Democrats in Congress put very sharp ceilings on the number of active duty US service personnel who could serve there—some 57 in total, if my memory serves.  I remember being outraged at the time that Congress was meddling to this degree and depriving US commanders of what they thought was necessary to fight the war.  But in the end it proved to be a very good move.  The low ceiling on American combat forces compelled the commanders there to get fully serious about training and equipping the Salvadorian army, who in any event had better local knowledge who and what they were fighting.  The army reversed the tide and put the FMLN under heavy pressure, which then paved the way for the eventual accord that ended the war.

In this respect the added 30,000 troops now going to Afghanistan could prove to be a real trap, if they are seen as anything other than a temporary bridge while we build indigenous capacity and make the appropriate political deals.  It is not clear whether this will work, but we will have a better idea in a couple of years.  If it doesn’t, then we will need to figure out how to make an exit in any event.

Anyone who thinks that the Taliban are now suddenly encouraged by the administration’s announcement of a timetable needs to engage in a little reality check.  The American public is simply not going to support a large, open-ended commitment to fight in Afghanistan.  So we are either bluffing or kidding ourselves if we say today that we will bear any burden in this fight.  Our interests there are simply not great enough to merit that.  It is true that Afghans will not side with us if they know in advance we are leaving.  But what is much worse is pretending to them that we will stick it out over the long haul, and then leaving anyway because we actually didn’t mean it.  In the history of our foreign policy we have unfortunately made these kinds of hollow promises far too often.

I doubt that the Obama administration has justified its strategy to itself in the terms I just laid out.  Among other reasons is the fact that they continue to set an unreasonably low limit on how many indigenous ANA forces they intend to train and equip.  My main hope is that they will stumble upon the right strategy by the logic of events.  The process has not looked pretty up to this point, but that does not preclude the possibility of a good outcome.

Today’s headline in the Washington Post tells us that our Ambassador in Kabul, Karl W. Eikenberry, opposes the sending of more U.S. and allied troops to Afghanistan, putting him at odds with the commanding general in that war, General Stanley McChrystal. Eikenberry happens to be a general, too—3-star instead of 4-star, but who’s counting?

The point is that this sort of public disagreement—arguably worse than “dithering” but likely to contribute to it—was bound to happen thanks to the way in which the decision structure over the Afghanistan/Pakistan portfolio was peopled in the first place: Too many Chiefs, not enough Indians. I wrote about this in my blog, The Newest Dealer, on February 9, and warned about the consequences. Since no one reads my blog—true enough, I don’t make it particularly easy to read it—I thought I’d quote a bit from what I wrote a little more than nine months ago. As you’ll see, I predicted a train wreck if the lines of authority over this policy area were not sorted out carefully and clearly.  Oh, it’s so much fun to be able to say, “See, I told you so!”  I just wish it were possible these days to predict good outcomes as often as bad ones.

In Sunday’s Washington Post (Feb. 8, 2009), front page on the right above the fold–in other words, the Post’s Sunday lead–there appeared an article by Karen DeYoung entitled “Obama’s NSC Will Get New Power.” You can read what General Jim Jones has in store, evidently with the President’s approval, for yourself. What you can’t read in the Washington Post is about where these ideas came from. They came, in the main, from a two-year Congressionally funded commission called the Project on National Security Reform (PNSR). . . .

We’ll see how this new NSC design works out. . . but one thing is already clear: The transition to a stronger, more authoritative NSC is not likely to be a smooth one. The system in transition has already scored one doozy of a boner.

Jones apparently offered General Tony Zinni the post of U.S. Ambassador to Iraq, replacing Ambassador Crocker who is leaving real soon. Possibly seeing this as a power grab, Secretary Hillary scotched the notion, apparently arguing that it wasn’t a good idea to have military guys in both Baghdad and Kabul (General Karl Eikenberry, a 3-star, is headed there). So Chris Hill got that job instead–Chris Hill of the Six-Power Talks negotiations. . . .

Anyway, this was pretty embarrassing, obviously. Jones then reportedly apologized to Zinni for the mix-up and asked him if he’d wanted to be our man in Riyadh instead.  Zinni, again reportedly (heck, I certainly wasn’t there), general to general, Marine to Marine, told Jones where he could shove that job. Boy, isn’t gossip fun, especially when it has that strong, musky odor of verisimilitude about it?

You can see why Hillary Clinton felt as she did, assuming she did and this was not just an innocent start-of-administration communications mix-up. The Arab-Israeli portfolio has been rented out to George Mitchell, the Afghan-Pak portfolio to Richard Holbrooke. Vice-President Biden has staked a claim to policy on Russia and NATO. What does she get to do? Stare down Hugo Chávez?

But maybe she’s lucky. Look what these folks have drummed up for Afghanistan alone. You’ve got a 4-star in Washington at Centcom, General Petreaus, with overall authority on the security side. You’ve got another 4-star in the field there, Gen. McKiernan. You’ve got a 3-star soon in the Embassy, Gen. Eikenberry. You’ve got Richard Holbrooke as special representative of the President. You’ve got the lurking Joseph Biden, who has taken a special interest in Afghanistan for some time, and one of his longtime aides, Tony Blinken, in a hot seat with a joystick at the NSC. Someone down there is the Assistant Secretary of State for Central Asia, too, presently Richard Boucher but probably not for long. Secretary Gates? He counts also. And so the question: Who the hell is in charge?!  Beats me. Hillary is wise to stay out of the way until this gets sorted out…..if it ever does get sorted out.

You could say that we began going wobbly over Afghanistan in March, when the much-heralded new strategy embodied the best nation-building aspirations, but did not quite add up to a renewed declaration of war.   There are good reasons too.  It is a huge leap from calculating how much we can afford to lose to trying to decide seriously what it will take to win. The McChrystal 60-Day Assessment with its determination to protect the population is as solid as strategy-making can get under the circumstances. George Will framed the right side of the counter-argument with his counter-terrorism op-ed in the Washington Post.  And the Post’s Rajiv Chandrasekaran, who has been down here trying hard to get the story right, discovered the right critique: go all the way or none of the way, but not half-way.  Clausewitz would understand.  The debate is really about the value of the object, about US not THEM.  And in this realm — wild Afghanistan — as public tolerance for seeing more soldiers die decreases by ones and twos while our ambitions promise so much, the Taliban, with their totalitarian version of Islamism and no shortage of jihadi recruits to lose, simply show no sign of losing their nerve.

On the ground in Kandahar, at the epicenter of the insurgency, cynicism is skepticism’s temptation.  The Afghans are perfectly aware that the next phase of their future is being decided in Washington.  Most of them still welcome the American-led anchor in the sand.  But reality and survival demand wariness, under the cruel risk that the international counterinsurgency presence could give way to civil war that inevitably would begin again.  Sadly, corruption badly tarnished the August 20 elections, especially here in the South, where it was the Taliban who stole the first round on the strength of their intimidation campaign that kept turnout below 10% in many locations. To get the 30 km between our base at Kandahar Air Field and Kandahar City is a combat patrol, and Taliban Night Letters appear on regularly on mosque doors.  Last month in the provincial capital, a suicide truck bomb took out an entire city block.

The Stryker Brigade Combat Team I ride with is the best football team we ever sent in to play baseball.  They truly are the Army’s premier soldiers, led by the most tried and true 6′5″, 230 lb, African-American warrior you would ever want to have on your side in a fight with another country.   But Kandahar isn’t Moscow or even Mosul, it’s Chinatown.   They are busy learning this different game, but for eight years we’ve been wandering and stomping around in this first war of the 21st Century, which also happens to be the last war of the Cold War.  This business about what it really means to the Afghans when we say we are here to stay came home to me the other day at a village shura where we delivered the message.  The room was filled with grizzled Pashtun leaders, former mujaheddin, opium farmers, Taliban sympathizers, and not a Noble Savage among them, but all wise and experienced enough to welcome our power.  Then one elder stood up and said what they all knew, though none of us did: “You were here before and said the same thing, but in 2003 you left.” No one had to mention, “…for Iraq.”

OK, the Q is as always: What is to be done?  “I don’t know” is the only authentic answer, and yes, if we don’t give it our best try the dilemma will get worse. If I could dial back, I would clear this elephant herd of a coalition right out of Afghanistan, strip down to a few thousand Special Forces, form village defense groups, and train the hell out of the Afghan Army until they could stand on their own.  It is too late for that now, certainly too late for any magical surge, but maybe, but just maybe not too late to find enough of a muddle through to keep the forces of darkness from swarming back across the border.

–Todd Greentree is serving as State Department Political Advisor at Task Force Warrior in Afghanistan. He is the author of Crossroads of Intervention: Insurgency and Counterinsurgency Lessons from Central America (2008). His “Letter from Bagram” in the July-August 2009 issue of The American Interest can be found here.

The issues I will discuss with all of you are the blossoming relationship between what might seem unlikely bedfellows…. the Islamic Republic of Iran and the Bolivarian Republic of Venezuela, whether we have a national security crisis looming on the horizon, and whether our national security and law enforcement communities are sufficiently focused on this threat.

Iran and Venezuela are beyond the courting phase.  We know they are creating a cozy financial, political, and military partnership, and that both countries have strong ties to Hezbollah and Hamas.  Now is the time for policies and actions in order to ensure that the partnership produces no poisonous fruit.

Iran and Venezuela In Bed Together

The diplomatic ties between Iran and Venezuela go back almost fifty years and until recently amounted to little more than the routine exchange of diplomats.   With the election of Iranian President Mahmoud Ahmadinejad in 2005 the relationship dramatically changed.  Today I believe it is fair to say they have created a flourishing partnership rooted in a shared anti-American rhetoric and policy.

As early as 2006, public signs of their alliance began to emerge.  It was in this year that Venezuela joined Cuba and Syria as the only nations to vote against a U.N. Atomic Energy Agency resolution to report Iran to the Security Council over its failures to abide U.N. sanctions to curtail its nuclear program.  In 2007, during a Chavez state-visit to Tehran, the two nations declared an “axis of unity” against the United States.  Additionally in the diplomatic arena, Ahmadinejad has made recent visits to Latin America, and Chavez has personally helped initiate relationships between Iran and Nicaragua, Bolivia, and Ecuador.

In June, while protesters lined the streets of Tehran demonstrating for democracy and basic political rights following the substantial allegations of fraud in the re-election of Ahmadinejad, Chavez publicly offered him support.   As the regime cracked down on political dissent, jailing, torturing and killing protesters, Venezuela stood with the Iranian hard-liners.

Iranian investments inside of Venezuela are on the rise and ambitions of nuclear cooperation between the States are no secret.

Scores of Memoranda of Understanding between the two Nations have been signed in recent years relating to:

• joint technology development
• military cooperation
• banking and finance
• cooperation with oil and gas exploration and refining
• mineral exploration
• agricultural research

In April 2008, Venezuela and Iran entered into a Memorandum of Understanding pledging full military support and cooperation.  It has been reported that since 2006 Iranian military advisors have been embedded with Venezuelan troops.  Asymmetric warfare, taught to members of Iran’s Revolutionary Guard, Hezbollah and Hamas, has replaced U.S. Army field manuals as the standard Venezuelan military doctrine.

According to a report published in December 2008 by the Carnegie Endowment for International Peace, Venezuela has an estimated 50,000 tons of un-mined uranium.  In the area of mineral exploration there is speculation that Venezuela could be mining uranium for Iran.

On the financial front, in January 2008, the Iranians opened International Development Bank in Caracas under the Spanish name Banco Internacional de Desarrollo C.A. (BID), an independent subsidiary of Export Development Bank of Iran (EDBI).   In October 2008, The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed economic sanctions against these two Iranian banks – BID and EDBI – for providing or attempting to provide financial services to Iran’s Ministry of Defense and its Armed Forces Logistics, the two Iranian military entities tasked with advancing Iran’s nuclear ambitions.

My office has learned that over the past three years, a number of Iranian-owned and controlled factories have sprung up in remote and undeveloped parts of Venezuela.  These factories have emerged in small towns in interior Venezuela with a lack of basic infrastructure and simple amenities like restaurants and groceries.  The lack of infrastructure is offset by what experts believe to be ideal geographic locations for the illicit production of weapons.

Evidence of the type of activity conducted inside the factories is limited.  But given their location and secretive nature we should be concerned that illegal activity might be taking place.  That is so, especially in light of an incident in December 2008, in which Turkish authorities detained an Iranian vessel bound for Venezuela after discovering lab equipment capable of producing explosives packed inside 22 containers marked “tractor parts.”  The containers also allegedly contained barrels labeled with “danger” signs.  I think it is safe to assume that this was a lucky catch and that most often shipments of this kind reach their destination in Venezuela.

And let there be no doubt that Hugo Chavez leads not only a corrupt government but one staffed by terrorist sympathizers.  The government has strong ties to narco-trafficking and money laundering, and reportedly plays an active role in the transshipment of narcotics and the laundering of narcotics proceeds in exchange for payments to corrupt government officials.

The U.S. Government Accountability Office (GAO) recently published a study requested by Senator Richard Lugar examining the issue of illicit drugs transiting Venezuela.  The study reported a high level of corruption within the government, military, and law enforcement that has enabled Venezuela to become a major transshipment route for trafficking cocaine out of Colombia.  Intelligence gathered by my office strongly supports the conclusion that Hezbollah supporters in South America are engaged in the trafficking of narcotics.  The GAO study also confirms allegations of Venezuelan support for FARC, the Colombian terrorist insurgency group which finances its operations through narcotics trafficking, extortion and kidnapping.

In July of this year, in a raid on a FARC training camp, Colombian military operatives recovered Swedish-made anti-tank rocket launchers sold to Venezuela in the 1980s.  Sweden believes the recovery demonstrates a violation of the end-user agreement by Venezuela, given that the Swedish manufacturer was never authorized to sell arms to Colombia.  Venezuelan Interior Minister Tareck El Aissami, a Venezuelan of Syrian origin, lamely called the allegations a “media show,” that is “…part of a campaign against our people, our government and our institutions.”

But Venezuela’s link to terrorist organizations does not stop with FARC.  Particularly alarming, within the ranks of Chavez’s corrupt government lie supporters of Hezbollah.

In fact, Mr. El Aissami, who at one time headed Onidex, the Venezuelan passport and naturalization agency inside the interior ministry, is suspected of having issued passports to members of Hamas and Hezbollah.  There are also allegations that El Aissami and others affiliated with Hezbollah are in charge of recruiting young Venezuelan Arabs who are then trained in Hezbollah camps in Southern Lebanon.  Onidex is now headed by a very close friend of El Aissami; the two attended the same university and the friend is also reported to have ties to Hezbollah.

In June 2008, a Venezuelan national of Lebanese origin, Ghazi Nasr al Din, was added to the OFAC list of specially designated global terrorists and barred from accessing U.S. financial institutions and the U.S. banking system.  He’s a Venezuelan-based Hezbollah supporter who served in the Venezuelan Embassy in Syria, and was later appointed to the Venezuelan Embassy in Lebanon where we believe he currently serves as the Embassy’s Director of Political Aspects.

The relationship we are discussing today was underscored over the past few days during Chavez’s visit to the Middle East.  This past weekend, after meeting with Ahmadinejad in Tehran, both leaders reiterated their pledge to stand up to imperialist nations.  Ahmadinejad said, “expansion of Tehran-Caracas relations is necessary given their common interests, friends and foes.”  Without providing details, Chavez was quoted as saying that with Iran’s help he plans to build a “nuclear village” in Venezuela.  Supporting Iran’s claims that its nuclear ambitions are for peaceful purposes, Chavez stated, “there is not a single proof that Iran is building a… nuclear bomb.”  The matters I am about to discuss belie that claim.

Ties to Venezuela Make Iran More Dangerous

In the past year my Office has publicly announced two investigations that highlight the efforts of Iran to procure weapons materials despite U.S. and international economic sanctions designed to prevent Iran from developing long-range missile capacity and nuclear technology for military purposes.  Our efforts uncovered a pervasive system of deceitful and fraudulent practices employed by Iranian entities to move money all over the world without detection, including through banks located in the jurisdiction I am responsible for protecting – Manhattan.  Why did Iran go to these lengths?  I believe the answer is simple: In order to pay for materials necessary to develop nuclear weapons, long-range missiles, and road-side bombs.

I believe the nature of Iran’s relationship with Venezuela makes for a more dangerous Iran.  The Iranians, calculating and clever in their diplomatic relations, have found the perfect ally in Venezuela.  Venezuela has an established financial system that, with Chavez’s help, can be exploited to avoid economic sanctions.  As well, its geographic location is ideal for building and storing weapons of mass destruction far away from Middle Eastern states threatened by Iran’s ambition and from the eyes of the international community.

To demonstrate the Iranian regime’s commitment to advancing its nuclear ambitions and long-range missile capacity, I would like briefly to describe the cases brought by my office.  The tactics used in these cases are instructive and should send signals to law enforcement, intelligence agencies, and military commands throughout the world about the style and level of deception the Iranian’s employ to advance their interests.  This is particularly important in examining the threats posed by the deepening ties between Ahmadinejad and Chavez.

In January of this year my office announced a deferred prosecution agreement with the U.K. bank, Lloyds TSB.   From 2001 – 2004, Lloyds, on behalf of Iranian banks and their customers, engaged in a practice known as “stripping,” in which the bank intentionally participated in a systematic process of altering wire transfer information to hide the identity of its clients.  This process allowed the illegal transfer of more than $300 million of Iranian cash despite economic sanctions prohibiting Iranian access to the U.S. financial system.  We currently have investigations into similar misconduct by other banks.

In April of this year we announced the indictment of company called Limmt, and its manager, Li Fang Wei, a rogue provider of metal alloys and minerals to the global market.  Limmt’s business included selling high strength metals and sophisticated military materials, many of which are banned from export to Iran under international agreements.  Limmt was also banned by OFAC from engaging in transactions with or through the U.S. financial system for its role in the proliferation of weapons of mass destruction to Iran.  Our investigation revealed that despite sanctions, Li Fang Wei and Limmt used aliases and shell companies to deceive banks into processing payments related to the shipment of banned missile, nuclear and so-called “dual use” materials to subsidiary organizations of the Iranian Defense Industries Organization.  Please note the first version of this statement refers only to U.S. banks.  In fact, banned materials were generally purchased in Euros and processed through European banks.

Based on information developed by my office, the Iranians with the help of Venezuela are now engaged in similar economic and proliferation sanctions-busting schemes.

For years I have stressed the importance of transparency in financial transactions.  In the realm of preventing money laundering and terror financing, the concept of “know your customer” is the starting point in any scheme designed to detect suspicious transactions. For wire transfers denominated in U.S. dollars, the transactions almost always clear through correspondent accounts in the United States, and usually at banks based in Manhattan.  Ideally, Manhattan banks have a clear picture of the sender and beneficiary of the funds, even in cross-border transactions.

Venezuela is not currently the subject of a U.S. or international economic sanctions program that places significant restrictions on the ability of Venezuelan banks to conduct business with the United States, including accessing U.S. banks to clear international U.S. dollar transactions. Presently, banks in the U.S. processing wire transfers from Venezuelan banks rely almost exclusively on the Venezuelan bank to ensure the funds are being transferred for legitimate purposes.  I have little faith that this is effectively being done, and the Iranians, aware of this vulnerability, appear to be taking advantage of it.

The ostensible reason the Iranian-owned bank Banco Internacional de Desarrollo (BID) was opened in Caracas was to expand economic ties with Venezuela.  Our sources and experiences lead me to suspect an ulterior motive.  A foothold into the Venezuelan banking system is a perfect “sanctions-busting” method – the main motivator for Iran in its banking relationship with Venezuela.  Despite being designated by OFAC we believe that BID has several correspondent banking relationships with both Venezuelan banks and banks in Panama, a nation with a long-standing reputation as a money laundering safe-haven.

This scheme is known as “nesting.”  Nested accounts occur when a foreign financial institution gains access to the U.S. financial system by operating through a U.S. correspondent account belonging to another foreign financial institution.  For example, BID who is prohibited from establishing a relationship with a U.S. bank could instead establish a relationship with a Venezuelan or Panamanian bank that has a relationship with a U.S. bank.  If the U.S. bank is unaware that its foreign correspondent financial institution customer is providing such access to a sanctioned third-party foreign financial institution, this third-party financial institution can effectively gain anonymous access to the U.S. financial system.

In Venezuela, Ahmadinejad and the hard-line Mullahs have found an ally who has stood by them as they crushed political freedoms and defied world consensus on its nuclear program.  Both countries have pledged mutual scientific, technical and financial support.  There is little reason to doubt Venezuela’s support for Ahmadinejad’s most important agenda, the development of a nuclear program and long-range missiles, and the destabilization of the region.  For Iran, the lifeblood of their nuclear and weapons programs is the ability to use the international banking system to make payments for banned missile and nuclear materials.  The opening of Venezuela’s banks to the Iranians guarantees the continued development of nuclear technology and long-range missiles.  The mysterious manufacturing plants, controlled by Iran, deep in the interior of Venezuela, give even greater concern.

With Iranian assistance Venezuela is bound to become a destabilizing force in Latin America

So why is Chavez willing to open up his country to a foreign nation with little in shared history or culture?  I believe it is because his regime is corrupt, hell-bent on becoming a regional power, and fanatical in its approach to dealing with the U.S.  The diplomatic overture of President Obama in shaking Chavez’s hand in April at the Summit of the Americas in Trinidad and Tobago is not a reason to assume a diminished threat from our neighbor to the south.  In fact, with the groundwork laid years ago, we are entering a period where the fruits of the Iran-Venezuela bond will begin to ripen.

That means two of the world’s most dangerous regimes, the self-described “axis of unity,” will be acting together in our backyard on the development of nuclear and missile technology.  And it seems that for terrorist groups they have found the perfect operating ground for training and planning, and financing their activities through narco-trafficking.

Sound like the making of a story you’ve heard before?  In 1962, President Kennedy stared down a nuclear threat to the United States when a leftist populist leader with a strong anti-American streak joined forces with the Soviet Union to bring nuclear weapons in close proximity to our borders.  JFK ended the Cuban missile crisis through resolve and tough diplomacy.  Although the same threat level does not yet exist in Venezuela, the United States needs to be focused on Iran’s expansionism wherever it occurs.

Conclusions

The Iranian nuclear and long-range missile threats and creeping Iranian influence in the Western Hemisphere cannot be overlooked.  My office and other law enforcement agencies can play a small but important role in ensuring that money laundering, terror financing, and sanctions violations are not ignored, and that criminals and the banks that aid Iran will be discovered and prosecuted.  We all know that stopping the flow of illicit funds has a direct correlation to curbing wrongful conduct.  But certainly law enforcement in the U.S. alone is not enough to counter the threat effectively.

As for Venezuela, the world must no longer assume that Chavez is bluffing when he speaks.  It is important that the public generally, and responsible government officials in particular, be aware of the growing presence of Iran in Latin America.   And it is necessary to urge Venezuela’s neighbors to understand the sinister implications of Iran’s presence in the region.  Brazil, whose constitution prohibits nuclear weapons, can play a significant role in influencing Chavez.  Finally, the U.S. and the international community must strongly consider ways to monitor and sanction Venezuela’s banking system.  Failure to take action in this regard will leave open a window susceptible to money laundering use by the Iranian government, the narcotics organizations with ties to the Venezuelan government, and the terrorist organizations that Iran supports openly.

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Several noteworthy news analyses published over the last several weeks underscore the salient observation in my article that, while the debate over nuclear energy in the United States continues, a number of other nations—including those that either have previously foresworn nuclear power or have never pursued it—are taking realistic steps toward building reactors in order to provide for their own energy independence.

Vincent Boland in the Financial Times explains how the Italians, who rejected nuclear energy by referendum in 1987, one year after the Chernobyl accident, have now reversed that law and are partnering up with the French to study the construction of new nuclear power plants in Sicily and in the northeast near Venice. The Italian rationale is simple: They are growing restless about the dangers of Europe’s excessive reliance on Russian gas supplies.

Leslie Allen’s Washington Post Magazine article on the emergence of thorium as an alternative to uranium as nuclear fuel highlights the phenomenon of increasing numbers of states going nuclear—even petroleum-rich states like the United Arab Emirates. In Abu Dhabi’s case, while they have plenty of oil for export, they will soon be starving for natural gas, and they see the prospect of importing coal as dirty and wind power as unreliable.

Juxtapose these international developments against Mark Clayton’s analysis of ongoing domestic arguments in the U.S., “Nuclear Power’s New Debate: Cost” (The Christian Science Monitor, August 9, 2009, pp. 33-35). Clayton’s piece shows how anti-nuclear groups are beginning to shift emphasis away from their emotionally charged “China Syndrome” arguments of the past and are now sharpening their talking points, criticizing the financial risks of nuclear power and Federal government guarantees being proposed in Congress.

While I agree that the nuclear energy industry’s record at controlling costs remains its principal Achilles’ heel, it’s time to have a honest debate comparing start-up and operating costs, current and proposed government subsidies, and electricity generating capacity for all potential sources of energy—including solar, wind, gas and biofuels. If this truly fair debate were ever to occur, we might be surprised to learn that nuclear energy has acquitted itself fairly well.

Bruce D. Slawter may be reached for comment at slawter <at> cox.net.

Since the AI’s inception, we’ve had the privilege of publishing some of the best minds in policy. With a new Administration taking over the White House in January, it’s not surprising that a number of these minds have found jobs in government. Now that they’ve had a chance to settle in at their new posts, we decided to go back into the archives to highlight the arguments they made in our pages. Below are some of our authors who are now in the Administration, their current posts, and links to the articles they penned for us. We’ll be watching to see whether they are able to enact any of the policies they prescribed.

Kurt Campbell, Assistant Secretary of State for East Asia and Pacific Affairs, Department of State: “McEmbassy,” May-June 2008.

Michael McFaul, Special Assistant to the President for National Security Affairs and Senior Director of Russian and Eurasian Affairs, National Security Council: “Liberal is as Liberal Does,” March-April 2007.

Dennis Ross, Special Advisor for the Persian Gulf and Southwest Asia, Department of State: “Iraq: Think Local,” March-April 2008.

James Steinberg, Deputy Secretary of State: with Ivo Daalder, “The Future of Preemption,” Winter 2006.

Todd Stern, Special Envoy on Climate Change, Department of State: with William Antholis, “Toolbox: Creating an E-8,” January-February 2007.

Stay tuned. We’ll update as more names become available.

Update:

Peter Ogden, staff, Special Envoy on Climate Change, Department of State: with Lawrence Korb, “Toolbox: Making the U.S.-India Civil Nuclear Deal Work,” Winter 2006; and with Lawrence Korb, “Toolbox: A Few More Good Men,” May-June 2007.

Update 2:

Ivo Daalder, U.S. Ambassador to NATO, Department of State: with James Steinberg, “The Future of Preemption,” Winter 2006; with James Lindsey, “Democracies of the World, Unite,” January-February 2007; with Mac Destler, “Toolbox: Advice for the Advisor,” January-February 2009.

Update 3:

Tamara Coffman Wittes, Deputy Assistant Secretary of State for Near Eastern Affairs: with Martin S. Indyk, “Back to Balancing,” November-December 2007.