I knew Harvey for more than 38 years, from a time sunk deep back in the mists, when he was nearly 27 and I was nearly 21 years of age. As several appreciations, including those by Dov Zakheim and John Hannah, have already noted, he was an extraordinary man: brilliant and incisive, creative and personable, learned and kind, stylish and an exuberant lover of life. A 1971 Penn Ph.D., he came to work in the world of universities, think-tanks and government. He served as a close aid to three Secretaries of State: Haig, Shultz and Baker. He is responsible, behind-the-scenes, not only for many memorable secretarial turns of phrase as a speechwriter in Policy Planning at the Sate Department, but also for several key policy directions those Secretaries took, from dealing with Saddam Hussein after the August 1990 Iraqi invasion of Kuwait to the masterful diplomacy that accompanied the reunification of Germany.

Since leaving government and Washington some 15 years ago, Harvey was director of the Foreign Policy Research Institute in Philadelphia. During these years we continued to work together, at FPRI and elsewhere. Harvey wrote brilliantly for The National Interest when I worked there, and even more brilliantly for The American Interest since it was founded in 2005. His final published essay, “For Richer, for Poorer”, appears in our November/December 2010 issue. But don’t miss, if you have not yet read it, his magisterial essay from May/June 2007, “Adventures in State-Building: Bremer’s Iraq and Cromer’s Egypt”, which I think remains the most insightful essay yet written on U.S. policymaking in the Iraq War.

Six years my elder, he served as a mentor to me during the many years we worked together, and as a mentor not only in professional life, but in all of life. We shared certain tastes—in humor, literature sacred and otherwise, old cars, fine whisky, sartorial punctuation and fountain pens—but he educated my tastes in all these domains and more. We shared more than that, too. I was with him during his father’s illness and passing; and he was with me, by my side, to bury my father. He attended my wedding; I attended the circumcision ceremonies of his sons and grandsons. I saw Harvey’s every mood—when he was, as ever, graceful, eloquent, charming and vivacious in public, but also when he was frustrated, worried, angry and tired in private.

From these experiences I know that Harvey was not only brilliant, creative and almost impossibly personable, but also wise. Many people may be said to be devoted, but not as many devoted to the right purposes. Harvey was: A perfectionist as an intellectual, he would not let fly in writing until he was sure he understood the material, had mastered its meaning, and took the necessary pains to express himself as clearly and carefully as possible. He cared about quality, not quantity, and he cared about making a positive difference, not pontificating for its own sake. He was, in short, the antithesis of the shoot-from-the-hip, naked-opinion-to-spite-learning style of the blogosphere.

In his insistence on doing things both well and for the right reasons, Harvey constantly elevated my understanding of what diligence in thought and expression is all about. He knew what was worth taking seriously, and he did. He knew how to have some fun, too, and he did that as well. Above all, however, he understood how to balance what was serious and what was fun because he also knew the difference between right and wrong, and never wavered from it.

It has been one of the greatest of honors in my life to have had Harvey as a friend and colleague, someone enough my elder to give me unfailingly good counsel over many years, but not so much so that he was unable to speak with me as an equal on matters of substance as we both grew older. He could talk and teach with the best, but he could also listen and learn from others–and to find someone capable of doing both is a great rarity in this world, in these days as in any. I miss him now, and I will miss him always.

(N.B.: I have written a more personal and longer reflection in my blog: thenewestdealer.blogspot.com.)

Several kinds of explanations have been adduced for the discrepancy between supposedly incipient recovery and the unemployment rate of over 9.5%. One, which Republicans favor, is that the investment environment is very uncertain because of Obama Administration policies. Business planners don’t know the real costs of the health care bill; they know the bill will cause them to have higher costs but they don’t know how much higher. They universally deny that the bill could possibly be revenue-neutral even for the government, and they are correct: most of the things that have to happen to make it revenue-neutral depend on actions Congress has yet to take and almost certainly never will because it requires courage; but they are certain it will add to costs in the private economy. They don’t know if some sort of carbon tax, whether cap-and-trade in structure or not, will pass Congress in the next year or two. That would also add to the cost of doing business. Financial markets remain unstable, and with the new financial regulations bill, too, more uncertainty is added to the mix. Some holding companies that own banks can’t calculate what their overall portfolio looks like until they see how the banks figure out how to apply the Volcker Rule. Uncertainty breeds hesitation, and companies want to hang on to cash in uncertain times.

Another explanation, not necessarily contradictory of the first, is that economists underestimated the impact of public sectors layoffs. I think this is true; indeed, I implored one my authors, Desmond Lachman, to take it more seriously when he was preparing his excellent article on the coming double dip. And he did. But a lot of economic analysts who focus on national-level statistics did not realize how broke most of the state and counties were, and how little the so-called stimulus bill made a dent in their circumstances. The layoffs have been huge, and have offset hiring in some other sectors, including manufacturing.

These explanations are at best partial, however, because they are superficial. There’s a lot more going on than this, and while I used to be reluctant to voice my views on this kind of thing, my not being an economist and all, I have lost a lot of my reluctance since it has become obvious that most economists don’t know what they’re talking about. Besides, this is just a blog, and it’s August…

First, it is already obvious—has been for a long time—that this is not a “V” recession but more like a “U” or “L” recession: Many jobs that existed when all this started are not coming back. The industries in which they existed have either died or retooled. We have witnessed a massive substitution of new capital for labor in productive processes in recent years, and a lot of this has had to do with IT-related inputs. We have exported a lot of jobs, yes, some of that owing to a death-of-distance phenomenon made possible by IT. We have allowed a lot of illegals to be hired, too. But most of all we have exported jobs to ourselves as teched-up consumers—think when you last had to deal with a bank teller, a gas pumper, a typist at an office, a telephone receptionist, even a grocery store checkout clerk.

It does not take a rocket scientist, or even an economist, to see that productivity increases are predicated on this capital-for-labor substitution, which has accelerated sharply because of the shake-up of the past two years. One of the reasons, of course, is that the cost of labor has gone up sharply as health care costs and related benefits have gone up—another reason why it is tragic that the so-called health care bill isn’t a health care bill at all—just an insurance bill that did nothing whatsoever to understand and get a grip on cost escalation. (AI has also focused on that, and we have the best essay anywhere on the basics.) And this process of substitution is going on not only in the United States, but practically everywhere, including China and the Asian rimlands. This more than anything else explains how economic activity can become increasingly decoupled from employment figures.

Also, just by the way, there is a strong likelihood that the numbers we’re using are inaccurate, but that’s another matter. The way we collect these numbers embeds certain biases in the figures, as Ryan Streeter pointed out in AI several issues ago. Most likely unemployment is even higher than we think on some counts, and not just because we don’t count people who have stopped looking. But unemployment is probably lower on others as people try to avoid taxes by moving into cash or barter economics. I am not talking about rich people, who always try to avoid or evade taxes if they can (and they often can). I am talking about people mostly in service industries who feel squeezed and to keep ends meeting have to shave expenses. They can do this by going off book, and I think we vastly underestimate how many people do this as a natural course of behavior. Lower middle class tax avoidance by this method is perfectly natural and in a sense fair, except that it burdens middle-class salary makers disproportionately. How does it balance out, between our underestimation and our overestimation? Is 9.5% right, or is it closer to 8%, or 13%? I don’t know; it would make for a terrific research project for those with the means—maybe a Nobel in economics awaits.

The Democrats, it will be recalled, a few weeks ago rolled out a so-called manufacturing initiative. This was two parts hilarious, two parts pathetic and one part just stupid. The so-called initiative really wasn’t; it just mainly renamed some other programs already out there for other reasons. They apparently thought voters would be too stupid or lazy to notice, and of course that’s right. So now they can claim an initiative, which doesn’t exist. This initiative’s main element is to tax companies that export jobs. How that encourages new start-ups or actually helps revive manufacturing is a little hard to see. What these nitwits seem not to get, too, as Charles Davidson, AI‘s publisher was quick to notice, is that any initiative that promotes a renewal of manufacturing is, under present conditions, going to accelerate the substitution of capital for labor and thus lead to a future with even fewer good jobs. So is it a good thing, then, that the Democrats’ initiative is a sham? Not exactly, and now we come to the gist of the matter.

We have a structural problem with the economy (structural as opposed to cyclical in econ-speak), and with the labor profile that goes with it. This is the word—structural—you now hear a lot, a word I was using regularly to describe the situation at least 18 months ago. Of course this refers to a rapid shift in the labor profile as new investment becomes sharply more capital intensive and as global trends continue to send shock waves against national economies, including even very large ones like our own.

But the structural problem goes deeper than that. Here is what else is going on that contributes to the current structural situation. Americans are saving more, which is good. This leads to lower aggregate demand, which is also good if you care about the environment, bad if you care about the speed with which money moves to stimulate spending. Edmund Phelps understands that what lower aggregate demand means is a whole lot less than it’s cracked up to mean. He at least remembers Vilfredo Pareto, the Italian wise guy who substituted the concept of preferences for the older idea of utility. The Keynesian macroeconomists have it wrong: people don’t make choices just on the basis of rational value-added calculations. The micro approach that emphasizes preferences has it right, and right now Americans are in a new mood. Some, at least, are asking why they’ve been buying bunches of junk they don’t need. Some are concerned about the effects of hyper-consumerism on the environment, if not also on their own mortal souls. It’s about time. In short, I suspect that a cultural shift underlies the so-called weakness of “consumer confidence”, which is a total misnomer for what is happening. It’s not just that a lot of people are worried about overextending themselves, though that is part of it for many, it’s that increasing numbers of marginally more intelligent people are re-thinking their styles of living, their priorities, and what makes them happy and satisfied. Partly this is a generational change. A lot of people don’t lack confidence; they’re just not as foolish with their time and money as they used to be. When Time magazine, of all publications, runs a cover story on “The End of Excess”, which it did last year, you know something is cooking.

If this is true, it means we cannot go on, or at any rate seem not likely to go on, as we have constantly generating artificial demand without end. We cannot forever invent pointless new gadgets—do we really need a new razor with 6 blades instead of “just” 5?—and throw billions of slick advertising dollars at them to sustain the economy on an upward tilt forever.

And let me not leave this point too soon: science-based corporate advertising represents a kind of Weapon of Mass Deception (WMD, yes…). Do you realize that when a TV ad for some hot car shows you a sleek black vehicle with a hot blonde standing over it, saying “I love my whatever-it-is”, that dopamine actually flows into your nucleus accumbens? The association between the sex object and the car for sale established by the ad image actually changes the neurotransmission sequences in your brain. The images create those pathways, and there is not a thing you can do about it, because human beings did not evolve over hundreds of millions of years under conditions in which their visual field included mediated images (as opposed to real ones) that could be rigged to deceive them. We have no natural defenses against such deliberate uses of neurochemistry to harvest us as consumers, anymore than Pavlov’s dogs were capable of outsmarting Pavlov and screwing up his operant conditioning experiments.

But people are figuring it out, and it’s going to get harder for corporations to sell them lots of junk they don’t need. I think we may be coming to a point, ever so slowly to be sure, where the value-added content of new products is going to have to be persuasive in a way it has not been heretofore in order to get large numbers of people to buy them. I think, I hope anyway, that people’s idea of what is and is not a “bargain” is finally starting to change, by which I mean to heal from the fetish-like sickness in which it has rested for about the past half century. (AI recently reviewed a book on this topic—I commend it to you.)

What this means is that economic growth beyond what population increase implies is going to depend increasingly on invention, innovation and that, in turn, depends on supporting entrepreneurial activity. That’s what the Administration does not seem to understand, though it has gotten the same advice from just about everyone with a brain. But there are fewer people with a business background in the Obama Administration than any in American history. These guys are on balance hostile to business. The stimulus was just for union constituencies involved in old, shovel-ready projects. This was a stupid way to spend that money, and there is still zero sign that these guys know new jobs are created: from high-tech start-ups and smaller businesses, which in turn thrive in investment-friendly conditions. The Obama Administration’s bigger-government, higher-taxes approach to everything points in exactly the wrong direction, of course. They say they understand this, and sometimes I think the President actually does understand it at some level. But where’s the action? Where are the genuine initiatives? This is what comes of ceding authority to people like Harry Reid and Nancy Pelosi.

Truth be told, what we’re witnessing now has been a long time in the making. It has a history. About 50, 60 years ago a lot of observers predicted that because of automation we’d eventually end up with overproduction, deflationary danger and structural unemployment. A lot also predicted that this was how the Cold War would end—through convergence forced by technology. We’d have a situation where less than half the work force would produce all anyone wanted or needed, and we’d have to figure out what the rest of the population would do to get its share of the goodies. If they did not have salaries because their labor was superfluous, how were they to live? What would they do, and how would they earn money? You can see where this is going, or seemed then to be going: The government would have to distribute the goodies. We would not necessarily have to collectivize the means of production, but we would have to collectivize the means of distribution. That’s what a welfare state is to some extent, but these observers were talking about countercyclical policies much bolder than those of the welfare state.

This problem is essentially the same one Bismarck recognized in the middle of the 19th century. It’s where his proto-socialist ideas of social inclusion came from, because he was worried about alienation and revolt. What these worriers did not see was that new technology could produce whole new industries that generated more good new jobs than the old ones the machines took away. It was dynamic and unsettling, but standards of living could rise fast.

When it dawned on people that this seemed in fact to be happening as the 19th century rolled on into the 20th, and that automation was not producing unemployment but growth and new structures of economic supply and demand, other questions arose. What about education? As jobs got more technically demanding, wouldn’t people have to know more? Herbert A. Simon took up this question in his 1964 book The Shape of Automation and concluded “not really”. He estimated that even if the share of capital in the economy as a whole increased by 3% a year, a workforce educated on the level of Japan or Western Europe, at the time lower on average than the U.S. levels, would be fine.

Simon was right for a while and those who feared the downstream impact of automation on employment were wrong, but I doubt he still is right, and I wonder sometimes whether the automation Cassandras were not so much wrong as premature. I think Simon may have underestimated the compound impact of IT-related value-added processes. I think we might be reaching limits here, and this is where our real problem comes into play—this is what “structural” really means in practice.

I think the substitution of capital for labor is accelerating rapidly, and I think IT is largely responsible for the current wave of substitution—and it has a generic and generative impact other technologies have not had. It’s not like a machine but like a machine tool. I think too we may well be moving into a situation, on a global scale, where comparative advantage is leaving high-wage jobs permanently scarce in the United States. If manufacturing at nearly all levels can move, largely thanks to IT, to find its level of highest sustainable profit, it will. Not that profit margins alone motivate employers. They, too, factor in all sorts of other considerations, like stability, community, quality of life and so on, just as consumers do. They will pay higher wages in order to keep cadres of workers who know each other and perform well in teams. On balance, however, nearly everything can move now, and it will, possibly until all the world’s relative labor costs even out. And since there are still 800 million poor people in China, that’s going to take quite a while. Either that, or the world will become sharply nationalist-protectionist as dispossessed citizens try to stop the global juggernaut, which under certain circumstances would be understandable and even morally justified (though the thought of what political opportunists could do with such energies is truly horrifying).

It could be, in other words, that we could face a very large, more or less permanent massive unemployment situation—unless we innovate like mad. And to do that we’ll have to educate like mad. And here is the crux of the matter: Pretty soon, most of our young people will be from minority groups that have a history of not learning very well. Let us not be coy: The reason for this is not mainly unequal educational opportunities, though there is plenty of that too. The reason is cultural, and there is a strict limit to what public policy can do about this. No Child Left Behind can fix this only to a very limited extent. Kids who are not spoken to and read to at home start school in inferior positions compared to other kids. A lot of this has to do with family stability, with having a mother and father in the house paying attention to and loving the children. The data on kids in minority groups growing up without fathers is appalling, and it is getting worse, not better. Schools alone can’t fix this problem, and it is fast becoming not a humanitarian problem affecting the so-called underclass, as it has been since the Moynihan Report, but a core economic and social problem on a national scale.

This is why I am on most days pessimistic not so much about the American economy—which remains capable of innovation and hence extensive growth—but about American society: We are going to have ever huger numbers of essentially unemployable minority citizens, a schizoid society as a result that is even worse than it already is. They won’t be able to learn enough to take the higher value-added jobs an innovation-based global economy will generate. They will be competing not just with other Americans, remember, but with a global labor force in many if not most areas. The prospects fills me with dread.

Is there nothing we can do about this? No, in fact, there is plenty we can do, but it will take boldness, imagination and some political courage. I can think of two major programs which might do the trick, at least to start.

The first, which I have talked about for years, is that we need a Baby Bond/National Service program. AI has featured a version of this idea, so I won’t belabor the point here.

The second is a New Homestead Act—a kind of combination of the original Homestead Act, the CCC and the GI Bill. We need to get otherwise unemployable people out of the sinkhole cities in which they live and get them back on the land, increasing dramatically the labor-input of agriculture. We need to turn America into one huge environmentally self-sustaining garden, understanding what that word really means. Perhaps I will elaborate my idea of a New Homestead Act in a future post.

These two programs taken together might not be a silver bullet, but they could save the country from the disaster of permanent structural high unemployment and social upheaval ahead. Is our political system capable of generating serious change? Can a flock of pigeons perform Beethoven’s Fifth?

I define a worthy 21st century infrastructure for America as an integrated structure that encompasses energy, transportation, communication, airports, water/sanitation and all the rest, bound together by an IT-driven central nervous system. We all know about the “smart grid”, but that’s just about electrical utilities. I am talking about something an order of magnitude above that. I am taking about maximizing the synergies among developing technologies, and I am talking about skipping a technology generation to acquire a truly advanced infrastructure that can serve as real productivity value-added for the economy. It’s not exactly like the opportunity Japan and Germany had after WWII, where the Allies had destroyed their legacy systems, but we’re in such bad shape that it’s almost analogous.

Yet the government seems clueless. The stimulus program was about shovel-ready infrastructure—old technology that it’s often foolish and wasteful to fix.  Of course, that was mainly a jobs programs for favored constituencies, and little more. The Obama Administration’s new investment in railroads is nice, but it’s a one-off. It is not integrated into anything, as best I can tell. The President is just jealous that French and Japanese and Chinese trains can go faster than ours. That’s what he actually said, in the State of Union address no less. I waited that night to hear a vision for infrastructure that was economically sensible and sound in terms of engineering principles. Nothing doing. If this guy is really so smart, why is he consistently so disappointing?

Now, I am not a centralization freak; on the contrary, I am more impressed by the efficiencies of subsidiarity. But there are some public-goods functions that can benefit from technical and engineering synergies if built up to scale, and I think national infrastructure in an age of rapid IT advances is one of them.

Even more than that is at stake. We want an infrastructure that’s efficient in thermodynamic terms, of course, but also one that is desirable in broader social terms. We know that the choices we make about technology affect social patterns, attitudes and behaviors (think internal combustion engines, highways, suburbs and drive-ins… or think the Pill, for that matter—not all the shaping is spatial in nature). We don’t get integrative efficiencies and social benefits from dumb luck. They require some planning, some forethought. They also require a capacity to trade short-term for longer-term benefits. Why, for example, do we still keep so many of our power and telecommunications lines up in the air, where they’re vulnerable to every passing windstorm, instead of burying them? Partly because we’ve become incapable, much of the time, of front-loading a long-term investment.  It’s not because we’re incapable of calculating the investment; it’s because we’re institutionally deficient when it comes to the politics of the matter.  Business models do not align with the long-term public good, and government seems incapable of  doing anything about it.

Seems to me, too, that if we now need some aspects of this system to be national in scope for the sake of efficiency and rational management (say, the telecommunications piece), then we cannot keep doing on the state level some of the things we’ve always done before. Just as it makes no sense to pay for digging up the street four times if you only have to do it once, how much sense does it make to have 50 separate licensing schemes when the technology is of national (and international) scale? (Though perhaps there are some functions that would be better de-federalized and given to the states.)

And it seems to me that the principle of modularity needs to be built into a new infrastructure, so that just as newer avionics packages can be put into old airframes (to a point), technological advances can be instituted in infrastructure systems without having to start over every time some key component ages. We now face a mountain of costs because we have let systems age so badly. If they had employed modular designs, we would be able to upgrade without that mountain being so high, and that should be our aim in the future: to use modular design, insofar as possible, to space out our investments, so that planned maintenance cycles double as forms of upgrading, again, insofar as possible.

Moreover, as already suggested, I want this essay to consider what the role of government ought to be to promote (not to own and manage) a new infrastructure.  Now, I know people who argue that government should have zero role in infrastructure, that it all should be privatized. I regard this as an insane remark, but actually, so do most of the people who assert it—because the moment after they got their libertarian rocks off, so to speak, they acknowledge all the “exceptions” in which some government role has been and remains necessary. If you add up all the exceptions, there’s not much ideology left. Any reasonable and historically literate person knows enough of the history of the canals and roads and railroads and telegraph and so on in our country to realize that we need government for a variety of purposes: licensing to ensure health and safety and rational use of scarce public goods, providing an understory market for new technologies, basic science and R&D investments, and so on. There is a logic to some kinds of public monopolies, after all, just as there is to certain zoning practices.

The design problem in this regard is that we need a permanent place where the partners and participants involved in building a new infrastructure can convene to decide what to do and how to do it. I have a hard time seeing how people who build electricity grids, people who build road systems, people who build trains and light rail, people who do energy infrastructure, people who do fiber optics, people who plan airports, people who think about financing such things, people who consider safety and environmental issues (one of several necessary governmental functions) and so on, will all somehow get together on their own accord within a private-market framework to plan an integrated system. Without such a place to convene and plan, we will continue to get incremental developments at best, and possibly developments not up to efficient scale. We will get a system that is less than the sum of its parts rather than more. As things stand now, there is no such place in the Federal government, nor is there any interagency arrangement substituting for such a place.

Now, I am mindful that even if a concept for such a place were developed (say, merging the Department of Transportation, the non-military side of DOE, the FCC and maybe the NTSB) there is a good chance that the U.S. political system, as presently constituted, could not do this right. (Look how the Feds messed up the original light-Washington-footprint DHS proposal to create the dysfunctional monstrosity we have now.) The opportunities for distortion, corruption and God-knows-what are almost too large to imagine. But is that a reason not even to think about it?

Moreover, seems to me that the promise of a really major leap forward could attract significant private sector support. Oddly enough, in this economic climate, it may be easier to think and build big than to persuade people to go further into debt to fix already obsolete bridges, rails, roads, water/sanitation systems and so on.

I think I have finally found an author who understands what I want and can do it. We’ll see. In the meantime, I went with some optimism to the newly opened offices of Building America’s Future (BAF) here in Washington. This is, supposedly, an infrastructure renewal project co-sponsored by Governors Schwarzeneggar, Rendell and Mayor Bloomberg. I told the head of this office that I wanted to help them get out their message. Come to find out, they have no message. They appear not to have any version of their program or vision even 2,000, let alone 4,000 or 5,000 words long, that they can give me for TAI. So far, it seems, they have only a PR stunt, a minor upper-middle-class jobs project and some expensive rental space. If they have done any actual thinking, I can find no evidence of it. Unkind? Too cynical? Maybe; let’s test the statement: Arnold, Eddie and Michael, prove me wrong if you can.  Make my day.

The William of the title, Het Wilhelmus, refers to William the Silent, the prince who led the armies of the Dutch Revolt against the King of Spain. So it is a more than a little puzzling to find William singing,

To the king of Spain I’ve granted
A lifelong loyalty.

The Dutch Revolt was the first modern war of national liberation. So why is one of the fathers of the Republic professing loyalty to the King of Spain?

The Wilhelmus, like the American Declaration of Independence, was written in the middle of a shooting war to justify armed rebellion. The participants in both wars needed to persuade themselves that they were not rebels, but loyal men forced to rebel by unendurable tyranny.  And they also needed to persuade the world.   It adds something to the match if you think of the Dutch fans with their faces painted orange as propounding Calvinist resistance theory. Set to music.

The great triumph of the Dutch is not that a small people succeeded in defeating the mightiest European Empire of the era, though that was a remarkable feat. What sets the Dutch Republic apart is that it introduced the modern era of nation states governed as liberal democracies.

I don’t know what the Hapsburg armies sang during the decades they spent trying to put down the Dutch Revolt, but I do know that they won’t be singing their national anthem on Sunday.

Actually, the question of the Spanish anthem is an interesting one. Spain does have at least half a national anthem. The music is a handsome eighteenth century march. What the Spanish can’t agree on are the lyrics.  Writing lyrics to a national anthem pretty much requires you to identify the nation you are writing about.   There is a committee working on it, and the members have my sincere sympathies as they attempt to write lyrics that will satisfy everyone without offending Basque, Catalan or Galician national sensibilities.

But on Sunday I will be rooting for the Dutch, because it was the Dutch who blazed a path out of the wars of religion that led to religious tolerance and liberal democracy. And because you have got to love the weirdly medieval lyrics that will be belted out by Dutch fans:

William of Nassau, scion
Of a Dutch and ancient blood,
I dedicate undying
Faith to this land of mine.
A prince am I undaunted,
Of Orange, ever free,
To the king of Spain I’ve granted
A lifelong loyalty.

Diana Muir Appelbaum is working on a book on nationalism.  She is the author of Reflections in Bullough’s Pond: Economy and Ecosystem in New England.

While Attorney General Woods was speaking in reference to Arizona’s now-infamous immigration law, his statement is just as salient to HB 2281, a controversial new statute that bans K-12 ethnic studies programs throughout the state. Woods’ plaintive observation leapt out at me as I was in the midst of examining Arizona’s public school history standards in light of the education legislation—and discovering that the standards omit most of the last 150 years of Hispanic-American history.

In the aftermath of HB 2281’s passage Arizona public school superintendent Tom Horne defended the new law on CNN, telling interviewer Anderson Cooper that “what I’m opposed [to] is dividing kids up so they have Raza studies for the Chicano kids….African-American studies for the African-American kids, Asian studies for the Asian kids.”  Horne went on to assure Cooper that Arizona’s educational standards “require that all social studies classes teach different cultures. We want all kids to be exposed to a lot of different cultures.” As a professional historian I became curious about how “Arizona’s Academic Standards for Social Studies” deals with the rich subject of Hispanic-American history.

After a careful review of Arizona’s K-12 benchmarks, I can attest to the accuracy of Superintendent Horne’s assertion, with one glaring exception: the Hispanic-American historical experience from the latter half of the 19th century onward. In this case the omissions are egregious, to the point of appearing nothing short of pathological.

We need to pause here and note that the main target of Superintendent Horne’s ire is the Tucson Unified School District’s K-12 Mexican American Studies program, whose Website informs visitors that among its goals is to provide “a counter-hegemonic curriculum” and “[a]dvocate for and provide curriculum that is centered within the Mexican American/Chicano cultural and historical experience.” Oy. The Tucson program embodies the academically dubious mission of consciousness-raising: the celebration of unique virtues and parochial monofocus embedded in the intellectual DNA of identity studies programs (although there are many individual scholars whose work is admirably rigorous).

However, part of the reason these programs emerged is because scholars were slighting minority groups’ historical experiences both in research and in the classroom. To their credit, historians have gone a long way over the past several decades toward redressing this record of scholarly omission, including Hispanic-American history, while generally avoiding the sort of feel-goodism or polemics that vex Tom Horne and other conservatives.

So if Arizona tosses out Hispanic/Mexican-American studies, what exactly is left?

It should be noted that the Arizona guidelines are actually quite good overall, marked by both breadth and admirable specificity throughout. For example, there are no fewer than six enumerated factors for teachers to cover in the seventh grade guidelines alone concerning the causes leading to the Civil War. The coverage concerning the Hispanic dimension of American history from the early Spanish colonization through the 1820s is consonant with other study areas during the same time period. Guidelines for the 1846-48 Mexican-American War are far less specific and encompassing than those for the Revolutionary and Civil Wars. But there is still room for sufficiently motivated (and well-informed) teachers to provide an adequate overview of the conflict and its controversies.

But from the post-Civil War period through the 20th century, Hispanics become virtually invisible in the Arizona standards. The result is a virtual blotting out of the historical experience of Hispanic Americans in both Arizona and the United States overall from the late 1800s through the present.

For example, when the standards deal with the emergence of the modern United States between 1875-1929, one of the guidelines meticulously deals with “changing patterns in Immigration (e.g., Ellis Island, Angel Island, Chinese Exclusion Act, Immigration Act of 1924).” But mysteriously absent is any mention of the importation of thousands of Mexican laborers to help build the Southern Pacific and Santa Fe railroad networks.  The guidelines also neglect to mention the movement of almost 900,000 Mexicans across the U.S. border into Arizona and other Southwestern states in the midst of the Mexican Revolution. They fail to touch on the Mexican emigrants’ subsequent settlement in the US as legal residents. Indeed, there’s nothing on the Mexican Revolution itself in either the United States or world history standards, an astounding oversight considering Arizona’s proximity and the conflict’s spillover effects. Finally, the Arizona standards skirt the anti-Hispanic nativist reaction that led to the establishment of the U.S. Border Patrol and efforts to limit cross-border migration.

In dealing with the Great Depression and the Second World War, there’s not a word in the standards on the mass deportations of Hispanics from Arizona and elsewhere in the Southwest under the euphemistically named “Mexican Repatriation Program”—in which upwards of 60 percent of those pushed out were U.S. citizens—or of the admission during World War II of hundreds of thousands more Mexicans to the region under the Bracero workers program. There’s a vague reference for fourth grade to “Native American and Hispanic contributions” to the war effort, but that’s as far as it goes (see below for more on American Indian versus Hispanic Arizona standards coverage). There’s nothing on the wartime anti-Mexican hostility in the Southwest that led, for example, to the “zoot suit” riots that occurred in neighboring California during the war. And it is notably odd that there is no mention of the FDR-era “Good Neighbor Policy” toward Mexico and the rest of Latin America—including why it was necessary as a corrective to previous policies in the first place.

As for the Civil Rights era, the Arizona standards duly mention Jim Crow laws, non-violent protests, the 1964 Civil Rights Act and 1965 Voting Rights Act, and the like. But again there is nothing on the Hispanic-American experience, save for three brief references to agricultural union organizer Cesar Chavez, who led a march to the U.S.-Mexico border in 1969 to protest American growers’ use of illegal immigrants as strike breakers. (Chavez’s act has become a conservative talking point on the issue of immigration control.) The standards offer nothing on the 1954 “Operation Wetback,” the Immigration and Naturalization Service agency’s roundup of over a million illegal Mexican immigrant laborers in the Southwest, including many thousands in Arizona. They evince no awareness of the long history of the segregation of Hispanic children in Arizona’s public schools. Concomitantly, there’s no guidance concerning the court rulings that brought about the end of Hispanic school segregation, such as California’s Méndez v. Westminster (1946) and particularly the Arizona’s Federal District Court’s Gonzales v. Sheely (1951), which was the direct legal antecedent of Brown v. Board of Education.

Especially curious is the yawning gap between the Arizona standard’s coverage of Hispanic American and Native American history from the Civil War era through the early 20th century. Concerning the latter, the guidelines include the Indian Wars and the American government’s removal policies and establishment of reservations in the 19th and early 20th centuries. The list of notable Native-American figures in Arizona during this period includes the likes of Chiefs Geronimo, Manuelito and Cochise. Contrast this with the complete absence of historically prominent Hispanic Arizonans like Henry Garfias, the first marshal of Phoenix, and Estevan Ochoa, the first Hispanic mayor of Tucson. (Unsurprisingly, contemporaneous Anglo-Arizonans like Charles Poston, the Arizona territory’s first Congressional delegate, and Sharlot Hall, the first woman officeholder in Arizona are listed in the standards.)

We’re left to wonder what these omissions of Hispanic Arizona and Hispanic-American history are all about. The most charitable reading is that they signify an honest—if terribly unfortunate—historiographic blind spot, rather than Anglo-Arizonan sub-nationalism, or Texas-style conservative dogmatism, or a blatant manifestation of anti-Hispanic sentiment, or rank state Republican primary politics.

In the spirit of charity, let’s assume it’s the former, rather than any of the unpleasant latters. The solution for Arizona’s public school social studies standards is thus straightforward: add in what is missing, as non-ideological historical narrative and analysis, not as polemic or ethnic esteem-building exercise. Over to you, Superintendent Horne.

Finally, the question of how to effectively integrate Hispanic-American history into social studies curricula is not merely a Southwest regional issue, but a national one. Hispanics make up over 15 percent of the total US population. There are substantial Hispanic populations in formerly unlikely states: they comprise over four percent of the population in Iowa and Minnesota, over five percent in Arkansas, and over seven percent in North Carolina, and a slightly higher percentage in Wyoming (Wyoming!), where Hispanics outnumber African-Americans, American Indians and Asians put together. There are more Hispanics than Asians in Washington State (9.8 versus 6.7 percent, respectively) and more Hispanics than blacks in Alaska (6.1 versus 4.3 percent).

Arizona’s problems dealing with the Hispanic historical experience in the United States should spur all of the states to review their history standards on the subject. Hispanic-American history is American history, and all of the nation’s public school students, and concomitantly the American commonweal, will benefit from a straightforward, nuanced examination of the subject and its complexities. Hispanic schoolchildren across the country will have an enhanced context for their residency and citizenship, which in turn can only aid the acculturative and assimilative process that some worry is inhibited in the Hispanic community. Just as important, they and all other students will add significantly to their understanding of America’s grand, tortuous, ongoing story of E Pluribus Unum.

Neal M. Rosendorf, Ph.D. is an independent scholar based in Santa Fe, New Mexico. He has taught U.S. history and international relations at Harvard University, the University of Queensland, and Long Island University.

The Washington Post‘s coverage was noteworthy for its balmy idiocy. The writers, in this case someones named, Mary Beth Sheridan and Philip P. Pan, wrote, inter alia, that: “The pact appeared to represent President Obama’s first victory in his ambitious agenda toward a nuclear-free world.” It is no such thing. If the editor told the reporters to go find something to praise Obama for, to help save his otherwise disastrous foreign policy, OK, one can understand that. But to link this agreement to this nutty, bumper-sticker slogan of a non-policy is just silly.

The actual reporting also made, just by the way, no sense. The article went on, “Each side will reduce its most dangerous nuclear weapons–those deployed for long-range missiles–from a ceiling of 2,200 to between 1,500 and 1,675. And the two militaries will make relatively small cuts in the number of jets and land- or submarine-based missiles that carry nuclear warheads and bombs.” No number was given.

This sentence is so screwed up that it will now take me several sentences so show how.

First of all, nuclear weapons are not dangerous unless they go off–i.e., are detonated, and it’s not at all likely that any U.S. or Russian weapons will be detonated, now or probably ever. It’s just as sensible, more so really, to describe a nuclear weapon as potent as it is to describe one as dangerous. Ms. Sheridan driving her car while talking on her cell phone is actually more dangerous than a nuclear weapon for any practical purpose.

Next, a weapon is not more dangerous because it is long-range. If a tac-nuke goes off near someone, they are going to be very dead, just as dead as if they were hit by something bigger from farther away. Long-range weapons may be more strategically consequential in some respects (and not in others), but that is quite a different matter. The nucs most likely ever to be used are tactical nuclear weapons, of which the Russians still have a whole damned lot in Europe. These are arguably more dangerous precisely because they are more apt to be used. The treaty does not cover them, at all.

And the language used!! Er, “warheads deployed for long-range missiles. . .”?! How about “deployed on” maybe? Jets? I think some of our bombers actually make their way across the sky with propellers. The Russians have been concerned with nukes on an F-18?

Next, the statement makes it seem as though what has been agreed is mainly a reduction of warheads, not launchers. It’s sure news to me if these negotiations have done that. It is not possible to verify warhead reductions. These sorts of negotiations, going back 40 years, have always been about numbers of warheads married to deployed delivery vehicles. So what is this article even talking about?

It also makes it seem that more weapons will be taken down than launchers. Though I have not yet seen the treaty text, that is not my understanding of the agreement or, as you’ll see in a moment, that of the New York Times. I think deployed weapons are down to 1,550 or thereabouts, and launchers down to 800. The latter is not “a relatively small cut.” It is significant.

There is also an intimation here that a warhead and a bomb are two different things. They are not. Yes, some warheads can be independently guided even after leaving their delivery vehicles. But they are still just bombs; they fall, because they have no engines.

It is hard not to conclude that Ms. Sheridan and Mr. Pan do not know what they are talking about, and neither does their editor. Shame on the Washington Post for getting a front page, top-of-the-fold story so messed up.

Compare the New York Times. The NYT describes the agreement this way: “. . .the two sides agreed to lower the limits on deployed strategic warheads by more than one-quarter and launchers by half. . .” Now, since there can be more than one warhead per launcher, this makes sense. Compare it to the Washington Post‘s language, above, which, as I have said, makes no sense. But the NYT, true to form, this time under the bi-line of Peter Baker and Ellen Barry, claims that the deal represents “perhaps the most concrete foreign policy accomplishment for Mr. Obama since he took office 14 months ago and the most significant result of his effort to `reset’ the troubled relationship with Russia.”

Wow, what an editorial.

First, it’s not really a foreign policy achievement; if it’s anything, it’s a national security policy achievement. Except that it isn’t, because the agreement is almost meaningless. The Administration thinks it will help the upcoming NPT Review Conference achieve something practical, but it won’t because the Review Conference itself can’t achieve anything practical, not at a time when real proliferation threats are being left unaddressed in practice. It’s nice to have the deal done before the NPT Review Conference, yes; not to have it done would be embarrassing, like not having an energy bill before Copenhagen, for example.

But we’ll have to wait to see what the Administration had to pay for that accomplishment. Just agreeing to negotiate these reductions with the Russians, and letting the Russians know we needed it done before a date certain (in May), gave Moscow free leverage over the terms, and they have dragged it out for many months just to screw with us and take advantage at the margins. The fact that the Russians announced the deal and the White House was taken by surprise is also a little worrisome; it suggests that perhaps this was another Russian pressure ploy to get their way on a few remaining details at the last minute. The Russians cannot resist this kind of gamesmanship against a weak and clueless White House. I think it may even be genetic. Well, we’ll see how the story plays out; maybe I am being cynical. But maybe not; stay tuned to this blog.

The real problem here is the Administration’s decision to privilege arms control in the relationship with Russia. I can see a reason for this, of course; it makes the Russians feel our equal, for this is the only area in which they are, more or less, our equal. It salves their wounded imperial pride. The idea seems to have been, OK, we play nice with them here and they’ll be more agreeable in other areas. I think the Administration believed that finishing the deal would be quick and easy, since there wasn’t really that much left to do.

Ah, but the Administration’s Russia policy, I hear tell, refuses to play the linkage game. Well, this use of arms control in the Russia reset business seems sort of contradictory then. Maybe they’re only saying this now because the deal took much longer and was much harder to do than they thought. In any event, if the promotion of arms control to the top of the U.S.-Russia agenda was meant to cause pliancy in Moscow, where is that pliancy? Where have the Russians been agreeable at all? With regard to Iran? Georgia? Search me. The Administration is right; there’s been no linkage, at least not in our direction.

I would rather have made reductions in the U.S. arsenal unilaterally, and invited the Russians to undertake a parallel unilateral action. We are capable of deciding how many of these things we need without all the pomp and circumstance of formal negotiations, and we know that Russian numbers are going to come down anyway for financial and technical reasons. There was no reason to negotiate any of this, except for symbolic purposes. Indeed, the number I would have chosen isn’t too far off from 1,550 deployed warheads and 800 launchers. For reasons I’d rather not write about in public, I’d say 1,200/750 would be OK, but 1,550/800 is close, so let’s not be picky. Too much lower than that and we might tempt third parties we would be foolish to tempt, and hence, by the way, one aspect of the idiocy of the nuclear-free world stuff, and one more reason why this agreement is NOT a step in that direction. (If the deal had taken both sides down to, say, 500/300, that would have been such a step and that would have been dangerously bad.)

The Administration is also claiming a major advance in verification protocols. We’ll see if that turns out to be true once the text is available for public inspection. Even if it is true, that could have been negotiated separately from the numbers.

So let’s for a moment credit, just for the sake of argument, the NYT view that this post-START II deal is the Obama Administration’s most important achievement in foreign policy. Now what does that say? A superfluous agreement whose manner of negotiation negated the diplomatic impact it was supposed to have on Russian behavior is the most important foreign policy achievement of the Administration?! Yikes. And gosh, maybe it is!

Nor did I have any other claim on his loyalty. I was never in the Army, or on Haig’s staff when he was Supreme Allied Commander of U.S. forces in Europe (SACEUR), bivouacked in Brussels. And certainly I did not know him when he was Richard Nixon’s White House chief-of-staff in the early 1970s–I was a just an undergraduate college student at the time. All I knew of the Haig family came some years before that, with my occasional encounter with a younger Alex and his sister Barbara at Yorktown High School in Arlington, Virginia. Their father and mother I never met at the time.

I knew Al Haig and saw him fairly regularly only in 1979-80, during the time between his retirement from the Army and his appointment as Secretary of State by President Reagan. During those 18 or so months he was president of United Technologies and a senior fellow at the Foreign Policy Research Institute in Philadelphia, where I was working at the time. This was also a time when he had triple-bypass surgery, and I remember being deeply impressed by the difference between how he looked and acted before the operation and after. Before, Haig had almost preternaturally sparkling steel blue eyes, and he looked right at you with them. Afterwards, the twinkle was dulled, and I never saw it fully return, though he did otherwise recover his energy and most of the spring in his step before very long.

I did not do a great deal for him in those days; I was, as I have said, just a junior aide. I helped him write an essay for a magazine called Strategic Review. (Actually, I wrote it; he read it, approved it, made a few minor changes.) I did up a few research memoranda he asked for on various topics. Most of all, and most memorable of all for me, I helped coach him through his appearance before the Senate Foreign Relations Committee on the matter of the SALT II Treaty.

As it happened, I had been seconded from Philadelphia to Washington at the time (for a second time; I’d gone before in 1977 for a little while) to help Senator Henry Jackson and, with him, Senator John Tower to interrogate that draft treaty. It was the habit, directed by Senators Jackson and Tower, and implemented by their staffers Richard Perle and Bud MacFarlane, to help prepare friendly witnesses for their testimonies when they came to town. I was instructed to help Haig.

He needed my help, too, through no fault of his own. He had nearly been blown up by terrorists on his way back from Brussels. He had arrived stateside only about 48 hours before his testimony, and had not had time to actually read the treaty carefully, let alone fully study it. It was a complicated business, too. I will say this: Haig was a very quick study, a superb gamesman with the Senators (not least a young fellow named Joe Biden…..), and generally a lot of fun to hang around with. I sat behind him in the Senate Caucus room during his testimony, passed him notes in tight spots a few times, and just generally hung around, trying to be helpful if needed. During a break, and this is something I could not forget even if I tried, John Stennis came up to me and complimented my “slick wrist action” in passing those notes. And he actually winked at me. So much for the gentleman from Mississippi; that’s the first and last conversation we ever had.

All through the testimony and after Haig was ever gracious, appreciative and altogether personable. At the age of 28, I guess you could say I found the whole deal very entertaining, and even a bit gratifying.

For a certain part of this period Haig was testing out his own bid for President, which never got too far, but which touched off what I thought then and still think of now as some pretty hilarious episodes. Some of these episodes intersected with my time with Haig in Washington; others took place in Philly. I may sit down and relate these onto paper at some point or other, just for the record, and to get them off my chest in the sheer fun of story-telling. But for now, I will note only one in brief, in passing, so to speak.

One afternoon I was designated as a driver to take Haig and a man named, I think, Dixie Walker (not the old Brooklyn Dodger baseball player and not the former U.S. Ambassador to South Korea, but a third person) from the offices of the Foreign Policy Research Institute near Penn in West Philly out to the Philadelphia International Airport. Mr. Walker was an associate of Adolph Coors, and Haig was clearly trying to raise some money for his campaign from Coors. I put the two of them in the back seat of the only car I owned at the time, a 1952 Cadillac — a Fleetwood, so thankfully a 4-door — which I had owned for about a year. It takes about a half hour, maybe a little less depending on traffic, to drive from 36th and Market Streets out to the airport, and during that time driving Haig and Walker were talking politics and campaigns and money. They got on pretty well, it seemed to me. Their assumption, or their choice of a proper assumption for purposes of that discussion (not at all the same thing, of course), was that “when Reagan faltered”, that was the exact language they both used, Haig would be “well positioned to make his move.”

I said nothing, of course. I just drove.

When we got to the airport, I drove out — you could in those days — to the private area where the Lear jets were waiting. One was fueled up, waiting to take the two of them to Houston for a fundraiser. Walker was sitting behind me on the left side of the back seat; Haig on the right. I remember this because when I shut off the Caddy’s engine and got out, I opened the door for Walker. I was too slow to get around the back to open the right rear door for Haig. He opened it himself, got out, and slammed the door closed a little too hard, sending the window glass off its track and down inside the body of the door with a loud clunk. Thank God, it did not break.

Haig seemed alarmed, however. “I’m sorry, Adam,” he said.

“Oh never mind, sir,” I answered, “It does that sometimes; no big deal.” I got their luggage out of the trunk, shook Haig’s hand and said, “Have a good trip, sir.”

In fact, the window had never done that before, and has never done it again since. I still have the car.

I saw Haig from time to time in the years that followed his short stint as Secretary of State. He was always friendly and cordial to me. The last time I saw him was already some time ago, in the fall of 2002, I think it was. It was at the annual dinner of The National Interest magazine, which I was editing at the time. Haig was to my right at the table, and to his right his old boss Henry Kissinger. The other two or three people at our table I do not recall. We talked about this and that, though given the layout of the table I mostly listened to the crosstalk. But I remember toward the end of the evening Haig turned and asked me, “Hey, Adam, you still have that old Cadillac?” And I answered, “Yep, and it runs just fine, and the rear-right window is fine, too, even though you once tried to break it.” “Yes indeed,” he answered, “and I tried and failed to get some money out of that guy in Colorado, too”–all accompanied by a friendly chuckle.

And that is how I remember Al Haig — quick with a smile, easy with an assuring hand on the shoulder. Rest in peace, sir.

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.

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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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.