'War on drugs' has failed, say Latin American leaders

Guardian
Jamie Doward

Watershed summit will admit that prohibition has failed, and call for more nuanced and liberalised tactics

Guatemala's president Otto Perez Molina believes a new
approach to Latin America's war on drugs is urgently needed.

A historic meeting of Latin America's leaders, to be attended by Barack Obama, will hear serving heads of state admit that the war on drugs has been a failure and that alternatives to prohibition must now be found.

The Summit of the Americas, to be held in Cartagena, Colombia is being seen by foreign policy experts as a watershed moment in the redrafting of global drugs policy in favour of a more nuanced and liberalised approach.

Otto Pérez Molina, the president of Guatemala, who as former head of his country's military intelligence service experienced the power of drug cartels at close hand, is pushing his fellow Latin American leaders to use the summit to endorse a new regional security plan that would see an end to prohibition. In the Observer, Pérez Molina writes: "The prohibition paradigm that inspires mainstream global drug policy today is based on a false premise: that global drug markets can be eradicated."

Pérez Molina concedes that moving beyond prohibition is problematic. "To suggest liberalisation – allowing consumption, production and trafficking of drugs without any restriction whatsoever – would be, in my opinion, profoundly irresponsible. Even more, it is an absurd proposition. If we accept regulations for alcoholic drinks and tobacco consumption and production, why should we allow drugs to be consumed and produced without any restrictions?
"
He insists, however, that prohibition has failed and an alternative system must be found. "Our proposal as the Guatemalan government is to abandon any ideological consideration regarding drug policy (whether prohibition or liberalisation) and to foster a global intergovernmental dialogue based on a realistic approach to drug regulation. Drug consumption, production and trafficking should be subject to global regulations, which means that drug consumption and production should be legalised, but within certain limits and conditions."

The decision by Pérez Molina to speak out is seen as highly significant and not without political risk. Polls suggest the vast majority of Guatemalans oppose decriminalisation, but Pérez Molina's comments are seen by many as helping to usher in a new era of debate. They will be studied closely by foreign policy experts who detect that Latin American leaders are shifting their stance on prohibition following decades of drugs wars that have left hundreds of thousands dead.

Chevron executives barred from leaving Brazil over spill

Reuters

By Guillermo Parra-Bernal and Jeb Blount

SAO PAULO/RIO DE JANEIRO, March 17 (Reuters) - A Brazilian court on Saturday barred 17 executives from Chevron and Transocean from leaving Brazil, pending criminal charges related to a high-profile oil spill last November.

A federal judge in Rio de Janeiro state granted a request from prosecutors who are pressing for charges against both firms, a spokesman for prosecutor Eduardo Oliveira said in a phone interview. George Buck, who heads Chevron's Brazil unit, and the other 16 executives must turn in their passports to the police within 24 hours, the spokesman said.

Charges are expected to be filed on Tuesday or Wednesday, according to the prosecutors' press office.
The court decision came a day after the Brazilian navy spotted a thin stain of oil extending for about 0.6 mile (1 km) in offshore field Frade, which was also the site of last year's spill. U.S.-based Chevron said in a statement it halted production at Frade on Saturday after winning permission from Brazilian oil industry regulator ANP.

Neither Chevron nor any of its executives "have been formally notified of any action by the judiciary yet," the company statement said. "Any legal decision will be abided by the company and its employees. We will defend the company and its employees."

Prosecutors want to press a criminal indictment of Buck and other executives from Chevron and Swiss-based offshore drilling company Transocean, three government sources told Reuters in January. Transocean's rig was used in the Frade field.

It is up to a judge to determine whether to accept the charges and proceed with indictments.

World finance chiefs chastise U.S. on budget gap

Reuters

A view of the International Monetary and Financial Committee (IMFC) meeting
at the IMF headquarters building in Washington April 16, 2011.

Finance ministers in Washington for semi-annual talks took sharper aim than in previous years at the United States' $14 trillion debt.

While most of the criticism came from emerging market economies, some advanced nations joined the chorus.

Dutch Finance Minister Jan Kees de Jager warned that if the United States and other advanced nations move too slowly it could undermine confidence in the global economy.

"Insufficient budgetary consolidation may spark off further escalation of debt sustainability issues, with repercussions on confidence and the still fragile financial sector," de Jager told the International Monetary Fund's steering committee.

"Debt dynamics in other advanced economies, including the United States, are of concern."
The IMF this week said the U.S. budget deficit was on course to hit 10.8 percent of nation's economic output this year, tying with Ireland for the highest deficit-to-GDP ratio among advanced economies. It urged Washington to move quickly to put a credible plan in place to tighten its belt.

Brazil's finance minister, Guido Mantega, offered sharp words in a thinly veiled attack on the United States. "Ironically, some of the countries that are responsible for the deepest crisis since the Great Depression, and have yet to solve their own problems, are eager to prescribe codes of conduct to the rest of the world," he said.

The Group of 20 countries agreed on Friday to a plan that could put more pressure on the United States to fix its deficits as well as push other leading economies to address their own shortcomings.
The IMF's advisory panel on Saturday said issues of financial stability and sovereign debt stability must be addressed, saying in a communique that "credible actions are needed to accelerate progress." It emphasized the need for fiscal consolidation in advanced economies while avoiding overheating in emerging economies.

The Obama administration and the U.S. Congress are locked in battle over how best to fix the deficit. Republicans are pushing for deep spending cuts as part of the argument over raising the nation's $14.3 trillion debt limit, something which is needed to avoid an unprecedented U.S. debt default.

The Republican-led House of Representatives on Friday approved a plan to slash spending by nearly $6 trillion over a decade and cut benefits for the elderly and poor.

President Barack Obama, who has offered a competing vision to curb deficits by $4 trillion over 12 years, said on Thursday the Republican plan would create "a nation of potholes."

The White House is wary about cutting spending sharply while the economic recovery remains fragile.
Treasury Secretary Timothy Geithner told fellow finance ministers on Saturday caution was needed.
"We are committed to fiscal reforms that will restrain spending and reduce deficits while not threatening the economic recovery," he said.

Geithner was quick to say others whose policies contribute to global imbalances must change too, "especially those whose fundamentals call for greater exchange rate flexibility..."

The United States has repeatedly called for China to relax its limits on the yuan currency.

Yi Gang, a deputy governor of China's central bank, called for "more rigorous" efforts by advanced economies to tighten budgets and said the IMF needs to strengthen its monitoring of these rich nations.
Russian Finance Minister Alexei Kudrin, taking aim at the U.S. Federal Reserve, said central banks that buy government debt to keep interest rates low were abetting fiscal profligacy.

The Fed is on course to complete the purchase of $600 billion in U.S. government debt by the end of June, which would take its total purchases of mortgage-related and government debt since December 2008 to nearly $2.3 trillion.

Echoing Republican lawmakers and even some Fed officials, Kudrin said those purchases blurred the line between monetary and fiscal policy in a way that could jeopardize a central bank's independence.
"We observe this process with some wonderment, since it amounts to the monetization of those countries' budget deficits," Kudrin said.

Egypt's Unrest May Have Roots in Food Prices, US Fed Policy

A few weeks earlier, political opponents of President Hosni Mubarak had rallied to protest rising prices and to demand price ceilings on products to protect Egypt's poor.

Soaring food prices aren't the only reason that Egyptians took to the streets to try to topple their long-serving president. But they're a significant factor, and a steady surge in global commodity prices reminiscent of 2008 is sure to bring new battles over food security this year.

Protests against food prices recently rocked Jordan and Algeria. These same rising prices were partly why Tunisia's strongman, Zine El Abidine Ben Ali, fled his nation in mid-January. India and China are navigating the difficult waters of trying to control rising prices in their populous nations.

In the trading pits of commodity markets, the buzz is that many poor nations are trying to hoard wheat, corn and other staples. Such stockpiling has added to the bullish sentiment that's driving commodity prices even higher.

"Countries are hoarding grain supplies right now because they don't want to see what's happening in Egypt happen to them," said Phil Flynn, senior market analyst for commodities trader PFG Best in Chicago.

The United Nations Food and Agriculture Organization took the unusual step last Wednesday of updating its guide for policymakers in developing nations. It urged nations to avoid "policy actions that might appear useful in the short term but could have harmful longer-term effects or even aggravate the situation."
Such actions in the past have involved export restrictions by food-producing nations, which aggravated tight global supplies in 2008 and led to a spike in prices. By restricting exports, these nations, which include Argentina and Ukraine, drove down domestic prices, discouraging production and causing even tighter global supplies.

The Food and Agriculture Organization compiles an index of basic food prices around the globe, and it peaked in December.

"With this new price shock only two years after the crisis in 2007/08 there is a serious concern now about implications for food markets in vulnerable countries," Richard China, the director of the U.N. organization's policy and program development support division, said last week in announcing the updated guidelines.

For U.S. farmers, Egypt presents the eighth largest export market, much of it wheat sales, since the country is the world's leading wheat importer. American wheat and corn are sold across North Africa and the Middle East, prompting worries by U.S. farmers that Egypt's problems will spread throughout the region.

Wheat prices have risen by more than 70 percent over the past 12 months, and corn prices climbed in mid-January to their highest level since July 2008, a period when global food prices soared. They've since dipped slightly, to just under $6.60 a bushel Monday, but they're expected to remain volatile, since corn production is expected to drop 14 percent globally, according to the U.S. Department of Agriculture.

U.S. corn farmers traditionally have had 80 percent of the Egyptian market, although that dipped to 50 percent last year. There's less concern about current shipments, especially since Egypt is thought to have adequate inventories for now. The focus is more on what sort of government emerges there.

"I think, longer term, it is really what's going to happen with the transitional government. Is that some sort of continuation," said Chris Corry, the senior director of international operations for the U.S. Grains Council, which represents U.S. farmers.

The issues in Egypt right now are basic, he said, noting, "The government must function for banks to be open, for payments to get transacted, for commodities to be purchased."

A number of factors are combining to drive up the global prices of wheat, corn, soy and other commodities. Some of the story is weather-related. Argentina, Australia and Pakistan have suffered from heavy rains, which have damaged crop production. Russia is recovering from a devastating drought last year.

Another part of the story is demand. Big emerging markets such as China, India and Brazil continue to soak up greater shares of global supplies, and the recovery in the U.S. economy, the world's biggest, is accelerating.

A third explanation that's gaining acceptance is that the U.S. Federal Reserve inadvertently exacerbated the price picture for grains and other commodities. The Fed has been engaged in what economists call "quantitative easing," buying U.S. Treasury bonds to attack the threat of deflation - the phenomenon of falling prices across an economy.

Quantitative easing has the effect of raising asset prices, whether they're the prices of stocks or what traders are willing to pay for commodities such as wheat or corn. One of the side effects of this policy is that the dollar weakens against other currencies, and that's helped push up the global prices of commodities.

"The truth of the matter is that when the Federal Reserve moved on the quantitative easing, it did export inflation to a lot of these emerging markets," Flynn said. "There's no doubt that one of the side effects of the weak dollar and quantitative easing has been rising commodity prices. It helped create this bullish environment for commodities. This is a very delicate balancing act."

It's a view shared by Ed Yardeni, a veteran financial market analyst, who reached a similar conclusion in a research note to investors Monday. He joked that Fed Chairman Ben Bernanke should be added to a list of revolutionaries, since his quantitative easing policy, unveiled last year in Wyoming, has provoked unrest and change in the developing world.

"Since he first indicated his support for such a revolutionary monetary change in his August 27, 2010, speech at Jackson Hole, the prices of corn, soybeans and wheat have risen 53 percent, 37 percent and 24.4 percent through Friday's close," Yardeni noted. "The price of crude oil rose 19.8 percent over this period from $75.17 to $90.09 this (Monday) morning. Soaring food and fuel prices are compounding anger attributable to widespread unemployment in the countries currently experiencing riots."

Although the policy was announced in August, the Fed didn't begin purchasing bonds until November. It's expected to buy $600 billion worth through June, in hopes of driving down the return on long-term bonds and forcing more investor risk-taking in the economy.

"There are a lot of different sticks in the fire here," said Jerry Gidel, the president of Midland Research Inc., which provides assessments of financial risk. What happens to the price of one food crop affects others, he added, because "it is a human-consumption commodity, and things can get emotional, and they do get emotional. And right now, we're kind of in one of those periods."

AIPAC: 'Thou shalt not recognize Palestine State'

Palestinian Cry

Here is the latest case of the power of Israel Lobby (AIPAC). Last week the US lawmakers passed ‘unanimously’ Resolution 1765 – condemning unilateral measures to declare or recognize a Palestinian state. Incidently, the democratically elected Hamas government has not declared an ‘Islamic State of Palestine’, but Bolivia along with Brazil, Argentina, Chile, Uruguay and Venezuela has recognized Palestine as a “free and independent state within its pre-war (1967) geographical status”.

According to former CIA counter-terrorism specialist and intelligence adviser, Philip Giraldi PhD, Resolution 1765 was drafted by the American Israel Public Affairs Committee (AIPAC) and sponsored by Congressman Howard Berman, currently Chairman of the House Foreign Affairs Committee. There were 53 co-sponsors.

Benji Netanyahu government is notorious in rubbing Ben Obama administration, from insulting Zionist Vice-presiden Joe Biden to telling Obama to shove-off his 20 F-35 stealth military planes and plus – in return for stopping illegal Jewish settlements in the West Bank for 90 days. Obama’s top Middle East adviser, half-Jewish Dennis Ross, and certainly AIPAC and the Democratic campaign committee must be behind this new bribe or “pretty please, with a cherry on top” as MJ Rosenberg called.

“Why would the Palestinians agree to negotiations under these conditions? They can’t. Or maybe they would for $3.5 billion, which they can sure use but would never be offered. Thanks to the Anthony Weiners, Steny Hoyers, Ileana Ros-Lehtinens, Eliot Engels and Brad Shermans of the world, what we invariably offer the Palestinians is not $3.5 billion but, to use a wonderful Yiddish term, bupkes — absolutely nothing or so little as to be an insult,” says MJ Rosenberg, senior foreign policy fellow at Media Matter Actions.

“Israelis and Palestinians need an “honest broker,” but that is not the role the Obama administration has decided to play. (Check out any speech on the Middle East by Vice President Joseph Biden, who always says, over and over, that there must be “no daylight, no daylight” between US and Israeli positions. Some honest broker!)”, wrote Rosenberg.

“If Obama is Israel’s friend, he’ll tell AIPAC and its cutouts in Congress that he will do what’s right for Israel, which, not so incidentally, is what is right for the United States,” says Rosenberg. However, what’s right for the future generations of the Jews, Muslims and Christians living in the Middle East And United States, would be a single democratic State of Palestine.