Category Archives: Department of Homeland Security

Operating Military Drone Flights over U.S.

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Pentagon admits operating military drone flights over U.S.

WashingtonTimes: The Pentagon has deployed spy drones to fly over U.S. territory for non-military missions over the past decade, but the flights were few and lawful, according to a new report.

The domestic drone flights have occurred less than 20 times between 2006 and 2015 and were always conducted in compliance with existing laws, according to the report by the Pentagon Inspector General which was made public under a Freedom of Information Act request, according to USA today.

The Pentagon did not provide details of the domestic spy missions, but said it takes the issue of military drone flights over America soil “very seriously.”

The list of domestic drone operations was not made public in the report, but some examples were cited.

In one case, an unnamed mayor asked the Marine Corps to use a drone to identify potholes in the mayor’s city. The Marines denied the request because obtaining the required approval from the defense secretary to “conduct a UAS mission of this type did not make operational sense.”

The issue of unmanned aerial surveillance drone flights over the U.S. first arose in 2013 when then-FBI director Robery Mueller told a Congressional committee that the bureau employed spy drones to aid in investigations, but in a “very, very minimal way, very seldom.”

According to the report, which was completed in March 2015, the Pentagon established guidance in 2006 governing when and whether drones could be used domestically.

The interim policy allowed spy drones to be used for homeland defense purposes and to assists civil authorities.

However, the policy said that any use of military spy drones for civilian authorities must be cleared by the Secretary of Defense or someone delegated by the secretary. The report found that the defense secretaries never delegated that responsibility, according to USA Today.

 Truthseeker/UK

But the desire for domestic drone operations is growing, according to the report. Military units that operate the drones told inspectors that they would like more opportunities to fly them on domestic missions, even just to give pilots more experience.

Shortly before the report was completed a year ago, the Pentagon issued a new policy on the use of spy drones requiring the defense secretary to approve all domestic drone operations.

Unless permitted by law and approved by the secretary, drones “may not conduct surveillance on U.S. persons,” under the new policy.

**** Is it is nefarious? Very doubtful:

Plotted out all the information we’ve (Electronic Frontier Foundation) received about applications to fly domestic drones on our Map of Domestic Drone Authorizations. (Clicking this link will serve content from Google.)

US Federal Agencies:

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WH: All FOIA Requests Require WH Scrutiny

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Being snarky, but just how many in the Obama administration got the early heads up….Hillary? Kerry? Holder? Jackson? Rahm?

It Took a FOIA Lawsuit to Uncover How the Obama Administration Killed FOIA Reform

By Jason Leopold

The Obama administration has long called itself the most transparent administration in history. But newly released Department of Justice (DOJ) documents show that the White House has actually worked aggressively behind the scenes to scuttle congressional reforms designed to give the public better access to information possessed by the federal government.

The documents were obtained by the Freedom of the Press Foundation, a nonprofit organization that supports journalism in the public interest, which in turn shared them exclusively with VICE News. They were obtained using the Freedom of Information Act (FOIA) — the same law Congress was attempting to reform. The group sued the DOJ last December after its FOIA requests went unanswered for more than a year.

The documents confirm longstanding suspicions about the administration’s meddling, and lay bare for the first time how it worked to undermine FOIA reform bills that received overwhelming bipartisan support and were unanimously passed by both the House and Senate in 2014 — yet were never put up for a final vote.

Moreover, a separate set of documents obtained by VICE News in response to a nearly two-year-old FOIA request provides new insight into how the Securities and Exchange Commission and the Federal Trade Commission (FTC) also tried to disrupt Congress’s FOIA reform efforts, which would have required those agencies to be far more transparent when responding to records requests.

The disclosures surface days before Sunshine Week, an annual celebration of open government, and a renewed effort by the House and Senate to improve the FOIA by enacting the very same reforms contained in the earlier House and Senate bills — the seventh attempt in at least 10 years by lawmakers to amend the transparency law. But the administration is again working to derail the legislation, according to congressional staffers.

The FOIA Oversight and Implementation Act of 2014, co-sponsored by then–House Oversight and Government Reform Committee Chairman Darrell Issa and ranking member Elijah Cummings, would have codified into law Obama’s presidential memorandum, signed on his first day in office in 2009, that instructed all government agencies to “adopt a presumption in favor of disclosure, in order to renew their commitment to the principles embodied in FOIA, and to usher in a new era of open Government.” (Attorney General Eric Holder issued a set of guidelines to federal agencies a couple of months later that explained how the presumption of disclosure should be implemented.)

Additionally, the legislation called for the implementation of a centralized online portal, overseen by the Office of Management and Budget (OMB), to handle all FOIA requests and required government agencies to update their FOIA regulations. The bill unanimously passed by a vote of 410-0, one of the few pieces of legislation during President Barack Obama’s tenure to receive bipartisan support.

But the administration “strongly opposed passage” of the House bill and opposed nearly every provision that would have made it easier for journalists, historians, and the public to access government records. The White House claimed it would increase the FOIA backlog, result in astronomical costs, and cause unforeseen problems with processing requests, according to a secret six-page DOJ set of talking points turned over to the Freedom of the Press Foundation along with 100 pages of internal DOJ emails about the FOIA bill.

“The Administration views [the House bill] as an attempt to impose on the Executive Branch multiple administrative requirements concerning its internal management of FOIA administration, which are not appropriate for legislative intervention and would substantially increase costs and cause delays in FOIA processing,” the talking points say. “The Administration believes that the changes… are not necessary and, in many respects, will undermine the successes achieved to date by diverting scarce processing resources.”

US Justice Department talking points on the FOIA bill that went nowhere despite bipartisan support in Congress

Remarkably, the talking points go on to say that the DOJ opposed the administration’s own instructions that called on agencies to act with the “presumption of openness” as stipulated in Holder’s guidelines and Obama’s presidential memo. The DOJ, they said, would “strongly oppose” any attempts to codify it into law. Instead, the DOJ touted a December 2013 “National Action Plan” to “modernize” FOIA and make it more efficient, saying that effort went far enough. But that had little to do with forcing the government to be more transparent.

“If this memo reflects thinking of the White House, than I have to question their commitment to transparency,” said Anne Weismann, the executive director of The Campaign for Accountability and a leader in the effort to reform FOIA. “The notion that these changes are going to increase the FOIA backlog, increase costs, and increase problems with FOIA is ludicrous. The breadth of their objections and lack of evidence to back up their claims and their absolute opposition to codifying Obama’s memo expose the lie that is the administration’s policy…. If the president and this administration believes in their stated FOIA policy they should be supporting an effort to codify it.”

Notably, the DOJ’s talking points also shed light on the ongoing turf war between the Office of Information Policy and the independent Office of Government Information Services (OGIS), also known as the FOIA ombuds office, which provides requesters with mediation services. Congressional efforts to expand OGIS’s role, as cited in the bill, were interpreted by DOJ to be an encroachment on its powers. The DOJ went so far as to claim that empowering another agency to improve FOIA administration was unconstitutional.

DOJ spokeswoman Beverley Lumpkin told VICE News that the Justice Department is “committed to the Freedom of Information Act and dedicated to improving transparency and open government.” When asked about DOJ’s opposition to FOIA reform, she said, “It is not uncommon for subject matter experts to provide feedback on technical aspects of proposed legislation and potential unintended consequences.”

‘The FOIA reform bill was incredibly modest and had the unanimous support of both parties — something that almost never happens.’

When the Senate took up its version of the 2014 FOIA reform bill, co-sponsored by Democratic Senator Patrick Leahy and Republican Senator John Cornyn, it was much stronger than the House’s version. Importantly, the Senate bill would have transformed the most overused and abused FOIA exemption — there are nine total — that government agencies routinely cite to deny requesters access to records: Exemption 5, also known as the deliberative process privilege, which covers “inter-agency or intra-agency memorandums or letters,” drafts, and attorney-client records.

Exemption 5 is referred to by open government advocates as the “Withhold it because you want to exemption.”

The discretionary exemption has been cited to justify the withholding of countless documents, such as a half-century old CIA history of the Bay of Pigs invasion and an internal CIA study on the agency’s torture program, on grounds that they are not “final decisions.” The reform bill would have authorized the release of records that fell under Exemption 5 after 25 years and it would have introduced a “foreseeable harm” standard, requiring government agencies to demonstrate the harm that would result from the disclosure of records; currently, they need only cite a specific FOIA exemption to justify the withholding of records. It too was unanimously passed by the Senate.

But everything died in the House in December 2014 after then–Speaker John Boehner failed to bring up the final version for a vote. Rumors soon began to surface that the DOJ, the SEC, and the FTC, prodded by banking lobbyists, worked behind the scenes and lobbied lawmakers not to bring the legislation up for a vote. The DOJ used the same talking points to sound alarm bells about the Senate bill.

“This FOIA reform bill was incredibly modest, had already been watered down, and had the unanimous support of both parties — something that, in today’s political climate, almost never happens,” said Trevor Timm, executive director of the Freedom of Press Foundation. “Transparency advocates have been very cynical of the Obama administration’s claim that they’re the ‘most transparent ever’… but the fact that they opposed virtually every aspect of this bill is sadly a new low.”

Tracking down hard evidence to back up claims about the administration’s intervention proved to be extremely difficult. So the Freedom of the Press Foundation and VICE News used the very law at issue — FOIA — to obtain answers.

“It took the Freedom of Information Act to provide evidence of what many felt but could not prove: that the Department of Justice ‘strongly opposes’ fixing the Freedom of Information Act,” said Nate Jones, the director of the FOIA project at George Washington University’s National Security Archive. “The released talking points make clear that on the one hand, DOJ ensures agencies do the bare minimum to comply with the FOIA’s requirements and paints a misleadingly rosy picture during congressional testimony, while [on] the other it secretly works to block Congress’s attempts to release more records to more people more quickly.

“It’s no wonder FOIA requests take decades to process and tens of thousands of pages are improperly withheld when the DOJ — the agency envisioned in 1966 to be the watchdog tasked to “encourage compliance” — is actually working to stymie reform.”

Last year, in testimony before the House Oversight and Government Reform Committee, Melanie Pustay, who heads the DOJ’s Office of Information Policy (OIP), which is supposed to ensure that all government agencies adhere to Holder’s guidelines, told lawmakers that the DOJ is doing a great job with FOIA. She graded the agency five out five on “presumption of openness.”

“Five out of five, on an effective system in place for responding. Proactive disclosure. Are you kidding me?” Committee Chairman Jason Chaffetz asked Pustay. “The Department of Justice gives themselves a five out of five on proactive disclosure. You really think anybody in the world believes the Department of Justice is the most — they’re at the top of their game, they got an A-plus, five for five? Do you really believe that?”

“I do,” Pustay responded. “I absolutely do.”

“You live in la-la land,” Chaffetz responded. “That’s the problem.”

[I also testified before the committee last year and discussed the problems with the FOIA, pointing to OIP’s failure to enforce Holder’s guidelines.]

Emails that were included with the talking points turned over to the Freedom of the Press Foundation also show that most congressional staffers were not heeding DOJ’s dire warnings and did not bow to the intense lobbying campaign by DOJ officials in the Office of Legislative Affairs about what would happen if the bill were passed.

But one lawmaker made a fuss: Senator Jeff Sessions. The deputy chief counsel for Sessions, Rachael Tucker, who had placed a hold on the 2014 bill, said the Republican lawmaker was concerned that reforms to Exemption 5 would harm attorney-client privilege if documents potentially including that info could no longer be withheld after 25 years. The email makes clear that Sessions’ opposition was partially the result of the DOJ’s lobbying, and that the Senate would not support any attempt by Sessions to try and strip the provision from the bill.

A Senate Judiciary Committee report from February 2015 noted that the DOJ and the National Association of Assistant United States Attorneys contacted Sessions and objected to the FOIA reform legislation, specifically the overhaul to Exemption 5. Moreover, during a House Oversight and Government Reform Subcommittee hearing that month, Representative Elijah Cummings said the DOJ had contacted lawmakers to voice opposition to the FOIA reform bill.

Tucker emailed an official at the DOJ’s Office of Legislative Affairs and asked, “I’m wondering if extending the [25-year] sunset would be something DOJ could support. Maybe making it 40 years or something? Do you have any suggestions or thoughts?”

A response from DOJ, if there was one, was not included in the cache of documents. Sessions eventually relented and removed the hold and voted in favor of the Senate bill. But congressional sources told VICE News he’s now the lone lawmaker who placed a hold on the new version of the Senate FOIA reform bill, raising the very same concerns about Exemption 5 that he did two years ago. It’s unclear why he is holding up passage of the bill again. A spokesperson for the senator did not respond to requests for comment.

VICE News filed separate FOIA requests with the DOJ, FTC, and SEC seeking documents about conversations officials may have had with members of Congress about the 2014 FOIA reform bills. It took more than a year to obtain responsive records from the agencies. In the case of the FTC, it required VICE News to file a formal appeal challenging the integrity of the agency’s search after the FTC initially turned over just a handful of documents. Eleven months after we lodged the appeal, the FTC said it found an additional 900 pages of emails and produced those.

As if to underscore why Congress has been aggressive in its attempt to reform Exemption 5, the FTC redacted 95 percent of the emails — citing Exemption 5.

Still, there are a few noteworthy takeaways. The emails reveal that the the regulatory agency raised red flags about the FOIA reform bill, issuing warnings to lawmakers — notably Democratic Senator Jay Rockefeller — about how its passage would stymie the FTC and SEC’s ability to protect American consumers from financial fraud and other abuses.

Before the Senate sent its version of the FOIA reform bill to the floor for a full vote, Rockefeller placed a hold on the legislation, claiming that unnamed “experts” with whom he’d consulted told him parts of the bill would “greatly aid corporate defendants and undermine law enforcement efforts,” one of his staffers told VICE News at the time.

The emails reveal that Rockefeller reached out to government agencies and requested they articulate their concerns about the bill in a joint letter, suggesting there was far more coordination between the executive branch and Congress on efforts to thwart passage of the bill than had been previously reported.

Additionally, the emails show that Jeanne Bumpus, director of the FTC’s Office of Congressional Relations, wrote to her colleagues and said she contacted Leahy and left messages for his staff “reiterating serious concerns and seeking more information abut the timing and content of the [FOIA] bill to be considered.”

A spokesperson for Leahy, who has historically been a staunch advocate for transparency, said the Senator was unavailable to comment. When the Senate bill was not put up for a vote, he released a statement saying, “In a political climate as divided as this, I had hoped that we would come together in favor of something as fundamental to our democracy as the public’s right to know.”

Jones told VICE News that the the emails “confirm what we knew at the time: that some at the FTC and other ‘independent regulatory agencies’ with little knowledge of FOIA used vague, incorrect warnings at the last minute to try to kill the FOIA bill.”

“Throughout the correspondence — ironically marred with huge exemption 5 redaction boxes — there is not a single tangible example of how this bill could harm the FTC or other agencies mission,” Jones said. “[There is] just vague scare phrases such as ‘compromise public interest investigatory or litigation strategies’ or ‘make it more difficult to obtain information from sources.'”

Prior to the passage of the Senate bill, a handful of lawmakers who sit on the Senate Banking Committee said they were informed that the reform bill would loosen the FOIA’s Exemption 8, which protects information pertaining to financial regulatory institutions. But it was all a ruse, prompted by the SEC, to force the Senate to specifically state on the record that Exemption 8 would not lead to the release of more information about financial institutions that would otherwise be protected from disclosure under Exemption 8.

In one email VICE News obtained, the SEC’s chief FOIA officer, John Livornese, remarked to a colleague after the Senate memorialized its position in a report, “Just when you thought exemption 8 couldn’t get any stronger,” meaning the SEC could continue to withhold information under that exemption.

Chaffetz, who co-sponsored the latest FOIA reform bill passed by the House in January, told VICE News in a statement that the Obama administration’s promises of transparency have never materialized.

“President Obama promised the ‘most transparent’ administration in history. I see no evidence to support that statement,” Chaffetz said. “Time and time again this administration has aggressively thwarted efforts for a more open and transparent government.”

*****

If you are so inclined to review over 1000 responsive pages and names with text, click here.

 

Hat Tip Delta Force, Capture of Islamic State CW Expert

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Update: He was captured last month: Sleiman Daoud al-Afari, Iraqi dictator’s chemical and biological arms specialist, captured by Delta Forces. He worked directly for Saddam Hussein.

(CNN) The U.S. military has conducted airstrikes against targets it believes are crucial to ISIS’ chemical weapons program based on information provided by a senior ISIS operative involved in chemical weapons, several U.S. officials told CNN.

The information he provided to interrogators has given the U.S. enough information to begin striking ISIS areas in Iraq associated with the group’s chemical weapons program. One U.S. official said the goal is to locate, target and carry out strikes that will result in the destruction of ISIS’s entire chemical weapons enterprise — mainly mustard agent ISIS produces itself.

It was not immediately clear if the U.S. was able to strike all of the necessary targets. Intelligence and surveillance of the targets had indicated in some Iraqi locations that civilians were present at prospective sites, officials told CNN.

While the goal is to end ISIS’ capability to manufacture and use mustard agent, the actual targets being struck include people, facilities and vehicles. The agent itself is made in relatively small quantities and has a fairly short shelf life, the U.S. government believes. Since the weekend, the U.S. has struck what it is calling “improvised weapons facilities” and other targets near Mosul, Iraq, but officials would not say if these were chemical weapons sites.

The operative was captured in one of the first missions of the so-called Expeditionary Targeting Forces. It is a group of some 200 Special Operations troops assembled in northern Iraq to gather intelligence and pursue ISIS operatives on the ground by either capturing or killing them in Iraq, and eventually in Syria. Carter recently acknowledged the ETF is “having an effect and operating.

U.S. Captures, Interrogates Top Islamic State Chemical Weapons Expert

Capture is among recent U.S. advances in ongoing effort to counter terror network

WSJ: WASHINGTON—The U.S. military captured one of Islamic State’s top chemical weapons experts in a recent raid—and has spent several weeks interrogating him about the terror network’s capabilities and planning, U.S. officials said Wednesday.

The detainee, who wasn’t named by U.S. officials, is expected to be released to the Iraqi government at the end of this week, the officials said.

Iraqi military spokesmen declined to comment on his capture. A spokesman for Iraqi Prime Minister Haider al-Abadi didn’t immediately respond to a request for comment.

The capture was among recent U.S. advances in an ongoing, though uneven, effort to counter Islamic State, which has maintained a foothold in Iraq and Syria while also recently expanding into parts of Libya as well.

In one airstrike last week in Syria, Pentagon officials believe they killed Abu Umar al-Shishani, a top Islamic State commander known fairly widely by the nickname “Omar the Chechen.”

The chemical weapons expert was captured in recent raid the Pentagon acknowledged last week. However, officials at the time said they had captured a high-ranking operative, without providing further detail. His actual role in the organization was disclosed on Wednesday.

The move came as U.S. and Western officials have grown increasingly concerned about the terror network’s plans to use chemical weapons against enemies and in the U.S.

Director of National Intelligence James Clapper told Congress last month that Islamic State already has used chemical weapons “numerous times” in Iraq and Syria, adding that “aspirationally, they would like to do more.”

It was at least the second time that the U.S. military was able to capture and interrogate a person with valuable intelligence about Islamic State’s operations. In May, U.S. special-operations forces conducted a raid in Syria that killed Abu Sayyaf, considered to be one of the group’s financial chiefs. His wife, Umm Sayyaf, was detained and interrogated by the U.S. military. The intelligence from that raid helped U.S. officials run numerous operations and crack down on the group’s access to money, officials have said.

*****

In part from ToI: The two Iraqi officials identified the man as Sleiman Daoud al-Afari, who worked for Saddam Hussein’s now-dissolved Military Industrialization Authority where he specialized in chemical and biological weapons. They said al-Afari, who is about 50 years old, heads the Islamic State group’s recently established branch for the research and development of chemical weapons.

He was captured in a raid near the northern Iraqi town of Tal Afar, the officials said. They would not give further details.

The officials, who both have first-hand knowledge of the individual and of the IS chemical program, spoke on condition of anonymity as they are not authorized to talk to the media. No confirmation was available from US officials.

Airstrikes are targeting laboratories and equipment, and further special forces raids targeting chemical weapons experts are planned, the intelligence officials said. They and the Western official also spoke on condition of anonymity because they were not authorized to talk to the media.

IS has been making a determined effort to develop chemical weapons, Iraqi and American officials have said. The militant group, which emerged out of al-Qaeda in Iraq, is believed to have set up a special unit for chemical weapons research, made up of Iraqi scientists from the Saddam-era weapons program as well as foreign experts.

Iraqi officials expressed particular worry over the effort because IS militants gained so much room to operate and hide chemical laboratories after overrunning around a third of the country in the summer of 2014, territory which they then joined with territory they controlled in neighboring Syria. Full article here.

To Move the Gitmo Detainees Stateside, Change the Law

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Cuba setting the early stage for Barack Obama’s visit to Cuba?

Reuters: Cuba said, in an editorial published Wednesday, it would welcome President Barack Obama to Havana later this month, but the Communist government had no intention of changing its policies in exchange for normal relations with the U.S. Nathan Frandino reports.

   Video including in this link.

They may be preparing to host U.S. President Obama in a new era of detente, but Cuba has a bristling message for its former Cold War foe. (SOUNDBITE) (Spanish) NEWS PRESENTER, RAUL ISIDRON, SAYING: “Working together does not mean that we have to renounce the ideas we believe in and which have brought us this far – our socialism, our history, our culture.” The editorial was issued by Cuba’s state-controlled media and comes 15 months after Obama and Cuban President Raul Castro agreed to end more than five decades of hostilities and try to normalize relations. But the editorial made clear, strong differences remain… chief among them the U.S. trade embargo, which congressional Republicans have refused to end, and U.S. support for dissidents on the island. Despite the tough words, ordinary Cubans say they’re hopeful that positive changes are on the way. (SOUNDBITE) (Spanish) ACCOUNTANT, GUILLERMO RAMIREZ, SAYING: “This is the beginning, the beginning of a long deal, it is not all done now with a magic wand. We have a long road. We have to be conscious of that.” Obama’s visit on March 20 will be the first by a U.S. president since the 1959 revolution.

Lynch: No Gitmo transfers to US without change in law

TheHill: The Obama administration will not try to transfer detainees from Guantánamo Bay to the United States without a change in law, Attorney General Loretta Lynch said on Wednesday.

“The law currently prohibits a transfer to U.S. soil, and the president would have to work with Congress,” Lynch testified before the Senate Judiciary Committee.

“Congress would have to consider any relevant changes that could be made to the law before any transfers could be taken.”

The comments are perhaps the most explicit acknowledgment that the president’s goal of closing the detention facility will not be met while he is in office, given the overwhelming opposition in Congress.

The administration has repeatedly claimed it believes current prohibitions in defense policy law bar the Pentagon from bringing any of the 91 detainees at the camp to the U.S. But Wednesday’s comments, which follow the president’s unveiling of a general strategy for closing the facility last month, make clear that those restrictions will obstruct Obama from fulfilling his long-held promise to close the detention facility.

“The president’s policy indicates a desire to work with Congress to implement any necessary changes that would have to be taken before this could be taken,” Lynch said before the Senate panel on Wednesday. “I believe that is his plan.”

The White House proposal last month, which was demanded by Congress, would send 35 of the remaining Guantánamo Bay detainees who have been cleared for release to foreign countries.

Given this statement by U.S. Attorney General, Loretta Lynch, it is no surprise this report came out this week.

More former Gitmo detainees suspected of returning to battlefield

FNC: A dozen former detainees at Guantanamo Bay are suspected of returning to the battlefield on behalf of various militant groups, according to a report released by the Obama administration Monday.

The Office of the Director of National Intelligence (ODNI) said that seven of the 144 detainees who have been freed since President Barack Obama took office in 2009 have been confirmed to have returned to fighting as of Jan. 15. The ODNI’s previous report, from this past July, said six detainees had gone back to battle.

The number of suspected recidivist detainees was double the number in this past July’s report. The increase is likely to spark new protests by Republicans opposed to President Obama’s plan to shut down the facility and transfer dozens of detainees to prisons in the U.S.

Under Obama’s plan, roughly 35 of the 91 current prisoners will be transferred to other countries in the coming months, leaving up to 60 detainees who are either facing trial by military commission or have been determined to be too dangerous to release but are not facing charges. Those detainees would be relocated to a U.S. facility.

House Speaker Paul Ryan, R-Wis., said last month that Republicans are taking legal steps to stop Obama from closing the prison. Ryan told reporters that lawmakers have the votes to block Obama’s plan in Congress and enough votes to override any veto.

“These detainees cannot come to American soil,” Ryan said at the time.

The ODNI report does not specify where or for which groups the former detainees are confirmed or suspected to be fighting.

The report also found that 111 of 532 prisoners released by the George W. Bush administration had returned to the battlefield, while another 74 were suspected of doing so.

Should we be suspect of Barack Obama’s trip to Cuba this month?

The plane is full already:

NYT:  It wasn’t so long ago that a small congressional delegation’s trip to Cuba was a less-than-popular outing. But at least 20 lawmakers will accompany President Obama on his trip to Cuba this month, and many more asked for a seat aboard Air Force One. The group is bipartisan, demonstrating that some Republicans are coming around to the idea of ending a decades-old trade embargo, a policy Mr. Obama and President Raúl Castro of Cuba have pursued.

“We’re getting there,” said Senator Jeff Flake, Republican of Arizona, who has been an early and strong ally of Mr. Obama on the issue and is a sponsor of legislation that would end prohibitions on travel to Cuba. “If we put that bill on the floor tomorrow,” he said, “we’d have north of 60 votes.” Mr. Flake will travel with the White House contingent, as will Senator Patrick J. Leahy, Democrat of Vermont.

The thaw between the United States and Cuba has divided Republicans and become an issue in the race for the White House. Senators Ted Cruz of Texas and Marco Rubio of Florida, both Republicans, have been sharply critical of the trip as well as Mr. Obama’s use of executive authority to end some economic restrictions on Cuba.

 

 

Yikes, the IMF is Sounding the Alarm

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Deja Vu? Imagine what a new president of the United States is about to inherit? Terrifying…

The IMF Is Sounding the Alarm. Is Anyone Listening?

WSJ: The International Monetary Fund is sounding louder and louder alarms about the state of the global economy. The problem is, few major economies seem to be hearing them.

“The IMF’s latest reading of the global economy shows once again a weakening baseline,” the fund’s No. 2 official, David Lipton, warned Tuesday in a speech to the National Association for Business Economics.

While the world economy is still expanding, he said, “we are clearly at a delicate juncture, where risk of economic derailment has grown.”

The IMF alerted finance ministers and central bank governors from the Group of 20 largest economies gathered in Shanghai late last month, signaling it would likely downgrade its outlook for the global economy in April.

IMF Managing Director Christine Lagarde said a coordinated effort was needed, urging governments with room in their budgets to ramp up spending and all countries to accelerate delivery of long-promised economic overhauls.

Unlike the G-20’s massive joint-stimulus effort in 2009 to combat the financial meltdown wreaking havoc across the globe, IMF members are at odds about the severity of the problem and how to fix it.

“We are strictly against announcing publicly that the G-20 is preparing a stimulus program,” German officials privately told other countries as the group drafted its joint communiqué.

The IMF fears such an attitude risks jeopardizing the global economic expansion.

Mr. Lipton, at his speech Tuesday, cited a World War II-era quote by Winston Churchill: “I never worry about action, but only inaction.”

Part of the problem is a growing concern that policy makers are running out of ammunition or have lost the resolve to deploy growth-reviving measures.

“For the sake of the global economy, it is imperative that advanced and developing countries dispel this dangerous notion by reviving the bold spirit of action and cooperation that characterized the early years of the recovery effort,” Mr. Lipton said.

The IMF calls come as the Organization for Economic Cooperation and Development said leading indicators already suggest global growth will slow in the coming months. And the Bank for International Settlements cautioned against diminishing returns for central banks as they keep pushing easy-money policies to boost growth, including “great uncertainty” about navigating deeper into uncharted waters of negative interest rates.

There are few signs policy makers are shifting into higher gear. “There’s a great deal of economic uncertainty in the world, but there’s not a crisis and it would not be reasonable to expect a crisis response,” a senior U.S. Treasury official said during the recent meeting.

While the IMF is pushing the G-20 to boost spending, it is not a call to do so at the expense of monetary policy. The fund has long pushed the Federal Reserve to delay its planned rate increases and asked the European Central Bank to rev up its stimulus efforts.

Mr. Lipton worries premature withdrawal of central bank support could pitch the global economy into a deflationary death trap.

Then, “vicious and self-reinforcing dynamics” would plague the world in the form of higher real interest rates, falling output, building debt and higher unemployment, he said.  Such effects are “notoriously difficult to combat once they become entrenched.”

If recent history is any guide, the IMF may once again have to turn its downside scenario for the global economy into its baseline.

 
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This was also the major topic at DAVOS in January.
Fear, Uncertainty Causing Market Chaos and Davos Isn’t Helping

The trouble with the World Economic Forum is that it has a propensity to become something of an echo chamber. Rather than promoting a plurality of different views, ideas and sentiments, the mood tends to get focused on a single, self-reinforcing consensus which is endlessly repeated and passed around, as if trending on social media. So it is with financial panics, which have an unnerving tendency to coincide with the annual conference in Davos. I’ve seen it happen on a number of occasions, most memorably in the run up to the invasion of Iraq, when the sense of fear for the future among financiers and policymakers was palpable.

It happened again in early 2009, in the depths of the banking crisis, when an end-of-days mentality hung over the conference. Somehow or the other, Davos amplifies these panics rather than calming them. This year threatens to be little different. Nobody here knows quite what to make of the latest stock market sell-off, and that, indeed, is part of the problem, for uncertainty breeds fear of loss and can easily degenerate into a collective dash for the exit. The danger is that we talk ourselves into something a good deal more serious than it should be.

There is no particular trigger for the latest panic. Most of, if not all, the concerns that underlie it have been with us for some time now — the apparent incompetence of once omnipotent Chinese policymakers in the face of a slowing economy, the collapsing oil price and the growing sense of geo-political instability that accompanies it. As for the rise in American interest rates, that happened a month ago, and had been widely signalled by the Federal Reserve for more than a year beforehand. Yet it is only now that this slight tweak to monetary policy has transmogrified in the eyes of investors from a benign and well-flagged response to an accelerating US economy into a grievous policy mistake that threatens to destabilise the world economy.

So what are we dealing with here; a long-overdue adjustment to asset prices unduly inflated by years of central bank money-printing, or a signal of tough times ahead for the real economy? It’s not hard to make the case for financial Armageddon; certainly, there are plenty of people here only too willing to imagine the worst. Start with the plunging oil price, which ought to be positive for the big consumer economies of the West — given that it puts more money in people’s pockets for spending on other things.

One worry, though, is that it is already causing such a hiatus in oil industry investment that today’s glut will in short order turn to famine, causing the price to surge anew. Back in the late Nineties, the Economist ran a cover on why the oil price would remain at $5 a barrel “for ever”. But as everyone knows, nothing is for ever and little more than 10 years later, it had risen to nearly $150.

The same cycle is being repeated today, with investment cut to a level that, in the long term, will leave supply more than a third lower than present demand. Markets are now anticipating the cooling effect of these higher prices to come. Another worry is that the low oil price will end up bankrupting Saudi Arabia, causing further chaos in an unstable region. Isil taking control of some of the world’s biggest oil reserves scarcely bears thinking about.

Meanwhile, a strong dollar in combination with collapsing commodity prices is threatening a wave of corporate bankruptcies in a world awash with dollar debt. To this list of woes must be added continued worries over China’s transition from to a consumer-led economy. Since the financial crisis, China has been the key source of growth in an otherwise stagnant global economy, but now this progress seems to have stalled. Stories abound of extreme unhappiness within the notoriously secretive Chinese high command. There is even talk of attempted coups. These scenarios may seem far-fetched, but what is undeniable is that all these concerns play into a world of extreme flux. Investors may crave stability and predictability. But for now, these are in lamentably short supply.