UN Report, Weapons Trafficking: Hamas, Islamic State, AQ

Egypt discovers enormous tunnels coming from Gaza Tunnels big enough to fit a truck have been discovered by the Egyptian military on the Sinai-Gaza border. These tunnels are allegedly the source of weapons being used by ISIS and Islamic Jihad in the peninsula, and point to a thriving weapons industry in the Strip.

Alex Fishman

Israel News  Hamas has been digging tunnels on the border of Egypt that are big enough to permit vehicles the size of trucks to go through, according to Egyptian security officials.

The tunnels connect the Gaza Strip with the Sinai Peninsula, and are being built in order to compensate for the tunnels which were flooded or blocked by the Egyptians.

These enormous tunnels, some of which stretch for over three kilometers, are designed to traverse the security zone Egypt set up between the border with Gaza and the Sinai. This security zone – which ranges between half a kilometer and a kilometer in length on the Egyptian side – has been cleared out of any buildings or people. The area has also been flooded in order to block the existing shafts into the tunnels.

These tunnels are meant to transfer fighters and weapons, as well as building materials and other imports in an effort by Hamas to break the economic siege imposed on the Strip, Egyptian officials said.

Israeli security officials don’t know of any tunnels that large crossing into Israel. However, if they do exist, Israel will have to take into account the possibility of the existence of tunnels that are over three kilometers in length, which will make them harder to find.

Israel estimates that the recent increase in the number of tunnel collapses in Gaza in the past several months is due to the increased difficulty in obtaining materials to structurally support the tunnels – principally wood and cement. To replace these materials, Hamas is using fiberglass, which is also illegal to import into the Strip. Hamas still tries to smuggle it in, even though the material can’t support the same amount of weight as cement, and collapses.

The Egyptian government also notes another worrying phenomenon regarding the relations between Hamas and the terrorist organizations in the Sinai: it turns out that Hamas has become a weapons exporter to Egypt. In the past several months, several types of weapons were found by Egyptian security forces which bear the markings of being manufactured by the Hamas military wing.

Amongst the weapons found were solar water heaters filled with explosive materials, which are one of the deadliest weapons ISIS in Sinai uses against the Egyptian military. The solar water heaters are used as IEDs with the ability to take out a tank. A few years ago, Hamas used one of these IEDs and disabled an Israeli tank.

The Egyptian government also claims that ISIS shoots Hamas-made rockets at Egyptian military bases in the peninsula.

Hamas also ships weapons from the Gaza Strip to elements affiliated with global Islamic Jihad which is active in Sinai. These are weapons which were smuggled into Gaza either by the Iranians or from Libya, which then ended up in the hands of the jihadists.

At present, there is a new reason to worry – the export of weapons made in the Strip in industrial quantities is a new phenomenon which indicates a new level of institutionalization of the weapons manufacturing process in the Gaza Strip.

****

But it is much worse especially when the United Nations is pinpointing violations that curiously involves The Turi Defense Group, noted for supplying weapons to Benghazi, Libya.

U.N. Report Sees Array of Nations, People and Companies Breaking Libyan Arms Embargo

WSJ: A United Nations report has found an array of companies, individuals and countries supplying arms to factions in Libya, breaking a long-standing international arms embargo placed on the politically unstable and divided North African country.

In the report, which was submitted to the Security Council in January and is soon to be made public, U.N. investigators allege sanctions were broken in 2014 and 2015 with shipments of military equipment from the United Arab Emirates, Egypt and Turkey, among others. In some cases, goods were transported across countries, such as Jordan, and in others transport was supplied by firms with close associations to states such as shippers from Ukraine, the report says.

U.N. officials said they are also investigating actions of two U.S.-based companies that investigators said appear to have brokered an arms deal in 2011, as well as an Italian middleman working with a U.K.-based Libyan national on behalf of the Libyan authorities in control of Tripoli.

The Security Council will consider evidence presented in the report and decide what, if any, action to take against U.N. member nations and the individuals allegedly involved.

The Security Council placed the arms embargo on Libya and all warring factions during the Arab Spring revolution in 2011, as part of an international military intervention against former dictator Moammar Gadhafi, who eventually was deposed and killed by Libyan rebels.

The arms embargo, as well as asset freezes for several former regime officials and for state institutions such as the sovereign-wealth fund, remain in place as Libya struggles to regain political and security stability.

The weapons in question were destined for Libya’s two rival governments and their allied militias, which have been fighting for control of the oil-rich nation since the summer of 2014, according to the report.

Since 2014, competing authorities have in effect divided Libya into two. The government based in Tripoli is a collection of regional and Islamic militias and allied politicians. The regime based in Tobruk represents many regions across Libya and won the country’s most recent election in 2014. The U.N., however, recently has brokered a new unity government that is still being formed.

Officials from the government in Tobruk have confirmed they have received weapons from friendly allies but say such arms were necessary for self-defense. “I don’t think the Security Council should have any say in who the Libyan government buys or receives weapons from,” said Abdulsalam Nasiya, an official with the House of Representatives in Tobruk.

Saad Sharada, a member of the congress based in Tripoli, said his political allies have received military personnel carriers, but he denied they have procured any weapons.

“Arms and ammunition are continuing to be transferred to various parties in Libya, with the involvement of member states and complex networks of brokering companies that do not appear to be deterred by the arms embargo,” the report states.

The report devotes separate sections to nation states and individuals that investigators believe are complicit in sanctions violations. It includes more than 100 pages of documentation including copies of arms orders, invoices, end-user certificates, as well as serial numbers and photos of armaments which were once held in national militaries but that have ended up in the country.

Libyan and international officials told U.N. investigators the government in Tobruk had been receiving equipment from abroad, through its own procurement operations and from countries supporting it, according to the report. Those countries include Egypt and the U.A.E., according to two people familiar with the situation.

Investigators allege the U.A.E. approved weapons shipments to the Tobruk government, in addition to allowing its national companies to sell weapons to that faction.

Investigators said the U.A.E. has largely been unresponsive to requests for explanation and comment about allegations its government approved direct arms shipments to Libya’s Tobruk-based authorities and allowed U.A.E. companies to ship weapons. A person familiar with the situation said the U.A.E. government wouldn’t be issuing any comment about the report.

The report says Egyptian military hardware, including attack helicopters, ended up in the arsenal of the Tobruk regime. It cites photos of the helicopters, including tail numbers.

U.N. officials contacted Egypt to obtain further information on what investigators believe were official government transfers of arms, according to a person familiar with the situation. Egypt responded that the panel’s information regarding the transfers was incorrect and that it was fully committed to the implementation of U.N. resolutions, the report said.

The Sudanese government is alleged to have shipped ammunition, among other weaponry. The report shows pictures of samples of the ammunition.

Rabie Abdelaty, spokesman for Sudan’s information ministry, said on Thursday that his government has yet to see the U.N. report, but he described the allegations as untrue. “We are for peace, and we support the U.N.,” Mr. Abdelaty said. “We can’t side with anybody who is trying to destabilize Libya or any other country. That’s not how we operate,” Mr. Abdelaty said. He added that Khartoum has deployed more troops to patrol the border with Libya to ensure there aren’t illicit arms flows.

Turkish arms manufacturers are said by the report to have sold and shipped weapons to Libyan actors, while Ukrainian national companies are alleged to have been involved in shipping armaments.

Turkish officials told the U.N. their government was committed to upholding the embargo and that it was investigating incidents detailed in the report in which Turkish arms manufacturers allegedly sold and shipped weapons to Libyan actors, according to the report. Turkish officials didn’t immediately respond to WSJ requests to comment.

And Ukraine in previous responses to the investigators said it was looking into the allegations in the report that its national companies were involved in shipping armaments to Libya.

The U.N. report also says arms shipments had often passed through Jordan en route to Libya. Jordanian officials told U.N. investigators the government had no record of flights using Jordanian airspace to transport illegal cargoes of weapons to Libya. A Jordanian government spokesman told The Wall Street Journal that the allegations in the U.N. report weren’t accurate.

Meanwhile, investigators are looking into an Armenian-registered airline the report alleges transported arms and materiel from the U.A.E. via Jordan on behalf of Libyans allied with the regime based in Tobruk.

The airline Veteran Avia, which is based in the Armenian capital of Yerevan and operates out of Sharjah, U.A.E., couldn’t immediately be reached to comment. Armenian government officials told U.N. investigators the airline confirmed it had flown cargo from the U.A.E. via Jordan to Libya, but that the cargo was humanitarian aid, according to a U.N. official familiar with the situation.

The U.S. companies mentioned in the U.N. report have been named in U.S. criminal cases brought by American authorities over the alleged arms deal in Libya, according to court filings and documents published as part of the 215-page report submitted to the Security Council in January.

Representatives of the two companies—Turi Defense Group and Dolarian Capital—couldn’t immediately be reached to comment. Status of the court cases isn’t clear. Both companies, which the report said worked together to broker the alleged arms deal, have previously denied any wrongdoing. Lawyers for Turi Defense have moved to have the cases dismissed.

U.N. Investigators report on a regular basis about violations of the U.N. arms embargo. The January report to the Security Council underscores how regional actors have exacerbated the continuing political schisms by providing weapons to their favored militias and rival governments.

The U.N. report also cites alleged payments by Libyan Central Bank officials to members of Libyan militias that have been classified as terrorist organizations, namely Ansar Sharia, the group in Benghazi that U.S. officials hold responsible for the 2012 attack on the U.S. Consulate and CIA safe house that killed four American officials.

Two Central Bank checks made out for 6 million Libyan dinars ($4.2 million) were cashed by the Benghazi Revolutionaries Shura Council, an umbrella group of militias in that eastern city to which Ansar Sharia belongs. Officials from the Central Bank didn’t reply to U.N. requests for comment or clarification, the report says.

 

Arms Dealers, Chicago, Middle East and the Donald

To gain top security clearance, the background investigations are rigorous and rightly so. The investigations are designed to ensure there are no nefarious relationships, events or people of which embarrassment and extortion are made of and most of all to ensure no future compromises are possible.

Can Donald Trump pass these investigations?

Phillydotcom: Donald Trump is another rich guy who doesn’t have it so easy. Trump, of course, is the real estate developer who, while he might not have the biggest fortune in the world, has one of the loudest. He brought his yacht, the Trump Princess, into Washington last week where commoners could gawk at it.

He bought the boat last year from Adnan Khashoggi, the arms dealer who is his chief rival for the title of World’s Most Obnoxious Zillionaire, for a mere $30 million. He did have to spend $10 million fixing it up, but everyone agreed it was a steal.

This is not your everyday run-of-the-mill millionaire’s yacht. It is roughly the size of Cleveland. It makes the president’s yacht, Sequoia, parked across the way, look like a dinghy. It has, among other things, two marble waterfalls in the formal dining room, which also features suede-covered walls and leather-tiled ceilings. It has a master bedroom suite with a walk-in closet, a leather barber chair, a sauna and a 600-pound pop-up bar made of solid onyx. It has a movie theater, a swimming pool, an exercise room, two 30- foot speedboats, as well as gold fixtures in the bathrooms. Oh, I almost forgot, also a discotheque with a marble dance floor. Also 210 phones.

Adnan Khashoggi enjoyed life beginning in the 1970’s. He created great wealth being an arms dealer and several years later, his fortune collapsed do to the scandals of BCCI, Bank of Credit and Commerce International, while he was also part of the Iran Contra Affair and played in investment circles that included Donald Trump and Ferdinand Marcos. A Saudi, Adnan’s father was an opportunists who was a vehicle dealer selling trucks toMuhammad bin Ladin, Osama’s father.

Then there was the time Trump financially screwed TV game show owner and entertainer, Merv Griffin. There is something about Trump applying Chicago tactics, a city that so enamored Trump he thought the ‘windy city’ would be a great place for another home. Additionally, Trump was looking for re-financing for his real estate project in Atlantic City. Banks and investors told Trump he could not use junk bonds to do so. ‘Oh, I would not do that, ever to keep the other investors’. Don’t look now but he did use junk bonds and the first missed debt payment came do and it was late. The junk bond market tanked.

In 2001, Chicago was booming or was it? Seems some seedy people saw opportunity.

Will big names, big egos, bring big trouble?

July 20, 2001|By David Greising.

ChicagoTribune: We now know Donald Trump and Marvin Davis are coming to town with big real estate deals. Mark my words: These won’t be the last out-of-gas 1980s egoists to make their move on Chicago.

Throwback titans are like ants that way: If you see one, there’s bound to be a whole colony.

Keep your eyes peeled and your hands on your wallets. Before you know it, Ivan Boesky will be betting on takeovers from deluxe office space in Marvin Davis’ new building.

Michael Milken will show up, too. He’ll reassemble his famous X-shaped trading desk inside Trump’s tower.

The top floor, no doubt. Which, given the expected skinniness of the soon-to-be Trump Spindle Chicago, should be about the size of an isolation cell at Cook County Jail. This should make Milken feel very much at home.

Both Milken and Boesky are felons banned from the securities business. I’ll bet you’re thinking they can’t possibly set up investment shops in the Trump and Davis spaces.

But no worry. Problem solved. If the Securities and Exchange Commission comes after them, Boesky will simply call his old defense lawyer, Harvey Pitt, who now just happens to be President Bush’s nominee to run–you guessed it–the SEC.

Watch for Marc Rich to revive his commodities business here. The Hunt brothers–best remembered as the men who killed the Chicago Board of Trade’s silver pit–will resume trading the not-very-precious metal.

Boone Pickens will make a comeback. He’ll resume haranguing CEOs and launch hostile takeovers against Ameritech, Amoco or First Chicago.

Wait a second. Those big names from the 1980s didn’t survive the mismanagement of the 1990s. Pickens will have to find a new target. Motorola, maybe.

High-finance hangers-on will come flocking in, too.

Milken will need a valet. This means Bill Farley will have a job again. After his embarrassing bust-out at Fruit of the Loom, Farley gets a second chance to be a Milken-made man.

And if Milken chooses to abandon the natural look and resume wearing the toupees he favored during the 1980s, he’ll need an experienced wig dresser. Someone who really knows fashion. Revlon’s Ron Perelman would be just the person for the job.

The Davis name will lure some tarnished glitterati from the days when the one-time wildcatter owned 20th Century Fox. Sylvester Stallone, Arnold Schwarzenegger and Bruce Willis will sell Davis on a new restaurant concept: “Planet Washed Up Movie Star.”

Former Beatrice deal maven Jim Dutt will work the grill. John Sculley can sell the Pepsi. Former R.J. Reynolds chief Ross Johnson will probably even try to sell cigarettes.

It won’t all be gravy and glory for Trump and Davis. Merv Griffin will stop by–not to star in a TV show, but to rag on Trump for bankrupting the Taj Mahal Casino after he wrestled it away from Merv.

And another Davis, Al, will come into town. The longtime Oakland Raiders owner hasn’t seen a winning Raiders team since the 1980s, but that won’t stop him from chiding Marvin Davis for his failed effort to bring an NFL team to Inglewood, Calif.

Before you know it, junk bonds will trade in the Board of Trade’s pits. It will get so raucous the FBI will send undercover agents to investigate again. And just as they did in the 1980s, they’ll come out full of suspicions but mostly empty handed of criminal convictions.

And this time, the feds will be fighting some new top-notch legal talent. Attorneys who know the way the government thinks when it goes under cover into the pits. Dan Webb and Tony Valukas will be the go-to lawyers on the traders’ defense side.

This is the life that awaits Chicago now that Davis and Trump are coming to town.

Mayor Daley has embraced the idea. He met with Trump and emerged visibly awed by the glint of Trump’s celebrity. Or maybe that was just the glare from the top of Trump’s head.

Trump says he may even make Chicago his second home. Consider the way Chicago could become with Trump and Davis in town, and you’ve got to wonder: Is that a promise, or a threat?

Upon Trump’s announcement for the Oval Office, he filed this 92 page financial disclosure.  There are countless companies in Trump name variations, some successful, others not at all but all over the globe including Turkey, Qatar and Azerbaijan.

In closing, one final point needs to be made. Where does Trump have his products made? He has been outsourcing since 2006.

WashingtonExaminer; Donald Trump has been offshoring the production of Trump-brand products since 2006, despite his unrelenting criticism of companies that send jobs overseas, according to a new report.

The report comes less than a week after Trump was caught defending outsourcing as “not always a terrible thing” and sometimes “a necessary step” in a 2005 blog post unearthed by Buzzfeed News.

Trump-brand products have been outsourced to China, Japan, Honduras and Brazil as well as European countries Norway, Italy and Germany since 2006, according to data collected by ImportGenius, a company that gathers information related to exports and imports.

Everything from slippers and men’s shirts to ballpoint pens and “Trump body soap” has come to the U.S. from Asian and South American countries, the data shows. Trump has previously admitted that clothes such as ties, which belong to his menswear line, are manufactured in China and Mexico. Full article here.

To Move the Gitmo Detainees Stateside, Change the Law

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

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.

 
****
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.

Trump and the Phony “Job-Creating” EB-5 Scam

Thank you Michelle, I hope those dedicated researchers that did all that grand work on Obama, too late in the game, don’t do it a second time….

Malkin: Ugh: Trump and the Phony “Job-Creating” EB-5 Green Card Racket

By: Michelle Malkin

CR: Whelp. It appears that one of Donald Trump’s projects helped make America great… by soliciting an estimated $50 million from Chinese investors using the fraud-riddled EB-5 green card program for politically connected cronies.

This is the same racket exploited by Virginia Gov. Terry McAuliffe, lobbied for by Nevada Sen. Harry Reid and DHS official Alejandro Mayorkas, and embraced by South Dakota Republican officials. It’s a scam I’ve reported on for years.

Bloomberg News has the new story on how EB-5 funded a Trump-branded tower in New Jersey. In a nutshell:

Trump Bay Street is a 50-story luxury rental apartment building being built by Kushner Companies, whose chief executive officer, Jared Kushner, is married to Trump’s daughter Ivanka. It will have an outdoor pool, indoor golf simulator and sweeping views of Lower Manhattan; it adjoins an existing high rise condo, Trump Plaza Residence. The firm that was hired to seek investors, US Immigration Fund, is run by Florida developer Nicholas Mastroianni, who announced a partnership last year with a Trump golf course in Jupiter, Florida.

The visa program is known as EB-5. In exchange for investing at least $500,000 in a project promising to create jobs, foreigners receive a two-year visa with a good chance of obtaining permanent residency for them and their families. In 2014, the most recent year for which records are available, the U.S. issued 10,692 of these visas — 85% to people from China.

The Jersey City project has raised $50 million, about a quarter of its funding, from loans obtained through EB-5, according to a slide presentation by US Immigration Fund. Mark Giresi, general counsel of US Immigration Fund, said he believed nearly all of the EB-5 investors in the Trump project were from China.

A Trump spokesperson said the presidential candidate was not a partner in the financing deal. A Kushner flack told Bloomberg News the project was “entirely legal and creating jobs.”

But in my longtime investigations and in Sold Out, my book with John Miano, the evidence is clear: EB-5’s job creation claims are as phony and manufactured as fuzzy porkulus math, H-1B lobbyists’ math, and corporate welfare/economic development subsidies math.

Since 2001, I’ve warned about the systemic and bipartisan corruption of America’s EB-5 immigrant investor visa program. The program puts America up for sale to the most politically connected bidders.

Created under an obscure section of the expansionist Immigration Act of 1990, EB-5 promised bountiful economic development for the U.S. in exchange for granting permanent residency (and eventual American citizenship) to foreign investors. The law allows 10,000 alien entrepreneurs a year to obtain green cards by investing between $500,000 and $1 million in new commercial enterprises or troubled businesses. After two years, foreign investors, their spouses, and their children can receive “conditional permanent resident” status for two years and a gateway to permanent U.S. citizenship.

Originally, the law required individual investments in commercial enterprises to directly generate at least 10 new full-time jobs. Investors were expected to manage the businesses themselves and dedicate some of the newly-created jobs to exports. Failure would mean loss of their money and their business. In 1992, Congress created the “Immigrant Investor Pilot Program” and established government-approved EB-5 “regional centers” — specially selected business groups and corporate entities designated to administer EB-5 investments and oversee a much more relaxed definition of job creation.

The idea was to pool investor funds in a defined industry and targeted region to promote economic growth. Under this loan model, the regional center would recruit and collect funding from a group of foreign investors, then turn around and lend the money to selected projects at a low interest rate. The project would then pay off the loan over an agreed period of time. In targeted areas of high unemployment, the threshold for investment was lowered.

There are currently 614 such regional centers approved by the feds. Participation in the program has risen from 5,748 visa winners in 2008 to 22,444 in 2014. EB-5 participants in these joint ventures can fulfill job-creation requirements if they “create or preserve” either direct jobs or “indirect” jobs shown to be “created collaterally or as a result of capital invested in a commercial enterprise affiliated with a regional center by an EB-5 investor.” The five-year “pilot program,” which has been reauthorized routinely since its inception, was extended last year until September 2016.

As John and I reported, early EB-5 boosters used various theoretical multipliers to hype the program’s benefits, predicting that “4 million millionaire investors along with family members, would sign up, bringing in $4 billion in new investments and creating 40,000 jobs [annually].” In 2011, President Obama’s Council on Job Competitiveness regurgitated the same, old figures in its call to “radically expand” the program:

If the EB-5 program reaches maximum capacity, it could result annually in the creation of approximately 4,000 new businesses, $2 billion to $4 billion of foreign investment capital, and create 40,000 jobs.

But in practice, like so many of the Beltway’s immigration programs, EB-5’s ever-evolving regulations are Byzantine and arbitrary. Fraud and abuse are rampant. Unsurprisingly, the purported economic benefits of EB-5 are woefully dubious. One sensible journalist, Charles Lane, put the EB-5 promoters’ claims in proper perspective:

“Sounds impressive,” he explained, “until you realize that foreign investment in the United States totals $2.5 trillion and that the program’s fuzzy job-creation count includes jobs ‘indirectly’ attributable to the investment. EB-5 would be dubious policy even if it could claim five times that impact. Simply put, it is corporate welfare — yet another attempt to subsidize the flow of capital into politically favored channels.”

Center for Immigration Studies analyst David North adds that “foreign investment comes to the United States routinely, in large volume, with minuscule help from EB-5.” In 2010, he observed, total foreign investment in the United States increased by $1.9 trillion, according to the U.S. Department of Commerce. Based on the investors’ green card applications filed two years after the first investment, North estimated that “EB-5 investment that year was about $191 million, and that was a well above-average year for the program. So, for every $100 of increased foreign investment that year, the EB-5 program contributed about one penny [emphasis added].”

Beltway cronyism was embedded in EB-5’s DNA from the get-go. The original Democratic House sponsor and his spokesman went on to establish for-profit companies that marketed the program and provided consulting services. Former federal immigration officials from the George H.W. Bush administration formed lucrative limited partnerships to cash in on their access and EB-5 expertise.

Key supporters of the original immigrant investor visa program included Democrat Sens. Ted Kennedy, D-Mass., and Paul Simon, D-Ill. Big Government Republicans embraced it, too. Prescott Bush, George W. Bush’s uncle, was on the board of American Immigration Services, one of the leading EB-5 visa vendors. So was former President Bush’s Immigration and Naturalization Service commissioner, Gene McNeary. GOP Sen. Mitch McConnell worked closely with the woman who was instrumental in drafting the EB-5 law: Maria Hsia.

That final name should ring a bell. Hsia was a Simon and McConnell donor identified by the House Governmental Affairs Committee as “an agent of the Chinese government.” In 2000, she was found guilty by a federal jury of laundering more than $100,000 in illegal donations to the Democratic National Committee through the infamous Hsi Lai Buddhist temple in California. At the time, Funny Money Honey Hsia was working for McConnell and others on the 1990 immigration bill, she also worked for a campaign fund-raising group called the Pacific Leadership Council. Hsia co-founded the PLC with Lippo Bank officials John Huang and James Riady, the chief figures in the Clinton-Gore Donorgate scandal convicted of campaign-finance crimes. At least six Lippo Bank officials reportedly benefited from the EB-5 law. Hsia partnered with former Democratic Rep. Bruce A. Morrison of Connecticut, an immigration lawyer, author of the 1990 Immigration Act in the House, and main sponsor of EB-5. After leaving Congress to run (unsuccessfully) for governor in Connecticut, Morrison formed a business to market the investor visa program.

An entire side industry of economic book-cookers has arisen to supply analyses of the “job creation” benefits of EB-5 projects and to gerrymander Census employment data to fit the program’s definition of “targeted employment areas” in order to qualify for lower investment thresholds (as was done in New York City’s Atlantic Yards/Pacific Park EB-5 deal).

Think Solyndra and federal stimulus math on steroids.

How does Trump respond to the debunking of the bogus job-creation math upon which the entire cash-for-citizenship swindle rests? Have any other Trump projects been subsidized by EB-5 China money? Where are the other GOP candidates on the issue and will they join Capitol Hill calls to kill the program?

If the RNC-organized, corporate media-controlled GOP debates weren’t such clown shows, maybe American voters could get some answers.