Category Archives: Industry Jobs Oil Economics

Regulations Cost $108 Billion Each Year

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Hey, Obama was are the cost benefits and where is this a part of law? Further, who is watching this and who is challenging the postings? Are they really legal in the first place?

 

Revealed: President Obama’s 229 Major Regulations Cost $108 Billion Each Year

NationalInterest: The Obama administration is responsible for thousands of new regulations—including a historic number of major regulations. As the costs of these regulations add up, they place more of a burden on economic freedom in America.

In 2015, 43 new major regulations went into effect, increasing regulatory costs by more than $22 billion, according to the latest “Red Tape Rising” study from The Heritage Foundation.

Since President Barack Obama took office in 2009, 229 new major regulations have increased regulatory burdens by $108 billion annually. But it doesn’t stop there. As the administration tries to push its agenda before the end of Obama’s term, 144 more major regulations are already in the works.

Among the biggest culprits are the Environmental Protection Agency, the Department of Transportation, and the Department of Energy. Although Congress funds these bureaucratic agencies, the rules they impose do not typically need congressional approval. Some independent agencies, like the Federal Communication Commission, are not even required to perform analyses to determine if their regulations will be cost-effective.

Not only do regulations cost American families and businesses more money, they have a damaging effect on economic freedom.

The Index of Economic Freedom, published annually by The Heritage Foundation, shows a decrease in economic freedom in the United States for eight of the last nine years. To make matters worse, since 2010, the U.S. has been stuck in the “mostly free” category, due in large part to falling scores related to business and labor regulation. In just one year, U.S. scores for business freedom and labor freedom have dropped by 4.1 points and 7.1 points, respectively.

Heritage Foundation researchers James Gattuso and Diane Katz have argued that “the unparalleled increase in regulatory burden spells a decline in economic freedom and individual liberty.”

All that red tape is piling up and Congress needs to take immediate action to prevent further growth in the regulatory burden and to restore economic freedom in the U.S.

**** Additional information for context:

Regulatory Federal Agencies
Agencies, like the FDA, EPA, OSHA and at least 50 others, are called “regulatory” agencies, because they are empowered to create and enforce rules – regulations – that carry the full force of a law. Individuals, businesses, and private and public organizations can be fined, sanctioned, forced to close, and even jailed for violating federal regulations.

The oldest Federal regulatory agency still in existence is the Office of the Comptroller of the Currency, established in 1863 to charter and regulate national banks.

The Federal Rulemaking Process
The process of creating and enacting federal regulations is generally referred to as the “rulemaking” process.

First, Congress passes a law designed to address a social or economic need or problem. The appropriate regulatory agency then creates regulations necessary to implement the law. For example, the Food and Drug Administration creates its regulations under the authority of the Food Drug and Cosmetics Act, the Controlled Substances Act and several other acts created by Congress over the years. Acts such as these are known as “enabling legislation,” because the literally enable the regulatory agencies to create the regulations required to administer enforce them.

 

The “Rules” of Rulemaking
Regulatory agencies create regulations according to rules and processes defined by another law known as the Administration Procedure Act (APA).

The APA defines a “rule” or “regulation” as…

“[T]he whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency.

The APA defines “rulemaking” as…

“[A]gency action which regulates the future conduct of either groups of persons or a single person; it is essentially legislative in nature, not only because it operates in the future but because it is primarily concerned with policy considerations.”

Under the APA, the agencies must publish all proposed new regulations in the Federal Register at least 30 days before they take effect, and they must provide a way for interested parties to comment, offer amendments, or to object to the regulation.

Some regulations require only publication and an opportunity for comments to become effective. Others require publication and one or more formal public hearings. The enabling legislations states which process is to be used in creating the regulations. Regulations requiring hearings can take several months to become final.

New regulations or amendments to existing regulations are known as “proposed rules.” Notices of public hearings or requests for comments on proposed rules are published in the Federal Register, on the Web sites of the regulatory agencies and in many newspapers and other publications. The notices will include information on how to submit comments, or participate in public hearings on the proposed rule.

Once a regulation takes effect, it becomes a “final rule” and is printed in the Federal Register, the Code of Federal Regulations (CFR) and usually posted on the Web site of the regulatory agency. Keep reading here.

 

The LEAVE Vote Won, What Brexit Means Now

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Populism and Elitism finally lost…the people have spoken and the battle for independence is long and hard but ultimately sweet. Citizens are disgusted with being ruled by Belgium.

Related reading: Brexit spreads across Europe: Italy, France, Holland and Denmark ALL call for referendums

The dynamics have not been determined and are impossible to predicts.

Given the drop in the value of the UK currency, the U.S dollar has risen however, the markets are going to be volatile for several days. France and Germany are in precarious positions and France has become the 7th largest economy by the drop in the value of the pound.

The Bank of England is working earnestly to calm markets across the globe.

Watch Scotland:

How Could Scotland Protect its EU Links After Brexit? 

It is often presumed that Scotland will continue to be part of the EU, either through a UK-wide vote to remain in the EU referendum or by joining the EU after a successful second independence referendum, writes Kirsty Hughes. She argues, however, that it is possible that Scotland could find itself outside the EU following a vote to leave, and that it should consider how to develop a differentiated relationship with the EU distinct from England.

At issue going forward is Article 50:

1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.

2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.

3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.

4. For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it.

A qualified majority shall be defined in accordance with Article 238(3)(b) of the Treaty on the Functioning of the European Union.

5. If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49.

Prime Minister, David Cameron has resigned and will leave office by October. Cameron is expected to notify the EU this morning that the U.K. is invoking Article 50 of the Lisbon Treaty, under which the two sides will have an initial two years to agree how their relations will look in future.

Markets were generally unprepared for “Brexit” after the last opinion polls, and more important Britain’s widely watched bookies, before the vote had pointed to a victory for the Remain camp. The Bank of England, the IMF, and OECD, as well as the Fed’s Janet Yellen, have all warned of a severe bout of volatility after a “Brexit” vote, with longer-lasting damage to the economy as a result of higher uncertainty, lower investment and more obstacles to trade. More here from Forbes.

 

Top Secret Reason for the Cold War Revealed

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The Top-Secret Cold War Plan to Keep Soviet Hands Off Middle Eastern Oil

Fearing a Russian invasion, the U.S. and Britain were prepared to ravage the region’s oil industry—and even considered going nuclear.

By Steve Everly

 Politico: On a cool summer day in London in 1951, an American CIA officer told three British oil executives about a top-secret U.S. government plan. The goal was to ravage the Middle East oil industry if the region were ever invaded by the Soviet Union. Oil wells would be plugged, equipment and fuel stockpiles destroyed, refineries and pipelines disabled—anything to keep the USSR from getting its hands on valuable oil resources. The CIA called it the “denial policy.”

Such a plan couldn’t work without the cooperation of the British and American companies who controlled the oil industry in the Middle East, which is why the CIA operative, George Prussing, ended up at the Ministry of Fuel and Power in London that day. To the British representatives of Iraq Petroleum, Kuwait Oil and Bahrain Oil, Prussing detailed how their production operations in those countries would in effect be transformed into a paramilitary force, trained and ready to execute the CIA’s plan in the event of a Soviet invasion. He asked for their help, and they agreed to cooperate. He also emphasized the need for security, which included keeping the policy secret from the targeted Middle East countries. “Security now is more important than the success of any operations,” Prussing told them.

The CIA’s oil denial policy is a snippet of a Cold War history that is finally giving up more of its secrets. In 1996, a brief description of the plan emerged after the Truman Presidential Library mistakenly declassified it—a security breach the National Archives deemed the worst in its history—and some additional details have trickled out over the years. But a recently discovered trove of documents stashed in Britain’s National Archives, along with some key American documents, now declassified, provide a more complete and more revelatory account—published here for the first time.

It turns out that the denial policy, long believed to have ended during Eisenhower’s presidency, was in place much longer than that, lingering into the Kennedy administration. And the newly discovered British documents reveal Britain was prepared to use nuclear weapons to keep the Soviet Union from Middle Eastern oil. The documents also show that the CIA played a far larger role than previously thought. The State Department and the National Security Council were always known to have been significantly involved, but in fact, it was the intelligence agency that was the driving force of the operation, organizing American and British companies to execute the denial policy, coming up with plans, providing explosives and spying on some of those companies as part of its oversight.

The history of this top secret U.S. government plot is a tumultuous mix of Arab nationalism, Big Oil and the CIA on the most oil-rich chunk of real estate on earth. Fundamentally, it is a tale of the growing importance of Middle Eastern oil and the West’s early thirst to control it. And decades later, with that thirst still driving U.S. involvement in the volatile region, it’s worth remembering the risky scheme that foreshadowed it all.

The oil denial policy was hatched in 1948 during the Berlin Blockade, when the Soviet Union tried to block the West’s access to the German city. The blockade stoked fears that further communist aggression would include a sweep through Iran and Iraq to the Persian Gulf—an invasion, the Truman administration worried, that U.S. troops and their allies wouldn’t be able to stop. But American and British companies controlled Middle Eastern oil, and the U.S. government decided a stop-gap measure could stymie the Soviet military by ensuring its taste for fuel wasn’t slaked with petroleum.

The National Security Council’s plan, officially known as NSC 26/2 (and which was approved by President Harry Truman in 1949), was for those American and British companies to destroy or sideline Middle East oil resources and facilities at the start of a Soviet offensive. According to the NSC 26/2 planning documents, the State Department would provide oversight; the CIA would handle operational details for each country.

160622_everly_aramco_pipeline_1160_ap.jpg

Based on National Security Council documents, the intelligence agency immediately approached Terry Duce, Aramco’s vice president of government relations, for advice about implementing a covert denial plan in Saudi Arabia. Aramco owned the rights to produce Saudi Arabian oil and had a working relationship with the country’s government. Duce, who liked to wear a black beret and loved the spy game, had served a stint at the federal government’s Petroleum Administration during World War II and was well known in Washington. Allen Dulles, who later became the CIA’s director, was a frequent guest at Duce’s home.

Aramco, jointly owned at the time by predecessor companies of Exxon Corp., Mobil Inc., Chevron Corp. and Texaco Inc., threw itself into the effort by providing the CIA with crucial advice, including how to plug oil wells and disable refineries. Through Duce, Aramco also volunteered its employees to execute the plan and was even willing to consider their induction into the military if the plan were triggered. (Aramco and U.S. officials hoped military status would protect employees from execution for sabotage if they were captured.)

In the meantime, according to British Foreign Office documents, the British government was notified about NSC 26/2 and threw its support behind the measure, agreeing to prepare denial plans for its oil companies in Iran and Iraq. Britain’s approach differed from the outset: While the CIA’s strategy for Saudi Arabia relied entirely on Aramco employees and not at all on the U.S. military, the British plan used airborne troops to protect and assist the hundreds of oil company employees who would participate in destroying the facilities.

All appeared to be going well for the CIA’s ambitious plot. But it wasn’t long until this promising start began to degenerate. British oil companies turned out to be way more reluctant to cooperate than their government had been. In late 1950, Sir Thomas Fraser, chairman of Anglo-Iranian Oil Co., a jewel in the fading British Empire, learned for the first time his company was expected to provide hundreds of employees for the denial scheme. He feared economic blackmail, even expulsion, if the Iranian government learned about his company’s involvement—and, according to British documents, Fraser pulled Anglo-Iranian Oil out of the plan in late 1950.

George McGhee, an undersecretary at the State Department, was furious. In February 1951, he summoned a British official to Foggy Bottom and told him it was time for his government to make up its mind regardless of what Anglo-Iranian Oil—later to be renamed British Petroleum—thought. “It was quite unjustifiable that the oil denial arrangements should not be completed to the last detail,” McGhee said, according to a British memo about the meeting. In response a few weeks later, the British offered a denial blueprint for Iran that depended entirely on military troops and suggested a similar approach for Iraq. According to British documents that reveal communication with the State Department, this proposal stunned U.S. officials, who believed the plan would fail without the expertise and manpower provided by the oil companies.

What the United States didn’t know, however, was that the British were in fact willing to tap their oil companies for assistance, and that the oil companies were willing to provide it. London just didn’t want the United States to be aware of this, for fear that U.S. knowledge would jeopardize the secret. “We are bound not to let them know how much British oil companies are cooperating,” said D.P. Reilly of Britain’s Foreign Office to a senior British military official, a few weeks after the McGhee meeting.

***

When George Prussing, the CIA operative assigned to work with Middle Eastern oil companies on denial plans, stepped into the State Department on May 1, 1951, he hoped to convince the two British diplomatic and military officials there to meet him that they needed the CIA’s help to salvage their strategies. He gave them for the first time a detailed briefing of the Aramco plan he had helped develop, hoping that it would serve as a model for the rest of the region.

The Aramco denial plan, according to British notes of Prussing’s briefing, was organized around the company’s three administrative districts in Saudi Arabia. Forty-five senior Aramco employees were “fully in the picture.” Altogether 645 employees were earmarked to participate, but most knew only of their individual roles to prevent disclosure of the overall plan.

In addition, five CIA undercover agents were embedded in Aramco in jobs such as storekeeper and general manager’s assistant. They were charged with keeping the intelligence agency informed of the company’s work on the denial plan and any developments that might affect it. Outside the CIA, only one Aramco executive and one State Department official were aware of the agents’ real jobs, according to the British notes.

The CIA had already imported military-grade explosives into Saudi Arabia, specially shaped to fit specific parts, to store in bunkers on Aramco property.

The goal was to keep the Soviets from tapping Saudi Arabia’s oil and refined fuels for up to a year in the event of an invasion. The plan would unfold in phases, starting with destruction of fuel stockpiles and disabling Aramco’s refinery. Selective demolitions would destroy key refinery components difficult for the Russians to replace. This would leave much of the refinery intact, making it easier for Aramco to resume production after the Soviets were ousted.

According to British notes of this meeting, the CIA had already imported military-grade explosives into Saudi Arabia, specially shaped to fit specific parts, to store in bunkers on Aramco property. Flamethrowers were to be widely used to melt small equipment parts. Other weapons included special grenades tested for destroying fuel stockpiles. Cement trucks were ordered for plugging oil wells.

Trucks, railway cars, generators and drilling rigs were also slated for destruction. Aramco employees, besides receiving military commissions, would be evacuated to safety once the denial operation was completed, Prussing said.

The briefing impressed J.A. Beckett, petroleum attaché at the British Embassy in Washington, who fired off a telegram to London advising that Aramco and the CIA had “developed a satisfactory modus operandi for this type of covert planning and are most anxious to extend their activities to cover the remaining [oil] fields.”

Prussing sought approval to install Aramco-style plans in Bahrain, Kuwait and Qatar, where a mix of American and British oil companies were then operating, according to British documents. Britain, the governing authority in those countries, accepted Prussing’s proposal as long as Britain could remain responsible for triggering the execution of the denial plans in Kuwait and Qatar. (A decision about which country would order the plan to begin in Bahrain was deferred although Britain was inclined to give it to the United States.)

Britain remained responsible for developing the denial plans for Iran and Iraq, but Prussing offered the CIA’s assistance. To this end, British officials arranged a meeting in London for the next month, which is how Prussing ended up briefing executives from oil companies in Kuwait, Bahrain and Iraq in June 1951. There, according to British notes of of the meeting, Prussing reviewed the Aramco plan with the businessnmen and said he was ready to advise and assist their own denial plans. They agreed to the assistance.

Yet, there was one key oil empire conspicuously missing from the meeting: Iran. Arranging plans for that country was proving to be far more difficult than for the others.

***

In early 1951, Iran was a steaming stew of resentment toward Anglo-Iranian Oil. The British company’s shabby treatment of its Iranian employees and its mercenary grip on the country’s oil riches had long soured relations between the company and the country.

Whispers about the denial plan were making things even worse. In December 1950, a Tehran newspaper published a story that reported rumors of high-level British government discussions to destroy Iran’s oil industry in the event of war—arousing astonishment and anxiety in Iranian political circles. The story also set off alarms bells in London and at Anglo-Iranian Oil, where efforts were redoubled to keep its cooperation a secret. Based on British Foreign Office documents detailing a conversation with an Anglo-Iranian executive, the company’s general manager was told—whether by his company or the government, it’s not clear—to disavow any knowledge of the denial plan. “The article was far too near the truth,” A.T. Chisholm, a company executive, said while dropping off a translated copy of the story at the British Foreign Office in London.

At the time, the British government owned 51 percent of Anglo-Iranian Oil, but an unusual clause in the ownership agreement prevented the government from being involved in the company’s commercial matters. According to Foreign Office documents discussing Anglo-Iranian’s participation in the plan, Fraser, the company’s chairman, shrewdly used this provision to push his view that the denial plan would be a financial disaster for the company. He warned that an American competitor might intentionally leak his company’s participation to Iran’s government to gain an advantage in the country—and he said he would not participate.

“He was convinced that no security measure would be effective once the American oil companies were brought into the picture,” said R. Kelf-Cohen, an official with Britain’s Ministry of Fuel and Power, during a meeting in London to discuss the denial policy.

But Fraser, under pressure after the McGhee meeting with British government officials in February 1951, eventually grudgingly agreed to allow a denial plan to use his company’s employees. He had conditions, though. His approval would be required, for instance, to execute the denial plan until he was sure the company could recover any financial losses incurred. The British government decided that his cooperation would be kept secret from the Americans so that U.S. oil companies didn’t try to undercut Ango-Iranian oil.

But then, Iranian politics put a wrench in the plan. On March 7, 1951, Iranian Prime Minister Ali Razmara was assassinated by a nationalist and was replaced in April by Mohammad Mosaddeq, who promptly nationalized the company.

Seizure of Anglo-Iranian Oil’s assets by the Iranian government nixed the denial plan with consequences that threatened the entire NSC 26/2 policy. The company produced half the oil in the Middle East and more than half the gasoline, diesel and jet fuel. Its Abadan refinery was the largest in the world and by itself could probably satisfy a Soviet invasion’s thirst for fuel.

The nationalization triggered a scramble for options. According to British documents, the United States asked Britain if the plan’s mission to counter a Soviet invasion could be salvaged with airborne strikes aiding British troops on the ground. Britain rejected this idea, claiming spare troops were not available and the ground demolitions called for by the plan would be too dangerous without the expert assistance of refinery workers.

According British military documents, Britain’s Joint Chiefs of Staff, responsible for the country’s denial planning, decided instead that “oil denial [in Iran] can only be carried out by air attack.” Still, they were skeptical about having enough aircraft to successfully attack the massive Abadan refinery. Because of this fear, the plan that emerged was highly targeted: If the Soviets invaded Iran, the British Royal Air Force based in Iraq would attack fuel stockpiles at the Abadan facility, which was then idled by a British embargo of Iranian oil, leaving the refinery intact. British aircraft would snip production at the Abadan refinery, if reactivated, by bombing a railway that delivered crude oil to the facility. Airstrikes would also hit two small refineries in Iran, at Kermanshah and Naft-I-Shah, along with their fuel stockpiles.

***

By late 1951, as the denial plan for Iran reorganized, the plan for Saudi Arabia was settling in. Prussing was even treating a handful of Aramco employees to a picnic in the desert where they discussed the gritty details of oil denial over sandwiches.

“Refinery explosions would work like Chinese firecrackers; when one exploded it would set off another,” Bill Otto, an Aramco employee and a manager of the company’s denial plan who was at the picnic, told me in an interview.

The CIA wanted a speedy timetable to ensure the plan could be completed before the Soviets arrived. The agency had already arranged a communications channel that would allow the U.S. secretary of state to send the order triggering the denial plan to a boat sitting off the shore of Saudi Arabia. Aramco did its part by filling binders with photos, diagrams and instructions needed to execute the plan. A handful of the company’s American employees stored the 20,000 pounds of dynamite and plastic explosives needed for the demolitions—a job done without arising suspicion since Aramco used explosives in its normal operations.

“The program didn’t have any meat to it until we started putting [demolition details] down,” said Otto, a former Army bomb disposal expert. “[The CIA was] happy to have someone else doing it.”

Refinery explosions would work like Chinese firecrackers; when one exploded it would set off another.”

There were other signs of progress in the region, with Bahrain Petroleum Co. and Kuwait Oil wrapping up their Aramco-style denial plans while the British oil company in Qatar agreed to cooperate with the CIA, according to a National Security Council document tracking the denial plan’s progress. A U.S. delegation visiting the Middle East in late 1951 gushed that “pre-war plans for denial of oil facilities have never before been so perfected.”

But this confidence was premature as Aramco, Kuwait Oil and Bahrain Petroleum executives signaled second thoughts, according to a later NSC progress report. They told U.S. officials in 1952 that they had made no final decisions about their companies’ role in executing the denial plan. “I think they saw the difficulties,” said Parker Hart, the State Department consul general in Saudi Arabia at the time.

These difficulties included using employees to execute the policy. Though the companies had initially embraced the idea, they later had doubts about their authority to force workers to participate in the dangerous operation. That problem could be fixed by using volunteers, but the companies wanted military protection for them, something not part of the CIA’s plans. But the biggest issue for these companies, just like for Anglo-Iranian Oil, centered on the economic consequences if the denial plans leaked to the host governments: Aramco, for example, was producing more than twice the amount of oil it had been when it agreed to help the CIA in 1948—and bigger revenues meant the company was less prepared to risk Saudi Arabia’s wrath.

Looking for some insurance, Kuwait Oil and Bahrain Petroleum requested letters from the British and American governments stating their companies had been commandeered for the denial plan. They could show the letters to local government officials if the plan leaked, which they hoped would save their companies. But the State Department refused to provide the letters, saying they were unnecessary: There was ample evidence in its files to show it pressured the companies to cooperate. British officials summarily rejected the request fearing the “demand for such a letter appeared to be a lever which might be used in any subsequent discussions on compensation.”

Aramco and Kuwait Oil, by then the largest oil producers in the Middle East after production plummeted in Iran following the nationalization of Anglo-Iranian, tried another route and pushed for disclosure of the denial plans to Saudi Arabia and Kuwait. The United States again refused, since it was about to ask some Middle Eastern countries to join a military alliance (which became the Baghdad Pact of 1955). U.S. officials believed disclosure of the denial policy could derail the fledgling alliance.

With that, Aramco decided the economic risk for the company was too great and demanded removal of denial plans and explosives from its property. The company believed the surge in denial training and the growing number of Saudi employees at Aramco made a security leak inevitable, and American diplomats in the country agreed. “You’d never get away with it,” said U.S. Consul General Hart to the State Department.

***

The setback in Saudi Arabia threatened to kill the denial policy as it limped into the Eisenhower administration in 1953. But just a few weeks after the new president’s inauguration, a report on NSC 26/2 landed at the National Security Council, and ignited efforts to save it. The author of the report was Walter Bedell Smith, a former chief of staff and trusted aide for Ike during World War II who was settling into a State Department job. He told colleagues he was “vexed” by the denial policy, and his report, seasoned by his recent three-year stint as CIA director, reflected it. He sketched out the plan’s problems, which went beyond Aramco’s reluctance to participate. The use of volunteers was under review, but they might not be as effective as hand-picked employees. The program to plug oil wells was also in trouble because of the time it took to complete the job. The report noted high-level discussions taking place about giving the U.S. military more responsibility for the denial policy, which would diminish the CIA’s control.

The report led with a bullet-point list of the changes in oil demand and supply since the approval of NSC 26/2 four years before. The United States had become a net importer of 600,000 barrels of oil per day, double what it was in 1949, and the United Kingdom’s demand for imported oil climbed had to 161 million barrels in 1952, up from 126 million barrels just three years earlier. During the same period, Middle East oil production had soared to meet the needs of the West.

A follow-up review found that while denial plans were still needed to counter the Soviets, it was increasingly important that Middle East oil be preserved for later use by the West. The denial policy’s use of selective demolitions promised a quick production rebound once the Soviets were ousted. The problem was with plugging the oil wells, which could take a week or more to do—not fast enough in the face of a rapid Soviet assault. Unplugged wells could allow the Soviets to cause permanent damage to the oil fields, by setting the wells on fire or letting them flow freely.

In 1954, Eisenhower approved NSC 5401, which straddled these disparate goals. The new policy called for “conservation” of Middle East oil, with more emphasis on plugging oil wells in a timely way, while also maintaining ground demolitions. At the same time, a last resort plan was added: If the companies were unable to execute ground demolitions, the U.S. military would destroy the oil facilities with airstrikes.

The State Department also eyed the military to fill the vacuum left by Aramco’s refusal to execute the ground demolitions—that meant sending in troops to do the job. But the Defense Department pushed back. Smith told the National Security Council, as it mulled approval of NSC 5401, that he understood the military’s reluctance but it was inevitable that oil denial in Saudi Arabia was primarily a military job. Allen Dulles, by then director of CIA, agreed that for Saudi Arabia if “anything at all were to be done on D-Day, it would be done by the military.”

But the Defense Department, anticipating a shortage of troops in the region, refused to commit to ground demolitions. Airstrikes were still available as a last resort, but they were not ideal since disabling rather than destroying the fields was the preferred outcome. “The most therefore that could be hoped for was the [ground demolition] job could be done by experts from Aramco and the CIA with some degree of protection by the military,” said Robert Cutler, Eisenhower’s special assistant for national security, according to a National Security Council document in December 1953.

Had Aramco changed its mind? Cutler left it an open question, but William Chandler, vice president at the time of Aramco-owned Tapline, said in an interview before his death in 2009 that the company did resume cooperation, at least to some extent. He received a call in early 1954 from an Aramco executive to expect a briefing about a “special program” involving Tapline, which operated an oil pipeline across Saudi Arabia. The plan was to disable the pipeline if the Soviets invaded by destroying key valves in its pumps. Company supervisors were trained to use plastic explosives, which they stored in footlockers under their beds. “It was something we were ordered to do,” said Chandler.

***

Meanwhile, Britain was also rethinking its denial plans for Iran and Iraq. In 1953, a coup in Iran, backed by the United States and Britain, installed a friendlier government. An oil consortium, majority owned by British Petroleum and the four American oil companies that owned Aramco, was created to manage the bulk of the country’s oil industry. But Iranian government owned facilities were emerging despite the consortium, according to British documents.

The same thing was happening in Iraq, where hundreds of Iraq Petroleum employees were prepared to disable the company’s massive Kirkuk petroleum complex. The British company’s grip on the Iraqi oil industry had loosened, and the country’s government controlled refineries in Baghdad, Basra and Alwand.

For the denial plans to succeed in these countries, these government-controlled facilities had to be sidelined as well as all the others. But asking Iran and Iraq’s governments to develop denial plans would confirm existence of the policy and likely cause the two countries to lose confidence in their Western allies. That left Britain with the option to use airstrikes, but the military was wary of that option: German refineries during World War II had proven difficult to knock out using conventional bombs.

The “most complete method of destroying oil installations would be by nuclear bombardment,” read a 1955 report endorsed by Britain’s Joint Chiefs of Staff.

In 1955, when Britain was just starting to stockpile nuclear weapons, Britain’s Joint Chiefs of Staff showed interest in using nuclear weapons to destroy oil facilities in Iran and Iraq. The “most complete method of destroying oil installations would be by nuclear bombardment,” read a 1955 report endorsed by Britain’s Joint Chiefs of Staff. It’s not clear if U.S. officials were involved in these discussions at this stage. But according to British military documents reviewing denial plan options, the Joint Chiefs, had minister-level approval to ask the United States to help by using some of its nuclear arsenal on Iran if the denial plan were triggered, according to British Ministry of Defence documents. The request was discussed in a meeting with U.S. officials in London in early 1956. Meeting records don’t mention any American reaction to the proposal. But a decision was deferred until Prussing could review the denial plan for Iran and inspect its oil fields and facilities. A British memorandum to Britain’s Joint Chiefs of Staff after the meeting said in the “near future, the only feasible means [in Iran] of oil denial would be American nuclear action.”

After returning from Iran, Prussing concluded that oil denial using ground demolitions was still workable for the country. In British military documents dated after Prussing’s review, British officials noted the growing number of U.S. nationals working in Iran made it increasingly likely that ground demolitions would be successful, and that nuclear destruction wouldn’t be necessary. Otto, Aramco’s expert on ground demolitions, was dispatched to help the British restructure its denial plan for Iran.

Elsewhere, Britain and the United States agreed to extend the reach of the denial policy. A refinery in Lebanon owned by predecessor companies of Chevron and Texaco, and a British refinery in Egypt for the first time were covered by denial plans. A proposed refinery in Syria was slated for one as soon as it was completed. The United States agreed to be responsible for denial planning in the Kuwait Neutral Zone, a patch of land between Saudi Arabia and Kuwait. The British identified refineries and pipelines in Israel and Turkey to eventually target.

The progress was encouraging enough for the State and Defense Departments and the CIA in 1956 to propose continuing the denial policy essentially unchanged. But a junior staffer at the National Security Council had a different idea. He believed changing politics in the Middle East meant that “the whole operation” should be killed.

***

George Weber, 31, was no stranger to the denial policy, having assisted the government committee whose recommendations led to NSC 5401. But by 1956 the University of Cincinnati graduate and NSC staffer believed it should be shelved, in part because it only dealt with a war involving the Soviet Union. By that year, the Soviets weren’t the only problem for Western nations in the Middle East; burgeoning Arab nationalism movements were also a threat to the West’s hold on regional oil. President Gamal Abdul Nasser’s 1956 nationalization of the Suez Canal was a prime example.

Weber also questioned the usefulness of selective demolitions to disable facilities since the Soviets would probably completely destroy them when forced to retreat. Meanwhile, increased selective-demolitions training by the oil companies was raising chances of a security leak, “I think the Council should review very carefully the wisdom of such a program,” he said in a memorandum to Cutler, Eisenhower’s national security adviser.

The denial policy was not killed, but Weber triggered a transformation, and in a few months Eisenhower approved its replacement: NSC 5714. The destruction of oil facilities in the event of a Soviet invasion remained part of the plan as a last resort, but only with “direct military action” as opposed to employee involvement directed by the CIA. The CIA partnership with the oil companies was abandoned. “Covert denial by civilian agencies had become impracticable,” said William Rountree, a State Department official, in a memo.

In 1963, the Kennedy White House asked the State Department whether NSC 5714 should be rescinded, replaced by something else, or if it still represented U.S. policy. A response is not in the file.

The new policy also became more preemptive, swinging toward protection of oil facilities in the face of new threats in addition to Soviet invasion, like sabotage and regional war. In this, Middle Eastern countries were to be asked to play an unprecedented role. Oil companies and local governments were to work together to boost security, including hardening oil facilities for protection against attack. Local governments would also be asked to cooperate in plugging oil wells if they were threatened to save the oil for later use by the West.

“Thus the evolution of this policy has taken another step,” Weber said.

The shift did not put an end to other American and British plans involving Middle East oil. A broader U.S initiative in 1958—unrelated to NSC 5714—called for the possible use of military force as a last resort against Arab nationalists, to keep the oil flowing at reasonable prices. The British in 1957, deeming a Soviet invasion unlikely, refined plans to use its military to protect oil installations in Kuwait, Bahrain and Qatar if threatened by “Egyptian subversion.”

How NSC 5714 fit in to this new Middle Eastern security landscape is unclear. It was put in place, but the handful of declassified documents reveals little about its fate, including whether or not any local governments agreed to cooperate. In 1963, the Kennedy White House asked the State Department whether NSC 5714 should be rescinded, replaced by something else, or if it still represented U.S. policy. That is the last document I was able to find about the denial plan in America or Britain. A response is not in the file, and it’s unclear when the policy ended.

Those in the field did notice the shift brought on by NSC 5714. Otto was instructed to destroy the 10 tons of explosives stashed at Aramco, which rattled windows miles away. He was also was dispatched in the late 1950s to Tapline to remove the explosives still tucked under the beds of supervisors. Chandler, who became president of Tapline, was relieved to see them gone. The Saudis believed they owned the pipeline and would have been furious about the denial plan.

So why take the risk from the start? Patriotism was high in the years after World War II, Chandler later recalled, and so was the willingness to help the United States in its fight against communism.

“We had a good crowd and we didn’t have complaints and that was the amazing thing,” he said. “It was just we had to do this and everyone went along with it.”

 

 

 

DoJ: National Healthcare Fraud Takedown

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In what the Justice Department is calling the largest takedown of healthcare fraud in U.S. history, federal authorities on Wednesday brought charges against 301 people for $900 million in false billings.

Among those charged includes 61 doctors, nurses, and other licensed medical professionals who, among other crimes, allegedly committed money laundering, identity theft, and Medicare Part D pharmacy fraud. Across the country, 23 states and 36 federal districts coordinated with the Justice Department and the Department of Health and Human Services to go after the alleged fraud schemes.

The defendants allegedly submitted Medicare and Medicaid claims the Justice Department said “were medically unnecessary and often never provided.” Some of the defendants were paid kickbacks for providing information for fraudulent bills. At least 28 doctors were among those charged on Wednesday. More from Atlantic.

 

Lynch/Justice Department: Good morning everyone and thank you all for being here.  I am joined by several key leaders in our nation’s efforts to address health care fraud: Department of Health and Human Services Secretary [Sylvia] Burwell; Assistant Attorney General for the Criminal Division [Leslie] Caldwell; United States Attorney [Wifredo] Ferrer of the Southern District of Florida; FBI Associate Deputy Director [David] Bowdich; HHS Deputy Inspector General for Investigations [Gary] Cantrell; DCIS Acting Director [Dermot] O’Reilly; and [Shantanu] Agrawal, Deputy Administrator and Director of the Center for Program Integrity at the Centers for Medicare and Medicaid Services.

We are here today to announce a significant step in the federal government’s ongoing work to keep our nation’s health care system free of fraud and exploitation and to ensure that taxpayer dollars are used lawfully and appropriately.  Over the last three days, the Medicare Fraud Strike Force – a joint effort between the Department of Justice and the Department of Health and Human Services – executed a significant nationwide health care fraud takedown.  This action involved charging or unveiling charges against  approximately 300 defendants in 36 federal districts for their alleged participation in a variety of schemes involving more than $900 million in fraudulent billings, making this the largest takedown in the Strike Force’s nine-year history.

The defendants named in these charges include doctors, nurses, pharmacists, physical therapists and home health care providers.  They are accused of a wide range of serious crimes, from conspiring to commit health care fraud to making false statements and from bribery to money laundering.  They submitted dishonest claims, charged excessive fees and prescribed unnecessary drugs.  One group of defendants controlled a network of clinics in Brooklyn that they filled with patients through bribes and kickbacks.  These patients then received medically unnecessary treatment, for which the clinic received over $38 million from Medicare and Medicaid – money that the conspirators subsequently laundered through more than 15 shell companies.  In another case, a Detroit clinic billed Medicare for more than $36 million, even though it was actually a front for a narcotics diversion scheme.  And yet another defendant took advantage of his position in a state agency in Georgia by accepting bribes and recommending the approval of unqualified health providers.  These are just a few examples of the criminals that we targeted in this operation and although the specific nature of their wrongdoing varied from case to case, all of them betrayed the basic principles of their professions.

In addition to the usual patterns of fraud and deception that we’ve encountered in the past, we also saw new trends emerging in this year’s charges.  For instance, in a number of cases involving the Medicare prescription drug benefit program known as Part D, we saw new evidence of identity theft, including the use of stolen doctors’ IDs to prepare fake prescriptions.  We have also seen a growing number of cases involving compounded medications, which are combinations of two or more drugs prepared by a licensed professional.  In recent years, the cost of these drugs has grown exponentially, making them a more attractive target for criminals looking to exploit them for profit.

As this takedown should make clear, health care fraud is not an abstract violation or benign offense.  It is a serious crime.  The wrongdoers that we pursue in these operations seek to use public funds for private enrichment.  They target real people – many of them in need of significant medical care.  They promise effective cures and therapies, but they provide none.  Above all, they abuse basic bonds of trust – between doctor and patient; between pharmacist and doctor; between taxpayer and government – and pervert them to their own ends.  The Department of Justice is determined to continue working to ensure that the American people know that their health care system works for them – and them alone.

In tackling these challenges, the Medicare Fraud Strike Force relies on close cooperation between the federal, state and local, governments.  Since 2014, the Justice Department’s Criminal Division has organized an annual National Health Care Fraud Training Conference for Assistant U.S. Attorneys and state and federal law enforcement officers, which has substantially expanded the reach of our actions.  More than 20 non-Strike Force U.S. Attorney’s Offices participated in this year’s takedown, helping us to combat health care fraud in a total of 30 federal districts nationwide, from Alaska to Florida.  We were also assisted by approximately 20 state Medicaid Fraud Control Units, a reflection of the close partnership between state and federal authorities in combatting health care fraud – a partnership that we will continue to strengthen in the days ahead.

I want to thank my colleagues in the FBI, the Criminal Division and U.S. Attorneys’ Offices for their ongoing efforts to combat health care fraud.  I want to thank all of the state and local law enforcement officers across the country who participated in this complex and fast-moving takedown.  And I look forward to continuing our work together in the days ahead.

At this time, I’d like to turn things over to Secretary Burwell, who has been a dedicated leader and indispensable partner in this critical work and who will provide additional details on today’s announcement.

Here is One That Should Have Received a Visa, But…

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Athens, Greece – Working for the US Army in Afghanistan can get you killed, but there’s a silver lining.

  

The US Army offers its Afghan translators the right to request the Special Immigration Visa (SIV). It’s a program initiated by the US to help certain foreign employees leave their home countries and get on a path to permanent residency in the states—usually for protection from groups like the Taliban. For the last four years, the program has been renewed in the National Defense Authorization Act. This year, however, both the House of Representatives and the Senate failed to vote for the allocation of more visas, which could imperil remaining applicants.

Through that program, Muhammad, a former US Army translator in Afghanistan that I met in the port of Piraeus, Greece, should already be in the US. But like several other forgotten Afghan translators who served the United States, his visa has not come through. After being laid off by his army base in 2014, Muhammad fell into a bureaucratic gap between the United States’ promises to its employees in Afghanistan, and its rocky attempt to withdraw from the country.

Muhammad applied for the SIV in 2014. He was rejected in May 2015. According to the rejection email, his application was ruled invalid on the grounds of “Lack of faithful and valuable service.” Muhammad says that’s because he was fired—but not for lack of faithfulness or value. 2014 was simply the year that the Obama administration started closing army bases, in an early phase of withdrawal from Afghanistan. With fewer bases and fewer troops, fewer translators were needed. Muhammad was downsized by government contractor Mission Essential.

So in January 2016, he decided to make a go of it on his own. He paid $5,500 in smuggling fees to be trafficked from Afghanistan to Iran, from Iran to Turkey, and then from Turkey to Greece. By the time he arrived in the port of Piraeus in March, the 22-year-old’s life had been reduced to the phone in his pocket, the clothes on his back, and a sheaf of papers from his job with the United States Army.

His service and his perfect English together, in theory, put him in a better position than most refugees, but because he is Afghan, he isn’t even eligible for any of the expedited European relocation measures that the Syrian and Iraqi refugees sheltering in the port can claim.

Today he lives in limbo in a tent outside the port’s E1 terminal, where he can watch the Greek ferries come and go, bearing tourists to their summer holidays.

A life-threatening profession

Muhammad says that he was well aware his job translating between US and Afghan forces in the city of Khost came with a death sentence from Taliban insurgents, who oppose the current government and US intervention. He never told anyone, not even his family, what he did for a living.

“I was trying to keep a low profile,” he says, sitting cross-legged next to a ship bollard in the port. He forks a clump of rice from crinkled plastic tray on the ground in front of him. If anyone asked about his work in Afghanistan, he says, he told them he was going to school. These days, he’ll tell anyone who’ll listen.

In an Oct. 2014 episode of Last Week Tonight, US comedian John Oliver highlighted the bureaucratic nightmare that Iraqi and Afghan translators have to deal with in applying for an SIV—and the US system’s inability to take into account individual circumstances and dangers. One Afghan translator interviewed by Oliver had to wait three years and four  months between applying for his SIV and arriving in the United States. In that time, the Taliban killed his father and kidnapped his younger brother.

In April 2016, Muhammad met someone who nearly met a similar fate: another former Afghan translator for the US army named Ahmad. Until Jan. this year, 25-year-old Ahmad worked for the US army in Jalalabad, Afghanistan. Knowing the dangers of his job, he applied for his SIV in 2014, but the paperwork moved slowly. He went back to work on the base.

In Dec. 2015, Ahmad’s family in Kabul received a letter from the Taliban, which threatened to kill his parents if he kept working for American troops. The next month, in January 2016, Ahmad decided he could not wait for a visa any longer, and decided to flee Afghanistan with his younger brother. They paid smugglers nearly $11,000, and got as far as Piraeus. Like Muhammad, the two brothers now camp in the port. Ahmad has not yet tried to restart his visa application process.

The SIV process has five basic steps, which include several phases of petition and permission before actually applying for the visa. The State Department estimates that this entire process takes 357 business days—but clearly, it can also take much longer.

“The single biggest cause for delay is security checks,” says Betsy Fisher, policy director at the International Refugee Assistance Project (IRAP), which provides legal assistance to refugees. A puzzling problem, considering that anyone who has worked as a translator on a US army base in a conflict zone, has already undergone extensive security checks, including periodic polygraph tests.

Those who make it to the United States…

With patience, some Afghan translators do make it to the United States. Hamed, who asked to go by his first name only, is a former translator who worked for the US Army in the provinces of Khost and Paktika between 2010 and 2015. He began his SIV application in 2012. His application was approved the next year, but he did not receive his visa until early 2015. Luckily, he and his family survived the wait.

“I told them I want to leave as quick as possible,” Hamed told Quartz about the sense of urgency he felt after multiple threats due to his work for the Army. When he got word one night that he was finally cleared to leave, he says, he was so overcome with joy that he couldn’t sleep. In May 2015, he and his family boarded a plane to the United States.

But their departure has not had an entirely happy ending. In Afghanistan, Hamed’s wife was in her last semester of law school in Afghanistan, but they left before she could finish. Hamed has a degree in information technology, but in Woodbridge, Virginia, where they now reside, he has only been able to find a job in fast food.

…and those who don’t

Today, fewer than 4,000 SIV visas are still available, according to Fisher. Roughly 10,000 SIV applicants are currently waiting for a decision.

With the Balkan route that saw a million refugees work their way into Europe in 2015 effectively shut down, Muhammad and Ahmad’s only options are to wait, apply for asylum in Greece, or go home again. Asylum in Greece is not an option, says Muhammad. “This is not a country which can bear refugees,” he says of its record-high unemployment and the economically paralyzing effects of austerity. “Greeks already have too many problems.”

Despite being stonewalled by US immigration authorities, he carries with him at all times proof of his years of army service: copies of letters of recommendation from two sergeants he worked for, as well as certificates commending his work—just in case they might come in handy.

“I have no idea what to do,” he says.