In this issue:

Senate Revolts Against Bush Cut in Medicaid

House Passes $82 Billion War Supplemental

Senate Panel: Pinochet Had 125 Accounts in U.S. Banks

Torture Scandals May Derail Haynes Nomination

Three European Countries Investigating U.S. Renditions

New Report Shows Iraqi Weapons Sites Were Looted

United States News Digest

Senate Revolts Against Bush Cut in Medicaid

In a major blow to the Bush-Cheney regime, on March 17, seven Republican Senators voted against cuts in the Medicaid program—the only health insurance for America's poorest people. The vote, 52 to 48, stripped a provision from the budget resolution instructing the Finance Committee to cut $14 billion from Medicaid over the next five years. The seven Republicans who crossed the aisle to vote with the Democrats and one Independent were: Gordon Smith of Oregon, the chief sponsor of the amendment; Lincoln Chaffee (R.I.); Norm Coleman (Minn); Susan Collins and Olympia Snowe (both Maine); Mike DeWine (Ohio); and Arlen Specter (Pa).

House Passes $82 Billion War Supplemental

On March 16, the House passed, by a vote of 388 to 43, a supplemental appropriations bill to cover the costs of the wars in Iraq and Afghanistan through September 2005. While the House Appropriations Committee made some minor changes to the bill, some increases in military accounts, and decreases in international relations provisions, passage of the funding was never an issue. But, the issue that dominated the debate was the unwillingness of the Bush Administration, and the Defense Dept., to submit to oversight. But that concern was not limited to Democrats.

Rep. Louise Slaughter (D-N.Y.), the ranking Democrat on the House Rules Committee, decried the Committee's rejection of an amendment by Rep. John Tierney (D-Mass) that would have established a select committee in the House to investigate fraud and abuse in contracting in Iraq, including an audit report recounting the failure of the Coalition Provisional Authority to properly account for $9 billion in Iraqi funds that it spent. Slaughter pointed out that the House spends much of its time renaming post offices and honoring foreign dignitaries and athletic successes. "If we have enough time for that," she said, "we certainly have enough time to track down $9 billion that the administration seems to have misplaced." Rep. David Obey (D-Wisc), the ranking Democrat on the Appropriations Committee, warned the House that the Democrats would no longer support such supplemental spending bills "if we do not have adequate oversight and we do not have adequate information on the part of the administration."

Rep. Jim Leach (R-Iowa), who not only endorsed Tierney's amendment from the floor, but is cosponsoring a stand-alone bill with Tierney that does the same thing, told the House, "I personally believe that the only way you can maintain support for national policy, however controversial, is to have complete confidence that things are being pursued in the most honest way possible." Tierney's amendment was allowed to go to the floor, but was declared out of order because it constituted legislation on an appropriations bill.

Senate Panel: Pinochet Had 125 Accounts in U.S. Banks

The Senate Permanent Subcommittee on Investigations released a report, on March 16, which documents that Chilean fascist dictator Augusto Pinochet had more than 125 bank accounts at a half-dozen U.S. banks, including Citibank and Riggs Bank, during the 1990s. Pinochet, who was brought to power in 1973 by George Shultz and Henry Kissinger, and who maintained a close relationship with them in succeeding decades, maintained a "secret web of accounts," using false identification papers under fake names.

According to the report: "Some banks actively helped him hide his funds; others failed to comply with U.S. regulations requiring banks to know their customers." Pinochet, his son Marco Antonio and his business adviser Oscar Aitkin opened so many accounts, and transferred funds between them so often, that the money attracted "little or no notice from U.S. regulators or law enforcement."

Pinochet's relationship with the Riggs Bank encompassed 28 accounts spanning 25 years, including secret accounts opened under misleading names.

From 1981 to 2004, eight Riggs accounts, opened in the names of Chilean military officers, served as conduits for Pinochet funds.

Over the past 25 years, Riggs Bank, Citigroup, Banco de Chile-United States, Espirito Santo Bank in Miami, and others helped Pinochet hide an estimated $13 million or more in funds.

Citigroup opened 63 accounts for Pinochet and 19 for family members, as well as making large loans for him and his relatives. The bank, which controls a large share of the private accounts set up in Chile and other Ibero-American nations after the privatization of social security in Chile in 1981, only began to close its Pinochet accounts in 1995, when a bank employee in Miami found that Pinochet created an account under the name of Jose Ramonte Ugarte, using a passport with a disguised picture of Pinochet!

Torture Scandals May Derail Haynes Nomination

President Bush's re-nomination of Pentagon General Counsel William Haynes to the 4th Circuit U.S. Court of Appeals in Richmond, Va., is one of seven nominations that Senate Democrats are threatening to filibuster. Last year, Sen. Edward M. Kennedy (D-Mass) blocked the Haynes nomination from proceeding to the Senate floor. Haynes was directly involved in formulating U.S. detention and interrogation policies, and he was directed by Defense Secretary Donald Rumsfeld to establish the Pentagon "Working Group" on interrogations in the Spring of 2003, which adopted the policies set forward in the most infamous of the DOJ "torture memos." As we reported in the March 18 issue of EIR, military lawyers were frozen out of the deliberations of the "Working Group."

The March 21 Newsweek also says that a classified version of last week's Pentagon report refers to still-secret memos and other material that could raise news problems for Haynes. White House aides are said to be worried that the Haynes nomination is in serious trouble, and one senior GOP Senate source is quoted calling it "DOA" ("dead on arrival").

EIR has learned that some of those involved in fighting the Haynes nomination, in anticipation that this would be the next venue to air the torture allegations, are not yet certain it is dead. Sources previously told EIR that the Judiciary Committee had planned to hold Haynes' nomination hearing on March 8, but it was delayed after committee chairman Arlen Specter (R-Pa) ran into trouble on his first nomination hearing, the one which he had expected to be the easiest.

Three European Countries Investigating U.S. Renditions

Germany, Italy, and Sweden are each investigating abductions of persons in their countries believed to have been carried out by U.S. agents, usually said to be CIA, as part of the so-called war on terrorism. All three cases have been previously reported. European parliamentarians and prosecutors are asking whether the U.S. practice of abducting suspects and taking them to third countries where they are tortured, is a blatant violation of their nations' sovereignty and human rights, according to the Washington Post March 13.

In the Italian and German cases cited, it is reported criminal charges are possible.

The three investigations are:

* Italy: An Egyptian-born Islamic cleric was kidnapped in Milan in February 2003, and apparently taken to Cairo where he was jailed and tortured. Italian investigators are demanding flight records from Aviano air base, and logs of vehicles entering and leaving the joint U.S.-Italian air base at the time of the abduction. The Italian daily Corriere della Sera has reported that investigators have identified 15 agents, some of whom are CIA operatives, as involved in the abduction. Opposition parliamentarians are demanding answers from the Berlusconi government as to whether Italian intelligence services also played a role.

* Germany: As we have previously reported, prosecutors are investigating the December 2003 abduction of a German citizen, Khaled al-Masri, who was abducted in Macedonia and apparently taken to Kabul and Baghdad. German prosecutors say that al-Masri's story checks out, and they have asked for assistance from U.S., Macedonian, Albanian, and Afghan officials.

* Sweden: A parliamentary investigation has found that CIA agents, wearing hoods, orchestrated the abduction of two Egyptian nationals in December 2001; they were taken to Egypt and tortured in prison. It has been disclosed that Swedish authorities had secretly invited the CIA to assist in the operation.

New Report Shows Iraqi Weapons Sites Were Looted

The global threat supposedly posed by Iraq's high-technology "dual use" weapons and machinery production sites, was offered as a reason Iraq had to be invaded in Spring 2003, but those sites were left unguarded by U.S. troops after the invasion and fall of Saddam Hussein, and were thoroughly looted by organized gangs. This, according to a new report by the Interim Iraqi Deputy Defense Minister, Sami al-Araji, who said, "They came in with the cranes and the lorries, and they depleted the whole sites.... This was sophisticated looting." A UN report only one week ago put the number of such looted precision-equipment sites at 90; this was based on studies of satellite imagery by the IAEA and UNMOVIC—since neither of those organizations has been allowed in Iraq by the U.S. occupation since the invasion. Dr. Araji's report added details, and some new sites, according to a front-page article in the New York Times March 13.

The peak of the looting of these sites—including some where intermediate-range missile parts could be made, and others involving nuclear technology—was in May 2003, Dr. Araji reports, when U.S. and British troops had complete military control, but not enough forces for the occupation.