United States News Digest

Blackwater: Well-Connected, Well-Protected

Sept. 20 (EIRNS)—Today's newspapers are full of stories about the outrage within Iraq against Blackwater USA—the private firm which provides security for the State Department and diplomatic personnel in Iraq, and which seemingly shoots and kills Iraqi civilians with impunity. Blackwater, like other mercenary firms, is immune from Iraqi law, but it is not held accountable for its actions under U.S. law, either.

One of its chief protectors is State Department Inspector General Howard Krongard. Rep. Henry Waxman (D-Calif.), chairman of the House Oversight and Government Reform Committee, recently notified Krongard that the committee is probing his interference with ongoing investigations, particularly those involving private contractors in Iraq and Afghanistan.

One of the charges in Waxman's Sept. 18 letter is that Krongard blocked an investigation into "whether a large security contractor working for the State Department was illegally smuggling weapons into Iraq." Associated Press reported yesterday that while Waxman did not name the contractor, "several senior administration officials confirmed it was Blackwater."

The Project on Government Oversight reports some important background on Blackwater's political connections: Howard Krongard's brother, A.B. "Buzzy" Krongard, when he was executive director of the CIA in 2002, was instrumental in securing a secret, no-bid CIA contract for Blackwater. Buzzy worked alongside Cofer Black, who went from the CIA Counterterrorist Center to the State Department in 2002, and then in 2005, went to work for Blackwater. Former Defense Department Inspector General Joseph Schmitz is the general counsel for Blackwater and its parent company, the Prince Group.

Blackwater and other private security firms are heavily involved in lobbying Congress to block any regulation of their war-zone activities, according to the Capitol Hill newspaper Roll Call.

House Mortgage Crisis Bill Ignores the Mortgage Crisis

Sept. 19 (EIRNS)—The House of Representatives yesterday passed, by a 348 to 72 vote, HR 1852, a "comprehensive reform of the Federal Housing Administration," which is likely to be introduced in some form in the Senate today, by Sen. Christopher Dodd (D-Conn.). This Act would put the FHA in the subprime mortgage-lending insurance business, allowing it for the first time to insure mortgage loans which involve no initial down payment, are issued to "high-risk" borrowers, and are what are colloquially called "jumbo loans," up to 125% of the average home price even in "high-cost states" like California and Florida. The ongoing rise in mortgage-loan interest rates, especially for jumbo loans, and the plunge in housing prices which is just now gathering steam, would involve the FHA in large losses if this program is passed, as a few Congressmen have pointed out in hearings. But the initiating House Financial Services Committee press release announcing the bill's passage, issued Sept. 18, ignores this threat arising from the mortgage bubble collapse.

U.S.-Russia Missile Defense Cooperation Proceeds, Slowly

Sept. 19 (EIRNS)—Comments following yesterday's U.S./Russia/Azeri missile defense talks, which included a visit to the Gabala radar near Baku, reveal the differing views within both the Russian and U.S. militaries on the possibility of implementing the Russian proposals for a joint ballistic missile defense system.

In a speech yesterday in Washington, at the European Institute, U.S. Missile Defense Agency head, Lt. Gen. Henry Obering, urged Moscow to link use of the Gabala radar in Azerbaijan to the proposed U.S. European components: "We do not anticipate, and cannot see, that what they are proposing can take the place of what we are proposing for Poland and the Czech Republic," Obering said. The Russian system is "not capable of performing the functions" of the proposed Czech radar, he claimed, according to the International Herald Tribune. This is a straw man, as the Russians haven't said it could; MIT's Ted Postol has pointed out that a U.S. radar in Turkey, or on Aegis ships, could perform the functions of the proposed Czech radar, and wouldn't threaten Russia.

In contrast to Obering's remarks, Brig. Gen. Patrick O'Reilly, who led the U.S. delegation at the Baku talks, is quoted: "We believe that there are opportunities for mutually beneficial cooperation.... This was a technical level visit to give our experts an opportunity to get a tour of the facility and a briefing on its capabilities. There were no formal negotiations or consultations.... These discussions were very informative, but there is significant analysis—this is a very complex subject—that we have to continue back in the United States.... Our impression here is that it is a radar that has performed the functions that it was designed for by the Russians back in the '80s, and has been performing since, and we're evaluating how that would fit with a mutually beneficial, cooperative way ahead." O'Reilly invited Russian experts to visit U.S. missile defense facilities in Colorado, Alaska, and California, and to witness a missile defense test, reported Xinhua and AFP.

Russian Maj. Gen. Alexander Yakushin, deputy head of Russian Space Forces, who led the Russian delegation in Baku, is quoted by Itar-Tass describing the talks as "fruitful" and rich in content. AFP adds Yakushin's statement that: "Today's intensive work can persuade us that the U.S. is interested in continuing our work together. We showed the basic characteristics, parameters, and prospects of this facility," and how the radar could be upgraded, "if there is a political decision to cooperate."

Commenting on Obering's Cheneyesque "we don't compromise" statement made yesterday, Gen. Yuri Baluyevsky, chief of the Russian General Staff, who also was not at the Baku meeting, said he was not surprised to hear that the U.S. proposes to use the Gabala radar as a supplement to the Poland/Czech deployment. Interfax reported. "I was almost sure they would react this way," he said of Obering's statement.

Itar-Tass reported statements by Russian Deputy Foreign Minister Sergei Kislyak, who leads the Russian political participation in the talks, and was not at Baku: "There have been two rounds of consultations, but I cannot say that we have moved forward in terms of bringing Russian and U.S. positions closer together."

The next meeting will be led by the foreign and defense ministers of Russia and the U.S., in mid-October.

Hedge Funds Revive K-Street Project for War on Congress

Sept. 18 (EIRNS)—The Washington lobby-firm chosen to press the case against regulating and taxing hedge funds, is the very firm that acted as a headquarters for the notorious "K-Street Project." Former House Majority Leader Tom DeLay used this firm, the Federalist Group (which was renamed Ogilvy Government Relations in 2007), to coordinate with the now-imprisoned Jack Abramoff, for the financiers' political agenda demanded by Vice President Dick Cheney, in energy and other fields.

In the first six months of 2007, Ogilvy Government Relations has received $4 million from the two giant private equity firms, Blackstone Group ($3.7 million) and the Carlyle Group ($260,000) to lobby against hedge fund legislation pushed by Rep. Charles Rangel (D-N.Y.) and others. Blackstone and Carlyle are core members of the Private Equity Council set up this year, which pays for a group of "minority and women" hedge fund operators calling themselves the Access of Capital Coalition. They oppose Rangel's and others' proposal to tax hedge fund managers' income at normal rates, instead of the lower capital gains rate.