Truthout Stories Fri, 21 Nov 2014 06:58:01 -0500 en-gb PolitiFact Left the House Without Its Pants On

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(Image: Jared Rodriguez / Truthout)(Image: Jared Rodriguez / Truthout)Liar liar pants on fire…or are they?

The folks over at PolitiFact’s PunditFact have rated a claim I made on a recent episode of The Big Picture as “Pants on Fire,” but they’ve totally missed the point of what I was really saying.

Talking about the Keystone pipeline and the Koch brothers earlier this month, I said that, “The Kochs stand to make around $100 billion if the government approves the Keystone XL pipeline.”

That claim comes from a study released last year by the International Forum on Globalization, which argued that the Koch brothers’ stand to make around $100 billion if the Keystone project is ever approved, because of their massive holdings in millions of acres of oil-bearing Canadian tar sands.

Now, as they do with all of their fact-checks, the folks over at PolitiFact’s PunditFact methodically broke down that study, pointed out what they said were its many flaws, and came up with the conclusion that the $100 billion number was absurd.

They even went straight to the source, and asked Koch Industries about the claim, which a spokesman obviously said was false. What else was a mouthpiece for the Koch brothers going to say?

But that’s besides the point.

In all of their fact-checking and flaw detection, PunditFact missed the point that I was trying to make.

So, let’s try again.

The most profitable investment in the US right now is to buy politicians, and there’s no one better at that than the Koch brothers.

For the 2014 midterms alone, the Koch brothers and their massive political network spent at least $100 million that we know of. And other estimates say that number could be closer to $200 or $300 million.  

That money was used to buy tens of thousands of ads across the country, in an effort to put Koch-friendly lawmakers into power.

And let’s not forget what the Koch brothers are all about. They’re about increasing pollution, doing away with environmental regulations, gutting the EPA, and getting their massive oil reserves in Canada into the US so that they can sell them off and get even richer.

So, with all that in mind, let’s say that the Koch brothers don’t stand to make $100 billion from Keystone. After all, that was just one estimate from one group.

Instead, let’s say that will only make $1 billion from the pipeline project.

Still, wouldn’t they invest $100 million or $200 million in buying politicians to make that $1 billion in profits from Keystone?

Obviously they would, and obviously they did.  

Just hours after the final midterm results were in, both Speaker of the House John Boehner and Senate Minority Leader Mitch McConnell - both big beneficiaries of Koch money and the Koch machine - said that the Keystone XL pipeline would be at the top of their priorities list when the new Republican-controlled Congress is sworn in in January.

The Koch brothers’ plan worked.

By focusing on a number, which was just one estimate by one group, PunditFact completely missed what I was saying.

The money the Koch Brothers spent in the 2014 midterms was all about buying Mitch McConnell, John Boehner and enough Republicans in Congress so that the Keystone XL pipeline would eventually get passed, and so that the Kochs’ Canadian tar sands oil turn into profits - among other things.

So PunditFact, you may have rated me “Pants on Fire,” but for completely missing the point that I was trying to make, and also for thinking that the Koch brothers themselves would tell you the truth, I'm rating you as “Having Left the House Without Your Pants On.”

Opinion Thu, 20 Nov 2014 15:06:05 -0500
The Outpost That Doesn't Exist in the Country You Can't Locate

Admit it. You don’t know where Chad is. You know it’s in Africa, of course. But beyond that? Maybe with a map of the continent and by some process of elimination you could come close. But you’d probably pick Sudan or maybe the Central African Republic. Here’s a tip. In the future, choose that vast, arid swath of land just below Libya.

Who does know where Chad is?  That answer is simpler: the U.S. military.  Recent contracting documents indicate that it’s building something there.  Not a huge facility, not a mini-American town, but a small camp.

That the U.S. military is expanding its efforts in Africa shouldn’t be a shock anymore.  For years now, the Pentagon has been increasing its missions there and promoting a mini-basing boom that has left it with a growing collection of outposts sprouting across the northern tier of the continent.  This string of camps is meant to do what more than a decade of counterterrorism efforts, including the training and equipping of local military forces and a variety of humanitarian hearts-and-minds missions, has failed to accomplish: transform the Trans-Sahara region in the northern and western parts of the continent into a bulwark of stability.

That the U.S. is doing more in Chad specifically isn’t particularly astonishing either.  Earlier this year, TomDispatch and the Washington Post both reported on separate recent deployments of U.S. troops to that north-central African nation.  Nor is it shocking that the new American compound is to be located near the capital, N’Djamena.  The U.S. has previously employed N’Djamena as a hub for its air operations.  What’s striking is the terminology used in the official documents.  After years of adamant claims that the U.S. military has just one lonely base in all of Africa -- Camp Lemonnier in the tiny Horn of Africa nation of Djibouti -- Army documents state that it will now have “base camp facilities” in Chad.

U.S. Africa Command (AFRICOM) still insists that there is no Chadian base, that the camp serves only as temporary lodgings to support a Special Operations training exercise to be held next year.  It also refused to comment about another troop deployment to Chad uncovered by TomDispatch.  When it comes to American military activities in Africa, much remains murky.

Nonetheless, one fact is crystal clear: the U.S. is ever more tied to Chad.  This remains true despite a decade-long effort to train its military forces only to see them bolt from one mission in the face of casualties, leave another in a huff after gunning down unarmed civilians, and engage in human rights abuses at home with utter impunity.  All of this suggests yet another potential source of blowback from America’s efforts in Africa which have backfired, gone bust, and sown strife from Libya to South Sudan, the Gulf Guinea to Mali, and beyond.       

A Checkered History with Chad

Following 9/11, the U.S. launched a counterterrorism program, known as the Pan-Sahel Initiative, to bolster the militaries of Mali, Niger, Mauritania, and Chad.  Three years later, in 2005, the program expanded to include Nigeria, Senegal, Morocco, Algeria, and Tunisia and was renamed the Trans-Sahara Counterterrorism Partnership (TSCTP).  The idea was to turn a huge swath of Africa into a terror-resistant bulwark of stability.  Twelve years and hundreds of millions of dollars later, the region is anything but stable, which means that it fits perfectly, like a missing puzzle piece, with the rest of the under-the-radar U.S. “pivot” to that continent. 

Coups by the U.S.-backed militaries of Mauritania in 2005 and again in 2008, Niger in 2010, and Mali in 2012, as well as a 2011 revolution that overthrew Tunisia’s U.S.-backed government (after the U.S.-supported army stood aside);the establishment of al-Qaeda in the Islamic Maghreb in 2006; and the rise of Boko Haram from an obscure radical sect to a raging insurgent movement in northern Nigeria are only some of the most notable recent failures in TSCTP nations.  Chad came close to making the list, too, but attempted military coups in 2006 and 2013 were thwarted, and in 2008, the government, which had itself come to power in a 1990 coup, managed to hold off against a rebel assault on the capital.

Through it all, the U.S. has continued to mentor Chad’s military, and in return, that nation has lent its muscle to support Washington’s interests in the region.  Chad, for instance, joined the 2013 U.S.-backed French military intervention to retake Mali after Islamists began routing the forces of the American-trained officer who had launched a coup that overthrew that country’s democratically elected government.  According to military briefing slides obtained by TomDispatch, an Intelligence, Surveillance, and Reconnaissance (ISR) liaison team was deployed to Chad to aid operations in Mali and the U.S. also conducted pre-deployment training for its Chadian proxies.  After initial success, the French effort became bogged down and has now become a seemingly interminable, smoldering counterinsurgency campaign.  Chad, for its part, quickly withdrew its forces from the fight after sustaining modest casualties.  “Chad's army has no ability to face the kind of guerrilla fighting that is emerging in northern Mali. Our soldiers are going to return to Chad,” said that country’s president, Idriss Deby.   

Still, U.S. support continued.

In September of 2013, the U.S. military organized meetings with Chad’s senior-most military leaders, including Army chief General Brahim Seid Mahamat, Minister of Defense General Bénaïndo Tatola, and counterterror tsar Brigadier General Abderaman Youssouf Merry, to build solid relationships and support efforts at “countering violent extremist operations objectives and theater security cooperation programs.” This comes from a separate set of documents concerning “IO,” or Information Operations, obtained from the military through the Freedom of Information Act. French officials also attended these meetings and the agenda included the former colonial power’s support of “security cooperation with Chad in the areas of basic and officer training and staff procedures” as well as “French support [for] U.S. security cooperation efforts with the Chadian military.”  Official briefing slides also mention ongoing “train and equip” activities with Chadian troops. 

All of this followed on the heels of a murky coup plot by elements of the armed forces last May to which the Chadian military reacted with a crescendo of violence. According to a State Department report, Chad’s “security forces shot and killed unarmed civilians and arrested and detained members of parliament, military officers, former rebels, and others.”

After Chad reportedly helped overthrow the Central African Republic’s president in early 2013 and later aided in the 2014 ouster of the rebel leader who deposed him, it sent its forces into that civil-war-torn land as part of an African Union mission bolstered by U.S.-backed French troops.  Soon, Chad’s peacekeeping forces were accused of stoking sectarian strife by supporting Muslim militias against Christian fighters.  Then, on March 29th, a Chadian military convoy arrived in a crowded marketplace in the capital, Bangui.  There, according to a United Nations report, the troops “reportedly opened fire on the population without any provocation. At the time, the market was full of people, including many girls and women buying and selling produce. As panic-stricken people fled in all directions, the soldiers allegedly continued firing indiscriminately.” 

In all, 30 civilians were reportedly killed and more than 300 were wounded.  Amid criticism, Chad angrily announced it was withdrawing its troops.  “Despite the sacrifices we have made, Chad and Chadians have been targeted in a gratuitous and malicious campaign that blamed them for all the suffering” in the Central African Republic, declared Chad's foreign ministry.

In May, despite this, the U.S. sent 80 military personnel to Chad to operate drones and conduct surveillance in an effort to locate hundreds of schoolgirls kidnapped by Boko Haram in neighboring Nigeria.  “These personnel will support the operation of intelligence, surveillance, and reconnaissance aircraft for missions over northern Nigeria and the surrounding area,” President Obama told Congress.  The force, he said, will remain in Chad “until its support in resolving the kidnapping situation is no longer required.” 

In July, AFRICOM admitted that it had reduced surveillance flights searching for the girls to focus on other missions.  Now AFRICOM tells TomDispatch that, while “the U.S. continues to help Nigeria address the threat posed by Boko Haram, the previously announced ISR support deployment to Chad has departed.”  Yet more than seven months after their abduction, the girls still have not been located, let alone rescued.

In June, according to the State Department, the deputy commander of U.S. Army Africa (USARAF), Brigadier General Kenneth H. Moore, Jr., visited Chad to “celebrat[e] the successful conclusion of a partnership between USARAF and the Chadian Armed Forces.”  Secretary of the Navy Ray Mabus arrived in that landlocked country at the same time to meet with “top Chadian officials.”  His visit, according to an embassy press release, “underscore[d] the importance of bilateral relations between the two countries, as well as military cooperation.”  And that cooperation has been ample.     

Earlier this year, Chadian troops joined those of the United States, Burkina Faso, Canada, France, Mauritania, the Netherlands, Nigeria, Senegal, the United Kingdom, and host nation Niger for three weeks of military drills as part of Flintlock 2014, an annual Special Ops counterterrorism exercise for TSCTP nations.  At about the time Flintlock was concluding, soldiers from Chad, Cameroon, Burundi, Gabon, Nigeria, the Republic of Congo, the Netherlands, and the United States took part in another annual training exercise, Central Accord 2014.  The Army also sent medical personnel to mentor Chadian counterparts in “tactical combat casualty care,” while Marines and Navy personnel traveled to Chad to train that country’s militarized anti-poaching park rangers in small unit tactics and patrolling.

A separate contingent of Marines conducted military intelligence training with Chadian officers and non-commissioned officers.  The scenario for the final exercise, also involving personnel from Burkina Faso, Cameroon, Mauritania, Senegal, and Tunisia, had a ripped-from-the-headlines quality: “preparing for an unconventional war against an insurgent threat in Mali.”

As for U.S. Army Africa, it sent trainers as part of a separate effort to provide Chadian troops with instruction on patrolling and fixed-site defense as well as live-fire training.  “We are ready to begin training in Chad for about 1,300 soldiers -- an 850 man battalion, plus another 450 man battalion,” said Colonel John Ruffing, the Security Cooperation director of U.S. Army Africa, noting that the U.S. was working in tandem with a French private security firm. 

In September, AFRICOM reaffirmed its close ties with Chad by renewing an Acquisition Cross Servicing Agreement, which allows both militaries to purchase from each other or trade for basic supplies.  The open-ended pact, said Brigadier General James Vechery, AFRICOM’s director for logistics, “will continue to strengthen our bilateral cooperation on international security issues... as well as the interoperability of the armed forces of both nations.”

The Base That Wasn’t and the Deployment That Might Be

In the months since the Chadian armed forces’ massacre in Bangui, various U.S. military contract solicitations and related documents have pointed toward an even more substantive American presence in Chad.  In late September, the Army put out a call for bids to sustain American personnel for six months at those “base camp facilities” located near N'Djamena.  Supporting documents specifically mention 35 U.S. personnel and detail the services necessary to run an austere outpost: field sanitation, bulk water supply, sewage services, and trash removal.  The materials indicate that “local security policy and procedures” are to be provided by the Chadian armed forces and allude to the use of more than one location, saying “none of the sites in Chad are considered U.S.-federally controlled facilities.”  The documents state that such support for those facilities is to run until July 2015. 

After AFRICOM failed to respond to repeated email requests for further information, I called up Chief of Media Operations Benjamin Benson and asked about the base camp.  He was even more tight-lipped than usual.  “I personally don’t know anything,” he told me. “That’s not saying AFRICOM doesn’t have any information on that.”

In follow-up emails, Benson eventually told me that the “base camp” is strictly a temporary facility to be used by U.S. forces only for the duration of the upcoming Flintlock 2015 exercise.  He stated in no uncertain terms: “We are not establishing a base/forward presence/contingency location, building a U.S. facility, or stationing troops in Chad.” 

Benson would not, however, let me speak with an expert on U.S. military activities in Chad.  Nor would he confirm or deny the continued presence of the Intelligence, Surveillance, and Reconnaissance liaison team deployed to Chad in 2013 to support the French mission in Mali, first reported on by TomDispatch this March.  “[W]e cannot discuss ISR activities or the locations and durations of operational deployments,” he wrote.  If an ISR team is still present in Chad, this would represent a substantive long-term deployment despite the lack of a formal U.S. base.

The N’Djamena “base camp” is just one of a series of Chadian projects mentioned in recent contracting documents.  An Army solicitation from September sought “building materials for use in Chad,” while supporting documents specifically mention an “operations center/multi-use facility.”  That same month, the Army awarded a contract for the transport of equipment from Niamey, Niger, the home of another of the growing network of U.S. outposts in Africa, to N’Djamena.  The Army also began seeking out contractors capable of supplying close to 600 bunk beds that could support an American-sized weight of 200 to 225 pounds for a facility “in and around the N'Djamena region.”  And just last month, the military put out a call for a contractor to supply construction equipment -- a bulldozer, dump truck, excavator, and the like -- for a project in, you guessed it, N'Djamena. 

This increased U.S. interest in Chad follows on the heels of a push by France, the nation’s former colonial overlord and America’s current premier proxy in Africa, to beef up its military footprint on the continent.  In July, following U.S.-backed French military interventions in Mali and the Central African Republic, French President François Hollande announced a new mission, Operation Barkhane (a term for a crescent-shaped sand dune found in the Sahara).  Its purpose: a long-term counterterrorism operation involving3,000 French troops deployed to a special forces outpost in Burkina Faso and forward operating bases in Mali, Niger, and not surprisingly, Chad

“There are plenty of threats in all directions,” Hollande told French soldiers in Chad, citing militants in Mali and Libya as well as Boko Haram in Nigeria.  “Rather than having large bases that are difficult to manage in moments of crisis, we prefer installations that can be used quickly and efficiently.”  Shortly afterward, President Obama approved millions in emergency military aid for French operations in Mali, Niger, and Chad, while the United Kingdom, another former colonial power in the region, dispatched combat aircraft to the French base in N'Djamena to contribute to the battle against Boko Haram. 

From Setback to Blowback?

In recent years, the U.S. military has been involved in a continual process of expanding its presence in Africa.  Out of public earshot, officials have talked about setting up a string of small bases across the northern tier of the continent.  Indeed, over the last years, U.S. staging areas, mini-bases, and outposts have popped up in the contiguous nations of Senegal, Mali, Burkina Faso, Niger, and, skipping Chad, in the Central African Republic, followed by South Sudan, Uganda, Kenya, Ethiopia, and Djibouti.  A staunch American ally with a frequent and perhaps enduring American troop presence, Chad seems like the natural spot for still another military compound -- the only missing link in a long chain of countries stretching from west to east, from one edge of the continent to the other -- even if AFRICOM continues to insist that there’s no American “base” in the works. 

Even without a base, the United States has for more than a decade poured copious amounts of money, time, and effort into making Chad a stable regional counterterrorism partner, sending troops there, training and equipping its army, counseling its military leaders, providing tens of millions of dollars in aid, funding its military expeditions, supplying its army with equipment ranging from tents to trucks, donating additional equipment for its domestic security forces, providing a surveillance and security system for its border security agents, and looking the other way when its military employed child soldiers. 

The results? A flight from the fight in Mali, a massacre in the Central African Republic, hundreds of schoolgirls still in the clutches of Boko Haram, and a U.S. alliance with a regime whose “most significant human rights problems,” according to the most recent country report by the State Department’s Bureau of Democracy, Human Rights, and Labor, “were security force abuse, including torture; harsh prison conditions; and discrimination and violence against women and children,” not to mention the restriction of freedom of speech, press, assembly, and movement, as well as arbitrary arrest and detention, denial of fair public trial, executive influence on the judiciary, property seizures, child labor and forced labor (that also includes children), among other abuses.  Amnesty International further found that human rights violations “are committed with almost total impunity by members of the Chadian military, the Presidential Guard, and the state intelligence bureau, the Agence Nationale de Securité.”

With Chad, the United States finds itself more deeply involved with yet another authoritarian government and another atrocity-prone proxy force.  In this, it continues a long series of mistakes, missteps, and mishaps across Africa.  These include an intervention in Libya that transformed the country from an autocracy into a near-failed state, training efforts that produced coup leaders in Mali and Burkina Faso, American nation-building that led to a failed state in South Sudan, anti-piracy measures that flopped in the Gulf of Guinea, the many fiascos of the Trans-Sahara Counterterrorism Partnership, the training of an elite Congolese unit that committed mass rapes and other atrocities, problem-plagued humanitarian efforts in Djibouti and Ethiopia, and the steady rise of terror groups in U.S.-backed countries like Nigeria and Tunisia.  

In other words, in its shadowy “pivot” to Africa, the U.S. military has compiled a record remarkably low on successes and high on blowback.  Is it time to add Chad to this growing list?

News Thu, 20 Nov 2014 12:36:41 -0500
Molly Crabapple Illustrates How Mike Brown's Death Shed Light on Police Brutality

Three months have passed since Michael Brown was killed in Ferguson, and this week the community there is nervously awaiting the grand jury’s decision whether to indict Police Officer Darren Wilson. On Monday, Missouri Governor Jay Nixon declared a state of emergency and issued an executive order to activate the National Guard to act as a backup to police in case protests get out of control.

How exactly did we get here? We recommend you watch this video animation by artist and activist Molly Crabapple. She beautifully illustrates the story of Mike Brown and the activism his death inspired. Crabapple highlights the history of police brutality and also recounts the details of other black men who have died recently at the hands of authorities, including Eric Gardner in New York and John Crawford in Ohio.

News Thu, 20 Nov 2014 11:35:42 -0500
FBI's "Suicide Letter" to Dr. Martin Luther King, Jr., and the Dangers of Unchecked Surveillance

The New York Times has published an unredacted version of the famous “suicide letter” from the FBI to Dr. Martin Luther King, Jr. The letter, recently discovered by historian and professor Beverly Gage, is a disturbing document. But it’s also something that everyone in the United States should read, because it demonstrates exactly what lengths the intelligence community is willing to go to—and what happens when they take the fruits of the surveillance they’ve done and unleash it on a target.

The anonymous letter was the result of the FBI’s comprehensive surveillance and harassment strategy against Dr. King, which included bugging his hotel rooms, photographic surveillance, and physical observation of King’s movements by FBI agents. The agency also attempted to break up his marriage by sending selectively edited “personal moments he shared with friends and women” to his wife.

Portions of the letter had been previously redacted. One of these portions contains a claim that the letter was written by another African-American: “King, look into your heart. You know you are a complete fraud and a great liability to all us Negroes.” It goes on to say “We will now have to depend on our older leaders like Wilkins, a man of character and thank God we have others like him. But you are done.” This line is key, because part of the FBI’s strategy was to try to fracture movements and pit leaders against one another.

The entire letter could have been taken from a page of GCHQ’s Joint Threat Research and Intelligence Group (JTRIG)—though perhaps as an email or series of tweets. The British spying agency GCHQ is one of the NSA’s closest partners. The mission of JTRIG, a unit within GCHQ, is to “destroy, deny, degrade [and] disrupt enemies by discrediting them.” And there’s little reason to believe the NSA and FBI aren’t using such tactics.

The implications of these types of strategies in the digital age are chilling. Imagine Facebook chats, porn viewing history, emails, and more made public to discredit a leader who threatens the status quo, or used to blackmail a reluctant target into becoming an FBI informant. These are not far-fetched ideas. They are the reality of what happens when the surveillance state is allowed to grow out of control, and the full King letter, as well as current intelligence community practices illustrate that reality richly.

The newly unredacted portions shed light on the government’s sordid scheme to harass and discredit Dr. King. One paragraph states:

No person can overcome the facts, no even a fraud like yourself. Lend your sexually psychotic ear to the enclosure. You will find yourself and in all your dirt, filth, evil and moronic talk exposed on the record for all time. . . . Listen to yourself, you filthy, abnormal animal. You are on the record.

And of course, the letter ends with an ominous threat:

King, there is only one thing left for you to do. You know what it is. You have just 34 days in which to do it (this exact number has been selected for a specific reason, it has definite practical significance). You are done. There is but one way out for you. You better take it before your filthy, abnormal fraudulent self is bared to the nation.

There's a lesson to learn here: history must play a central role in the debate around spying today. As Professor Gage states:

Should intelligence agencies be able to sweep our email, read our texts, track our phone calls, locate us by GPS? Much of the conversation swirls around the possibility that agencies like the N.S.A. or the F.B.I. will use such information not to serve national security but to carry out personal and political vendettas. King’s experience reminds us that these are far from idle fears, conjured in the fevered minds of civil libertarians. They are based in the hard facts of history.

News Thu, 20 Nov 2014 11:22:56 -0500
How Running for Governor Is Like Selling a Vacuum

Zephyr Teachout ran against New York State Governor Andrew Cuomo in the Democratic primary earlier this year, on a populist platform. While she lost, she received more than a third of the vote and carried almost half of the state’s 62 counties.

While Teachout is well known for her efforts to limit the influence of money on politics, she still needed to raise money to fund her campaign. In this clip, she tells Bill that she felt like a “vacuum cleaner salesman” as she spent hours smiling and dialing in an effort to raise funds.

“If you have to spend half your day, 70 percent of your day, talking to donors and then turn around and give a speech engaging people on the issues that matter to them — their dental care, credit cards, the real difficulty finding a job — it feels false,” says Teachout, a constitutional and property law professor at Fordham Law School. “It’s hard to have those two conversations at the same time and gradually I think people have gotten more and more disillusioned because they feel like they aren’t being served.”

Teachout and Lawrence Lessig, campaign finance reform advocates, appear on this week’s show: The Bare Knuckle Fight Against Money in Politics.

News Thu, 20 Nov 2014 11:22:23 -0500
As Sioux Tribe Calls Keystone XL an "Act of War," TransCanada Hires PR Firm to Probe Critics

In a dramatic showdown Tuesday, the Senate narrowly missed a 60-vote threshold required to approve construction of the Keystone XL pipeline. Fourteen Democrats supported the measure along with all 45 Republicans. With just 59 aye votes, the measure failed to pass. After Democratic Sen. Elizabeth Warren announced the tally, a man reportedly with the Lakota Tribe of South Dakota burst out in song, followed by protesters who called out Democrats who voted in support of the pipeline. After Tuesday’s vote, Republicans vowed to immediately bring the bill back in January, when they will hold the Senate majority. This comes as newly leaked documents reveal the company behind the Keystone XL pipeline is engaged in a "perpetual campaign" to mobilize support for another pipeline connecting the tar sands oil fields to an ocean port, this one entirely inside Canada - bypassing opposition in the United States. Strategy documents drafted for TransCanada by the public relations firm Edelman, the world’s biggest privately held PR firm, also detail its lobbying strategy and efforts to mobilize some 35,000 supporters. We speak to Cyril Scott, president of the Rosebud Sioux Tribe in South Dakota, and Suzanne Goldenberg, environment reporter at The Guardian.


AMY GOODMAN: "No KXL" by Bethany and Rufus. They were singing at a rally in downtown Manhattan ahead of Tuesday’s Senate’s vote on the Keystone XL pipeline. This is Democracy Now!,, The War and Peace Report. I’m Amy Goodman, with Juan González.

JUAN GONZÁLEZ: Well, in a dramatic showdown Tuesday, the Senate narrowly missed a 60-vote threshold required to approve construction of the Keystone XL pipeline. Fourteen Democrats supported the measure along with all 45 Republicans. With just 59 aye votes, the measure failed to pass. Democratic Senator Elizabeth Warren announced the tally.

SEN. ELIZABETH WARREN: Any senator wishing to vote or wishing to change a vote? If not, on this vote, the yeas are 59, the nays are 41. The 60-vote threshold having not been achieved, the bill is not passed.

LAKOTA MAN: [singing]

SEN. ELIZABETH WARREN: Sergeant-at-arms will restore order. Order in the gallery.

AMY GOODMAN: After the vote was recorded, a man reportedly with the Lakota Tribe of South Dakota burst out in song, followed by protesters who called out Democrats who voted in support of the pipeline. The Keystone XL bill was sponsored by Louisiana Democratic Senator Mary Landrieu, who faces a battle to keep her seat in a runoff next month against Republican Congressmember Bill Cassidy, who’s a sponsor of the pro-Keystone bill in the House. Senator Landrieu tried to rally her fellow Democrats during the debate before Tuesday’s vote.

SEN. MARY LANDRIEU: I know, beyond a shadow of a doubt, that with our partners in Canada and Mexico, this can be done. And North America can be the super-energy powerhouse of the planet. What people in Louisiana want, what people in Texas want, what people in Mississippi want, what people in New Jersey want, what people in South Dakota and Illinois and Kansas and Vermont, are good-paying jobs.

JUAN GONZÁLEZ: Among the Democrats who refused Senator Landrieu’s plea was Senator Barbara Boxer of California. She said Keystone XL stood for "extra lethal." Boxer spoke moments before the vote.

SEN. BARBARA BOXER: I’m telling you, Madam President, as sure as I’m standing here, when the nurses stood with me and the public health doctors stood with me, and they said, "You know what? Let’s be very careful here, because this pipeline is going to unleash 45 percent more of the dirtiest, filthiest oil." And that’s why I call it the "Keystone extra lethal" pipeline. And I hope we won’t vote it up today. I hope we’ll vote it down. I hope the president will veto it if it passes. And I will be on my feet, because I came here to protect people like this. Thank you, and I yield the floor.

AMY GOODMAN: Senator Boxer was pointing to a large photograph next to her of a girl wearing an oxygen mask.

After Tuesday’s vote, Republicans vowed to immediately bring the bill back in January, when they’ll hold the Senate majority. This comes as newly leaked documents reveal TransCanada, the company behind the Keystone XL pipeline, is engaged in a "perpetual campaign" to mobilize support for an entirely Canadian pipeline that could bypass opposition in the United States.

For more, we’re joined by two guests. In Washington, D.C., Cyril Scott is with us, president of the Rosebud Sioux Tribe in South Dakota. And in Dallas, Suzanne Goldenberg is with us, U.S. environmental correspondent for The Guardian. Her recent piece is headlined "Revealed: Keystone company’s PR blitz to safeguard its backup plan."

We welcome you both to Democracy Now! Before we go to the documents, Cyril Scott, let’s start with you. Can you talk about your response to the defeat of Keystone XL—at least for now?

CYRIL SCOTT: First of all, good morning. Yeah, it was a great thing that happened yesterday. I want to thank all the people that voted to oppose it. But as we all know, the fight has just begun. The Republicans take the House in January. So, the fight has just started. We have to gear up and be ready and start our own campaign to make sure we secure enough support to stop this black snake that’s going to harm not only Indian country, but the United States of America.

JUAN GONZÁLEZ: You’ve declared the XL pipeline, if it goes through, a declaration of war against your people. Could you talk about why you feel that way?

CYRIL SCOTT: Yes, because we have to take care of our children and our grandchildren, as we are proposing to do, not only our children and our grandchildren, your children, your grandchildren. This thing is going to affect the biggest—the second-largest water aquifer in the world, the Ogallala Aquifer. We have to protect that at all costs to give your children and our children good, clean drinking water. Without that, you just can’t imagine what would happen if that Ogallala Aquifer was contaminated. It supplies water to six states here in the United States. It is one of the major water fairways here in the United States.

AMY GOODMAN: Suzanne Goldenberg, can you talk about the documents that were just revealed and how they were?

SUZANNE GOLDENBERG: Well, the documents were obtained originally by Greenpeace Canada, which made them available to The Guardian and other news outlets. And these are interesting because they’re strategy documents drawn up by Edelman public relations, which is, you know, the biggest privately held PR firm in the world and was advising TransCanada on how to beat back opposition and get this second pipeline route through, through Canada.

JUAN GONZÁLEZ: That indicates that—the documents indicate, at least, that the company was already realizing that it was facing defeat coming through the United States. And Edelman has talked about employing as many as 40 people from its staff to work for the company to build so-called grassroots support for a new route to the east?

SUZANNE GOLDENBERG: I don’t know. You know, I’m not privy to the inner thoughts of TransCanada. I don’t know whether they think that this is going to be defeated, but they aren’t taking any chances, and neither is the Canadian government or the oil companies that are invested in the Alberta tar sands. There is a tremendous pressure for the energy industry to get that tar sands oil out, to get it to market, because they can’t now. This is a tremendous source of carbon, and it’s landlocked, so they are looking for—you know, for routes to market anywhere.

And so, to doing that, you know, stung by the huge opposition that they encountered in—to the Keystone project, which has put that project on ice for six years, they’ve started to sort of get to place not—it goes beyond public relations, but a big sort of plan to get a second route through. They’re talking about mobilizing 34,000 activists. There’s a budget for mobilizing those activists in the strategy documents. They sort of say they need to apply intelligent pressure on community groups, environmental groups and scientific groups in Canada to—you know, essentially, opposition research to sort of stop them from coming out and saying why this pipeline is a bad idea, this pipeline that would go through Canada, in this case. So there’s a very big campaign here that goes far beyond what most people would think of as public relations. This isn’t about buying a few ads on TV. It’s not just about a website. It’s about a big astroturfing campaign to defeat this—to get this project through.

AMY GOODMAN: One part of the leaked documents, titled "Detailed Background Research on Key Opposition Groups," reads, quote, "We will prepare a research profile of key opposition groups by examining public records ... traditional media sources ... and social media ... All relevant findings will be compiled in a written, fully documented report, to include a summary of findings and an assessment of strengths and weaknesses. We will begin with the Council of Canadians. Other possibilities include Equiterre, the David Suzuki Foundation, Avaaz and Ecology Ottawa." Suzanne Goldenberg?

SUZANNE GOLDENBERG: Yes, that’s true. I mean, this is what would pass for—in, you know, political circles, this is opposition research. They’re trying to find out potential weak points on their opponents to use these to discredit their opponents, you know. And there’s another section in there where they talk about—where they talk about scientific reports, very fleetingly, you know, that would show that this project would be a bad idea because it would open up the tar sands to further development, and it would make climate change a lot worse. Some of the information they propose digging up is financial information. So, there’s a strategy here that hints at discrediting and embarrassing anybody who speaks up against this Energy East project, this alternative pipeline through Canada.

JUAN GONZÁLEZ: And, Cyril Scott, president of the Rosebud Sioux Tribe in South Dakota, I wanted to ask you about the recent signals from the White House, President Obama seeming a lot more skeptical about the pipeline, and then some unnamed sources saying after today’s vote that even if the Senate tries to bring it back up in January with the new Republican majority, that the president is likely to veto that, because he wants instead for a—he doesn’t want the Congress making this decision. He wants the scientific study and his final decision to hold sway. Are you encouraged by that?

CYRIL SCOTT: Yes, I am. I really encourage Native Americans—Indian country has put a lot of stock in our president, President Obama, so we support him, as he supports us today. And we are very excited that he has this veto power within him and that he is going to do the right thing, not only for Indian country, but for all Americans.

AMY GOODMAN: Suzanne Goldenberg, you report Edelman, the world’s privately—biggest privately held PR firm, has previously been drawn into controversies about its position on climate change. And you said that it declared on August 7th it would no longer take on campaigns that deny global warming. What is the Keystone XL relationship with global warming, as the Senate clearly will take this up again when Republicans control the Senate in just a few weeks?

SUZANNE GOLDENBERG: Well, absolutely. The Alberta tar sands are one of the biggest stores of carbon on the planet, and the science on this is very clear. We cannot dig up all this oil and hope to avoid catastrophic climate change. There’s going to be a report coming out from the U.N. Environment Program in a couple of hours, later today, and it’s going to make that point again. We are on a road to busting through our carbon budgets. We’re burning up this oil much too fast, creating far too many greenhouse gas emissions, and we are not meeting the targets that science tells us we need to reach to avoid dangerous effects of climate change.

AMY GOODMAN: And, Cyril Scott, usually in South Dakota, now in Washington, your next step at this point? Mary Landrieu pushed very hard. She was also pushing for her own Senate seat. She’s in a runoff, and her opponent, a congressman, is the sponsor of the pro-Keystone XL pipeline bill in the House. What you’re planning to do? How you’re strategizing?

CYRIL SCOTT: Right now, we’re calling for the Oceti Sakowin, the Great Sioux Nation, to gather a couple—next week there in Rosebud to start our strategy, not only with the Great Sioux Nation, but also Bold Nebraska, and all of our supporters. We’re going to come up with a game plan also to keep the fight going. And all means, we need to stop this Keystone XL pipeline. We talk about jobs. It’s only—the CEO said it only creates 50 jobs. These are temporary jobs that go to journeymen, not to local economy. It’s people that are—I call them transients, that will be flooding into our state and onto our reservations to do harm within our state and our reservations.

AMY GOODMAN: We’re going to leave it there, but we’ll continue to cover this issue, of course. Cyril Scott, president of the Rosebud Sioux Tribe in South Dakota, and Suzanne Goldenberg with The Guardian. We’ll link to your piece. She’s speaking to us from Dallas.

News Thu, 20 Nov 2014 11:14:31 -0500
This Will Make You Think Twice About Getting That Manicure

Beauty can be painful: just ask anyone who’s ever sat in a salon getting their scalp seared with straightener or their fingers soaked in noxious chemicals. But the problems aren’t just skin deep; the glamor of the cosmetics industry hides many underlying health hazards.

The materials used in salon treatments like perms and manicures are as dangerous as any industrial chemical. But unlike industrial workplaces where protective equipment is often the norm, at salons personal image and comfort are paramount. So regulation remains a gray area, consumers ignore those ugly fumes, and yet for workers who labor all day in these shops, practically every breath may carry toxic risks.

Although the exact degree of risk salon workers face is unclear and varies across workplaces, a report by the advocacy group Women’s Voices for the Earth highlights troubling research findings. For example, “[s]ome surveys found that over 60 percent of salon workers suffer from skin conditions, such as dermatitis, on their hands,” and other studies have detected links between exposure to salon chemicals—in nail polish, hair straighteners and related products—to respiratory irritation, immune or neurological problems, or even birth defects. Some chemicals in popular hair care products are associated with cancer risk, such as formaldehyde gas (a byproduct of the hair treatment Brazilian Blowout), which “can be released from hair straighteners and flat iron sprays when used with high heat.”

Much of the research is preliminary and inconclusive; WVE points out that some studies have not shown significant risks. But anecdotal evidence confirms patterns of harm, according to the report’s author, WVE Director of Science and Research Alexandra Scranton. Though more research must be done, she tells The Nation via e-mail, “for some of the more acute effects (dermatitis and breathing problems particularly) there are several studies [observing] the salon workers symptoms would improve significantly when they were away from the workplace—indicating that it was likely to be salon exposures causing these effects rather than other factors.”

In a survey of Vietnamese-American salon workers in Southern California, a worker described the body burdens she faces every day at work: “Working in the nail profession, my nose has allergies to the chemicals in the nail products. Just sitting down to do nails, my nose hurts and my head hurts so much that I can’t bear it.”

Citing the unique risks faced by the many women workers of childbearing age, the report cites research showing that “[h]airdressers and cosmetologists may be more likely to give birth to low birth weight babies.” A study on New York cosmetologists found heightened risk of low birthweight and postpartum hemorrhage, measured against a comparison group of realtors, which was in turn linked to the frequency of administering perms and hair spraying.

Often, the health risks faced by women workers are exacerbated by low incomes and limited access to health care.

The research gaps and safety risks reflect deeper deficits in the public health system. The chief regulatory agency responsible for overseeing the industry, the Food and Drug Administration, is notoriously weak, underresourced and corporate-friendly. According to WVE, “The Food, Drug and Cosmetics act contains no provisions that require evidence of the safety of ingredients in cosmetics products prior to their marketing.” If something does go wrong, the agency generally must rely on “voluntary” recalls, in which corporations choose whether to comply with the government’s warnings about their consumers being slowly poisoned.

But environmental standards don’t blend easily with retail operations more focused on pampering than regulating toxins. For workers, a major obstacle to improving environmental health is that the workplace dynamics are complicated by culture and language gaps, as many of the salons are staffed and run by Asian immigrants, and safety monitoring and enforcement tasks are left to the private sector. The WVE report notes that “health and safety rules and regulations in salons are often promulgated by the state cosmetology and barbering boards.” So while Vietnamese women workers are left struggling to breathe, their communities may be distanced from, or wary of, regulatory authorities and, in turn, alienated from crucial guidance and training on best practices (even simple things, like keeping shop windows open).

Some women have emerged within the beauty industry to become community health advocates. Safiyyah Edley, director of the Naturally Dezign’d: Natural Hair & Fashion Runway Show Expo,wrote recently for WVE about the challenges of building awareness of workplace environmental safety at the grassroots. She contends with coworkers who resist change in their business practices and an industry that stubbornly resists regulation:

Some of these manufacturing companies lie on their labels, like labeling everything “natural” when it really isn’t or hiding the truth about some of the ingredients used to make their products. Also, it’s truly harder to find healthier options when it comes to some products, so it’s hard to get around it.… The major challenge is compromising your health in order to do what you love and also to take care of your family.

To alleviate the burden on workers, WVE recommends, in addition to tightening occupational safety standards, moving toward a proactive, precautionary approach to commercial toxins, focused on reducing risk through local “healthy salon” certification programs, and advocating for scientifically informed, safer product alternatives. That could start with a community-driven movement to demand greener beauty products.

Some communities have moved ahead of regulators by cultivating a grassroots environmental justice movement in the industry. The California Healthy Nail Salon Collaborative (along with its partner, the National Healthy Nail and Beauty Salon Alliance) runs outreach and education campaigns to foster safer work environments for consumers and workers. The Collaborative also aims to conduct research, and build “the leadership, decision-making, and power of California salon workers and owners invested in improving their working conditions and workplace health and safety.”

From Victorian Painted Ladies to Brazilian Blowout, the marketing blitz driving our beauty obsession has historically eclipsed the struggles of the women who make cosmetic fantasies come true. Today, their health concerns are no longer invisible, and it’s time to find a way to pursue beauty without masking harm below the surface.

News Thu, 20 Nov 2014 11:05:29 -0500
Cashing in on the ISIS Crisis

The Military Fat-Cat Complex (Image: Khalil Bendib/Other Worlds)The Military Fat-Cat Complex (Image: Khalil Bendib / Other Worlds)

Maybe you think the US air war on the Islamic State is a fine plan. Maybe you don’t. Either way, have you considered how little Washington’s latest military foray in the Middle East has to do with America’s welfare?

In case you haven’t heard, shock and awe are out in what’s increasingly being called either Iraq War 3.0 or — more ominously — Iraq War III. “Persistent and sustainable” are in, according to General Martin Dempsey, chairman of the US military’s Joint Chiefs of Staff.

Why can’t our leaders leave bad enough alone and get out of there? One possible explanation is that this apparently eternal battle has more to do with profits than protection.

No matter how pointless these wars prove, America’s military-industrial complex makes a killing.

There’s always a profit to be skimmed by the makers of cruise missiles and builders of submarines. They stay in the black even when humanity suffers.

But wait. Doesn’t the United States lose when these wars inevitably shore up anti-American hatred?

Worrying about that kind of thing isn’t really a job for military contractors. Just like the oil, gas, and coal industries, their goal is to grab what they can while the grabbing is good.

America’s hired guns and military contractors took a big hit after the last Iraq War wound down. But thanks to the eruption of “the ISIS crisis,” the dogs of war in Congress are howling again.

At the moment, they’re yelping at President Barack Obama and telling him to stop ruling out more “boots on the ground.” Obama has already called for doubling current troop levels in Iraq and asked Congress for permission to spend $5.6 billion more than anticipated on the conflict.

Perhaps the most galling military development so far is the Pentagon’s mobilization of depleted uranium weapons. These weapons are already suspected of causing widespread birth defects in Iraq from prior military campaigns, and there is a debate underway right now in the United Nations to ban them.

Whistleblower Peter Van Buren recently asked a good question about all of this: “What could go possibly go right?”

Opinion Thu, 20 Nov 2014 10:43:56 -0500
Something Big Is Changing in the Fight for Reproductive Freedom - Women Are Done With Being Shamed

Women, especially young women, are coming out of the closet and talking openly about how access to abortion has empowered their lives. On November 20, a reproductive rights nonprofit, Advocates for Youth hopes to take that to a new level with an eight-hour live broadcast they are calling the 1 in 3 SpeakOut. Celebrities including comedienne Lizz Winstead, Congresswoman Barbara Lee, and author Jessica Valenti will “speak out,” telling their abortion stories in an act of defiance against stigma and shame.

As a woman who went public with my own abortion story after the murder of Dr. George Tiller, I am grateful and deeply optimistic about the rising chorus of voices.

The speakout event will be hosted and organized by the 1 in 3 Campaign, so named because 1 in 3 American women has an abortion at some point before reaching menopause. It is being promoted by a coalition of women’s groups including Advocates for Youth, Planned Parenthood, and Lady Parts Justice. And the 100 participants are part of a growing number of women who are saying firmly and publically, Stop telling me how I should feel about my abortion—guilty, conflicted, grieved, relieved—my experience is my own.

In 2000, a group called Exhale pioneered what they called the pro-voice approach, offering non-judgmental support for women (and men) who wanted to talk about their experiences. The safe space they carved out for people who reached their call line has been a small bubble in a wide sea of shame and stigma. Surrounded by shrill public debate in which any woman’s reproductive decision is a political act that perfect strangers feel entitled to judge, most women choose to remain silent.

Silencing women is a core tool of abortion opponents. That is because when the voices and faces of abortion seekers and compassionate providers vanish, the right to end a pregnancy become a legal or theological abstraction. When opponents don’t have to look into the eyes of real women who are managing full, complicated lives and families, they feel free to manipulate emotions by focusing on gritty details of the surgical procedure itself. The big picture—a young person’s hopes and dreams, our responsibilities to the world around us, the fiercely intense challenges and joys of parenthood, the human flourishing made possible by family planning, the medical and psychological risks of an ill-timed pregnancy, the mercy of a fresh start—all of these powerful and personal dimensions of childbearing fade from view, papered over with pictures of gestation sacs and fetal remains.

Even conversation among friends and family members gets muted. Today abortion need is dropping fast thanks to better birth control technologies. Even so, abortion is more common than recognizable miscarriage. (Most miscarriage simply takes the form of an odd period.) And yet, according to sociologist Sarah Cowan at NYU, only 52 percent of people say they know someone who has had an abortion, while 79 say they know someone who has had a miscarriage. In reality, virtually all adults are close with someone who has had an abortion. They just don’t know that because they haven’t been told.

But times may be changing.

In 2012, the 1-in-3 Campaign offered a platform for women and men who wanted to tell their stories more publically, and over 500 responded. Then a young woman who called herself Jane published photos online of her first trimester abortion. They were seen by millions and ultimately covered by mainstream news outlets around the world. Jane chose to stay anonymous because, as she said,

“The power in anonymity is placing my little story in a much larger context and making it relatable to anyone and everyone. I could be from the deep south or live in your neighborhood. I could be a minor or perimenopausal. I could be a high school graduate or a PhD professor. I could be Christian or Muslim. I could be your daughter, your mother, your sister, your boss, your friend. I could be all of these things to this audience. This isn’t about me. This is about all of us.”

In January of 2014 another young woman took the opposite approach, going public with her own name and face. Emily Letts chose to be filmed as she reacted to the news of her unintended pregnancy, then during the abortion procedure and a month later. Her three minute video has been played over a million times.

In the months that followed, Cosmopolitan Magazine, better known for fashion and sex tips than advocacy, made waves by leaning into the conversation about reproductive choices rather than leaning away. One story featured a young Texas ob-gyn, who told of performing a hysterectomy on a 16-year-old after a botched self-induced abortion. Another interviewed Kate Cockrill and Steph Herold, the young founders of Sea Change, (tagline Stigma divides, isolates, hurts. Lets make shift happen).

In October another mainstream women’s magazine, Elle, took up the torch, publishing “I had an Abortion—Real stories from real women,” followed by an article in which Cecile Richards, president of Planned Parenthood, spoke openly about her own abortion. Despite screams from the Right, the Elle editorial team hasn’t backed off. Most recently they have showcased award-winning poet and columnist Katha Pollit, who is on tour with her new book, Pro: Reclaiming Abortion Rights.

In the book and related interviews, Pollit goes beyond shame and stigma to embrace the other end of the moral spectrum, honoring women who make childbearing a thoughtful, intentional decision regardless of when and how they find themselves pregnant. She is unflinchingly pro-choice and unflinchingly critical of the Religious Right.

Pollit embraces abortion with the same confidence that she might hold forth on the benefits of appendectomy, knee replacement, or antibiotics. She points out that abortion is normal, that nature itself eliminates many conceptions that are off to a poor start. (More than half of all fertilized eggs and 30 percent of early pregnancies self-abort, including many that are defective.) And she reminds us that induced abortion has been common through history as it is today in the US, where 1 out of 3 women choose to end an ill-timed, unwanted, or unhealthy pregnancy. More importantly, she talks about the ways in which abortion enables families to thrive psychologically and economically.

Pollit is far from the first to explicitly endorse abortion as a social good. In 1978, five years after abortion was legalized nationally via Roe vs Wade, the Washington Association of Churches published a six page document in which members articulated, in religious language, some of the issues at stake: freedom, justice, balance, compassion, responsibility—and humility. The document opened by acknowledging that earnest people, including earnest Christians found this issue challenging:

Clearly there is no Christian position on abortion, for here real values conflict with each other, and Christian persons who seek honestly to be open to God’s call still find themselves disagreeing profoundly.

Given the competing values at stake, member denominations (save Catholics alone) asserted that whether to keep a pregnancy was a decision best left to a woman and those from whom she sought guidance. Alas, Evangelicals and conservative Catholics decided they knew better. They affirmed a traditional set of beliefs that value women as incubators and men as deciders. Then, from their position of “male headship” church leaders pronounced that the personhood of fetal life (however microscopic or malformed) and female life (however cherished or self-actualized) were equivalent.

But they are wrong, and therein lies the power of telling our stories.

When women come out of the shadows, the world is reminded that we are as individual as snowflakes, each with a life story that has its own intricate pattern and beauty. We are playfulness and big dreams, confusion, creativity, complexity, maternal love, wisdom, responsibility, partnership, sensuality, sexuality—all qualities that are utterly absent in an embryo or fetus. Our decisions to bear or not to bear children, to carry pregnancies or end them, are inseparable from the gloriously tangled web of our loves and our lives.

When women come out of the shadows, the world sees the self-aware determination that leads almost a third of us to end an ill-conceived pregnancy despite the toxic culture of stigma that condemns our decisions rather than honoring the wisdom of a woman who knows her own limits, responsibilities, and dreams.

When we come out of the shadows, the purveyors of shame are exposed for who they are—bullies who are frightened of change and who have been wielding self-righteous judgment as a weapon for far too long.

Opinion Thu, 20 Nov 2014 10:06:11 -0500
Wall Street Journal Reports: Bank of North Dakota Outperforms Wall Street

While 49 state treasuries were submerged in red ink after the 2008 financial crash, one state’s bank outperformed all others and actually launched an economy-shifting new industry.  So reports the Wall Street Journal this week, discussing the Bank of North Dakota (BND) and its striking success in the midst of a national financial collapse led by the major banks. Chester Dawson begins his November 16th article:

It is more profitable than Goldman Sachs Group Inc., has a better credit rating than J.P. Morgan Chase & Co. and hasn’t seen profit growth drop since 2003. Meet Bank of North Dakota, the US’s lone state-owned bank, which has one branch, no automated teller machines and not a single investment banker.

He backs this up with comparative data on the BND’s performance:

[I]ts total assets have more than doubled, to $6.9 billion last year from $2.8 billion in 2007. By contrast, assets of the much bigger Bank of America Corp. have grown much more slowly, to $2.1 trillion from $1.7 trillion in that period.

. . . Return on equity, a measure of profitability, is 18.56%, about 70% higher than those at Goldman Sachs and J.P. Morgan. . . .

Standard & Poor’s Ratings Services last month reaffirmed its double-A-minus rating of the bank, whose deposits are guaranteed by the state of North Dakota. That is above the rating for both Goldman Sachs and J.P. Morgan and among US financial institutions, second only to the Federal Home Loan Banks, rated double-A-plus.

Dawson goes on, however, to credit the BND’s remarkable performance to the Bakken oil boom. Giving his article the controversial title, “Shale Boom Helps North Dakota Bank Earn Returns Goldman Would Envy: US’s Lone State-Owned Bank Is Beneficiary of Fracking,” he contends:

The reason for its success? As the sole repository of the state of North Dakota’s revenue, the bank has been one of the biggest beneficiaries of the boom in Bakken shale-oil production from hydraulic fracturing, or fracking. In fact, the bank played a crucial part in kick-starting the oil frenzy in the state in 2008 amid the financial crisis.

That is how the Wall Street-owned media routinely write off the exceptional record of this lone publicly-owned bank, crediting it to the success of the private oil industry. But the boom did not make the fortunes of the bank. It would be more accurate to say that the bank made the boom.

Excess Deposits Do Not Explain the BND’s Record Profits

Dawson confirms that the BND played a crucial role in kickstarting the boom and the economy, at a time when other states were languishing in recession. It did this by lending for critical infrastructure (roads, housing, hospitals, hotels) when other states’ banks were curtailing local lending.

But while the state itself may have reaped increased taxes and fees from the oil boom, the BND got no more out of the deal than an increase in deposits, as Dawson also confirms. The BND is the sole repository of state revenues by law.

Having excess deposits can hardly be the reason the BND has outdistanced even JPMorganChase and Bank of America, which also have massive excess deposits and have not turned them into loans. Instead, they have invested their excess reserves in securities.

Interestingly, the BND has also followed this practice. According to Standard & Poor’s October 2014 credit report, it had a loan to deposit ratio in 2009 of 91%. This ratio dropped to 57.5% in 2014. The excess deposits have gone primarily into Treasuries, US government agency debt, and mortgage-backed securities. Thus the bank’s extraordinary profitability cannot be explained by an excess of deposits or an expanded loan portfolio.

Further eroding the official explanation is that the oil boom did not actually hit North Dakota until 2010. Yet it was the sole state to have escaped the credit crisis by the spring of 2009, when every other state’s budget had already dipped into negative territory. Montana, the runner-up, was in the black by the end of 2009; but it dropped into the red in March of that year and had to implement a pay freeze on state employees.

According to Standard & Poor’s, the BND’s return on equity was up to 23.4% in 2009 – substantially higher than in any of the years of the oil boom that began in 2010.

The Real Reasons for Its Stellar Success

To what, then, are the remarkable achievements of this lone public bank attributable?

The answer is something the privately-owned major media have tried to sweep under the rug: the public banking model is simply more profitable and efficient than the private model. Profits, rather than being siphoned into offshore tax havens, are recycled back into the bank, the state and the community.

The BND’s costs are extremely low: no exorbitantly-paid executives; no bonuses, fees, or commissions; only only one branch office; very low borrowing costs; and no FDIC premiums (the state rather than the FDIC guarantees its deposits).

These are all features that set publicly-owned banks apart from privately-owned banks. Beyond that, they are safer for depositorsallow public infrastructure costs to be cut in half, and provide a non-criminal alternative to a Wall Street cartel caught in a laundry list of frauds.

Dawson describes some other unique aspects of the BND’s public banking model:

It traditionally extends credit, or invests directly, in areas other lenders shun, such as rural housing loans.

. . . [R]etail banking accounts for just 2%-3% of its business. The bank’s focus is providing loans to students and extending credit to companies in North Dakota, often in partnership with smaller community banks.

Bank of North Dakota also acts as a clearinghouse for interbank transactions in the state by settling checks and distributing coins and currency. . . .

The bank’s mission is promoting economic development, not competing with private banks. “We’re a state agency and profit maximization isn’t what drives us,” President Eric Hardmeyer said.

. . . It recently started offering mortgages to individuals in the most underserved corners of the state. But Mr. Hardmeyer dismisses any notion the bank could run into trouble with deadbeat borrowers. “We know our customers,” he said. “You’ve got to understand the conservative nature of this state. Nobody here is really interested in making subprime loans.”

The Downsides of a Boom

The bank’s mission to promote economic development could help explain why its return on equity has actually fallen since the oil boom hit in 2010. The mass invasion by private oil interests has put a severe strain on the state’s infrastructure, forcing it to muster its resources defensively to keep up; and the BND is in the thick of that battle.

In an August 2011 article titled “North Dakota’s Oil Boom is a Blessing and a Curse”, Ryan Holeywell writes that virtually all major infrastructure in the boom cities and counties is strained or exhausted. To shore up its infrastructure needs, the state has committed hundreds of millions of dollars in revenue. Meanwhile, it is trying to promote industries other than oil and gas, such as companies involved with unmanned aircraft, manufacturing associated with wind energy equipment, and data centers; but the remoteness of the western part of the state, along with the high cost of labor, makes doing business there complicated and expensive.

Hydrofracking, which has been widely attacked as an environmental hazard, is not as bad in North Dakota as in other states, since the process takes place nearly two miles underground; but it still raises significant environmental concerns. In 2011, the state levied $3 million in fines against 20 oil companies for environmental violations. It also undertook a review of industry regulations and was in the process of doubling its oil field inspectors.

The greatest stresses from the oil industry, however, involve the shortage of housing and the damage to the county road system, which in many places consists of two-lane gravel and dirt roads. Drilling a new well requires more than 2,000 truck trips, and the heavy rigs are destroying the roads. Fixing them has been estimated to require an investment of more than $900 million over the next 20 years.

These are external costs imposed by the oil industry that the government has to pick up. All of it requires financing, and the BND is there to provide the credit lines.

Lighting a Fire Under Legislators

What the Bank of North Dakota has done to sustain its state’s oil boom, a publicly-owned bank could do for other promising industries in other states. But Dawson observes that no other state has yet voted to take up the challenge, despite a plethora of bills introduced for the purpose. Legislators are slow to move on innovations, unless a fire is lit under them by a crisis or a mass popular movement.

We would be better off sparking a movement than waiting for a crisis. The compelling data in Dawson’s Wall Street Journal article, properly construed, could add fuel to the flames.

News Thu, 20 Nov 2014 09:46:15 -0500