There is a great deal of speculation these days about the immediate political future after Chavez’ expected death.
Some analysts, like Amherst University professor Javier Corrales argue that regardless of what happens, the next government will have to deal with a serious problem left behind by Chavez . This problem centers on the previous irrational approach to government spending in which money was used as an instrument of political influence domestically and abroad. Government officials never worried or valuated whether these expenditures made sense or whether they were creating a huge deficit and debt. Therefore, Corrales believes that the main challenge for Venezuelan leaders will be economic adjustment and that no successor will have the same level of largesse or fiscal irrationality as Chavez had.
However, there are other commentators who focus more on the ideological differences and potential conflicts that may ensue after Chavez’s departure.
They view Chavismo as being deeply divided between the military and the civilian factions. This division was kept together under Chavez but it is likely to explode after the commander’s death.
Nicolas Maduro, the current foreign Minister and the man Chavez appointed as his successor, leads the civilian faction. Maduro has strong ties to the Cuban government and plays a key role in forging alliances with rogue states such as Iran, Syria, and Belarus. He was also instrumental in strengthening alliances with the Bolivarian countries and in raising the status of Venezuela in the region, including its inclusion in the South American common market (MERCOSUR).
The current President of the National Assembly, Diosdado Cabello, leads the military faction. He is more nationalist oriented, has only visited Cuba once, and is not close to the Cuban government. However, Cabello played a role in Chavez’s domestic agenda, particularly in cracking down on the media. He was also instrumental in helping Chavez corrupt the machinery of government in order to strengthen his power. Cabello was part of the group of officers that orchestrated the coup d’état in 1992 that helped Chavez rise to the public scene as an anti-establishment figure.
According to Vladimir Gessen, a former congressman, the military reject the Cuban model and also resent their presence in the Venezuelan military.
Thus, according to his view, the conflict between the two factions could be very serious as the military has played a role in the social missions and eleven of twenty Chavista governors are former military officers. Therefore, Gessen assumes that Cabello will do everything he can to prevent the civilian faction led by Maduro from taking the reins of the Bolivarian Republic.
In my opinion, these analyses are relevant and important to note.
However, I would like to reflect upon the situation from a different angle before relating to the arguments presented above.
Going forward, the first major question to consider is whether the Bolivarian Revolution will change its course. In other words, is there any incentive to change a revolution that has shown considerable success both domestically and abroad? While taking into account Corrales’ serious arguments about the Venezuelan fiscal deficit, it is important to understand that Chavez was not only re-elected in the October 7th elections but also was victorious in the December 16th elections, winning the overwhelming majority of governorships (20 out of 23.) Though these results reflect continued popular support for Chavez, elections in Venezuela are not transparent. Chavez and his cronies have an overwhelming advantage because the Electoral Commission is controlled by the regime as well as large segments of the media.
At the domestic and regional level, Chavez has earned an image as the father of the oppressed, thus his followers believe he is the only leader in the region that has the ability to unite different and diverse sectors of the population. Following the thought of scholars Hannah Fenichel Pitkin and Ernesto Laclau, we can say that, how the constituent is kept satisfied matters less than the symbol the government or the leader represent. Whether or not the Bolivarian Revolution succeeded in fulfilling its promises or whether it has created a fiscal cliff has less weight than the loyalties and identification of its followers. One of the great accomplishments of Chavismo has been its ability to homogenize and bring together a diverse group of people, who now have a sense of representation, unknown to them prior to the revolution.
The collective perception that Chavez and his revolution represent the oppressed and disadvantaged, is crucial, regardless of whether people truly are better off now than they were fourteen years ago. The revolution has also succeeded in blaming the opposition for the problems it has created. The Chavez regime has adopted a patronizing attitude towards the opposition, accusing it polarization, when in truth, the larger polarizing force is the regime itself.
The Bolivarian Revolution has excited the masses, not only in Venezuela, but also across Latin America. It has expanded the revolution to Bolivia, Ecuador and Nicaragua. It is a symbol among the grassroots of the ruling Workers and Peronist Parties in Brazil and Argentina respectively, and the Movement of Popular Participation (MPP), one of the largest sectors in Uruguay’s ruling party, the Broad Front. The Bolivarian Revolution is popular among the indigenous grassroots, including CONAIE, the largest indigenous movement in Ecuador. The revolution has also fascinated important sectors of the intellectual left.
Chavez and his revolution are so powerful that various governments in South America, including that of Brazil, a rising world power, viewed the victory of Chavez in the October elections as a necessary condition for the continuity of regional integration. A proud atheist such as the Uruguayan president, Jose Mujica, took time out of his schedule to pray in a Church for Chavez’s health.
The success of the Bolivarian Revolution provides no incentive to the new leadership in Venezuela to change its course, whether there is economic bankruptcy or internal divisions. Contrary to the Fascist or the Communist Revolutions, the Bolivarian Revolution has neither been challenged nor contained.
Once we have reached this conclusion, we can discuss how, for example, the Maduro-Cabello confrontation might play out. The assertion that the military is anti-Cuban requires a more comprehensive analysis than this piece can cover.
However, even if the military were anti-Cuban and succeeded in expelling Cuban advisors and officers from the Venezuelan Armed Forces, this act alone would probably not constitute a major turning point or the end of the Bolivarian Revolution as we know it. One might also ask, is the military now anti-Cuban enough after all the purges that have taken place in the last 14 years and after all the bribery and luxurious life that has been provided to many of the military officers? What role are the 125,000-troop militias likely to play after Chavez’s death? Will the alliance with Iran or the drug cartels end? Will the revolution lose ideological strength? Will it become less hostile to America?
The Bolivarian Revolution does not depend on the Cuban government economically but, rather, the other way around. Nor, does the revolution depend on Cuba for ideological support. In fact, it has already achieved an influence that the Castros never had. The Castro Regime, at its peak, responded to the Soviet Union, whereas, the Bolivarian Revolution maintains its own leadership. The Cubans mostly play a role in assisting the Bolivarian regime in consolidating a repressive and controlling regime.
From a geo-political point of view, governments of the region, including the United States, must look beyond hasty conclusions because, as has been repeatedly pointed out, the Bolivarian Revolution is the most far-reaching and most challenging phenomenon in the Western Hemisphere.
Two days prior to the Venezuelan presidential election, Francisco Toro, a Venezuelan journalist and blogger, wrote an op-ed in the New York Times stating that Chavez and his movement have become irrelevant.
As Chavez’s socialism is becoming increasingly authoritarian and has failed to reduce poverty, Toro claims that it is no longer an exemplary to other Latin American states; in his opinion, it is Brazil’s template—combining free enterprise and democracy with social programs aimed at reducing poverty—that is what everyone in the region hopes to follow.
To illustrate his point, Toro uses the examples of Ollanta Humala in Peru and Venezuelan presidential opposition candidate, Henrique Capriles Radonski. (To this list, we could also add Fernando Lugo in Paraguay). All of them ran on a “Brazilian” platform based on the social democratic principles established by former Brazilian president Lula Da Silva.
Toro also points out that, in public, the authoritarian and the social-democratic Left are united but, behind closed doors, they are divided to the point of being “viciously dismissive of each other.”
Yet, as we have observed, both the authoritarian and the democratic Left displayed public enthusiasm for the victory of Hugo Chavez. I would argue that this was not necessarily a public display of hypocrisy but rather an event that has serious implications for the region.
Indeed, shortly after Chavez’s victory was announced, various Latin American leaders congratulated Chavez. Of course, the followers of the Bolivarian alliance enthusiastically praised Chavez’s victory. Non-Bolivarian allies such as Argentina broadcasted live the announcement of the president of the Venezuelan National Electoral Council declaring Chavez the victor. Argentina’s president, Cristina Kirchner, tied Chavez’s victory to the future of her own government and political philosophy. Paraphrasing Venezuelan national hero, Simon Bolivar, Ms. Kirchner sent a written note to Mr. Chavez stating, “Hugo… you have cultivated the land and planted seeds in it; you have watered it and now you have harvested it…. Your victory is our victory.”
However, the reaction of the Government of Brazil is the most confounding, precisely because it is the Brazilian model that has been most often contrasted with Chavez’s.
Brazil’s president, Dilma Roussef pointed out that the “Venezuelan election is a model of an exemplary democratic process.”
Marco Aurelio Garcia, a senior advisor to President Roussef, and a former senior advisor to President Lula—and considered one of the most influential organic intellectuals and foreign policy architects of both governments—praised the democratic character of the Venezuelan elections. He also pointed out, “Venezuela is not a model Brazil should follow, but Chavez, with his own style, implemented a program of social inclusion. In this way, he sought to find equilibrium between political and social democracy. Such equilibrium is something the whole region aspires to achieve.” (My own translation).
Interestingly enough, the first part of Garcia’s statement seems to point to a distance between Brazil and Venezuela (as Toro rightly pointed out) but the second part of the statement seems to recognize, as acceptable, the Venezuelan model.
Then, Garcia proceeded to complain about the “international support for the Capriles’ candidacy and for the attempt to delegitimize the democratic process in Venezuela”. In an even more perplexing statement, Garcia suggested that Chavez’s victory reinforced democracy, particularly after the region suffered “a democratic interruption with the impeachment of (President) Fernando Lugo in Paraguay.”
This argument surprised everyone that has followed or experienced the deterioration of democracy, human rights, and the increasing political restrictions and political violence promoted by the Venezuelan government for more than a decade now.
But this makes sense if we continue to listen to what they say.
Echoing Chavez’s repeated statements, Garcia said, “right and center-right opposition forces in Latin America supported Capriles.” Thus, he implied that the Venezuelan elections were a point of contention between the right and left wing forces in the region. Therefore, had Chavez lost the elections it would have been a defeat for the left in general—whether the authoritarian or the democratic wing.
This last point is particularly astonishing since Capriles ran on the platform of the social-democratic Brazilian model. However, the left could not see Capriles as one of them; he confronted Chavez, an authentic symbol of the left. The Bolivarian model for the Brazilin leaders may not be the model to follow, but Chavez remains a symbol of the left’s strength throughout the continent.
In other words, the Brazilin leaders felt that if Chavez lost the election, it may have made the entire left vulnerable.
Garcia acknowledged that in the region there are different types of leftist regimes but what they all have in common is that “all of them are marching in the direction of translating political democracy into a social factor.” Here, Brazil is passionately defending the idea that no political democracy can co-exist with inequality or the lack of social inclusion.
The fact that political democracy, human rights, and judicial independence are sacrificed in the name of social justice is of no concern to the Brazilian leaders.
Brazil’s position suggests that its government cares more for regional integration than for democracy.
Chavez is seen as a good partner for regional integration—and this is what matters to the Brazilian leaders. Both Brazil and Venezuela have championed the idea of regional integration and economic independence. This would not only be good for the region but also for Brazil as it aspires to be a regional leader and ultimately a world power.
The Brazilian government seems to obsessively believe that such integration can only work with left wing governments.
This is why Roussef pointed out that “Brazil wants to cooperate with Venezuela in the construction of a more equal and just South America by reinforcing bilateral relations and regional integration.”
The idea that regional integration can only come to being through the left and not through the right has pushed conservative governments, also eager to be part of this regional integration, to adopt positions aimed at gaining the acceptance of its leftist neighbors.
As an example, the foreign minister of the Conservative Government of Sebastian Pinera in Chile, Alfredo Moreno, not only congratulated Chavez on his victory but also pointed out that “most countries of Latin America are experiencing a democratic reality that has been in existence for a long time and this is different than what occurred in our continent a few decades ago.” The reference of course was to the right-wing military dictatorships of South America but does he really think that Venezuela is a true democracy?
Chile’s desire to be part of this regional integration not only contradicts the idea that integration can take place only through the left but also shows the overwhelming pressure left wing countries can exercise over conservative governments.
By the same token, the conservative government of Manuel Santos in Colombia has initiated talks with the guerilla group known as the Revolutionary Armed Forces of Colombia (FARC). I dare to assume that a Colombia-FARC reconciliation is somehow tied to Colombia’s willingness to gain acceptability among the dominant left.
If at one point I thought, like Toro, that the solution to the problem of Bolivarianism and the radical left could be found in the counter-balancing power of the moderate social-democratic left, I no longer hold this view.
For the moderate left, political or liberal constitutional democracy is only understood in the context of social justice. Without social justice, democracy has no meaning. But the problem has been that the drive towards regional integration became the excuse to disregard political democracy and legality.
I foresee that very soon the Organization of American States (OAS) and its democratic charter will cease to be relevant.
Perhaps, at this point, the best hope to weaken the power of Chavez and the Bolivarian Revolution is if the moderate left loses elections in the countries where it holds power.
Furthermore, what we have witnessed during the different Latin American summits (including the Latin American and Caribbean Summit, the Summit of the Americas, and the OAS General Assembly) is that the leftist tsunami returned the intractable authoritarian Cuban regime to the status of acceptable government while the Inter-American Human Rights Commission and the Inter-American Court were ferociously attacked by the authoritarian left and by moderate Brazil.
In the short term, we will see the OAS coming under pressure to dissolve itself as governments in the region view it as an obsolete organization aimed at serving U.S. hegemony. This is a major challenge for the United States, which should try to use its influence to discourage such a situation.
This context may have affected Capriles Radonski’s decision to immediately accept the results of the election.
Indeed, those allowed to “observe” the election included Marco Aurelio Garcia himself; Carlos “Chacho” Alvarez, an Argentinean former vice-president who is the head of the Latin American Integration Association (ALADI) and a Kirchner loyalist; and ; other individuals friendly to Chavez including a Spanish Communist professor and a fervent pro-Chavez Chilean writer, among others). The Chavez-controlled Electoral National Council did not allow the OAS or any other neutral body to observe the election.
This was a deterring factor on Capriles.
Had Capriles waited a few hours and gotten the right advice, he could have requested a careful review of the electoral process. Had he done so, he would have, at minimum, brought the Venezuelan abuses to public debate or even mass protests and attracted some international attention. By accepting the results he contributed to the myth propagated by Chavez and his regional supporters that Venezuela is, without doubt, a true democracy.
The upcoming October 7th elections in Venezuela do not constitute just another round of elections in another country. These elections are crucial for the future of Latin America and for the security of the United States. In fact, it is no exaggeration to point out that the Venezuelan drama should be as great a concern as the elections in the young democracies of the Middle East that emerged in the aftermath of the Arab spring.
Unfortunately, the Venezuelan electoral process has been characterized by intimidation of the opposition and the press, violence, and indiscriminate use of state resources, all this with the objective of providing an advantage to Hugo Chavez.
In fact, two supporters of Henrique Capriles Radonsky, the opposition candidate challenging the President, were recently shot to death.
Although Chavez and his interior Minister pledged to make every effort to bring the killers to justice, the case seems to follow an environment of intimidation and fear that has characterized the Chavez campaign. Opposition rallies have been blocked and undermined by pro-Chavez supporters and fistfights have been very common. Even the last killings took place at the time Chavez supporters blocked a motorcade of Capriles supporters. In September, Chavez supporters blocked a motorcade and burned a truck that belonged to the Capriles campaign.
As polls have shown a tight race between the two contending sides, Mr. Capriles has proven himself adept at mobilizing large crowds. In the aftermath of the election, It seems almost inevitable that violence will increase especially if Chavez loses the race.
Experts have discussed possible scenarios in the aftermath of October 7th. They predict that if Chavez loses the election there might be a rise in violence, street protests, political hooliganism, and even sabotage of public services or invalidation of the election. So far, the Venezuelan government has rejected observers.
A paper written by Dr. Ray Walser, a Senior Fellow at the Heritage Foundation, is called “The Chavez Plan to Steal the Venezuelan Election.” In that document, Walser unequivocally defines the electoral process as an attempt by Chavez to win the election by non-legitimate means. Walser describes how Chavez has used state power and monopoly over the main natural resource (oil) to spend money to benefit people; how he has restricted the media and freedom of the press including laws that protect slander of the President; and how he has abused the electoral rules that limit air time for other presidential candidates.
Walser stresses that the electoral process has been flawed. Many voters have raised questions about whether their vote is really secret as their fingerprints, which are required as an anti-fraud mechanism, may be ultimately used to reveal the identity and the political choice of the voter. There is also concern about fraudulent registration of people who are not legally allowed to vote.
I would add that violent scenarios could be created not only if Chavez loses but also even if Chavez wins. This is not necessarily because the opposition and Capriles supporters are violent but because if it is perceived that Chavez cheated, there will be rage similar to the one that took place in the Ukraine and some of the former Soviet satellites and Republics a few years ago. This sense of fraud might mobilize people who are tired of Chavez’s chaotic and authoritarian rule.
In either case, Chavez is likely to mobilize his militias and paramilitary; violence will ensue but this time the presence of fire -arms will increase and we will see a situation of civil war. Not unlike what is now occurring in Syria.
It will be interesting to see how the United States will respond should Venezuela erupt.
In his paper, Walser urges the United States government to support civil society and continue to support NGO activity to train domestic electoral observers. Walser also urges the Administration to reaffirm their commitment to democracy and demand transparency. Likewise, he suggests that the United States work in coalition with other countries in the region and in Europe to act in unison in case of fraud or violence that might arise. Finally, Walser calls on the Administration to develop a plan of action that could include severe economic sanctions such as designating Venezuela a state sponsor of terrorism, thereby prohibiting the importation of Venezuelan oil.
These recommendations are certainly right on target. We can only hope that countries such as Brazil, Colombia, Chile and a few others will stand on the side of democracy without making excuses in the name of national sovereignty. These countries have to understand that the prevalence of authoritarianism may have a contagious effect in the hemisphere and can promote more and more pro-Chavez leaders in the region . The clearest examples are, beside the countries of the Bolivarian alliance, the former Government of Manuel Zelaya in Honduras, a conservative who became a Bolivarian, and the current government of Cristina Kirchner in Argentina. Almost 30 years ago, Argentina rejected authoritarianism after horrible years of repression. Ms. Kirchner has elevated Chavez to the level of a statesman and a hero. What is worse she has replicated a number of Chavez’s practices including the nationalization of private companies, bullying of the opposition and the private sector, control and censorship of the media. In addition Kirchner has created a constant discourse of hostility, and has instigated a suspicious project of constitutional reform.
The U.S needs to exercise leadership among countries in the Hemisphere but making sure that the Democratic Charter signed by members of the Organization of American States (OAS) is implemented. The U.S must exercise its influence to take democratic leadership in the region or allow another key country to do so. It would be ideal if Brazil could be persuaded to take such leadership as the country is a growing democracy and economic power.
I would add that the struggle for democracy in our hemisphere should not be merely based on moral principles. The struggle for democracy needs to be understood as a major strategic tool of national security. Democracy promotion creates a culture of peace and tolerance. A real democracy includes substantive components that reject elements such as alliances with rogue states.
As Venezuela continues to ally itself with Iran, Belarus, Russia and China, the security threat on the United States aggravates. Chavez has brought his Bolivarian allies in the hemisphere including Presidents Rafael Correa from Ecuador, Evo Morales from Bolivia and Daniel Ortega from Nicaragua into similar alliances with Iran. If Iran turns nuclear, it is likely that missiles will be posted on Venezuelan soil creating a major threat to our security.
Chavez has built an illiberal democracy that includes regular elections but nothing else: no rule of law, no reasonable dialogue between the factions, no free press and abundant violence and intimidation. Chavez, nonetheless, rules because he continues to be elected. This is the card he holds to maintain his legitimacy. This is why Western Hemisphere countries have accepted Venezuela as a democracy, as have the Organization of American States (OAS) and Mercosur (The South American Common Market). In both organizations democracy is a pre-condition to become a member. However, Venezuela does not seem to fall under the category of non-democratic countries because Chavez elections are held and Chavez has been “democratically elected”..
If Chavez continues in power, he will consolidate his regime to the point where it will survive his death. Moreover, both China and Russia have major interests in perpetuating the Chavez government for a number of reasons including an ability to counteract U.S. influence in the hemisphere.
The United States cannot treat the Venezuelan case as it has treated the Syrian case. Our national security is at stake.
U.S. policy should be as determined and aggressive as possible with the purpose of restoring genuine democracy to Venezuela and the hemisphere. The morning after the election will be the real test for the region and for the United States.
As anti-American feelings are being cultivated in large parts of Latin America, not much attention is being paid to the potential consequences that this may eventually have.
Propaganda is easy to dismiss as non-sense. But propaganda can unfortunately work. It is sometimes easy for those who are better informed to disregard propaganda as being the work of fanatics whose discourse is so ridiculous that nobody in his right mind would take it seriously. Yet, the effects of propaganda are manifold. Often information that distorts reality can have harmful repercussions.
This is because when something is repeated so many times, there is always the risk that such lies might perpetuate themselves. Since many governments in the region are left-wing regardless of whether they are extreme or moderate, anti-American prejudice is omnipresent. Many on the left believe in the theory of dependency, a notion that views economic development among advanced countries as being made possible by the exploitation of raw materials in the Third World. As the theory goes it is a zero sum game where Third World countries, including those in Latin America, have always been the losers.
There is also resentment over past American actions, particularly during the Cold War, where the U.S. supported right wing anti-communist dictatorships that often ended up violating human rights.
These widespread anti-American feelings have real consequences. For example, Chavez’s love for Iran has not been limited to him and his allies in the ALBA group. Former Brazilian President Luis Inazio “Lula” Da Silva, considered to be a moderate, took the lead in trying to reach a compromise on Iran’s nuclear program that would have released the latter from any commitment to stop the program. Lula also received Iranian president Mahmoud Ahmadinejad in Brazil. Another so-called moderate leader, Uruguayan president Jose Mujica spoke about the special relations with Iran because Iran purchases Uruguayan rice. However, it was not merely a relation of convenience. A delegation from the Uruguayan Congress visited Iran with its president leading the visit.
Indeed, Iran has turned into a symbol of expressing anti-American feelings and repudiation of historical American influence throughout the continent. Mujica, himself, echoing Chavez called the current period a “second independence”. The government of Argentina, the third largest country in the region, has also an anti-imperialist discourse that even if it is not as blunt as the one conveyed by the Venezuelan leader, is still there. Argentinean president, Cristina Kirchner in the last conference of the Latin American and Caribbean Community of States (CELAC), referred to the problem of drug trafficking as follows: “the cause of the world’s problems has to do with those countries that have veto power in the international community and impose the rules by force”. With regard to drug trafficking she said that the “dead people are Latin Americans but the money is collected by somebody else”. President Kirchner suggested that money is being laundered in first World banks and thus she concluded that even drug trafficking benefits the First world.
This is a clear display of a political war or a war of ideas. What is worse, these ideas also influence those who are more moderate in their thinking.
In the case of anti-American propaganda there are also a set of circumstances that make the situation worse. There is a general perception of American decline as new powers emerge in the world competition. China is a case in point. China, as a relatively new player in the region, is seen by many in Latin America as a rising power with an economy that may soon overtake that of the United States. For those on the extreme left, China is a much more desirable trading partner because it is seen as being in competition with the U.S. In spite of one’s political leanings, China is viewed favorably as a major purchaser of Latin American goods and as such having significantly contributed to the region’s growth.
The prospect of an “American defeat” has raised the euphoria of those like Chavez who want to see “the empire” collapse. But this has also been the source of rejoicing for less radical elements in Latin America, including Lula whose tenure ended in 2010 and who with a smile on his face pointed out that the “recession is affecting the White American and European people”.
The influence that Chavez and his allies are having in regional forums such as the Organization of American States General Assembly (OAS), the Summit of the Americas, CELAC, and the Union of South American Nations (UNASUR), has had the effect of increasing tolerance towards anti-American and anti-democratic ideas.
The reaction of the U.S. Government is to keep a low profile in regional forums and downplay the expansion of negative forces in the region. We are seeing American diplomats praising Latin American leaders in hyperbole, generals downplaying security threats and the presence of Iran and the president of the United States, himself, declaring that there is no security challenge coming from the South. The U.S. has been successfully forced to take a back seat in order not to aggravate this menace and even denying that there is such a menace.
But the United States does not get any reward for taking a back seat. The American attitude is perceived as a sign of weakness and therefore, anti-American hostility grows worse.
Weakness generates a morbid pleasure on the other side. It is always weakness that invites more violence because it makes it easier for the perpetrator to carry it out.
To make up for this weakness no military action is needed. It is a matter of communication and projecting a resolute attitude.
We have not properly countered this misinformation coming from Latin America.
The U.S. government has this capacity to communicate to an international audience but is not using it very effectively. Currently, the Voice of America is used to broadcast news not to try to influence hearts and minds. This situation is different than the one that existed prior to 1999 before the United States Information Agency (USIA) was disbanded. (Since then the Voice of America was made part of the State Department).
This is why those who understand the power of ideas need to speak out.
It should not only be up to the U.S. Government to engage in this war of ideas but the work of thinkers, think-tanks , scholars and journalists who understand the negative message that is incubating in Latin America.
It is important to spread the idea that tyrannies will inevitably lead to enslavement of people even if they are now showing some largesse and claim to speak for the poor. A tyranny will end up hurting the poor and the hungry as it has come to pass in Cuba where the initial emigration of the rich was quickly followed by the emigration of the poor due to the oppressive conditions that existed and continue to exist.
It is important to point out that the militias and para-military groups being created by regimes such as the Venezuelan regime are aimed at establishing full political and existential control of the population and not for the purpose of defending the poor. It is necessary to say that this revolution, as in most revolutionary socialist countries, will end up being a Satanic, patrimonial sort of regime where a few people will have the monopoly over economic and state resources and govern at the expense of civil society. Some observers are already comparing the Ortega regime in Nicaragua with the decades long rule of the Somoza family.
It is also absolutely imperative to remind people that attacks against the judiciary are going to harm justice, in general. Likewise, attacks against the press will undermine the freedom of everyone, rich and poor alike.
It is also crucial to explain why the United States is a force for good.
Average Latin Americans including some non-leftists are not aware of the role the United States has played as an armed and economically powerful democracy. China may be a major buyer of Latin American goods but are we willing to live in societies dominated by oppressive elites as people live in China?
It must be made clear that if the power of America declines in the world, the alternative is not going to be another big democracy. When Great Britain ceased to be an empire and its power declined, the United States emerged as the new power. However, the United States was the continuation of Great Britain in so far as it was a mighty democracy.
Now there is no democratic alternative to the United States. No big power will speak for freedom, with the exception of the European Union. If China or Russia gains strong international power, the status of freedom and human rights will diminish as well. Who will carry out a moral policy as the U.S. and its European allies did during the Bosnian and the Libyan crisis?
China and Russia have been staunch supporters of the tyranny of Bashar Al Assad in Syria. China is suspicious of democracy and democratic movements because its leadership fears the rise of a democratic movement in its territory. Therefore, it will tend to support tyranny. It is no wonder that Hugo Chavez feels close and has encouraged relations with both China and Russia
We at the Menges Hemispheric Security Project have spoken in Spanish media outlets, including those in Venezuela, explaining the tyrannical nature of the Chavez regime, the role of the United States as a force for good and why it is important for the United States to participate in the war of ideas.
Left-wing governments and some people in Latin America are drunk with a sense of economic success. However, the continuation of future economic growth is as uncertain as the continuation of democracy.
In Latin America, the war of ideas is no less intense than the war within the Arab and Muslim world between the radicals and the moderates. We are taking the latter seriously, as it should be. However, we are taking the former lightly as it should not be.
Last month El Salvador experienced one of its most dramatic constitutional crises of the past 20 years.
It began when the Constitutional Chamber of the country declared as unconstitutional all the appointments of Supreme Court judges made in 2006 and 2012. The rationale for this decision was that the Legislature that made these appointments had already done so once before at the beginning of the legislative session. The chamber ruled that these second appointments were unconstitutional. The ruling also included another decision that declared unconstitutional the Legislature’s initiative to transfer the current president of the Supreme Court to another chamber and ordered the president to keep his position as President until the end of his term.
The Chamber had ordered the current Legislature to elect judges for nine years and also provided instructions to the Legislature on how to proceed in the future with regard to Supreme Court appointments. Such guidance by the Constitutional Chamber included elements such as transparency, access to information to citizens regarding the qualifications of the nominees; and documented information on the nominees so that the government could justify these appointments on the basis of merit and achievements.
These developments prompted the government of President Mauricio Funes of the left-wing Farabundo Marti National Liberation Party (FMLN) to refuse to accept the ruling. Funes proceeded to mobilize national as well as international support against the Supreme Court decision.
The Salvadorian Constitutional Chamber is one of the five chambers of the Supreme Court. It deals with issues relating to individual protections, habeas corpus, the constitutionality of government decisions and laws; and settling of disputes between the legislative and executive power. Five justices compose the chamber and its president is also the president of the Supreme Court and the entire judicial branch.
Interestingly enough, the Salvadorian Constitutional Chamber has been very active in the last several years in something that is still unusual in Latin America: the struggle for an independent judiciary, one of the key components of a true democracy.
In July, 2010, the Constitutional Chamber declared the national electoral system unconstitutional because the system did not allow for independent candidacies or direct votes to be cast for the candidate of the voter’s preference. Instead, the vote was for the party not the person. This angered the legislature that gathered overnight and passed a constitutional amendment that requires candidates to run for office only through political parties. That was an obvious reaction of the political parties against candidates that emerge outside the establishment and may threaten the power- hungry parties.
The Legislative Assembly followed this decision by adopting decree 743 that required the Constitutional Chamber to make a binding decision; it must have unanimous support among its members. President Funes signed the decree that night. It goes without saying that no court in any democratic-constitutional country works in such a way. In fact, the requirement of unanimity was aimed at strengthening the power of the political branches over the constitution and the eternal and typical attitude of the Latin American political class to see legal and constitutional restraints as an annoyance to their ability to make decisions. We cannot imagine any such situation in a true democracy.
This power grab by the Salvadorian political class against the judiciary brought about national and international protests that eventually forced the Legislature to revoke decree 743.
The recent decision pertaining to the appointment of judges once again sparked a conflict between the judiciary and the legislative and executive branches.
The Regional Involvement in the Salvadorian Crisis
This time, Salvadorian executive authorities decided to bring the case before the Central American Court of Justice (CACJ) that is the judicial branch of the Central American Integration System (SICA).
The CACJ not only admitted the case but also ruled against the decision of the Salvadorian Constitutional Chamber. The Salvadorian Constitutional Chamber declared the CAJC involvement and decision irrelevant and unconstitutional.
However, the Salvadorian Legislature invoked the decision by the CACJ and voted to strip the President of the Supreme Court of his powers by declaring that any member of the Supreme Court could convene a meeting, not just its president.
Thus, the executive and legislative actions endorsed the appointment of the new Supreme Court against the ruling of the Constitutional Chamber thus creating two Supreme Courts.
The Central American International Court of Justice undermined the principle of an independent judiciary by quickly ruling in favor of the Salvadorian Government.
To have an idea about the magnitude of irresponsibility of the CACJ, we can only think about how long it would have taken the U.S. Supreme Court or any normal court to make a decision about such a delicate issue.
I agree that Latin American Supreme and other courts have been deficient throughout the decades. However, in the Salvadorian case, the Supreme Court of Justice was moving in the direction of independence, legality and transparency.
Interestingly enough, the CAJC is based in Managua, Nicaragua, the same country whose government manipulated the Supreme Court in order to subjugate it and subordinate it to the will of the executive power.
For example, early in July, the CAJC criticized Costa Rica over the construction of a highway. The court considered that such a highway would cause environmental damage to the San Juan River which is located in Nicaraguan territory. The Costa Rican government reacted by accusing the CAJC of having a pro-Nicaragua bias.
Two justices of El Salvador, two from Honduras, and two from Nicaragua currently compose the CAJC. Guatemala, Costa Rica and Panama currently have no representation. The president of the Court is from Nicaragua.
Some Reflections from the Salvadoran Case
The Salvadoran case, particularly the behavior of both the legislative and executive branches of government, indicates that in many Latin American countries, politics is still oriented towards quick decisions, minimization of debate and lack of empowerment.
Democracy continues to be sacrificed by short- term interests and politization of all the spheres of government, particularly the judiciary.
But there is an important regional component that cannot be ignored.
Countries of the region have protested and acted against deposed presidents but have not acted against presidential abuse of other branches of government.
In the case of Honduras in 2009, countries of the region sympathized with the deposed president, Mel Zelaya while ignoring his contempt for the decisions made by the legislature and the judiciary in that country.
Barely a month ago, Paraguay was suspended from Mercosur for what its members Argentina, Brazil, and Uruguay defined as “democratic breakdown”, although no other countries except the Bolivarian ones defined the situation in such a way. What is worse these countries took advantage of Paraguay’s suspension to admit Venezuela, the most dictatorial regime in Latin America, to Mercosur (Venezuela’s membership in Mercosur was delayed amid objections by the Paraguayan Congress).
By the same token, the Central American Court of Justice without any hesitation sided with President Funes in the Salvadorian case.
I also believe that Costa Rican concerns over Nicaragua’s undue influence over the CACJ have some merit. If this is, indeed, the case, we may be seeing a propensity towards Nicaraguan regional hegemony in Central America. Taking into account the fact that the government of Daniel Ortega Saavedra is Bolivarian and pro-Chavez, such influence must be taken very seriously.
The harmony that some members of the U.S. Administration describe when they talk about Latin America is only the fruit of their imagination. In the case of Central America, the politicization of the rule of law and the crushing of the courts constitutes another bullet in the heart of institutional integrity which is already seriously wounded by the presence of the drug cartels, corruption and anarchy.
Christopher Holton delivered the following presentation, "Shariah Compliant Finance and Financial Jihad: What America Needs to Know," on Capitol Hill. He was introduced by Lisa Piraneo of Act for America:
Christopher Holton is Vice President for Outreach at the Center for Security Policy. He directs the Center’s Divest Terror Initiative and Shariah Risk Due Diligence Program.
He has been involved in legislation in 20 states to divest taxpayer-supported pension systems from foreign companies that do business with the Islamic Republic of Iran, the Islamic Republic of Sudan and the Syrian Arab Republic.
In 2005, Holton was a co-author of War Footing, published by the US Naval Institute Press. Holton’s work has also been published by National Review, Human Events, American Thinker, Family Security Matters, BigPeace, World Tribune, WorldNetDaily, Newsmax and The Hayride.com.
Before joining the Center, Holton was President of Blanchard and Company, a $200 million per year investment firm and editor in chief of the Blanchard Economic Research Unit.
CHRIS HOLTON: SHARIAH COMPLIANT FINANCE AND FINANCIAL JIHAD
[BEGIN FILE]
LISA PIRANEO:
– started right now. I’d like to thank everyone for coming today, especially Hill staff. I know that even when your bosses are out of town, it’s still really crazy in your individual offices and I appreciate you setting aside some time to come and talk about this very important issue, shariah finance or Islamic finance. This is something that is very much in place around the nation, particularly on Wall Street it’s very much in existence. But it really isn’t well known at all, definitely not without – not through the American communities as well as up on the Hill. It’s just not really an issue that folks know a lot about, so I think that’s why it’s very important that you all have come here today to set aside an hour of your time to listen to this report and discussion. So without further ado, I’m going to introduce our guest speaker, Christopher Holton, from the Center for Security Policy. This is an event that the Center for Security Policy is doing together with Act for America. I’m Lisa Piraneo, Director of Government Relations for Act for America. And Chris will be able to really discuss in depth and in detail a lot about this issue, so I’m glad to have him here again today. Christopher Holton is Vice-President of Outreach at the Center for Security Policy. He directs the Center’s Divest Terror Initiative and Shariah Risk Due Diligence Program. He has been involved in legislation in twenty states to divest taxpayer supported pension systems from foreign companies that do business with the Islamic Republic of Iran, the Islamic Republic of Sudan, and the Syrian Arab Republic. Since 2008, Chris has been the editor-in-chief of the Shariah Finance Watch Blog. In 2005, he was a co-author of War Footing, published by the US Naval Institute Press. Holton’s work has also been published by National Review, Human Events, The American Thinker, Family Security Matters, Big Peace, World Tribune, World Net Daily, News Max, and thehayride.com. Before joining the Center, Chris was President of Blanchard and Company, a two hundred million dollar per year investment firm, and editor-in-chief of the Blanchard Economic Research Unit. So without further ado, I give you Christopher Holton of the Center for Security Policy. Thank you.
CHRISTOPHER HOLTON:
How can something be called shariah compliant finance? I mean, after all, shariah is a code that has been around for a thousand years almost now. There weren’t stock markets and bond markets and things like that back then. What is shariah finance? Well, the fact of the matter is, is that shariah finance is not something that you’ll find in the Koran. Or the hadith. It is something that was man-made. It really had its genesis as recently as the 1940s. A guy named Abul Mawdudi essentially invented it. He was an Islamic philosopher born in India, eventually went to Pakistan. And his whole goal was to insulate the Islamic world from the Western Civilization. At that time, Western Civilization, through colonialism, was, at least in Mawdudi’s opinion, inflicting itself on the Islamic world. He thought the solution to that was a return to an Islamic way of life. He conceived of the concept of Islamic economics and a concept under which Muslims would do business with each other in an Islamic way to insulate themselves from the economic imperialism, as he called it, of the Western Civilization at the time. Particularly Britain. Also France, and to a certain extent, Germany and other countries that had colonies and interests in the Islamic world. Nothing much happened with that. In the 1950s, the famous Muslim Brotherhood philosopher, Sayyid Qutb, began to write about the concept of Islamic economics. He developed it a little bit more and developed it in such a way that we – that the Islamic world could insulate itself from Western colonialism by using a system of Islamic economics. But again, though he developed it a little bit more, nothing much happened on the ground with regard to the concept. Nothing really happened until the mid 1970s. In the mid 1970s, everything changed for a couple of reasons. Number one, the Arab oil embargo and the subsequent increase in the price of oil in 1973 as a result of the Yom Kippur War really enriched Saudi Arabia. And as a result, you started to see in Saudi Arabia and the United Arab Emirates and in Sudan the development of large Islamic banking institutions who did business according to Islamic principles. So this was a man-made phenomenon. It was not – it’s not rooted in any actual verses in the Koran. But it was invented by men. It really took off in 1979 with the Islamic revolution in Iran. In fact, the Islamic revolution in Iran gave birth to a myriad of Islamic financial institutions in Iran and one of the dirty secrets of shariah compliant finance to this day is that Iran dominates the world of shariah compliance. You can read all about shariah compliant finance on the internet from what the purveyors of shariah compliant finance say and they won’t mention Iran a whole lot. They don’t like to talk about it.
But the fact is, you can add up everybody else’s shariah compliant finance – financial instruments under management and they don’t add up to what Iran has under management. Absolutely dominates the world of shariah compliant finance. Which should tell you something. Six out of the top ten shariah compliant financial institutions in the world are state owned Iranian banks. Who happen to be under US and economic union sanctions for terrorism financing and for financing activities in support of weapons of mass destruction and ballistic missile programs in Iran. So those who call shariah compliant finance ethical investing may want to rethink that. Just in view of the fact that the largest shariah compliant financial institutions in the world are under sanctions for things that I don’t think you and I would consider very ethical. Like supporting Hezbollah and Hamas, for example. So why is shariah compliant finance an issue, though, in the West and in the United States today. The fact of the matter is, is that shariah compliant financial industry has absolutely poor standards of disclosure and transparency as compared to Western standards of disclosure and transparency when it comes to financial operations. And those standards of transparency and disclosure are directly related to issues involving national security and terrorism financing. And that’s what has to be investigated. And what – and the problem is, is that US policymakers, US regulators, and Wall Street in particular, are not equipped to research those items. I’ll give you a few examples right from the start. You know, the main problems with shariah compliant finance are lack of disclosure and transparency. From the very start, you have the fact that shariah compliant finance is usually not referred to as shariah compliant finance. It’s usually referred to as Islamic finance or Islamic banking. That’s a euphemism for shariah compliant finance. Because the purveyors, the financial jihadis, the purveyors of shariah compliant finance know that shariah has very bad implications for people in the West.
They know that shariah itself is a system that Westerners are very suspicious of. So they choose to avoid the use of the term shariah at all. So it’s shariah compliant, but you won’t hear them say that very often. They will just say, well, we invest according to Islamic principles without defining what that is. But the main problem is, is that they do not disclose what shariah is. Right from the start. The very basis of this program is something that is being concealed. If you look in most of the prospectuses for shariah compliant financial institutions and instruments, mutual funds and what have you, they’ll very briefly sometimes mention shariah. One shariah adviser that I was in the presence of at one point, when asked to define shariah, his response was, it’s the path on which we walk. And that was it. Now can you imagine that as being disclosure in a prospectus? For anything other than shariah compliant finance in Western Civilization? That’s no disclosure at all. The path on which we walk means absolutely nothing obviously. The problem is, is that shariah is of material interest to investors. Shariah as a system, as a broad overall system, not just shariah compliant finance. You cannot divorce shariah compliant finance from shariah. It is embedded in shariah. The purpose of shariah compliant finance is to promote shariah. Shariah compliant finance would not exist if it did not exist to promote shariah. This was brought force very forcefully in 2009 at the World Islamic Economic Forum in Kuala Lumpur in Malaysia. Where there was a meeting of the finance ministers of most of the Organization of Islamic Cooperation. At the time it was known as the Organization of Islamic – of the Islamic Conference. A bloc of fifty-seven nations in the UN. Their finance ministers got together in Kuala Lumpur and at the keynote address from the finance minister from the host nation of Malaysia, he encouraged the shariah finance industry to keep conducting its dawa operations. Well, what does dawa mean? Dawa means missionary work. They look at this as a form of missionary work to promote shariah and Islam. You cannot get away from that. Because of that, it has to be disclosed what shariah is and that is not being done at this point.
Not only are they not even talking about shariah, they’re not even mentioning it. So the lack of transparency and the lack of disclosure with regard to shariah is the first problem when it comes to shariah compliant finance. But it’s more than that. We can get into the nuts and bolts now. Beyond the overarching issue of shariah, we get down into the nuts and bolts of shariah compliant finance. The next issue that we have with regard to lack of disclosure with regard to shariah compliant finance has to do with the shariah scholars who essentially run the industry. Number one, there are very few of them, so there are lots of conflicts of interest that are built up within the industry and with competing financial institutions. You’ll have a shariah scholar who’s on the shariah advisory board of a financial institution and on a shariah advisory board of one of their competitor’s financial institutions, which in most walks of life, that would be considered a conflict of interest that you just wouldn’t have. But because there is a shortage of shariah advisers – there’s only about two dozen of them who are really the most qualified to sit on shariah boards – and that’s the way it basically works. If you have a shariah compliant financial institution or entity or instrument, you set up a shariah advisory board of usually three or more scholars, although in some cases, it’s just one scholar, and what this guy’s job is to do – and they’re all guys, there’s no women – is to keep the institution or instrument between the shariah lines. This person gets to decide, you know, you can invest in this, you can’t invest in that. And, you know, there’s a lot more to it than just like avoiding interest. A lot of people think that shariah compliant finance is just about avoiding interest. And to individual Muslims, that may very well be the case. Somebody might be investing in shariah compliant finance to be a pious Muslim. But on the institutional level, and on the doctrinal level, that is not what shariah compliant finance is about, unfortunately. It’s about a lot more than that. And if you look at the shariah advisers, you’ll see why. We’ve done background research on so many of these shariah advisers. And come back with really disturbing stuff.
For instance, there’s a guy named Mufti Taqi Usmani. Mufti Taqi Usmani was a member of the Pakistani supreme court for many years. He retired and he essentially cashed in. He is now a shariah scholar, a shariah adviser on dozens of institutions in the West and also in the Islamic world and in Asia as a shariah adviser. Usually, he is the chief of a shariah advisory board of a financial institution. Well, he used to be the chief of the Dow Jones shariah advisory board. He was also the chief of HSBC’s shariah advisory board. He’s not anymore. And the reason he’s not anymore is because they found out a little bit about the guy’s background. Now, they found out about it kicking and screaming. They had to be told about it over and over again. They had to be beaten over the head with it. Investor’s Business Daily, I think, was finally the straw that broke the camel’s back. But there were several publications that revealed that this guy, number one, he came from a madrassa and he was an officer of the madrassa that gave birth to the Taliban. Now, kind of a red flag. [LAUGHTER] He wrote a book called Islam and Modernity and he wrote another book called What Is Christianity? And in those books, you can pull out passages from his writings in which he said that Muslims in the West have a duty to rise up in jihad against their Western neighbors as soon as they’re strong enough to do so. Lots of stuff like that. He has written fatwas declaring whole sects of Islam to be apostates, resulting in what amounts to genocide of those sects of Islam within Pakistan. He is an evil man. Once this was revealed, HSBC and Dow Jones removed him from their shariah advisory boards. But keep in mind, he was the chief of their advisory boards. This stuff wasn’t that hard to find out. They could have found this stuff out if they had done any due diligence on this guy. All right? Now, when HSBC got rid of him, who do you think they replaced him with? His son. [LAUGHTER] So here we have a case where you’d got a really creepy guy with ties to jihadists controlling money. On a major – for a major financial institution in the West. And he’s still on the board of dozens of these institutions. He’s also the chief shariah adviser to the accounting and auditing standards organization for the entire shariah compliant finance – financial industry. He is perhaps the most powerful shariah adviser in the world and he is a complete jihadist. I’ve put out a dossier on him with more details than what I provide – than what I provide in this speech in your packet.
I’ll talk about a second shariah adviser who you’ve probably heard of. Sheik Yusuf al-Qaradawi. He’s been in the news relatively recently because he’s a famous Egyptian shariah scholar. He is probably the most prominent Sunni shariah scholar in the world. He’s the ideological mentor, at this point, for the Muslim Brotherhood. He was exiled to Qatar for thirty years from Egypt. He recently moved back to Egypt when Mubarak was taken out of office. And he has been on the shariah advisory boards of many financial institutions, including from 1988 to 2001, a bank called Al Taqwa. This bank was based out of the Bahamas. And it was associated with a real estate firm in northern Virginia named BMI. And what they were doing was they were conspiring to take a portion of their proceeds – and we’ll get to how this works in a minute – and send it to one of seven jihadist terrorist groups around the world. So this whole idea of their being a nexus between shariah compliant finance and some terrorism financing is not a fantasy, it’s not a theory, it’s actually been done. It’s been done in several cases, and this is one of them and it happened in the United States. Cause it involved a real estate firm in northern New Jersey. Bank Al Taqwa and BMI were shut down by the US Treasury Department and, of course, the shariah – the chief of the shariah advisory board was this guy Sheik Yusuf al-Qaradawi. He’s also the shariah adviser – chief of the shariah advisory board for Qatar Islamic Bank and Qatar International Islamic Bank. And if you look at those two banks, those are the two largest Islamic banks outside of Iran in the world. And this guy’s the shariah adviser to them. He is forbidden from entering the United States and Great Britain due to his ties to terrorism. He has written that suicide bombing against civilian targets in Israel is acceptable. He has called on all Muslims to support Hezbollah. He has stated that wife beating is absolutely permitted under Islam, but you’re not allowed to beat your wife if she enjoys it. He has endorsed female genital mutilation as a – which is euphemistically referred to as female circumcision. This guy is perhaps one of the most prominent shariah advisers in the financial world. He’s getting kind of old. He was a pioneer, though, when it was getting started. It could not have happened with Sheik Qaradawi’s help. So these are the kinds of people that we have sitting on shariah advisory boards of these shariah financial institutions. In many cases, if you look at the prospectuses of these shariah financial institutions, they don’t even mention that they have a shariah advisory board. And if they do, they don’t name them. In some cases, they might name them. Some cases, they might not. This is something that needs to be disclosed. And in fact, it needs to be researched.
The fact that somebody like Usmani could penetrate HSBC and Dow Jones and only through public humiliation get kicked off of those boards and then, of course, replaced by his son has got to be, you know, one of the most cynical moves by a financial institution that I can ever recall. That’s something that needs to be looked at by regulators and policymakers. Because of the next phenomenon which is, to me, the big problem when it comes to shariah compliant finance. Under shariah compliant finance, 2.5 percent, or one-fortieth, of the assets of the financial instrument have to be donated each year to zakat. Now zakat is one of the five pillars of Islam. It is a system similar to tithing in other religions. It’s ostensibly to eliminate poverty in Islam and that’s a good thing. The problem is, is that if you look at the shariah law texts, if you look at the actual shariah law authorities, there are eight acceptable destinations for zakat. Number seven is listed as those fighting in the way of Allah. And then if you look at the definition of those fighting in the way of Allah, it is defined – that is defined as those who are engaged in Islamic military operations for which there is no payroll on the army – on an army roster. In other words, irregular warfare – they are to be given the zakat even if they’re wealthy. And this is – these are codes that were written six or seven hundred years ago. But I mean, they could have been written by Osama bin-Laden twenty years ago. And then it goes on to say that families of those who are fighting in the way of Allah are to be supported as well with this zakat. In other words, if you’re a suicide bomber and you blow up a cafe in Tel Aviv, your family gets taken care of by rich Saudis or Saddam Hussein, which is what was going on throughout the 1990s. That is the system of zakat as defined by shariah law.
Now 2.5 percent of the proceeds from shariah compliant financial institutions go to zakat. That is very often not disclosed. In cases where it is disclosed, they will merely say something about it is donated to Islamic charities. And leave it at that. They won’t name the charities, they won’t talk about the activities of the charities. Now here’s the problem with that. Now fewer than eighty Islamic charities have been identified by the US Treasury Department or by British authorities or by the United Nations as funding jihad. Eighty. That’s not a small number. And the reason that so many Islamic charities fund jihad is because shariah law mandates that they do so. It is one of the eight destinations for zakat. This is not something that they think is wrong. So very many of these charities are involved in funding jihad. Now we saw it in Bank Al Taqwa with Sheik Qaradawi. It was absolutely happening with Bank Al Taqwa. And it was shut down because of that. Now more recently, our friend Sheik Qaradawi was named the head of a charity based out of Saudi Arabia called the Union of Good. The Union of Good is kind of like a United Way for Islamic charities. Depending on whose numbers you use, it’s either fifty-three or fifty-six or fifty-seven charities under the Union of Good. Okay? Now, the Union of Good has been designated a terrorist entity by the US Treasury Department. Because Qaradawi takes money from the Union of Good and he sends it to Hamas. I mean, that’s something that’s US government policy already. And this, remember, this guy who’s the head of this charity is also the chief shariah adviser to these big Islamic financial institutions. It’s not hard to connect these dots. There’s also twenty-seven other charities that have been designated by the US Treasury as terrorist entities. Including the three largest Muslim charities in the United States. The last one being the Holy Land Foundation. Which of course the offices of the Holy Land Foundation were convicted on all counts for material support of terrorism cause they were sending money to Hamas from right here in the United States. So we have a situation where there is no disclosure.
You can’t find any information on zakat and the charities that this money goes to in any of the publications from these Islamic financial institutions. And I’m here to tell you that Wall Street, they don’t want to fund terrorism, that’s for sure. But they’re so eager to win back some of the petrol dollars that we’ve sent overseas that they’re willing to take – take them at their word. You know, do these charities support terrorism? Oh, of course not. Okay. Good enough for me. And I’ve talked to people on Wall Street about this. I’ve talked to one person on Wall Street about this activity and he said, no, we’ve done the due diligence on shariah [MISPRONOUNCES WORD] [LAUGHTER] Interesting. How much due diligence did you do on shariah? [MISPRONOUNCES WORD] [LAUGHTER] So there isn’t – evidently, there’s not enough incentive for Wall Street to do due diligence on this. This is not a normal regulatory issue in that it’s got national security implications. There needs to be scrutiny of this. This is not something that we need to take lightly and say that this is big government getting in the way of Wall Street. That’s not what this is about. Cause a lot of people will say that all shariah compliant finance is, is a way for Muslims to invest according to their religious principles. And there’s absolutely nothing wrong with that. Nobody should have a problem with that. The problem is with the doctrinal level of what shariah is and the fact that shariah is a totalitarian system. It is the opposite of a free market system. So when people – when free market people say that this is something that we have to allow to go unfettered and unscrutinized, because of free market economics, what they don’t realize is, is that they’re bringing in a system which is an anathema to free market economics. In fact, Sheik Yusuf al-Qaradawi himself has called for replacement of capitalism by shariah finance. This is not capitalism. This is something else. It’s not communism. It’s not socialism. But it’s not capitalism, it’s not free enterprise. It is something else. It is a third way, if you will.
Another guy who said the exact same thing Sheik Yusuf al-Qaradawi did was our friend, Mahmoud Ahmadinejad. Who also, a couple of years ago, called for a replacement of capitalism by Islamic economics. And then, you may have been familiar, in 2009, an organization called Hizb ut-Tahrir, which is an international jihadist organization which has members in forty nations, has been banned in many nations, including Germany, their goal is reestablishing the caliphate. When they established their chapter in the United States, they held an event in Chicago – in Chicago [LAUGHTER] – and did I mention it was in Chicago? [LAUGHTER] Where else would it be? The name of their event was – I can’t remember the exact name, but it was essentially for Islam to replace capitalism. It wasn’t for Islam to replace democracy, it wasn’t for Islam to replace America, it wasn’t for Islam to replace Western Civilization. It was for Islam to replace capitalism. So shariah compliant finance is not about free enterprise. It’s not about free market. It’s not about capitalism. It is the opposite of that. And we’re allowing, literally, the camel’s nose under the tent by not seriously looking at this and determining where regulation is needed. Unfortunately, regulation is needed on this issue. That pretty much wraps up my prepared comments. Does anybody have any questions? Yes, ma’am?
WOMAN:
Have you guys any information on the financing [UNCLEAR] interested in, for that mosque at, you know, at 9-11 – I mean –
CHRISTOPHER HOLTON:
Well, that’s a good question. [OVERLAPPING VOICES] That’s a very useful question. The Ground Zero mosque, right. Now, we don’t know where that funding was going to come from. But it seems to be stymied right now. And the reason that it’s probably stymied is that it’s going to take a hundred million dollars to build it. And there’s two and a half million Muslims in the country and most of them, I don’t think, think that building a mosque at Ground Zero is such a peachy idea. So they’re not going to be able to raise a hundred million dollars from Muslims in America. You know, who, for the most part funds mosques in the United States? It’s the North American Islamic Trust. The North American Islamic Trust was named an unindicted co-conspirator in the Holy Land Foundation trial. Depending on whose numbers you use, they own the title between twenty-seven percent and eighty percent of the mosques in the United States. And when you own a mosque, you get to decide the curriculum at the madrassa school associated with the mosque, you get to decide who the imam is, you get to call shots.
And the overwhelming majority of the funding for the North American Islamic Trust comes from Saudi Arabia and Qatar. You should also – might also be interested in knowing that, remember Dow Jones’ chief shariah adviser was Taqi Usmani? Well, the adviser to the Dow Jones Islamic fund is none other than North American Islamic Trust. An unindicted co-conspirator in the largest terrorism financing operation in US history. Was the adviser to that fund. Again, we have an example of one of the most respected financial institutions in the United States not doing their due diligence when it comes to an organization that was involved in terrorism financing. Now, let’s take a look at the non-profit that Imam Rauf and his wife Daisy were putting – had before they put together the Ground Zero mosque. This might give as a clue as to where they were seeking to get their funds to build the mosque. They have an – she actually had an organization called ASMA, American Society for Muslim Advancement. [LAUGHTER] It was not lost on me. So the last year we have figures, they had an operating budget in 2009 of one million, three hundred and sixty thousand dollars. Okay? Not a big non-profit. But they had a one million, three hundred and sixty thousand dollar operating budget for the year. Six hundred and seven-six thousand dollars that year came from the emir of Qatar. All right? Three hundred thousand came from the Kingdom Foundation from the king of Saudi Arabia. So nine hundred and seventy-six thousand out of a 1.36 million operating budget we know came from two foreign powers. So they couldn’t – they basically could not run their little bitty non-profit without donations from foreign powers. Where do you think they’ve been getting a hundred million dollars to build a mosque at Ground Zero? I have a hunch that it wasn’t going to come from the United Way or the Red Cross. [LAUGHTER]
I know of no waivers that have been issued. You know, I don’t have an exact count as to how many financial institutions in this country have shariah compliant finance windows. There are dozens of them. If you look at most of the big financial institutions, the big banks, the big Wall Street firms, they almost all have shariah windows or shariah visions. You know, if you named them, I could probably tell you yes or no, but you know they almost all do. There’s four or five hundred total worldwide, perhaps, outside of Iran. Then you add Iran, it probably doubles the figure. So maybe a thousand. It’s 1.5 trillion dollars estimated to be under shariah finance right now.
There’s no question that that is the big problem. It’s a problem politically as well as, you know, in the world of finance. Just as you point out. And part of it is, it’s a result of disinformation that’s being circulated by Islamists here in the United States and throughout the world. When they give answers to questions about, you know, what is shariah? Well, it’s the path on which we walk. That’s probably one of the least evasive answers that I’ve heard. If you look at – shariah is the law of the land in only three nations in the world right now. Now there’s other nations that have shariah law embedded in their legal systems and have their legal systems subordinated to shariah law, but there’s only – shariah law is only the hundred percent law of the land in Saudi Arabia, Iran, and Sudan. Now look at those three countries. Human rights violations galore. Genocide in one of them. They all three support terrorism. I don’t care what anybody says. Saudi Arabia supports terrorism. They’re all into all these bad things and that’s not an accident, that’s not a coincidence. Wow. They’re all completely shariah and at the same time, they do all these really bad things. That is shariah. That’s not an accident. When you impose shariah completely on a nation, you end up with a situation where you, according to shariah, you have to wage jihad to promote Islam by violence if necessary. And yes, ignorance of shariah is a problem. The problem that I see on Wall Street is that it is blissful ignorance. It is like, I’m making money hand over fist, don’t tell me about all this stuff. I don’t want to know. Just tell me you’re not funding terrorism. And if they can be convinced that they’re not funding terrorism, they’re cool with it. The problem is, is that they’re not in a position to know for sure. Does that answer your question? Yes, sir?
MAN:
Chris, the article by Jeane Kirkpatrick from 1989 on how the PLO was legitimized through the UN would be most instructive, cause you see the whole process of covering up and of excusing terrorist organizations. It isn’t counted as terrorism if you’re doing it against oppressive colonial power, which would be the West, Israel, Britain, you name it. In some cases, India. [OVERLAPPING VOICES] Justify the raid on Mumbai.
CHRISTOPHER HOLTON:
That’s exactly a good point and I think it’s part of the problem that she – she mentioned, was that we, you know, Wall Street will try to make sure that there’s no terrorism funding going on. And Islamists could look back at somebody from Wall Street with a straight face and say, no, we’re not funding terrorism. Because they don’t consider whatever they’re funding to be terrorists. They don’t consider Hezbollah to be a terrorist organization. So they can fund Hezbollah with a straight face. According to their philosophy, that’s not funding terrorism. Yes, sir.
FRED GRANDY:
Chris, clarify something about zakat. The portion that must go to zakat, then is segmented among eight different categories, is that correct? Or is it determined –
CHRISTOPHER HOLTON:
[OVERLAP] It depends on which school of shariah you’re talking about. But in some schools, it has to be divided between all eight. In other schools, you can divide it how you want between the eight.
FRED GRANDY:
And is it that imam or that shariah compliant adviser who makes that determination?
CHRISTOPHER HOLTON:
Yes. And that’s something I failed to mention. I appreciate you pointing that out.
FRED GRANDY:
So just to finish, assuming – well, knowing that the large, the American financial institutions, the large banks, Bank of America, Goldman, Wells Fargo, and others, if they received our bailout money in 2008 and they had shariah compliant products, is it fair to say that some of that money coming from American taxpayers underwrote terrorist activities?
CHRISTOPHER HOLTON:
It’s certainly a possibility. Usually they segregate their shariah instruments from the rest of the institution simply because on the shariah side, it’s required. For instance, one of their things that are considered haram under shariah is to invest in any way in any Western financial institution. You can’t invest in a Western financial institution, but it’s okay to be a shariah adviser to Western financial institutions as long as your little segment is not, you know, involved in any of the rest of their business. So there’s supposed to be a division there. So I don’t know if TARP money would end up in the shariah division, but it, you know, the big example of that that I think you’re getting at is AIG. Where we know for sure that AIG was bailed out with tremendous amounts of TARP money and at the same time they were standing up this taqifal [PH] division, which is a form of insurance under shariah and that is an example where we know that, in essence, US government funds were being used to subsidize a shariah compliant instrument.
FRED GRANDY:
But at this point, even in the aftermath of Dodd Frank and with Sarbanes and Oxley on the books, there is no reporting requirement that would divulge or would create any kind of transparency as to where these products are, how they’re being used, and where that money might be going?
CHRISTOPHER HOLTON:
Absolutely not. There’s no requirement with regard to zakat at all. I mean, in some cases, it’s not mentioned at all. Yes, ma’am.
CHRISTINE BRIM:
If I’m a local investor, is there any kind of blue sky or any kind of, you know, consumer protection legislation – let’s say somebody comes to me and says, hey, I got this wonderful ethical fund and, you know, I like to do ethical investing and I buy green funds and I buy this and that, and I go, oh, this is great. It’s a Middle Eastern ethical fund. You know, peace in the Middle East. Nobody says shariah. Or if they do say shariah, I say, what’s this shariah [MISPRONOUNCES WORD] thing and they say, well, it’s, you know, the path we walk. And I go, oh, lovely. Is there anything out there that will help me know how to invest, know what I’m actually putting my money into?
CHRISTOPHER HOLTON:
It’s a real good question. Let me address that in a couple of ways. First of all, she makes mention of the fact that this is often referred to as ethical investing. There is an absolute move in, especially Great Britain, but it’s also moved over to this side of the Atlantic, to promote shariah compliant investments to non-Muslims. In Great Britain, it’s very common for non-Muslims to invest in shariah compliant investments and also to put their money in shariah banks. In fact, there’s one major shariah bank in Britain where forty percent of the depositors are thought to be non-Muslim. Now, Sheik Yusuf DeLorenzo is probably the most prominent shariah adviser to shariah compliant finance here in the United States. He actually recently moved to Dubai. But he actually came out and said that in countries that are non-Islamic, it is perfectly acceptable not to refer to shariah, but to refer to this as ethical investing. And not to refer to the shariah advisers and shariah advisers, but as ethical advisers. So this is – it gets back to the whole problem, it’s moving in the wrong direction when it comes to disclosure and transparency. It’s moving in the opposite direction. They’re concealing what this is and they’re trying to do it to capture non-Muslim investors, essentially, and get their money invested. Now there is really nothing right now that forces a shariah compliant fund to identify itself as such, except there’s going to be one state that has just passed a law – it passed the House and the Senate in Louisiana – and it’ll be signed by governor Jindal in a week or so, which requires this type of disclosure. And we’re hoping that more states will copy this. But really it needs to be done on the federal level, because the amount of regulation in the securities industry on the state level is obviously very limited. But it’s the best we can do right now. But it’s something that needs to happen on the federal level. There needs to be this disclosure of shariah, needs to be disclosure of zakat and where the zakat money goes. It absolutely has to be transparent. Yes, sir?
MAN:
Quick question, though. Having a law would be very good, but enforcement of the law is critical. I, in my organization, back in ’08, we put in a freedom of information act request of the US Treasury Department to tell us about the two day conference they held here in Washington with Harper Business School in December of ’08 on shariah compliant financing. Stonewalled. Wouldn’t give us anything.
CHRISTOPHER HOLTON:
Really?
MAN:
Really. And we have a freedom of information act built, you know, law on the books. And they just completely blew us off.
CHRISTOPHER HOLTON:
Is it any wonder that there’s no disclosure by the financial institutions themselves? If the regulators aren’t disclosing –
CHRISTINE BRIM:
[OVERLAP] What is your organization?
MAN:
Family Research Council.
CHRISTINE BRIM:
Family Research Council. Thank you.
CHRISTOPHER HOLTON:
Yes, ma’am.
WOMAN:
Is there a list – I mean, how do we find out, like you just said HSBC, well –
CHRISTOPHER HOLTON:
I can promise you HSBC is up to their ears and elbows in this.
WOMAN:
Right. And I mean, I had no idea. So how do we find out.
CHRISTOPHER HOLTON:
I’ve attempted in the past to publish lists. The problem is, that’s a dynamic thing. You know, if a company has a shariah compliant division and then, later on, stops it and they remain on the list, you know, they’ll threaten legal action and stuff like that. I can give you my card, you can contact me if you want to know, you know, about a particular institution, I’ll be happy to give you what information I have on that. It’s something that we ought to do. It’s something that we’ve looked at. But I can promise you right now if you’re dealing with one of the big boys, they pretty much have a shariah compliant division. Yes, ma’am?
WOMAN:
Can you talk a little bit about what happens if there’s any kind of dispute regarding the shariah compliant finances and if it goes to an imam for settlement rather than the SEC, is that a legal conflict or –
CHRISTOPHER HOLTON:
That is not something that I’m really aware of, of that type of dispute. Has that happened here in the United States?
WOMAN:
I mean, this isn’t my area. But my understanding is that that’s part of the problem. That it warns of creating like the parallel system –
CHRISTOPHER HOLTON:
[OVERLAP] Well, that is a problem with shariah, but I mean, that’s something new to me. I’m not aware –
WOMAN:
[OVERLAP] Yeah. I don’t want to put it in writing. [OVERLAPPING VOICES] Yeah.
CHRISTOPHER HOLTON:
I’d have to take a look at the prospectus to see how conflicts are supposed to be resolved [OVERLAPPING VOICES] but if they’re supposed to be resolved by the shariah advisers to the fund, you know, good luck. Yes, ma’am?
WOMAN:
To follow up with what this woman said about which institutions actually have these products, can you go to their individual website if you want to see –
CHRISTOPHER HOLTON:
[OVERLAP] No, not really. You know, you can to some extent. But there are some that have shariah divisions overseas, but you go to their website in the United States and you try to do a search to see if they have an Islamic division or something like that, it won’t appear, but it doesn’t necessarily mean that they don’t do it. They just don’t like to talk about it.
WOMAN:
So when you, for example, I get documents from board meetings so that I can vote for board of directors and so forth, are there ways on those forms, on those bios to determine this kind of information?
CHRISTOPHER HOLTON:
On the bios for –
WOMAN:
Well, let’s just say Metropolitan, cause I just got one –
CHRISTOPHER HOLTON:
Oh, you mean Metropolitan Life?
WOMAN:
Right. So –
CHRISTOPHER HOLTON:
Probably you’re not going to have a problem with Metropolitan Life, I’ll tell you why. Insurance – unless they have a taqifal insurance division, which I don’t believe they do, you know, insurance is something that is set up very differently under shariah finance than it is under conventional finance. So there are some shariah insurance companies. The only one in the West that I know of, really, was AIG. And, you know, they were into it in a big, big way, obviously.
WOMAN:
But Metropolitan has a whole investment division –
CHRISTOPHER HOLTON:
That’s true. You know, and I’m not aware of that particular one, but I’ll research it for you. I’ll be happy to.
WOMAN:
How about credit unions?
CHRISTOPHER HOLTON:
Most local credit unions, I don’t think you’d have a problem. You know, now maybe some of the big national ones, but I don’t think, yes, ma’am?
CHRISTINE BRIM:
There’s the blog shariahfinancewatch.org. If people have a question, they could also just search there. It might turn up.
CHRISTOPHER HOLTON:
We have a search feature on the blog. You can go in and – you’re not going to find anything under Metropolitan Life there, though, I know. But I’ll be happy to look into that for you.
WOMAN:
Well, that was just an example. I mean, is there any way to tell from these documents that come to vote on a board of directors or –
CHRISTOPHER HOLTON:
[OVERLAP] I’d be very surprised, unless they mention it overtly in the documents, you know, I’d be very surprised if it was disclosed. You know, very surprised. Cause most of these – when it comes to, you know, there’s a difference between a shariah compliant financial institution and a financial institution who has a shariah compliant division or maybe sells a shariah compliant product, all right? And in the United States, for instance, Chase – JP Morgan/Chase – has a shariah compliant division, okay? Now their overall financial institution is not shariah compliant. But they have a division that’s shariah compliant. That’s different from like Bank Melli in Iran, which is completely shariah compliant from soup to nuts. Do you understand the difference there?
WOMAN:
So these companies’ purpose is to put people on their boards or on their whatever, have someone to talk with them and decide about the shariah compliance?
CHRISTOPHER HOLTON:
Well, the shariah advisory board is more than just talk to them. I mean, those – the shariah advisers make the decisions. They make the decisions on whether you can invest in something or not and they make decisions on where the zakat money goes. Incidentally, there’s another aspect of that that I failed to mention. It’s called purification. It’s related to zakat, but it’s perhaps an even greater moral hazard. Under purification, let’s say that we’re running a shariah compliant financial instrument – a mutual fund – and we invest in your farm. And at the time that we invest in your farm, all you’re doing is growing corn. But we come back a year later and you’re making alcohol out of that corn. And that’s haram. We can’t profit by that. So what we’d have to do is we’d have to purify those funds. And shariah advisers would then take all the proceeds that we got from that investment, okay, and they would purify it by sending it to Islamic charities. And so, you know, you can see where, if you wanted to – if you wanted to send money to an Islamic charity that was supporting jihad, for instance, you know, first thing you’d do is you’d go find, pick a farm, invest in it and then come back a year later and say, oh, look what I’ve done. [LAUGHTER] How silly of me. And purify all that money. You know, it’s a great way to funnel money. And, look, it’s not a fantasy. Bank Al Taqwa did it. We know that it’s done. It’s breaking news in Bangladesh. A shariah adviser to one of the banks there was just arrested for taking part in an attack on a police station. I’ve got – that will go up on the blog later. I mean, this, he’s not a major shariah adviser. I’m not going to say he’s one of the top twenty-four, but, I mean, he’s a shariah adviser to a bank there. Yes, ma’am?
WOMAN:
Are you saying that the average middle class American investor could possibly be investing in shariah law with their funds and not even know it?
CHRISTOPHER HOLTON:
Could happen. Absolutely could happen. It’s very common in Great Britain. Everything that happens over there tends to come over here a few years later. So it’s theoretically possible here now. If you look in Great Britain, it is happening – it’s almost widespread there. But what could happen right now is that you could be approached by somebody with the Amana group of funds and they could come to you and say, this is a socially responsible group of mutual funds We don’t invest in alcohol, pornography, we don’t invest in – pork, yeah. You probably don’t care so much about that, but we won’t mention that. We’ll talk a lot about pornography and we’ll talk a lot about alcohol. We’ll talk about, oh, we don’t invest in armaments industries. At least in armaments industries in the West. So those are the things that they’ll go to people and they’ll say, you know, this is ethical investing, socially responsible investing. And they won’t mention that, you know, it’s socially responsible according to who? According to Taqi Usmani and Sheik Yusuf al-Qaradawi, they think it’s ethical as hell.
WOMAN:
So that would come through your investor and then your manager who’s managing your funds would relay that information to you, so it would be their responsibility to filter a lot of that out, correct? I mean –
CHRISTOPHER HOLTON:
[OVERLAP] Well, yeah, I think there’s a chain of responsibility. There’s a chain of responsibility there. The responsibility, you know, is with the fund itself to properly disclose. If they’re not doing it, then it’s the responsibility of, you know, your registered representative or your financial planner to do his due diligence. To make sure that you’re not, you know, doing something against your own principles. I mean, if you’re someone that has expressed an interest in socially responsible investing, he obviously – he or she obviously knows that you care about what you invest in, so he or she should research it for you. But if the fund itself is not fully disclosing what this is all about, how is he or she going to know? I can tell you that most registered representatives and financial planners, they’re salespeople. They depend on the literature that they’re given from the fund. They don’t have access to, I mean, it’s very difficult for me to believe that Wall Street could ever police themselves on this. They don’t have the incentive and they don’t have the skills to do it. They don’t know what to look for. Yes, sir?
MAN:
What has to happen here, from your perspective, you described the problems as huge, is I think you’re suggesting you have to have full disclosure, first of all, and that’s going to take some time, okay. But then the next step after that or simultaneously with that is for, what, the Treasury to look at these things and do an investment –
CHRISTOPHER HOLTON:
[OVERLAP] Well, I think that you’ll – under existing laws, this is something that should be scrutinized by the SEC. I think absolutely that that is the case –
MAN:
So that has to happen in order to solve this –
CHRISTOPHER HOLTON:
[OVERLAP] Or more legislation needs to be passed to get them to do it or maybe hearings need to be held. Maybe they need to call in the SEC in front of, you know, a committee and say, what are you doing about this?
MAN:
Conduct hearings, okay.
CHRISTOPHER HOLTON:
Something. I find it astounding that the Family Research Council would do a freedom of information act request and get no answer on that. That’s – it’s astounding. Astounding.
MAN:
Yeah. And because of the tyranny of the urgent, other things pressing in, we didn’t keep at it, keep at it, keep at it. But –
CHRISTOPHER HOLTON:
Well, I’d like to talk to you after this and maybe we’ll –
WOMAN:
[OVERLAP] – get a lawyer, the documents magically appear. [LAUGHTER] [OVERLAPPING VOICES] I’m just telling you.
MAN:
They called it – they didn’t cover up what it was. They said shariah compliant financing. Now, this was December of ’08.
CHRISTOPHER HOLTON:
I remember when they held that seminar.
MAN:
– two days. Department of Treasury. Harper –
CHRISTOPHER HOLTON:
And they had Sheik DeLorenzo was, you know, one of the big guys there. Now, let me tell you a little bit about Sheik DeLorenzo. Sheik DeLorenzo was – he graduated from a prep school in Massachusetts at eighteen and went to Cornell for a year and dropped out of Cornell, like everybody moved to Pakistan. [LAUGHTER] And went to a madrassa which was, lo and behold, the same madrassa that was giving birth to all kinds of jihadi organizations in Pakistan. He excelled there and he became an adviser to Zia ul-Haq, who was the general who took over Pakistan in the 1970s and essentially imposed shariah law on their legal system, the Islamization of Pakistan was extensively written about in those days. And this guy DeLorenzo from Massachusetts, born a Catholic, converted to Islam, became a shariah scholar, was an adviser to him for many years, came back to the United States. He was the dean of the curriculum at the Islamic Saudi Academy right across the way here. Which we know that they were – they had textbooks that were telling children that apostates from Islam need to be killed and all this other kind of stuff and Christians and Jews are descendants from apes and pigs and all that stuff. And this guy was in charge of that curriculum at the Islamic Saudi Academy. And this is the guy who was the keynote speaker, so to speak, the big shariah adviser at the Department of Treasury’s event promoting Islamic finance in December of 2008. I could go on and on about the guy. I mean, he’s got all kinds of connections that are like – make you scratch your head. And they all do. I mean, this is like –
WOMAN:
Who’s the Harvard connection?
CHRISTOPHER HOLTON:
Yeah, the Harvard. [OVERLAPPING VOICES] Yeah, I went to [OVERLAPPING VOICES] you’re catching me flatfooted here. The name of the – there’s two professors at Harvard, his name starts with a V – Vogel. One of them is Professor Vogel at Harvard –
FRED GRANDY:
Frank Vogel.
CHRISTOPHER HOLTON:
Frank Vogel, yeah. And there’s another guy there who’s into it. And I actually attended a seminar at Harvard Law School on shariah finance a few years ago. And let me tell you, I felt like I was on another planet. I mean, the way they were talking in there – first of all, they – I didn’t bring it with me, but they handed out a magazine from the banker in England, okay? And it was free to anyone that attended this seminar. And this was a big seminar. It was a big auditorium at Harvard Law School and everybody got one of these magazines. And it, you know, cover story, Iran dominates the world of shariah finance. I mean, they’re promoting and celebrating this and the world’s foremost sponsor of terrorism, who has a nuclear weapons program, and essentially has been waging a proxy war against the United States for a generation is the subject of the cover story of the magazine tat they hand out at the seminar at Harvard Law School. Now, I looked at it and I was like, gee whiz, I mean, does anybody see anything wrong with this?
MAN:
Harvard Law School or Harvard Business School?
CHRISTOPHER HOLTON:
Harvard Law School. The shariah finance division is at Harvard Law School.
MAN:
Was Kagan dean at the time?
CHRISTINE BRIM:
Yes she was. Yes she was. [LAUGHTER] There are three posts over at Big Peace that discuss Dean Kagan’s facilitation of shariah.
CHRISTOPHER HOLTON:
Yes, she was. [OVERLAPPING VOICES] I didn’t see her. I’d have noticed her. [OVERLAPPING VOICES] [LAUGHTER] But I took a lot of notes. That was a few years ago, but, you know, that was the first clue that I had that many people on the left in this country thought the Muslim Brotherhood was just peachy. I mean, they were talking about the Muslim Brotherhood like Palmolive or something.
WOMAN:
Well, I guess my question, how are they aiming it on the other side? What are they like a peace loving organization like a bunch of hippies from the 60s? I mean, what are they saying on the other side –
CHRISTOPHER HOLTON:
When you say the other side –
WOMAN:
The left or –
CHRISTOPHER HOLTON:
[OVERLAP] Well, the left hasn’t really chimed in on shariah finance. Now, on shariah, you know, they basically bought into the line that shariah is just something for pious Muslims and doesn’t have any implications beyond, you know, washing your feet before you pray. I mean, that’s their view of shariah. But the fact of the matter is, shariah is the enemy threat doctrine. And the way that they envision it and the fantasy that they have about it, shariah is not practiced that way anywhere in the world. You go anywhere in the world where shariah is practiced and you can pretty much find, you know, oppression of women and minorities, you can find sponsorship of jihad, you can find, in many cases, genocide. Which is usually an outgrowth of jihad. I mean, just – it just happens. It’s a totalitarian system. And totalitarian systems tend to be aggressive and violent. Shariah is, inherently. Yes, sir.
FRED GRANDY:
Could you just quickly tie in sukuk and sovereign wealth funds into how they fit under the arc of shariah finance?
CHRISTOPHER HOLTON:
That’s another good question. All right. Sukuk is something called Islamic bond. The shariah finance community wanted to tap into the debt markets, but they can’t because they can’t either give or receive interest. So they’ve invented something that they call, it’s called Islamic bond, which is – the proper name for it is a sukuk. It’s not a bond at all. It’s a partnership system in which, frankly, it’s convoluted. They created this financial instrument which, you know, pays out money, but they don’t call it interest. They call it something else. And it’s – you’re starting to see many Islamic nations, especially from the Persian Gulf region, issue sukuk. And you’re also starting to see them to pressure Western nations and non-Islamic nations to issue sukuk as their sovereign wealth. And this plays both ways. Number one, when they offer money to a country like Korea or the Philippines, and this has happened in both cases, what they’ve basically said is, you know, we’ve got all this money and we would be happy to invest in your national debt interests, but it has to be shariah compliant. So it is a form of Islamic imperialism. You can go ahead and issue, you know, national bonds, but you’re not going to get our wealth unless it’s shariah compliant. So you must comply with our law in order to do it. And you’re starting to see, I mean, Russia has issued a sukuk. Korea is probably reluctantly going to issue a sukuk. Philippines have issued a sukuk. You’re starting to see it more and more around the world. You’re going to see it in Western Europe very soon. You’re going to see these nations issue sukuk. It’s all about getting us to play by their rules. Remember, the purpose of shariah compliant finance is to promote shariah. Several years ago, the Archbishop of Canterbury mentioned that the incorporation of shariah law into some of British common law was inevitable. And then the prime minister of Britain, right after he said that, said, yeah, we’ve already accommodated shariah finance, after all, and it hasn’t done us any harm. This is a Trojan horse. It’s a means of getting us to play by their rules. And getting us comfortable with shariah so that next thing they can do is move in with family law. And then, little by little over time, get us to where we’re desensitized to where it’s where we don’t even care anymore. Yes, sir.
MAN:
Is there any debt held by the Americans under sukuk?
CHRISTOPHER HOLTON:
[OVERLAP] Yeah, General Electric Capital Corporation has issued a sukuk. There are several sukuks that have been issued from the United States. Not the US Treasury yet. Thankfully. I say yet. But you can be sure that we will be under pressure to issue a US Treasury sukuk because our counterparts in the Persian Gulf region will pressure us to make sure that our debt is shariah compliant. And, you know, the whole issue of sovereign wealth funds. The emir of Qatar is probably the biggest one when it comes to this. He’s got a huge amount of wealth that he’s, you know, garnered from oil and natural gas in Qatar. And, you know, he goes around and invests that sovereign wealth. But in the process of investing, they put conditions on him. And usually those conditions have to do with shariah. So it is a foil with which they are able to impose shariah on the rest of the world. In a way – if you want our money, if you want us to invest with you, just make sure that you’re shariah compliant and then – [TAPE BREAKS]
I have not seen any reports on that, but that doesn’t mean it’s not happening. I would imagine, given the close ties between Venezuela and Iran, that it’s probably happening there at some point. And Brazil has ties to the Middle East. I wouldn’t doubt that it would happen there. Just off the top of my head. I don’t know if any of these countries have issued a sukuk or anything like that. I don’t [OVERLAPPING VOICES] but the tri-border region of South America, where there’s a heavy Middle Eastern expatriate population, my guess is, is that there probably is a presence for shariah financial institutions down there. Yes, sir?
MAN:
A shariah compliant mortgage for a Muslim in this country, if he wants to get a shariah compliant mortgage, how does that differ specifically from a conventional mortgage?
CHRISTOPHER HOLTON:
That’s a real good question. It’s called murabaha, okay. And, you know, how does it differ? Well, I could tell you the convoluted way, but basically what it is – [OVERLAPPING VOICES] Basically what it is, it’s this. You know, they will advertise that as interest free mortgages. And that is incredibly unethical, because it’s not interest free. It’s just you don’t pay interest. You pay fees and charges. Which, coincidentally enough, fluctuate almost in lockstep with prevailing interest rates. Except the other difference between the shariah compliant mortgage and a conventional mortgage is that almost across the board, the charges and fees associated with a shariah compliant mortgage are greater than the interest charge would be on a conventional mortgage. And then they advertise them as interest free. And they do that, make no mistake about it, they advertise them as interest free to try to get non-Muslims to buy – to sign up for them.
MAN:
Is it difficult, if I want to go buy that house over there and it had a mortgage on it and it was a Muslim-owned shariah compliant finance – financial institution, would it be easy for me to buy that house or would it be easier for a Muslim to buy that house? I mean, are there restrictions? Do they try and keep that –
CHRISTOPHER HOLTON:
I think you can probably do it. If you approach them and say, I want to have one of these –
MAN:
They don’t care?
CHRISTOPHER HOLTON:
They – one of their goals is to have non-Muslims abide by shariah law. And the purpose of this is to promote shariah. So if you want to have a mortgage according to shariah law, they’re happy for you to do that.
MAN:
Are they more sympathetic or more willing to deal with people who are going to buy their mortgage? I think you would say – I see what you’re saying, but –
CHRISTOPHER HOLTON:
[OVERLAP] I don’t know. I don’t know. I have never been in that position. I don’t know. I don’t know if you’d be treated nice or not. I would imagine you would be, though. If you just went in there and say, I heard this is a much better way of –
MAN:
[OVERLAP] – discriminate against those people who are non-Muslims and –
CHRISTOPHER HOLTON:
I think probably, unfortunately, just the opposite. [OVERLAPPING VOICES] Yes, ma’am?
WOMAN:
Getting back to the General Electric sukuk bond, can you say that a portion of that money, then, through General Electric, [UNCLEAR] General Electric, goes to further the cause of –
CHRISTOPHER HOLTON:
[OVERLAP] No question. This is one of the cases where it – something is disclosed in the prospectus. I have a copy of the prospectus and they do actually acknowledge in the prospectus that a portion of the proceeds do – does get donated to Islamic charities. They leave it at that. That’s the extent of the disclosure. And to me, that amount of disclosure right there is enough to draw my interest, okay? Cause it’s like, all right, which Islamic charities? And what do you know about these Islamic charities? Because if you ask the folks at GE, my guess is they don’t know anything. Yes, sir?
MAN:
Do you have a copy of that prospectus –
CHRISTOPHER HOLTON:
I do have a copy of that prospectus, I’d be happy to share it with you. If you get my card, I will be happy to send it to you. Yes, sir?
MAN:
Would it be fair to actually say that these are different forms of fundraising for jihad?
CHRISTOPHER HOLTON:
Well, yeah. Incidentally, sir, that sukuk is not offered for sale in the United States, all right? It’s a General Electric Capital Corporation offering, but it’s not something that they’re offering here in the United States. It’s not regulated by the SEC. Okay? So I guess they realize that they may have a problem offering that here in the United States and they chose not to. [BACKGROUND VOICE] I’m sorry, say that –
WOMAN:
It’s called material support.
CHRISTOPHER HOLTON:
Material support for terrorism. No question. Any other questions? Thank you very much for coming. I appreciate it. [APPLAUSE]
Ever since announcing that he has cancer, the status of Hugo Chavez’s health and longevity has been an issue of great interest for those concerned about the future of Venezuela.
Understandably, it is logical to hope that Chavez’s death will lead to a better future as he is considered to be a man who carries a very dictatorial and inflexible ideology. Such ideology guides Venezuela’s domestic and foreign policy. Therefore, it is hoped that the death of the Bolivarian leader may lead to a more pragmatic approach with more democracy and less anti-Americanism as well as a more positive foreign policy.
This type of argument has no sufficient foundation on which to be sustained. Looking at history, we see that, in those countries where the death of a leader led to radical change was, in fact, an exception.
For example, in Spain, the death of Francisco Franco led to a transition to democracy after 36 years of authoritarian rule. However, in Spain there were gradual changes that enabled the transition after the death of the “Generalissimo”. First, the Spanish state evolved form being a European fascist type of regime following the Italian model to being an authoritarian regime that focused on economic development and moved Spain in the direction of a modern society. Whatever the intentions of Franco were, the economic modernization of the regime unleashed a number of important forces that generated tensions with the regime, particularly a business community, industrial sector, and other sectors and organizations that grew stronger and more independent. The regime could not control society as it had intended. Furthermore, it was forced to show some flexibility. At one point more strikes were registered in Franco’s Spain than in the rest of Europe. Likewise, Spain’s being part of continental Europe felt the pressure of the environment to democratize since being a democratic state was a pre-condition to be part of the European Common Market. At the time of Franco’s death there was a civil society in place ready for democracy. The transition was possible thanks to Adolfo Suarez, a man loyal to Franco. Furthermore, Spanish public opinion supported democracy and rejected the alternative after almost four decades of dictatorship.
On the other hand, in countries such as the Soviet Union after the death of Joseph Stalin or Iran after the death of Ayatollah Ruhollah Khomeini, the death of the strong man did not lead to democracy. Authoritarian structures remained in place . In the post-Stalin Soviet Union, no group was allowed to organize without permission and sponsorship of the government, even if the group was not political. Censorship and state-control of society continued. Moreover, despite the repudiation of Stalin by his immediate successor, Nikita Khrushchev, a less murderous Stalinism prevailed but Stalinim prevailed, nonetheless. Repression and the gulag remained alive for a long time. Hungary and Czechoslovakia were both crushed by Soviet invasions at the moment these Soviet satellite countries experienced revolts or considered reforms. It was only by the initiative of Mikhail Gorbachev in the 1980’s that the Soviet Union began a transformation that led to its collapse.
In Iran, the death of Ayatollah Khomeini ten years after the revolution not only failed to lead to a transition but those reformers such as Muhammad Khatami (1997-2005) failed in their attempts to make the regime more open and flexible. Khatami, indeed, advocated for issues such as freedom of expression, foreign investment, free market and better foreign relations. However, it was undermined by a structure built by Khomeini that gathered a group of hardliners that provided continuity to the regime.
The Case of Venezuela
After his death, Hugo Chavez leaves behind a revolutionary process that is not only domestic but also transnational. He leaves a thirteen year old government that provided Chavez with enough time to purge members of the military and fill the army with loyal officers, many of whom live in luxurious homes and enjoy a life-style not easy to give up. This military is likely to resist change unless a new government provides them with the same conditions (all this assuming that these officers are opportunists and are not necessarily identified with the Bolivarian ideology). But even if these officers are true democrats that reject Chavez, the Bolivarian regime has already in place para-military groups such as the Bolivarian Circles. It has also created a militia that responds directly to the executive branch. As things are defined now, Para-military forces and even militias might be filled with “fighters” from other groups such as the Revolutionary Armed Forces of Colombia (FARC) and even Middle Eastern terrorist groups such as Hezbollah; two groups Chavez has embraced.
Secondly, the regime has created a network of people who have benefitted from his regime and would like to see continuity. This includes the “boliburguesia” , which is a business class that has made its wealth not from its hard work and devotion but by virtue of its connections to the state.
Henry Rangel Silva, now defense minister and former intelligence chief of the Venezuelan Army, said in a newspaper interview that the military would not accept an opposition victory in the October, 2012 election. His appointment later as Minister of Defense confirms that the Bolivarian leadership will provide continuity to the Bolivarian revolution regardless of an opposition victory in the upcoming election.
Nelson Bocaranda, who is a columnist for the Venezuelan daily El Universal, revealed that in Cuba there was a meeting between Hugo Chavez, Raul Castro, six Cuban generals and eight pro-Chavez Venezuelan generals, including the Minister of Defense, Rangel Silva. The discussion was focused on possible scenarios after the death of the Bolivarian leader. Bocaranda reports that among the issues considered was the possibility of creating a situation of chaos including violence and looting which would provide an excuse for the military and other non-military security forces to carry out a self-coup.
This suggestion was brought by no other than Rangel Silva who said, even before the trip to Cuba, that the Venezuelan armed forces “are now Chavistas”.
These revelations should not surprise anybody who has been following the course of the Bolivarian revolution and its absolutist tendencies.
But there are other unfortunate elements at play here.
At present, polls indicate that Hugo Chavez enjoys an eighteen point advantage over his opponent, Henrique Capriles Radonski. Of course, this can change in the future but it still indicates that the majority of the Venezuelan population is more fascinated by Chavez’s welfare populism than disgusted by his anti-democratic and often violent practices. This is very much contrary to the dominant spirit of the Spanish people in the aftermath of Franco’s death that regarded democracy as a goal to be achieved.
Moreover ,the Bolivarian revolution lives in a continental environment that values nationalism, populism and welfare policies above liberal democracy. His partners in the Bolivarian countries such as Cuba, Nicaragua, Ecuador and Bolivia love Hugo Chavez for providing them with financial ideological support. Chavez also remains a symbol of liberation of Latin America (“Nuestra America”) for grassroots organizations including many indigenous organizations. The leaders of non-Bolivarian countries such as Argentina and Uruguay admire him and he is more than acceptable in the eyes of the leaders of Brazil, the fastest growing economy and democracy in the region.
Social justice and social equalities are the key codes for which democracy is sacrificed in Latin America, very much unlike in Europe of four decades ago, where Spain’s economic growth and opportunity was not enough of a condition for Spain’s acceptance in the community of European countries.
The Bolivarian revolution has not yet been defined as a dictatorship. The existence of regular elections has distorted the fact that between elections there is intimidation of judges, violence, persecution of the opposition and restrictions on the media. The principle of national sovereignty stands above international demands for human rights. For the U.S government, the trauma of the war in Iraq and our image as nasty and interventionist has prevented it from even stating that the Bolivarian regime is not a democracy. The Bolivarian regime is a dictatorship legitimized by a doubtful electoral process that uses state resources to perpetuate its power and uses intimidation tactics to influence their vote. (For more information see this article).
“Chavismo without Chavez” seems to be the winner supported not only by what has been described above but also with an overwhelming dose of indifference in the region. The United States government has also run out of imagination and is crippled by inaction.
The word democracy was not heard at the Summit of the Americas that took place in mid- April in Colombia. Perhaps there is another word we can use to replace the word ”democracy” as the word “terrorism” was replaced by “man-caused disaster”.
If there is such a word we have not heard it yet. As Winston Churchill pointed out after his predecessor Neville Chamberlain returned from Munich “You were given the choice between war and dishonor. You chose dishonor and you will have war”.
We would say after the last Summit of the Americas to our American government: “You were given the choice between speaking up for freedom and surrender to the majority. You chose the latter. You will have tyranny”
The Summit of the Americas, the largest gathering of leaders from the Latin American and Caribbean states plus the U.S. and Canada, ended last week in Cartagena, Colombia with no joint declaration or statement.
The reason is two-fold. First there was no consensus with regard to the status of Cuba in the forum. Second, there was no agreement regarding Argentina’s claim to the Falkland Islands.
The United States and Canada are opposed to the inclusion of Cuba. President Obama stated that he “will welcome a free Cuba in the next summit” (scheduled for 2015 in Panama,). Concerning the issue of the Falklands Islands, the U.S. maintained its neutrality on the conflict. Since final summit statements require unanimous consent, a statement on the Falklands could not be formulated.
These disagreements did not go without consequences. Venezuela, Bolivia, and Ecuador stated that they will not participate in the next summit if Cuba is not included. The presidents of Nicaragua and Ecuador did not even attend the summit due to the same reason.
With regard to the Falkland Islands, the Argentinean president, Cristina Kirchner, left the summit early in what many interpreted as an “angry mood”.
The summit’s host, Colombian president, Jose Manuel Santos downplayed these controversies by stating that “for the first time there is a deep and heated discussion about Cuba. “The discussion itself sparks closer relations (between the countries) and bridges that will enable us, God willing, to include Cuba in the next summit”
Santos also tried to hide the fact that President Kirchner upbraided him over his failure to mention the Falkland Islands in his opening speech.
These two issues dominated the summit (at least in public). Since the gathering ended without a statement and since the United States and Canada were the only two dissenting voices on the Cuba issue, the two countries seemed to have been somewhat isolated during the summit.
Colombia also seemed to have been weakened. Observers and academics in Colombia pointed out that this conference “was the biggest failure in Colombian diplomatic history” According to these observers, everyone expected events in Cartagena to develop the way they did since no sound strategy had been developed to avoid such a fiasco.
If that is the case, who benefitted from this summit?
Of course, the big winners of the summit were the countries of the Bolivarian Alliance (ALBA) led by Venezuela.
Bolivarian countries have been lobbying for the inclusion of Cuba for a long time. They have included Cuba in other Latin American forums while excluding the United States and Canada. (E.g. the Community of Latin American and Caribbean States or CELAC)
On the other hand, President Obama rightly stated that Cuba must be democratic before the U.S. agrees to include it in the Organization of American States (OAS). However, the U.S., Canadian and Colombian presidents failed to push the issue of democracy and articulate a clear message in support of democracy. Had they done so and brought every country to discuss the meaning of the Inter-American democratic charter, it would have been the ALBA countries that would have been isolated. The OAS charter plainly states that “representative democracy is indispensable for the stability, peace, and development of the region, and that one of the purposes of the OAS is to promote and consolidate representative democracy”. It is not clear whether this was poor planning, lack of imagination or mere indifference on the part of the leaders of these three countries.
In very simple terms, the reason why ALBA countries want to include Cuba is precisely because they aspire to become dictatorships like Cuba not because the latter has turned more democratic or more respectful of human rights. In fact, Cuba rejected all the overtures President Obama offered.
The biggest victory of the ALBA countries was precisely that they succeeded in making sure that Latin American countries supported the inclusion of Cuba without objections. Furthermore, ALBA countries have done remarkably well in maintaining their own violations of democracy and human rights under the radar.
Drugs and Drug Trafficking
The Summit also dealt with the important issue of drugs. Drug trafficking is a very serious problem, particularly in Central America and Mexico. Not long ago, the Guatemalan president proposed the legalization of drugs as a means to stop their illegal trade. This proposal was rejected by certain countries in Central America, particularly Honduras and Nicaragua.
The reason the proposal was put on the table in the first place is because of a set of common arguments raised all the time by Latin American leaders. The first is that U.S. drug policies are a failure and secondly that the United States is the main consumer of drugs and the principal provider of weapons to the cartels. Of course, nobody has raised the argument that the Drug Enforcement Administration has been expelled from the ALBA countries or that the leaders of these countries are linked to the drug cartels or that they encourage the cultivation of cocaine.
At this point, Latin American leaders agreed to give a mandate to the OAS to examine the possibility of developing alternatives and new ideas to combat drug trafficking and drug consumption.
It is highly doubtful that Latin American countries will bring any creative or positive idea.
The Case of Brazil
On April 9th, the Brazilian president, Dilma Roussef, visited the United States and met with President Obama for two hours at the White House.
The New York Times stressed the existence of an element of tension between the two countries. The Brazilian president was not honored with a special dinner at the White House, as happened when the Chinese and Indian leaders visited the United States. During the press conference both leaders looked tense and aloof.
Indeed, there are some disagreements between the two countries. Brazil still does not support international sanctions against Iran, and, contrary to the United States, it supports trade with Cuba.
The U.S. also objects to the inclusion of Brazil as a permanent member of the United Nations Security Council. Roussef also complained about U.S. monetary policies which she believes may hurt Brazil’s economy.
Despite this, Ms. Rousseff stressed oil and gas production as “a tremendous opportunity for further cooperation,” as the U.S. can supply equipment and knowledge to extract these materials and then buy the products.
This, of course, could be a tremendous opportunity not only to cooperate with Brazil in terms of energy but also to help the U.S. solve its own energy problem and dependency on Middle East countries or rogue states such as Venezuela.
Furthermore, during the Summit of the Americas, Rousseff pointed out something of extreme importance. In her own words: “In our region, we have to recognize the importance of the United States. The United States has features that are crucial in this emerging multi-polar world: it has flexibility; it has leadership in science, technology and innovation; and; it also has democratic roots”.
In other words, Rousseff wants to be a U.S. partner and ally and contrary to her predecessor, Jose Inazio Lula Da Silva, she is less engaged in ideological quarrels with the U.S. or with foolish and hyperbolic expressions of solidarity with tyrannical leaders in the third world, particularly in the Arab world. Rousseff is a former prisoner who was tortured and knows the evils of tyranny.
Contrary to Lula, she has been very outspoken about Iran’s human rights violations, ruthless executions, and treatment of women. She values human rights and democracy. Brazil could be an economic and political asset and could partner with the United States on economic and democracy promotion policies, particularly in Latin America. Brazil is a growing economic power and is moving in the direction of consolidating democracy. It has the potential to be an ally almost like the European Union in the global arena. It could potentially help on issues such as drugs, terrorism, rogue states and others. It is important to look at Brazil beyond Lula and his curious and misguided foreign policy.
During the Summit as well as during personal meetings, the White House seemed to have missed an opportunity to develop good partnerships and to clearly identify potential friends from those who are not. What is worse the United States did not bring any item to the agenda that was really important, like the crisis of democracy in the region. Instead, it granted Chavez and the ALBA a victory, and failed to strengthen actual friends such as Colombia or engage new friends like Brazil. A real missed opportunity.
In recent months the government of Argentina has launched a new political and public relations campaign aimed at putting pressure on Great Britain to negotiate the future of the Falkland/Malvinas Islands.
The islands constitute an archipelago in the South Atlantic Ocean 300 miles from the Argentinean coast. These islands have been ruled by Great Britain since 1833 except for a short period in April 1982 after the Argentinean navy invaded and conquered the islands.
Argentina has continued to claim the islands, arguing that the country acquired them from Spain after Argentina became an independent state in 1810. The United Nations called for the Argentineans and the British to conduct a dialogue over the future of the Islands. The British government has asserted, particularly since 2009, that there will be no talks since the residents of the islands do not wish to be part of Argentina. About 3,000 people live on the islands. The majority are of British descent. English is the official language and all are British citizens since 1983, shortly after the Argentinean Armed Forces were removed by the British from the island.
On February 10th of this year, Argentina complained to the United Nations about Great Britain’s "militarization" of the area after the British sent a warship to the island. Great Britain, the U.S. State Department, as well as several observers, pointed out that the presence of the ship is part of a routine and does not constitute any violation or militarization of the area. The United Nations proposed to mediate in order to achieve a peaceful solution to the conflict. Argentina accepted the UN proposal.
Beyond the question of who is right and who is wrong, it is important to understand how symbolic the issue of the islands has become and how much it is part of a nationalist foreign policy that transcends the boundaries of Argentina.
Indeed, the government of Cristina Kirchner has made the Falkland/ Malvinas issue a regional issue. "The Falklands have ceased to be a cause just for Argentines but to become a cause for [Latin] Americans," Kirchner pointed out. Countries in the region (Mercosur) have joined the Argentinean embargo of ships that carry the Falkland’s flag. The countries of the Bolivarian Alliance (ALBA), a group of eight countries, allied with Hugo Chavez met early in February and the Falkland Islands were the main issue discussed by the group. The Venezuelan president called on the foreign ministers of these countries to look into the possibility of sanctioning the United Kingdom for its "refusal to enter into dialogue". Thus, the Bolivarian Alliance joined the Argentinean-embargo against the Falklands/Malvinas flagged ships.
Ecuadorian President, Rafael Correa, one of the most anti-Western leaders in Latin America and the most likely successor to Hugo Chavez as leader of the Bolivarian alliance pointed out that "it is time that Latin America decides on sanctions against that misplaced power that intends to be imperial and colonialist in the 21st Century".
Indeed, the claim on the islands that is being made by the Argentinean government and its regional allies is an "anti-colonialist", anti-Western crusade.
The use of the United Nations is a very wise tool as it has been effectively used against the State of Israel, a U.S ally, over and over again.
Thus, Argentina has recruited not only regional leaders but also regional intellectuals, among them the former human rights activist and Nobel laureate, Adolfo Perez Esquivel, who has taken a lead on the issue. Interestingly enough, Perez Esquivel received the Nobel Prize over his struggle for human rights during the bloody dirty war in Argentina that took place during the years 1976-1983. Perez Esquivel is now an unapologetic supporter of Hugo Chavez and his regime, despite the Bolivarian leader’s countless human rights and democracy violations. Most recently Perez Esquivel also led a delegation of 22 intellectuals who met with Fidel Castro a dictator who has oppressively ruled Cuba for the last 52 years.
Latin American solidarity has been an issue well rooted in the nationalist left long before Chavez began to spread his Bolivarian doctrine of Latin American unity.
Moreover, this element of nationalism and anti-imperialism often unifies the extreme left and the extreme right.
For example, during the British-Argentinean war over the Falkland/Malvinas in 1982, Fidel Castro had no problem in enthusiastically volunteering his advice to the bloody anti-leftist Argentinean Military Junta. The fact that the regime persecuted and killed pro-Castro groups and assassinated tens of thousands of Argentineans did not cause any moral dilemma for Castro. (At that time, the Soviet Union also had a strong relationship with the anti-Marxist Argentinean military Junta).
The embargo against the islanders’ boats is unfair and is disrespectful of the desires of the Falkland/Malvinas residents who do not wish to be ruled by Argentina. Last year Kirchner and her allies were at the forefront of an international campaign to support Palestinian independence while ignoring Israel as a negotiating partner. This year they are willing to subjugate and impose their will over a population that does not wish to accept such rule. Indeed, they want to use international pressure in order to bring Great Britain to its knees.
This is why it is no wonder that a group of serious and prestigious intellectuals issued a letter indirectly repudiating the spirit of Kirchner’s motives.
This group led by Beatriz Sarlo, a well- known literary and cultural critic, blasted the strategy chosen by the Argentinean government to confront the United Kingdom over the islands. They demanded that the government engage in a genuine dialogue to "guarantee the self-determination of the islanders". The group sees a contradiction between Argentina’s request to negotiate with Great Britain and its claim that Argentinean sovereignty over the islands is non-negotiable".
Most importantly, the group also warned that the situation requires that "we do not engage in jingoism that in the past led us to death". They called to cease the nationalistic agitation promoted by the government and develop an "alternative vision to overcome the conflict with Great Britain". In a final statement these intellectuals reminded the public that "our worst tragedies were not caused by the loss of land but by lack of respect to life, human rights, and other Republican values such as freedom, equality, and self-determination".
As expected, the Argentinean government reacted with verbal aggression and contempt for the letter.
The Falkland/Malvinas case represents a display of regional unity for the wrong reasons. Such unity has also played into the hands of highly controversial figures, such as Hugo Chavez. Despite the fact that Chavez does not represent the spirit of the majority of the countries in the region, he has gained political leverage from these conflictive situations.
Chavez and Kirchner are two allies. Kirchner’s speech at the December summit of Latin American and Caribbean Community of States (CELAC) contained numerous statements suggesting a conflict of interests between the region and the West.
Both leaders are also seeking to increase tensions between the United States and Latin American countries. Among other things, they expect to embarrass the U.S. by exposing it as an ally of Great Britain and thus further radicalize "anti-imperialist" sentiments. The fact that groups of regional solidarity in Latin America have proliferated (e.g CELAC, Union of South American Nations or UNASUR, ALBA, the System of Central American Integration or SICA) drags other countries like Brazil, Chile and Mexico to accept unilateral positions that require more sophistication and balance.
Regional nationalism could become a real problem if it is not fairly and properly approached as the biggest winners could be the wrong actors.
The Falkland/Malvinas episode is not insignificant. The U.S. must anticipate these conflictive scenarios and be ready to develop contingent political plans to prevent further escalation. What seems to be a British/Argentinean problem might spread beyond these two countries. Ignoring the issue should not be an option.
Until Chavez assumed power Iran’s presence in the Western Hemisphere was not as strong as it is today. Its proxy, Hezbollah, had presence and even committed a number of atrocities in Latin America such as the attacks on Israeli and Jewish targets in Buenos Aires. However, its presence increased manifold since Chavez and his Bolivarian revolution began to spread throughout the hemisphere.
Not surprisingly the Iranians have tried to carry out another act of terrorism by attempting to assassinate Saudi Arabia’s ambassador to the United States with the help of a Mexican criminal group. Iran intended to carry out this attack by using an American citizen of Iranian origins who contacted a member of a well-known Mexican gang and drug cartel called "The Zetas". It was also disclosed that during their exchanges, they discussed attacks on Saudi and Israeli embassies in Washington and Buenos Aires.
This event surprised a number of analysts and journalists including the New York Times because Iran usually carries out its terrorist attacks through proxies such as Hezbollah, Hamas and the Mahdi Army. This time, however, Iran sought the help of a drug cartel and a gang that seeks to make money and not to carry out political terrorist attacks.
Thus, Max Aub, a Mexican journalist working in Miami, raised the question on Spanish language TV, why would the Zetas undertake such a risky operation for such a small amount of money- only $ 1.5 million?
From a different angle, Ali Alfoneh, an expert on Iran at the American Enterprise Institute doubts that Ayatollah Ali Khamanei planned such an attack because "he is a very cautious statesman and thus he would not gamble on something that involves so many risks". In Mr. Alfoneh’s view, this plot is indicative of an internal struggle within the Iranian leadership.
Nevertheless, the Menges Hemispheric Security Project has been warning for some time of the connections between Middle Eastern terrorist groups, rogue states and drug cartels. (See the latest here ).
Unlike countries in the Middle East where Iran has at its disposal, proxy groups such as the ones mentioned above, countries like those in the Western Hemisphere- far away from Iran’s natural geographical sphere of influence-consist of relatively unknown territory for Iran. Drug cartels and other local criminal elements on the other hand, being heavily involved in many types of criminal activities, possess logistical and strategic knowledge of their operational territory and are therefore capable of providing a tremendous service to rogue states with terrorist intentions such as Iran.
The attacks carried out by Iran against the Israeli Embassy and the Jewish community headquarters in Buenos Aires in 1992 and 1994 respectively are a case in point. During the investigation of these attacks it became clear that top officers of the Buenos Aires Province-which is the largest and one of the most corrupt police forces in Argentina- were involved in providing logistical and institutional support to the terrorists who carried out the attack. The cases against these police officers were dismissed for reasons that are not at all clear or justified (except on internal political grounds).
In the case of the plot against the Saudi Ambassador, the logic seems to be that the Iranians knew that the "Zetas" had ways to penetrate U. S. territory, since they have already done it. Also, the "Zetas" is the most ruthless and murderous group of all the drug cartels and gangs combined. The "Zetas" have been responsible for many massacres in Mexico, including mass murder of immigrants near the border, as well as kidnapping and extortion activities and piracy. In addition, they have been the main providers of fire -power initially to the Mexican Gulf Cartel and most recently to the families that control drug trafficking in Guatemala. Of course the "Zetas" are a drug cartel. However, they have always mainly been a supplier of violence. I would dare to say that for the "Zetas" being a killing and torture machine comes first and being a drug cartel comes second. Ruthlessness and audacity are key factors that the Iranians need. In answering the question why the "Zetas" would take such risk when the profit is not worthwhile, we can say that killing is part of the equation. Drug gangs are not there only for the money. There is a psychological element that plays a role. Killing is a challenge that is not necessarily limited by the need to make a profit. As an example a Mexican gang leader captured by Mexican authorities last summer, Oscar Garcia, admitted to killing 300 people with his own hands (he used to sadistically decapitate his victims with a knife) and ordered the death of another 300 people. This man- who confessed not without amusement that he was born to kill- began his career, like the majority of the "Zetas" members, in the police and the military. In other words, this is a vivid example of a man who joins the drug cartels not to become rich but to kill. It is safe to assume that he is not the only one.
Iran’s Strategy
It was the Iranian Quds force that planned the plot. Interestingly enough, the Quds force was established as a special branch of the Revolutionary Guards to help export the revolution through subversion and terrorism. Therefore, the Quds Force’s activities take place beyond the borders of Iran and it reports directly to the Supreme leader, Ali Khameini, and most probably to President Mahmoud Ahmadinejad, as well. There is no reason to believe that these leaders did not know about the plot. To talk about an internal plot against the will of these leaders whose ruthlessness has been proven beyond any doubt, is also a baseless speculation.
A totalitarian state such as Iran is designed to inflict damage on what it considers to be its enemy. Iran has carried out a number of operations where it has not assumed responsibility for them. First the attacks in Buenos Aires mentioned above; the attacks on the Khobar Towers in Saudi Arabia in 1996; a series of attacks on Paris’ metro systems; the hijacking of TWA Flight 847 from Athens to London in 1985 where a U.S navy diver was murdered and others. Iran never assumed responsibility of these lethal attacks precisely because evidence beyond reasonable doubt against Iran was never clear. It was always Lebanese Shiites or unknown people who committed these crimes. This time Iran tried to do the same thing, which is to carry out an attack where there is no evidence of its involvement. As scholar, Walid Phares, has rightly pointed out in an interview with Fox News, "in its operation against embassies in DC, Iran’s regime subcontracted cartels to strike, so that the Ayatollahs would escape international responsibility".
At this point there is little reason to doubt Iran’s responsibility for the plot against the Saudi Ambassador. What Iran is capable of doing on American soil or in any other country in the Western Hemisphere is a serious challenge that cannot be ignored. It requires heavy involvement by the White House. It cannot be delegated to any bureaucracy or agency that would treat these events as business as usual.
Iran has allies in the Western Hemisphere, first and foremost Venezuela under the leadership of Hugo Chavez. But other countries, following Chavez’ lead, such as Ecuador, Bolivia, Cuba, and Nicaragua have also deepened relations with Iran at a very dangerous level.
Venezuela is Iran’s Main Gate to the Western Hemisphere
Venezuelan president, Hugo Chavez, has been a major facilitator of the Iranian banking system by helping create a joint Iranian Venezuelan bank to fund "development" projects. CSP staff member, Nicolas Hanlon reported that this bank is the offspring of The Export Development Bank of Iran. This Iranian institution is under sanctions from both the U.S. Treasury and the international community for its alleged involvement in Iran’s nuclear program. The joint bank venture is aimed at finding new ways to finance Iran’s nuclear program, and mainly avoid sanctions imposed on Iran by the international community.
Moreover, Chavez also maintains a relationship with the Al Quds Force.
In fact, in January 2009, the Italian daily "La Stampa", reported that the regular flights between Caracas, Damascus and Tehran constitute a device for Venezuela to help Iran send Syria material for the manufacture of missiles. Accordingly, the materials are destined for the "Revolutionary Guards", the main force protecting the Iranian regime. In exchange for those materials Iran provided Venezuela with members of their revolutionary guards and their elite unit, "Al Quds", to strengthen Venezuela’s secret services and police. Finally, In April 2010, the Pentagon reported the presence of the Quds Force in Venezuela.
Chavez also provides logistical help to Iran. In 2008, it was reported at a conference organized by the CSP Menges Hemispheric Security Project that there were Iranian partnerships with dubious local businessmen in factories located in sensitive areas with access to strategic routes. One of the speakers at the conference talked about those partnerships as possibly including connections between drug trafficking networks that control sensitive strategic areas and Iran. In fact, Iran has established a financial and business infrastructure with Chavez’s consent and encouragement that now includes banks, gold mining, a cement plant, a tractor and bicycle factory, a tuna processing plant and a joint oil venture. On December 30th, 2008 twenty two containers were confiscated from an Iranian cargo ship bound for Venezuela. When the Turkish authorities inspected the shipment, they did not find tractor parts but components to build weapons, bombs and possibly some radioactive material (See story here)
Finally, a 2009 report by the Government Accountability Office (GAO) reported that for some time Venezuelan ports and airports are being freely used by drug traffickers. It is no secret that Venezuela has become a major trans-shipment point for drugs coming from Colombia and Ecuador and that Chavez has close connections to the FARC (Revolutionary Armed Forces of Colombia) who in turn work closely with the Mexican cartels.
U.S. Policy Action Required: Sanctions Against Venezuela Are Crucial
Thus far, U.S. policy has detached Venezuela policy from Iranian policy despite everything mentioned above. Venezuela has served as Iran’s main ally in helping Iran to avoid sanctions, to increase its presence in the Western Hemisphere and has even maintained nuclear cooperation with Iran.
Currently there are sanctions against Iran imposed by the United Nations and by the United States. These are sanctions directed primarily against Iran’s energy sector but these measures need to be fully implemented. In addition, the Central Bank of Iran must be sanctioned. This past August, more than 90 U.S. senators signed a letter to President Barack Obama pressing him to sanction Iran’s central bank, with some, threatening legislation to force the move. Such a step could freeze Iran out of the global financial system.
In regard to Venezuela, U.S policy has been very mild towards Chavez for fear of looking like a "bully" and for fear of losing influence on a continent where the left has gained substantial power.
The Venezuelan oil-giant PDVSA was mildly sanctioned last summer. The sanctions imposed on PDVSA only prohibit the company from obtaining either a U.S. export visa or money from the U.S. Import-Export Bank, as well as banning them from attempting to obtain U.S. procurement contracts. These sanctions, however, are remarkably limited in scope. They do not affect PDVSA’s U.S. branch (CITGO), nor does it stop the import of Venezuelan oil to the U.S. About 10% of the total oil the U.S imports comes from Venezuela. (See more about sanctions on Venezuela here)
Since Venezuela is a key Iran partner it only makes sense for the United States, the European Union and the United Nations to impose sanctions on Venezuela, as well. Additional sanctions against Iran will only be partially effective as long as the Iranian government has carte blanche to launder their money through the Venezuelan banking system.
The U.S needs to be assertive also with other countries in Latin America that maintain relations with Iran. Not only Chavez and his Bolivarian allies hold strong relations with Iran but also moderate socialist countries such as Brazil and Uruguay have strengthened their relations with Iran as a show of independence from the United States. This includes trade relations and stronger political relations. With news about murderous Iranian intentions, it is vital that the United States along with Europeans press Latin American countries to distance themselves from Iran and join the sanctions policy.
In conclusion, security challenges emanating from the Western Hemisphere have long been neglected. It is not that surprising that Iran hatched a plot reaching out to a Mexican drug cartel to carry it out. What is surprising is the lack of awareness of Iran’s substantial presence in our hemisphere and the seeming nonchalance with which the U. S. treats this ever rising danger.
Originally published at The Americas Report, a project of the Center for Security Policy.
