Category Archives: United States

Britain, Foreign Affairs, Government, Military, National Security, Syria, United States

Arming the Syrian rebels is looking less likely…

SYRIAN REBELS

Downing Street has ditched plans to arm the Syrian rebels after the Prime Minister has been warned that there is little point sending weapons unless he is prepared for all-out war with the regime of Bashar al-Assad.

General Sir David Richards, Chief of the Defence Staff, along with other commanders believe that sending small arms or ground-to-air missiles will hardly be worth it, since it would it would make little difference to the outcome of the conflict. Military chiefs have also said that even options like a no-fly zone (NFZ) would require air attacks on Syrian defences that would last weeks or even months.

The assassination last week of Kamal Hamami, a top commander of the Syrian Free Army, by a hardline group linked to Al-Qaeda, has compounded anxieties over plans by Britain and other Western countries to give military help to rebels fighting the Assad regime. Those fears are aggravated by the possibility that weapons and expertise provided to the rebels could be turned against the UK and her allies by radical Islamists. There are also growing rivalries between the Syrian Free Army and Islamists, who have sometimes joined forces on the battlefield.

But senior ministers and Whitehall officials have revealed that the Coalition is drawing up plans to help train and advise ‘moderate’ elements of the opposition forces who continue to battle with Assad’s forces.

The British Prime Minister has been keen to act on Syria and demanded last month an end to the EU arms embargo on the country to give him options. The EU reluctantly relented, but sending weapons to the beleaguered rebels in Syria remains an option open to the prime minister if parliament was to approve, though that does seem a remote possibility at the present moment given the lack of support among Tory whips.

Following a meeting of the National Security Council, in which British military commanders were asked to present options on the conflict, the Government was told that although it might make them feel better (by sending weapons) it was hardly worth it in terms of altering the balance of forces on the ground. Whilst Syria is known to have good air defences, military chiefs have also said that engaging Syria militarily would mean weeks of bombing and air strikes. A decision to engage is one that couldn’t be undertaken half-heartedly.

But given the lack of organisation within the rebel movement, training and advising the rebels remain district possibilities for Britain. The UK is concentrating on areas where it feels it has the expertise to contribute. The supply of weapons into Syria is continuing to be made by Qatar and Saudi Arabia.

It is understood that military advisers could be stationed in Jordon to advise Syria rebel leaders on strategy and tactics. UK chiefs are wary of being accused of having British boots on the ground in Syria or by making any ground incursion into the country.

Ministers believe it could take 18 months of further conflict before Assad is forced to the negotiating table. The civil war has already claimed more than 100,000 lives with millions more displaced on the borders with neighbouring countries.

There is also frustration about the approach taken by US Secretary of State John Kerry in pushing regime figures to the negotiating table. There is little idea of the solution Mr Kerry is seeking. Knowing where you are trying to get to in order to get there should surely be central in any negotiations over Syria, but this underpinning remains distinctly absent even after almost three years of intense fighting.

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Banking, Britain, Economic, Financial Markets, Government, United States

Libor handed over to the Americans…

BLOW FOR THE CITY OF LONDON

The owner of the New York stock exchange has been handed responsibility for setting controversial LIBOR interest rates in a move slammed by MPs as a ‘tremendous blow’ to the City of London.

Earlier this week the Treasury confirmed that the key role will pass from lobby group the British Bankers’ Association (BBA) to transatlantic NYSE Euronext from early next year.

The process, which will still take place in London, will be overseen by City watchdog, the Financial Conduct Authority (FCA).

But while FCA head Martin Wheatley hailed this as ‘an important step in enhancing the integrity of LIBOR’, John Mann, a member of the Treasury Select Committee, blasted the decision.

The Labour MP said it was further evidence that British banks are being unfairly singled out for rigging LIBOR interest rates – while, he says, their US counterparts escape punishment.

He said:

… This is a tremendous blow to the prestige of the City of London and sends out the message that you can’t trust the British.

… What the Americans have been doing is selectively picking out British banks that have done wrong and selectively ignoring the same scandals that have been committed by their own banks… The Chancellor has failed to stick up for the City. French and Germans will be rubbing their hands with glee at the prospect of stealing other financial markets.

LIBOR – The London Interbank Offered Rate – is a key benchmark rate which is used to set mortgages for millions of homeowners and is linked to $300 trillion of financial contracts around the world.

The BBA was criticised for being asleep on the job as a number of banks, including Barclays, the Royal Bank of Scotland and UBS, routinely rigged rates under its nose.

This culminated in huge fines for these banks and the decision by an independent review headed by Mr Wheatley to strip the BBA of its role.

The decision to award the contract to the New York Stock Exchange-owner followed a bidding war orchestrated by an independent committee, headed by former journalist Baroness Hogg – now a senior independent director at the Treasury. NYSE Euronext, which owns the pan-European Euronext market and will pay £1 for BBA Libor Ltd’s assets, said it is ‘uniquely placed’ to restore the international credibility of LIBOR. BBA has refused to reveal how many of its employees work on LIBOR.

Failed bidders are understood to include financial information provider Thomson Reuters, which has calculated LIBOR on behalf of the BBA since 2005.

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COMMENT

The British Bankers’ Association, a wildly discredited organisation given its mishandling of LIBOR, the interest rate that sets the price for trillions of dollars of transactions across the world, has much to answer for. Its sclerotic behaviour under the BBA’s previous leadership failed to respond with any willpower to criticisms made by the Federal Reserve. Had it done so, it is possible that the LIBOR scandal – which wiped out the top management at Barclays – might never have happened.

Not that the Bank of England has totally clean hands in any of this. It may have had no direct responsibility for keeping Britain’s markets honest, but it can be accused of being lackadaisical in making sure the BBA acted on Fed criticisms and forced through reforms designed to erect Chinese walls between LIBOR setters and traders so that opportunities for rigging were stamped out.

Paradoxically, the Libor business that NYSE Euronext will inherit has shrunk dramatically. Post the Great Recession the LIBOR market has been in deep slumber because banks are so distrusting of each other, especially in the eurozone.

It’s possible that among the reasons for awarding the LIBOR contracts to NYSE Euronext rather than the London Stock Exchange is that London’s bid came in association with Thomson Reuters, the financial institution which set the reference rate under the old broken regime.

Thomson Reuters’ independence has been challenged recently by the New York State Attorney Eric Schneiderman who is critical of an arrangement under which premium customers get privileged access – a two second advantage – to the University of Michigan consumer confidence index. At a time when the City is under siege from Brussels over a variety of issues, it does seem bizarre that we should allow an interest rate market that grew in London in the 1970s, to escape US tax measures, to head back across the Atlantic.

And while several European banks, including Barclays, RBS and UBS, have paid a heavy price from US regulators for LIBOR manipulation, so far there has not been a single successful prosecution or settlement with an American bank. That in itself should raise many previously unanswered curious questions, as LIBOR setting now moves to the United States.

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Egypt, Foreign Affairs, Government, Middle East, United States

Egypt is on the brink of sliding into civil war, but the U.S. is best placed to help…

TENSIONS RISING IN CAIRO

There is a grave prospect that Egypt will descend into a bloody civil war and insurrection following the overthrow of President Mohammed Morsi. The situation in Egypt is fast moving but another significant step has occurred with the military being accused of killing 51 protestors on Sunday. The fatalities include women and children, as well as hundreds of others injured.

The army said it opened fire after a group it described as ‘terrorists’ tried to storm a barracks on the outskirts of Cairo, where the deposed Egyptian president is believed to be detained under house arrest in the Officers Mess.

Television footage beamed across the world did identify a number of hooded men in the crowd brandishing weapons and firearms, but the large number of fatalities and wounded casualties will inevitably lead to an increase in tensions in a country that is now on the brink of collapse.

‘Egypt on the edge’: Egyptian military soldiers stand guard atop armoured personnel carriers near Cairo University, where supporters of Egypt's ousted President Mohammed Morsi have installed their camp in Giza, southwest of Cairo. [Photo-credit Manu Brabo]

‘Egypt on the edge’: Egyptian military soldiers stand guard atop armoured personnel carriers near Cairo University, where supporters of Egypt’s ousted President Mohammed Morsi have installed their camp in Giza, southwest of Cairo. [Photo-credit Manu Brabo]

To add to the already simmering tensions the political wing of the Muslim Brotherhood has called for a ‘public uprising’ to protest against last week’s military takeover. The Brotherhood is urging Egyptians to revolt against ‘those trying to steal their revolution with tanks’. Supporters of the intervention, however, claim it was necessary to prevent Mr Morsi’s Freedom and Justice Party, the Brotherhood’s political organisation, from mounting an Islamist takeover of the country by stealth.

If Egypt, the Arab world’s most populous nation, is to be spared the catastrophe of succumbing to a Syria-style civil war, urgent action will be required. Britain has called for ‘calm and restraint’, but the country best-placed to help is the United States. It donates at least $1.5 billion in military and humanitarian aid to Cairo each year.

Washington was supportive of Egypt’s first democratically elected government and has, understandably, been dismayed by the military’s conduct. The Obama administration, though, must now overcome its reservations and provide the support to the interim administration of Adly Mansour. Mr Mansour has the difficult task of not only changing the constitution and mandating for new elections, but for steering Egypt back to the path of democracy.

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