Petro Powers Drop the Dollar
8. If you thought record oil prices this year were a pain in your wallet, there's more bad news on the horizon. The latest Bank for International Settlements quarterly report, which tracks the investment trends of oil-producing countries, indicates that Russia and OPEC countries are moving their holdings out of dollars and into euros and yen. OPEC cut its holdings in the dollar by more than $5 billion during the first and second quarter of 2006. And Russia now keeps most of its new deposits in euros instead of dollars.
That decrease is swift and significant - and helps to explain why the dollar recently fell to a 20-month low against the euro and a 14-year low against the British pound. Holding dollars while other currencies gain strength means less profit for oil producers. But if they rapidly divest themselves of dollars, it may weaken the currency and push up inflation in the United States. "This new trend may be bigger trouble for the United States than high oil prices and surging Chinese exports," says Nouriel Roubini, a professor at New York University's Stern School of Business. If this year's move away from the dollar is a sign of future thinking by oil producers, the pain felt at the pump may soon be the least of our worries.
United States Funds the Taliban
5. The Taliban's resurgence brought the ongoing war in Afghanistan back onto the front pages in 2006. From record opium production to suicide bombings, the outlook has only grown dimmer in the past 12 months. What you probably didn't hear is that some of the money the United States is spending to combat the resurgence of the Taliban is winding up in the hands of . . . the Taliban.
As recently as November, the Institute for War and Peace Reporting revealed that villagers in Afghanistan's war-torn south were handing over U.S. cash meant for reconstruction projects to Taliban fighters, who then use the money to purchase weapons, cell phones, and explosives. As part of an effort to stimulate economic development in the country, the United States had committed $43.5 million for reconstruction as of September. One Canadian officer charged with helping to distribute cash said that "millions" has already gone missing in the five years since coalition troops arrived. Why? According to the report, local mullahs have urged residents to fight the foreign occupation and hand over the money in the hopes of gaining back the security they've lost. Others say it's simple extortion from Taliban thugs. Either way, the United States may inadvertently be aiding the enemy in a fight that will almost certainly become more costly in the year ahead.
Bush's Post-Katrina Power Grab
3. When U.S. President George W. Bush signed the $532 billion federal defense spending bill in October, there were the usual budgetary turf battles on Capitol Hill. But largely overlooked was a revision of a nearly 200-year-old law to restrict the president's power during major crises. In December, Congressional Quarterly examined the changes, saying that the new law "takes the cuffs off" federal restraint during emergencies. Rather than limiting the circumstances under which a president may deploy troops to "any insurrection, domestic violence, unlawful combination, or conspiracy," the 2006 revision expands them to include "natural disaster, epidemic, or other serious public health emergency, terrorist attack or incident." In other words, it's now easier for the federal government to send in troops without a governor's invitation.
Ostensibly, the move aims to streamline bureaucratic inefficiencies that left thousands of New Orleanians stranded last summer. Yet the Insurrection Act that existed when Katrina struck didn't actually hinder the president's ability to send federal troops. He simply chose not to.
Critics have called the changes an opening for martial law. Democratic Sen. Patrick Leahy of Vermont, one of the few to raise the issue in congress, says that "Using the military for law enforcement goes against one of the founding tenets of our democracy." Is martial law more likely than before? Perhaps not. But the fact that the revisions were slipped into a defense bill without a national debate gives ammunition to those who argue the administration is still trampling on civil liberties five years after 9/11.
India Helps Iran Build the Bomb, While the White House Looks the Other Way
1. The U.S. government usually takes a hard line against countries that assist Iran with its nuclear program. In 2006 alone, Washington sanctioned firms in Cuba, North Korea, and Russia for making it a little easier for Iran to develop weapons of mass destruction. But, when the proliferator is a close American ally, the United States seems to take a different approach.
Just after the U.S. House of Representatives voted in July to support a plan to provide India with nuclear technology, the Bush administration quietly imposed sanctions on two Indian firms for supplying Tehran with missile parts. Nor was the White House forthcoming with congress about other blots on India's proliferation record: In the past two years, two other Indian companies have been penalized for allegedly passing chemical weapons information to Iran, and two Indian scientists who ran the state-run nuclear utility were barred from doing business with the U.S. government after they allegedly passed heavy-water nuclear technology to Tehran. Far from scuttling India's nuclear deal, the United States seems to have rewarded the country by overturning 30 years of nonproliferation policy in its favor.
The Bush administration says one thing out of its mouth, but speaks far differently out its neck and out its ass, all to our detriment.
The "media" ain't much help.