Spanish Security World

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A calamitous intelligence operation proves Defense Minister lied to press

Posted by Fernando Celaya on November 25, 2009

VicePresident de la Vega & Defense Minister Chacon

A shocking revelation in the journal El Mundo suggests that three CNI intelligence operatives attempted the rescue of the three Spanish sailors from the ship ‘Alakrana’, hostage for 47 days, that were allegedly taken off the ship and brought somewhere into Somalia. What is more astonishing is that El Mundo’s Op Ed piece states the CNI operatives handed a $1 million ransom to an alledged Somali Defense Ministry officer who instructed them to wait for the sailors, who in turn, were never released.[1] Following the controversial rescue, crewmen and patron revealed the three sailors were never removed from the ship, and thus never reached the Somali coast.

The idiosyncrasy of the story is that Defense Minister Chacon, standing side by side with  Joint Chief of Staff Jefe del Estado Mayor de la Defensa (JEMAD), General Jose Julio Rodriguez, stated twice before the press that the Defense Ministry ‘always knew the whereabouts of the three sailors’. This is clear evidence the Defense Ministry outright lied to the press and the public in order to cover its embarrassing crisis management. Simultaneously, this evidence would also prove, VicePresident Maria Teresa Fernandez de la Vega also lied, before Congress, when stating, ‘the Spanish government has not paid any amount for the ransom of ship and crew’. 

Very serious accusations can be inferred in El Mundo’s piece, which if the government fails to disprove would indicate that, undoubtedly, this government has lost any and all credibility, not only by negotiating with, but also paying monies, to criminals who have exposed and ridiculed a nation and a government about to preside over the EU. This embarrassment would compel many politicians to think about political ostracism, but surely not in Spain. 

[1] ‘Timo de 1 millon al CNI por los tres marineros no desembarcados’, El Mundo (November 25, 2009), http://estaticos.elmundo.es/documentos/2009/11/25/portada.pdf (last accessed November 25, 2009)

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A Royal Navy patrol off Gibraltar… really?

Posted by Fernando Celaya on November 21, 2009

Spanish Flag, British sailors

A diplomatic row between Spain and the UK is renewing criticism at the Zapatero government for its perceived weak positioning on issues where Spain’s sovereignty is at stake.

According to the British Foreign Office’s account, a Patrol ‘off Gibraltar’ fired upon a buoy reflecting Spanish flag colors. However, the Guardia Civil’s report and recorded image of the event shows Royal Navy sailors in possession of a Spanish flag. Politicians in Spain confront each other while the British media does not report accurately the real reasons behind the criticism for the patrol’s behavior.

The hard truth, even if in fact, what was fired turned to be a buoy and not a Spanish flag, is that a foreign ship was well inside Spain’s 12 miles territorial waters… and firing its weapons. So, for Dominique Searle, editor of the Gibraltar Chronicle, to suggest that only the setting in which the incident took place makes the issue sensitive is absurd. Equally absurd results The Times’ claim suggesting British troops captured the colony. Excuse my English, but Gibraltar was a territory under Spanish sovereignty well before it ‘became’ a colony… a British one, after 1704.[2]

With the Zapatero government in power, UK, Spain and Gibraltar relations have improved substantially even when Gibraltar plans to expand territorially by building a macro-urban and tourism complex branded ‘Sovereign Bay’ designed by reputed architect Norman Foster as well as a projected new port at the cost of €2 million in 2014. Ironically, this is being conducted with sand extracted from the Peninsula. The lack of consideration and impunity on Gibraltar and British parts for the environmental impact caused by the numerous nuclear stoppages, most known of these that of the nuclear submarine ‘Tireless’, as well as the contamination following the sinking of the ‘New Flame’ should naturally be a logical source for criticism on Spain’s behalf.[3] Additionally, the way in which Spanish patrols are intimidated by Royal Navy vessels should not be forgotten.

Yet, there are other reasons, fiscal ones particularly, besides traditional sovereign claims, that should lead Spain to review its approach to Gibraltar policy. Nonetheless, Spain Foreign Minister Moratinos has accepted British ambassador Paxman’s explanations closing the debate despite the national uproar. Surely a source for continued disputes.

[1] ‘La armada britanica dispara contra una bandera rojigualda’, El Pais (November 20, 2009), http://www-org.elpais.com/articulo/espana/Armada/britanica/dispara/Gibraltar/bandera/rojigualda/elpepuesp/20091120elpepunac_10/Tes (last accessed November 20, 2009)

[2] ‘Royal Navy patrol off Gibraltar accussed of firing at Spanish flag’, The Times (November 21, 2009), http://www.timesonline.co.uk/tol/news/world/europe/article6926345.ece (last accessed November 20, 2009)

[3] ‘Gibraltar gana terreno al mar y contruye complejos en territorio espanol’, Libertad Digital (January 18, 2009), http://www.libertaddigital.com/nacional/gibraltar-gana-terreno-al-mar-y-construye-complejos-en-territorio-espanol-1276348492/ (last accessed November 20, 2009); ‘Gibraltar continua su invasion de aguas espanolas ante la pasividad del gobierno’, ABC (August 9, 2009), http://www.abc.es/20090809/nacional-nacional/gibraltar-continua-invasion-aguas-20090809.html (last accessed November 20, 2009)

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Spanish government stumbles with incompetence once more in piracy case

Posted by Fernando Celaya on November 16, 2009

20091115elpepinac_3

Fishing Ship 'Alakrana'

It has now been 45 days since the Spanish fishing ship ‘Alakrana’, carrying 36 crewmen and built in 2006 at the cost of €30 million, was impressed by 13 heavily armed pirates nearly 415 miles off the coast of Somalia on October 2. It has been the second such hi-profile piracy case since another Spanish fishing ship, the ‘Playa de Bakio’, carrying 26 crewmen suffered a similar experience on April 2008. However there are notable differences in the manner in which the government handled the crisis to recover both crewmen and ship.

While the Spanish government paid a ransom in the range of €700.000 in the Playa de Bakio case to end the hostage situation, the ‘Alakrana’ case is riddled not only with poor decision-making, but also with spectacular poor judgment and coordination, compounded by an inability or unwillingness to assume political responsibilities. According to the journal El Pais, which describes the government’s decision-making process since the ‘Alakarana’ was taken hostage, the government considered two options during the first 48 hours after the ship was taken over; the first option’s premise was based on the idea that the frigate Canarias from the Spanish Navy could run to the ‘Alakrana’s’ aid; then specially trained military would force a breakdown in the ship’s mechanics in order to compel a negotiated solution upon the pirates. This option was soon discarded as impracticable due to time constraints, as the ‘Canarias’ was 800 miles away from the ‘Alakrana’ and its 22 nots at peak speed were not enough. At the same time, the pirates commanding the ‘Alakrana’ had liberated the ship from a small boat it carried, which allowed the ship to cruise at 14 nots back to the Somali coast. Yet the Navy found an odd prize to its attempted aid when it apprehended two pirates in command of the small boat that was fleeced off the ‘Alakrana’. And here is where the government’s chaotic crisis-management really begins.

Soon after the situation unfolded, a crisis management ministerial cabinet team is created, surprisingly not including the Interior Ministry, with all its known terrorism and hostage expertise and technical resources. The cabinet decided the two pirates should be transferred to Spain, a decision that contradicted an opinion by the Armed Forces’ Intelligence Center Centro de Inteligencia de las Fuerzas Armadas (CIFAS) suggesting this may endanger the Alakrana and its crewmen and undercut the government’s bargaining power. Similutaneously, this action could violate plain national and international law; the basis for these contradictions result from effecting a detention without having received prior hijacking notice. Secondly, Vice-President Maria Teresa Fernandez de la Vega advised the Attorney General’s Prosecution Office Fiscalia del Estado to denounce the case. But against whom exactly; and with what implications? Seeing no solid ground to build a case against the pirates in Spanish territory, the Fiscalia refused to handle the case, after which Vice-President de la Vega had the State’s Attorneys Office Abogacia del Estado, through Justice Minister Caamano, denounce the case before the Special Court Audiencia Nacional. Finally, judge Garzon had the pirates moved to Spain.[1]

As El Pais’ Op Ed piece suggests, there was no meaningful debate indicating other options were considered or outside legal opinions sought by the crisis-management cabinet team, including taking the two pirates into a third country, such as Kenya, as had been done in the past. By the time the ship’s patron and crewmen families got involved in the ransom operation with an offer of €3 million the pirates refused claiming they wanted their colleagues released or else. In the aftermath of the pirates’ response the Vice-President has clashed with Defense Minister Chacon over who decided what only to finally have Foreign Minister Moratinos apply embarrassing diplomatic maneuvers ordering the Somali government, which cannot lord its own safety inside the city from which it rules, to ensure the lives of the Spanish hijacked crewmen. Ministers had been trying to pass on the hot potato to each other without assuming their responsibilities until Vice-President de la Vega claimed she was in charge.

Furthermore, to illustrate the level at which Spanish ministers are, Defense Minister Chacon, lacking necessary prudence, has entered into a public dialectic dispute with reputed London-based international law firm Ince & Co. suggesting these firms (alluding to Ince & Co.) maintain shady relations with pirates. Ince & Co. maritime counterterrorism expert, former Royal Marine, and head of the firm’s Emergency Hijacking Unit, Stephen Askins responded that Ince & Co. merely act as mediators and hand information to the Spanish embassy in London based on their sources of information. These indicated that pirates’ intentions and claims in ransom cases had augmented in recent times suggesting the Spanish government’s decision to extradite the two captured pirates to face prosecution in Spain was hasty.[2]

On another note, as the Strategic Studies Group Grupo de Estudios Estrategicos suggests, the government’s perceived shyness to use force across missions where the Spanish armed forces Fuerzas Armadas (FAS) are involved, including piracy prevention, are deteriorating private’s moral, particularly, as these missions are increasingly outsourced to security firms, at yes, perhaps a lower cost. Considering that often times perception determines reality, this is the reality under which the FAS as well as the Spanish government, are assessed by pirates and other like-minded criminals in their calculations. So what are FAS military leaders doing then as this dynamic eats up part of their market share? And what about fulfilling their Constitutional mandate to defend Spaniards?[3] Yet the questions that underlies the problem remains under which conditions should governments negotiate with criminals, including terrorists and pirates; and how?

Professor Rogelio Alonso, from the Rey Juan Carlos University in Madrid, suggests the government’s awful management in this case highlights this dilemma, with the added importance of the media, whose excessive implication often endangers a hostage operation. [4] The spectacularization of news in media outlets, its speed dissemination, as well as the emphasis today on terrorism, crime or acts of violence, complicate a government’s ability to enforce its will upon criminals and apply a strategy ensuring a positive outcome. According to Dean Pruit, from George Mason University’s Institute for Conflict Analysis and Resolution, who questioned negotiations with terrorists sampling the Northern Ireland case, Hamas and al-Qaida, ‘[t]here are many arguments against negotiation with terrorists, but most of them do not apply to secret backchannel talks, which are usually the method of choice in first approaching these groups. The success of negotiation depends on the development of flexibility by both the terrorists and the authorities’. Here, isolating terrorists from the ‘outside’ is critical.[5] As professor Alonso had done previously, Pruit’s arguments may also be extrapolated to piracy cases. It suffice to acknowledge then that in the Alakrana case Spanish authorities failed to listen to the pirates’ demands, thus impairing their own rescue mission. For the safety of the crewmen, SSW hopes this impairment may still end in a successful conflict resolution.

Unfortunately, the Zapatero government is now cornered into breaking judicial independence and taking the pirates away from the arms of Spanish law or facing the public’s retribution for not doing enough should the Alakrana and its crewmen be harmed.[6] It is paying an already high price in terms of public image, but the cold hard truth is that Spain deserves real leadership who lays it down for Spaniards, not that which is more worried over its own turf or standing according to what polls may indicate. Considering the embarrassing spectacle, the international community is seeing at the doorstep of Spain’s EU presidency in January 2010, it is bewildering that no minister has offered a resignation yet.

[1] ‘A la caza del Alakrana’, El Pais (November 15, 2009), http://www.elpais.com/articulo/espana/caza/Alakrana/elpepunac/20091115elpepinac_1/Tes (last accessed November 15, 2009)

[2] ‘El Gobierno enfurece tambien a mediadores de londres’, ABC (November 15, 2009), http://www.abc.es/20091115/nacional-nacional/gobierno-enfurece-tambien-mediadores-20091115.html (last accessed November 15, 2009)

[3] ‘Alakrana, fuerzas armadas en entredicho’, Grupo de Estudios Estrategicos (November 15, 2009), http://sub.gees.org/articulos/alakrana_fuerzas_armadas_en_entredicho_6873 (last accessed November 15, 2009)

[4] ‘Como se gestiona un secuestro?’, ABC (November 15, 2009), http://www.abc.es/20091115/opinion-tercera/como-gestiona-secuestro-20091115.html (last accessed November 15, 2009)

[5] Dean Pruit, ‘Negotiation with Terrorists’, International Negotiation, No. 11, pp. 371-394 (2006)

[6] ‘la crisis salpica a Zapatero’, El Pais (November 15, 2009), http://www.elpais.com/articulo/espana/crisis/salpica/Zapatero/elpepunac/20091115elpepinac_2/Tes (last accessed November 15, 2009)

Posted in Military Affairs, Terrorism | 1 Comment »

Illegal ‘Big Brother’ communications interception system revealed in Spain

Posted by Fernando Celaya on November 10, 2009

1244565002_0
Spain Interior Minister Perez-Rubalcaba (Efe)

On August 9 SSW produced a piece where the PP opposition to the PSOE government in Spain denounced what amounted to political persecution by the state in the so-called ’Gurtel’ investigation with the use of illegal eavesdropping technology tools. Well, since that day in August, the Spanish citizen has woken up to learn that a spy technology system called Sistema de Intercepcion de Telecomunicaciones (SITEL), completely unregulated by the Spanish judiciary and any legal framework, exists at the disposal of the state security forces Fuerzas y Cuerpos de Seguridad del Estado (FCSE) under the direction of the Interior Ministry, headed by Alfredo Perez-Rubalcaba.[1]

Spain’s FCSE have undergone a significant transformation in their policing practices and methods, particularly between the years 2001-2006, with reforms in both the Intelligence service Centro Nacional de Inteligencia (CNI) as well as in the FCSE. The creation of the Counterterrorisn Coordination Center Centro Nacional de Coordinacion Antiterrorista (CNCA) created in 2004 and modeled after the British Joint Terrorism Analysis Centre (JTAC) is illustrating. The transformation has not only been structural, but also practical. Spain’s FCSE have followed the US stead as well as that of other EU member countries regarding the securitization or technologization/digitization of policing practices to meet the challenge of hyperterrorism in an attempt to be proactive rather than reactive. As this author argued in an article providing account of this new dynamic in policing practices,  

[i]n 2006, the Antiterrorist Operations Coordination System Sistema de Coordinacion de Operaciones Antiterroristas (SICOA) is created. SICOA is used by the General Intelligence Commissariat of the national Police Comisaría General de Información del Cuerpo Nacional de Policia (CGI) and by the Guardia Civil Intelligence Service Servicio de Información de la (SIGC) to introduce data related to actual terrorism investigations as well as those related to it for the sake of the state security bodies’ efficiency. At the same time parameters for clear guidance under which government officials in the different diplomatic sites, foreign missions and international organizations are to coordinate between themselves and the Interior Ministry and the CNCA with regard to terrorism related issues are well-defined, though commensurate legal oversight does not necessarily follow under this scheme since CNI attaches within the CNCA may consider classifying information subject to democratic oversight.[2]

While SICOA was developed and implemented under political as well as legal frameworks to improve the coordination of the FCSE, SITEL, which was also developed under the auspices of the Aznar government, was discarded precisely because no legal framework was in place to regulate appropriately its usage. As investigative journalist Luis del Pino explains, SITEL resulted from an adaptation of Ericsson’s Interception Management System. SITEL basically obtains from other electronic databases all data from a particular telephone number, including copies of all incoming and outgoing conversations.[3] The Aznar government was provided with up to 22 reviews indicating no legal framework existed to implement SITEL and that doing so would be not only unconstitutional, but an attack upon judicial oversight and thus the rule of law in Spain.

Yet despite of this experience the PSOE government and its Interior Minister began using SITEL soon after rising to power. In 2005, upon the telecom industry’s refusal to ‘cooperate’ with the FCSE, a legal dispute reached the regional prosecution office in Madrid, where its lieutenant prosecutor, Pedro Martinez admitted that SITEL may be an effective tool to combat criminality, but it needs to be implemented under appropriate legality and proportionality afforded by parliamentary as well as judicial oversight guaranteed by the Supreme and Constitutional Courts. Unfortunately, as Martinez’s report contended, SITEL flagrantly violates the Constitution’s A. 18 and A. 24 and affects fundamental civil liberties.[4]

Two issues are most astonishing to citizens as well as interested observers; first the secrecy that has surrounded the controversy itself and the fact that SITEL resides ‘completely’ outside political and judicial review in a country where PSOE-led governments hold an unspectacularly shameful historical pattern of turning the state security apparatus into a mafia to score political or personal vendetta’s while billing the tax-payer. No matter the political color commentators subscribe to, this remains an undeniable fact. Therefore, for Interior Minister Perez-Rubalcaba to publicly state the PP party is aiding the ETA terrorist organization by denouncing the use of SITEL is not petty, no; it is a statement for which he should be compelled to resign, for few of his counterparts within the EU could post such an embarrassing statement in their record and still hold such office. But Spain ranks amongst few democratic countries where this shrewd politician would still have a career, for during his watch as Minister for the Presidency in the early 90s he refused to admit the government was running an extrajudicial antiterrorist killing squad [i.e, the GAL case].

Secondly, the hypocrisy surrounding the controversy, for Spaniards and most Europeans heavily criticized the US when it implemented the Patriot Act, yet either they are ignorant about their own laws or turn their backs on the fact that the EU applies similar invasive ones. The difference lies in that while others’ are regulated by appropriate parliamentary and judicial review, those in Spain [regarding SITEL] are not.[5] As an illustrating point, for the head of the CNI, General Felix Sanz Roldan, to issue the rare public suggestion advising citizens to scrutinize more carefully content sent over cell phones via text messages [a task more in line with the Agency for Data Protection Agencia de Proteccion de Datos] boarders on the surreal in the Western World.[6]  

Yet the opposition is not united over how to handle the controversy or is not handling it appropriately. In fact, Francisco Granados, the PP party’s head for Presidential, Justice and Interior matters issued a stark rebuttal to party members issuing public accusatory statements on this subject without producing any proof.[7] While an opinion by magistrates in Spain at different levels has yet to be produced, the Collegiate Board of Lawyers from the Professional College of Lawyers Colegio de Abogados is already up in arms, particularly after receiving proof that fame-seeking counter-terrorism and corruption, special judge, Baltasar Garzon, authorized the illegal use of wiretaps, violating attorney-client priviledge during the already infamous ‘Gurtel’ investigation case currently under review. Such a decision has only been taken twice (this the third) in the Spanish Judiciary’s history.

As SSW has argued in past news letters, at a time of serious overload of the Spanish Justice System, exacerbated by the financial and economic meltdown, a timeless window of opportunity to extract advantages from this weakness exists for criminals, as well as for security managers with agendas that part from the state’s interests regarding the rule of law. Will this be yet another stain the EU will have to observe on Spain’s record?

 

[1] ‘A political bomb falls on government in Spain amid claims of eavesdropping on opposition party’, Spanish Security World (August 9, 2009), http://spanishsecurityworld.wordpress.com/2009/08/09/a-political-bomb-falls-on-government-in-spain-amid-claims-of-eavesdropping-on-opposition-party/ (last accessed November 9, 2009)

[2] Fernando Celaya, ‘The terrorist threat is being materially and normatively shaped by national and global institutions of law and order: Spain & beyond’, Athena Intelligence Journal, Vol. 4, No. 1 (January-March 2009), p. 27, http://www.isn.ethz.ch/isn/Digital-Library/Publications/Detail/?ots591=0C54E3B3-1E9C-BE1E-2C24-A6A8C7060233&lng=en&id=95385 (last accessed November 9, 2009)

[3] ‘SITEL: todos los datos al alcance de la mano’, Libertad Digital (October 16, 2009), http://www.libertaddigital.com/nacional/sistel-un-sistema-sin-garantias-judiciales-1276373292/ (last accessed November 9, 2009)

[4] ‘La Fiscalia de Madrid aviso en 2006 de que SITEL ataca la Constitucion’, Libertad Digital (November 11, 2005), http://www.libertaddigital.com/nacional/la-fiscalia-de-madrid-aviso-en-2006-de-que-sitel-ataca-la-constitucion-1276375394/ (las accessed November 9, 2009)

[5] ‘Rubalcaba Act’, Grupo de Estudios Estrategicos in Libertad Digital (November 9, 2009), http://www.libertaddigital.com/opinion/gees/rubalcaba-act-51771/ (last accessed November 9, 2009)

[6] ‘Roldan pide reflexionar sobre legislar para proteger la información sensible’, Europa Press (October 21, 2009), http://www.europapress.es/nacional/noticia-sanz-roldan-insta-reflexionar-si-legislar-proteccion-informacion-sensible-alerta-uso-movil-20091021114559.html (last accessed November 9, 2009)

[7] ‘Un dirigente del PP vuelve a criticar a otro fuera de los órganos del partido, El Mundo (November 6, 2009), http://www.elmundo.es/elmundo/2009/11/06/espana/1257535277.html (last accessed November 9, 2009)

Posted in Intelligence, Rule of Law | Leave a Comment »

Soldiers & Civilians: assessing Spain’s military effort in Afghanistan

Posted by Fernando Celaya on October 28, 2009

Spanish Troops in Afghanistan

Spanish Troops in Afghanistan

The lack of steady progress in nation-building following the acknowledgement by the United Nations (UN) that at least one-third of the votes during the Afghan elections were rigged as well as mounting casualties on the ISAF following a surge in Taliban activity, are prompting NATO member countries to consider a new strategy.

Thus, the latest Spanish military casualties in Afghanistan have raised much-needed debate regarding the viability as well as the costs of the mission directed at the Defense Ministry and its National Defense Directive Directiva de Defensa Nacional. The political discourse regarding grand strategy pits conservatives from the PP party versus socialists from the ruling PSOE party and the left (IU). All parties play semantic games trying to justify the Spanish presence there or suggest the FAS should withdraw under the same arguments used to do so in Iraq; war versus humanitarian mission? But such a thing is clearly inconceivable at this juncture, especially because the FAS, in their limited capability, play a valuable role within ISAF. For this reason it remains surprising that despite what the top echelon may contend, privates feel the rules of engagement that govern their mission are not consistent with the level of threat they are exposed to.

The modernization and professionalization of the Spanish armed forces Fuerzas Armadas (FAS) is one of the most important transformations Spain has experienced in the past 25 years. Spain’s FAS have made a significant contribution to nation-building and in providing humanitarian aid in the Balkans as well as part of the UNIFIL mission in Lebanon. In 2001 nearly 350 units deployed in Kabul and its vicinity as part of the ISAF and in 2003 a military support contingent also formed part of the ‘coalition of the willing’ that used force against Iraq. Moreover, the FAS are also active in protecting ships against piracy in the Indian Ocean, but as General Jose Julio Rodriguez, Chief of the Joint Staff Jefe del Estado Mayor de la Defensa (JEMAD) admits, it is a mission that cannot succeed because of Somalia’s failed state status.[1]

The rise of President Zapatero marked the withdrawal of the FAS from the Iraqi theater of operations, which brought much criticism for such decision towards the new Spanish government as well as from Paul Bremer, former head of the Coalition Provisional Authority (CPA), who stained the FAS’ performance soon after. Similarly, NATO colleagues were dismayed when Defense Minister, Carme Chacon, unexpectedly announced in March 2009 the unilateral withdrawal of Spain’s 630 units that participated as part of the KFOR without advising anyone, even when NATO planned drastic cuts in its 14,000 strong stabilization force.[2]

Yet despite President Zapatero’s track record, he has maintained Spanish military effort within the parameters agreed in 2001 for ISAF in Afghanistan. Under a new contract, the Defense Ministry is replacing some BMR armored vehicles with new and better equipped RG31-MK5E; 85 model units and 15 ambulance versions are expected to be deployable by January 2010. However, according to Enrique Navarro, U.S. and other reports conclude this vehicle is a high-value target for Taliban hit-men, due to its slower mobility, size and vulnerability to RPG-7 or EPG. In addition, at the behest of the government, Congress recently approved a FAS surge of 220 additional soldiers, bringing the count to a total of nearly 1,100, of which nearly 500 will deploy in the province of Bagdhis, in the vicinity of the city of Qala-i-Naw. Until now and since 2005 FAS units formed part of the Provincial Reconstruction Team and Forward Operating Base (FOB) in Herat, which included a Rapid Reaction Force, under the direction of the Western Regional Command led by Italy, whose leadership has become tainted following revelations its forces paid off civilians in exchange for keeping the peace.[3]

Moreover, through the Operational Mentoring and Liaison Team (OMLT) the Spanish Ministry approved military and civilian consulting and support roles for the instruction of an Afghan Army Brigade based in Herat. Yet the Spanish mission has suffered a reversal of sorts after Kyrgyztan and Spain failed to seek consensus to renew the contract regulating the use of the Manas air base from where logistics organized the aid of Spanish troops stationed in Bagdhis with the help of C-130 Hercules aircraft. But not all is bad news, for according to Coronel Ruben Garcia Servert, who commands an over 1,000 man strong multinational force, including 70 Spaniards, administering and protecting Kabul International Airport (KIA)–also known as Khwaja Rawash Airport—claims that although military air traffic reaches 60%, commercial air services are increasing very quickly. Hence, the Spanish air transport and logistics could headquarter or operate to a certain extent from KIA.[4]

Whatever the final political consensus reached, from NATO and Afghan elites, as well as Pakistan, a clear and forward-looking COIN strategy needs to be implemented before withdrawing from Afghanistan. Furthermore, Al-Qaida’s core has yet to be hunted down. It is inconceivable this can be an attainable goal without a significant troop surge in line with General McCrystal’s report.

As far as civil-military relations are concerned regarding the FAS, this strategy and its objective need to be explained to the Spanish public who is becoming increasingly polarized considering that the Afghan tag on the Treasury will reach some 370 million Euros (including new investments; transport, elections support teams; troops surge, et al.) for FY 2009; a 15% increase from 2008, according to reputed defense expert Enrique Navarro.[5] More spending on military equipment and troops may be necessary, but so is a deeper debate fostering a discussion over what are we defending within NATO boundaries, and whether foreign interventions are ethical or not, and whether, in the final analysis, these result in a cost-benefit defense surplus. In times of harsh economic crisis at home and with a rise in regional nationalist activity civil-military relations are not at their best despite the FAS’ transformation. How will this relation evolve throughout the difficult times facing Spain in 2010?

[1] ‘Un Jemad muy profesional que habla claro’, El Mundo (October 26, 2009), http://www.elmundo.es/elmundo/2009/10/26/opinion/19918974.html (last accessed October 27, 2009)

[2] ‘España pone fin a su misión en Kosovo y la OTAN critica la medida’ El Mundo (March 19, 2009), http://www.elmundo.es/elmundo/2009/03/19/espana/1237468634.html (last accessed October 27, 2009); ‘El próximo embajador de EE UU en España critica la retirada de Kosovo’, El Pais (September 15, 2009), http://www.elpais.com/articulo/espana/proximo/embajador/EE/UU/Espana/critica/retirada/Kosovo/elpepuesp/20090915elpepunac_26/Tes (last accessed October 27,2009)

[3] ‘El ejercito recibe los ocho primeros blindados RG31-MK5E’, Libertad Digital (September 11, 2009), http://www.libertaddigital.com/nacional/el-ejercito-recibe-los-ocho-primeros-blindados-rg31-mk5e-1276370222/ (last accessed October 27, 2009); ‘Implicaciones de la mision en Afghanistan para las FAS espanolas’, Libertad Digital (October 20, 2009), http://www.gees.org/articulo/6798/ (last accessed October 27, 2009)

[4] ‘Aeropuerto de Kabul bajo control, problemas serios en Bagdis’, Salam Agur (October 27, 2009), http://participacion.abc.es/salamagur/post/2009/10/27/aeropuerto-kabul-bajo-control-problemas-serios-badghis (last accessed October 27, 2009)

[5] ‘Implicaciones de la mision en Afghanistan para las FAS espanolas’, Libertad Digital (October 20, 2009), http://www.gees.org/articulo/6798/ (last accessed October 27, 2009)

Posted in Military Affairs | Leave a Comment »

International banking and finance regulation: Who governs hen house rules? US & Spanish domains

Posted by Fernando Celaya on October 19, 2009

Spanish Cental Bank Chief

Bank of Spain Chief

The land-mark Glass-Steagall Act of 1933 became the bulwark of a renovated US financial regulatory system approved as a result of the financial collapse of the late twenties and thirties and propelled the separation of commercial and investment banking. As George Benson noted, at that time ‘a quarter of the formerly working population was unemployed… Over 11,000 banks had failed or had to merge, reducing the number by 40% from 25,000 to 14,000. The governors in several states had closed their states’ banks and in March FDR closed all the banks in the country’.[1] Despite these hard facts, bankers, economists and politicians hold serious reservations as to the empirical evidence that irrefutably proved ‘the belief that banks’ securities activities or investments caused them to fail or caused the financial system collapse’,[2] though this remains the widely accepted belief along with a perceived conflict of interests within banking and finance that purportedly fraudulently mislead investors. This inevitably split JP Morgan (the bank), which retained the right to issue checking accounts, and Morgan Stanley (the investment bank), which took over all corporate underwriting.[3] Nonetheless, ‘banks could underwrite municipal general obligation bonds and act as agents for private placements (unregistered securities that cannot be sold to the general public at large)’.[4] But adherence to Glass-Steagall began to erode by the 1960s ‘when banking organizations began using one-bank holding companies as a means of entering non-bank activities, such as mortgage banking, leasing, and data processing’,[5] effectively conducting these activities through non-bank subsidiaries. As a result, the amendments to the Bank Holding Company Act authorized the Federal Reserve to become the arbiter of appropriate or inappropriate activities which itself produced a cat and mouse race for the loopholing of banking and investment activities eventually facially resolved by the courts. 

Further, the Deregulation and Monetary Control Act of 1980 and the Garn-St. Germain Depository Institutions Act of 1982 effectively dismantled Regulation Q,[6] which produced one positive and one negative result. On the upside, deregulation

allowed the Savings and Loans [S&L] businesses (as well as other depository institutions) to compete for funds as money market rates skyrocketed in the early 1980s. The bad news was that S&L had been induced by regulations to invest in primarily long-term (usually 30 year) fixed-rate residential mortgages. Thus S&Ls were stuck with mortgages made in the 1970s or earlier, most of which were earning less than 8 percent, while they were renewing their short-term deposits at rates that were nearly double that…. Estimates by academics at that time indicated that the industry had a negative net worth of as much as $150 billion by the end of 1981.[7]

In broader terms, the banking and finance world’s troubles were aggravated ‘as high-quality borrowers moved to the commercial paper market during the 1970s and 1980s, [and] banks extended loans to borrowers with riskier prospects. Thus, banks were especially vulnerable to the international debt crises that emerged in the 1980s and economic shocks that plagued the oil industry, farming, and real estate industries’.[8] After 1989 when the Federal Reserve granted five banks the right to underwrite corporate debt banking regulation got even more complicated. It would be the subsidiary of the holding company (called Section 20 Affiliate who would be responsible for the underwriting). To minimize commercial banks exposure, the Federal Reserve required Section 20 affiliates to be insulated from the banks activities with barriers called fire-walls, separating their operations. It was believed at the time that conflicts of interests would be prevented by regulatory fire-walls which would, among other things, restrict the bank from channeling funds to the securities affiliate through the bank holding company.

At the international level, whether banking oriented economies such as Hausbanking in Germany or Keiretsu relations in Japan ruled, in contrast to the more market oriented British wholesale banking and US banking, cultures became irrelevant. Indeed foreign banks edged US banks in competitive advantage even though the consolidation of US commercial banks solidified in the 1990s, thanks in large measure to the attractive Eurobond market. As a result ‘financial innovation’ initiatives were presented to restore this competitive advantage. These, however, bordered on circumventing financial regulation. As Ritter and others explain, the ‘[c]ircumventing of regulatory constraints has been an important element in stimulating recent financial innovation, but it has not been the sole motivating factor. Other forces such as double digit inflation that characterized the 1970s, progressive legislation, the philosophy of deregulation, and the burst in technological advances were important as well’.[9] In this regard US Federal Reserve Chairman, Alan Greenspan, affirmed in 1990 that ‘[i]n an environment of global competition, rapid financial innovation, and technological change, bankers understandably feel that the old portfolio and affiliate rules and the constraints on permissible activities of affiliates are no longer meaningful and likely to result in a shrinking banking system’.[10] This led American Banks to accommodate to the universal banking norms whereby banks hold ‘more direct control [over clients and contractual covenants, and collateral] via their influence over firms as stockholders or as the agents of stockholders’,[11] which produced the expansion of American banks and financial entities’ influence in international markets.  As a result, American style universal banking became standard reference as emphasized by the growth in the bank loan sales market operating in Europe. As Calorimis notes, ‘[i]n explaining the rise of this market, bankers point to increasing pressures to conserve scarce bank capital and boost returns on equity’.[12] In addition, in 1999 US banks gained a competitive edge in universal banking as Glass-Steagall limitations on private securities underwriting were lifted. Clearly, deregulation of banking and financial markets in Europe would be slow coming as a result of the more favorable protectionist policies of European integration after 1999, but accommodation of American style universal banking would become the norm in the international stage.

Throughout the latter part of the XX Century, as globalization accelerated so did the interrelationship and interdependence of financial markets. Because appropriate integration of these never consolidated as expediently as would have been required, the probability of the occurrence of financial systemic risk grew exponentially. Simultaneously, the Bretton Woods financial institutions, (i.e., IMF, World Bank and WTO) tasked with an important dimension within the regulation of international markets laxed their supervisory practices in the interest of increasing market liberalization. The speed with which market liberalization was being applied led National Central Bank Governors and Finance Ministers in many countries to realize that some sort of international regulatory agreement was imperative for the new wave in the world of finance to be effectively controlled. To overcome this challenge, states formed international financial institutions (IFI) to manage systemic risk in global markets. Thus, several non-legally binding Agreements were reached in the post-Bretton Woods era geared towards this end. The main guarantors of the renovated international financial regulation system became thenceforth the Basel Committee on Banking Regulation and Supervisory Practices (BCBS); the International Organization of Securities Commissioners (IOSCO); the Financial Action Task Force (FATF); and the International Association of Insurance Supervisors (IAIS). In particular, the BCBS born in 1988 (Basel I), composed by the central bank governors and national bank regulators of the G10 countries arises as the main reference with regard to international banking and finance regulation.[13]

The main objective in Basel I was to make recommendations for the establishment of minimum capital requirements for commercial and investment banking in terms of capital risks associated with these institutions enterprises. However, Basel I is limited in its capacity as it fails to assimilate risk fluctuations and ignores credit quality. Simultaneously, non-legally binding implications, along with questions over Basel I legitimacy and accountability practices have seriously hampered the end for which it was created. Nascent regulatory frameworks are certainly always imperfect and need a period of time to become normalized before they are perfected. In this regard, Kern Alexander and others agree that, ‘[m]ost international standards and rules for banking regulation and supervision have evolved from a purely nonbinding and voluntary role to an increasingly precise and obligatory status backed by both official and market incentives and sanctions… [However] The haphazard development of these international standards and their uneven application to developed and developing countries has produced a vast but loosely coordinated, international regulatory regime that is ill equipped to deal with threats posed by today’s globalized financial markets’.[14]

Clearly the speed with which deregulation, technology and ‘financial innovation’ advanced impeded appropriate regulatory oversight. Singular bank and financial institution failures aside the experience of the debacle of Japanese banking in the 1980s along with the tech-bubble burst in the early 1990s, to the Asian market crisis in 1998 confirm this stance. In this environment the ex-Governor of the Bank of Spain (1992-2001), named best central banker in Europe for four straight years, Luis Angel Rojo, declared recently that he viewed for many years Alan Greenspan’s policies as absurd and was very critical of IMF chief Dominique Strauss-Kahn and the European Central Bank (UCB), but that nobody seemed to care to effect appropriate regulatory policies. Only France considered applying a similar conservative position but finally relented.[15] Now the Financial Times acknowledges Mr. Rojo’s performance when the Bank of Spain under his mandate in 2000 ‘furtively “gold plated”—or rewrote—European Union rules to discourage Spanish banks from creating entities such as structured investment vehicles (SIVs). And when banks such as Santander embarked on an acquisition spree in Mexico, the central bank reined them back’.[16] The Economist agrees with the Financial Times, but goes even further to explain the specific measures undertaken by the Bank of Spain:

The first was to demand that banks set aside the same amount of capital against assets in off-balance-sheet vehicles as they would against on-balance-sheet assets. That may not have squared with the rules of the outgoing Basel I accord, which offered capital relief on off-balance-sheet activities, but it did fit international accounting rules on consolidation…. The second policy does clash with international accounting standards. Since 2000 the Bank of Spain has had something called a “dynamic provisioning” regime, where bank provisions go up when lending is growing quickly. The scheme is based on the difference between banks’ specific provisions for identified losses in any given year and a “statistical” provisioning amount that reflects average losses on assets over the whole business cycle.[17] 

But the Bank of Spain regulation is not perfect. As the Economist also points out ‘[t]he statistical provision, which the Spanish banks calculated using data from two business cycles, is based on the assumption that all cycles are roughly similar, which they plainly are not’.[18] Despite this instance clearly these two supervisory instruments prevented toxic banking and financial practices from entering the Spanish economy even as the real estate market began to cool down.

By 2004 corporate accounting scandals in the US and abroad encouraged strict enforcement of the 2002 Sarbanes-Oxley Act, better known as the Public Company Accounting Reform and Investor Protection Act, and the harmonization of its foreign equivalents. This new regulatory drive led international regulators to approve a second round of regulatory and supervisory practices rules in a second round of Basel agreements (Basel II) in 2004 at the BCBS. In particular Basel II encourages home and host country regulators to work together to coordinate and cooperate when supervising complex financial conglomerates or what has commonly become known as application of the principle of consolidated supervision. Basel II is divided into three key pillars emphasizing (1) Capital adequacy assessments; (2) Assessment of internal controls and risk management practices for each affiliate and subsidiary within the banking group; and (3) Increases in the disclosures that the bank must make. This is designed to allow the market to have a better picture of the overall risk position of the bank and to allow the counterparties of the bank to price and deal appropriately.[19]

The complexities of harmonizing, applying and enforcing Basel II across banking and financial systems differently, not only culturally but also structurally, question its viability. At the same time there is concern over the implication that the principle of consolidated supervision may be applied decidedly in favor of the home country enterprises thereby ‘increasing systemic risk in many jurisdictions, especially for developing and emerging market-economies. Moreover, although it [Basel II] seeks to respect national legal principles regarding confidentiality of information held by the supervisor, the enhanced framework for cooperation and investigations may undermine the local authority of non-G10 regulators to utilize alternative capital adequacy standards in their countries.[20] Thus, what may be presented at times in mainly Western media outlets as an uncooperative response by developing and emerging market-economies to universal banking thrift should not come as a surprise if these practices are detrimental to the economic interest of a particular sovereign nation. Calorimis’ affirmation that Protectionism will likely disappear once it becomes clear that it undermines the global market share of the protected countries’[21] banks cannot be considered in its full scope. Especially after the sub-prime mortgage crisis hit the US in 2008 causing a general systemic risk that permeated across the international banking and financial spectrum. Certainly, this caught many national and international regulators by surprise. Yet there were many signposts and many missed opportunities. Some commentators, including General Accounting Office (GAO) Comptroller, David Walker, pointed out the negative influence of the ballooning $56 trillion US deficit;[22] and the $50-$60 trillion size of the US unregistered market, which grew exponentially thanks to credit default swaps (CDS) and collateralized debt obligations (CDO).[23]

Others such as the Bank of Spain were more steadfast and had already positioned to spare the Spanish banking and financial sector from the potential of US toxic ‘financial innovation’ as early as 2000, and moved once more, quickly in early 2008 to penalize mortgage concessions over 95% loan-to-value (LTV) positioning itself to curtail a projected increase in delinquent loans and also liberate some resources. Unfortunately, the current government adminstration in Spain, led by President Rodriguez Zapatero since 2004, has been utterly incompetent in handling a crisis which it first refused to accept; now it is gradually spiralling out of anyones control. In late 2008, Spanish Central Bank Chief, Miguel Angel Fernandez Ordonez acknowledged the ‘lack of confidence [in the Executive] is total, consumers are not comsuming, employers are not hiring, entepreneurs are not investing and banks are not lending…[24] and yet despite the Central Bank’s prestige, the PSOE government is questioning the regulator’s independence and that of its Chief, pitting both against PSOE backed labor unions UGT and CC.OO., while several former socialist heavyweights along with opposition leaders claim, as does the Spanish Central Bank, a reform of the labor market is imperative to maintain Spain’s diminishing competitive advantage. When credit rating agency Moody’s downgraded numerous Spanish Banks, the Zapatero government attacked Moody’s credibility, as it failed to predict the real estate and financial crisis in both the US and Spain. In this regard, Henry George’s 1879 thesis regarding speculation in land value and its impact over the rest of the financial system’s balance in Progress and Poverty… the Remedy, is still valid and telling today providing a sound explation for the roots of the real estate and overall financial debacle.[25] With unemployment projected to hit over 20% in 2010 and with calls, even from within the EU and the IMF, to revise Spain’s 2010 General Budget into a more comprehensive one, President Zapatero refuses to listen as a greater social malaise tears apart Spain’s social fabric as well as its sovereign integrity. The outlook has clearly worsened for Spain as it positions for EU Presidency at the beginning of 2010, when potential increases to EU Central Bank interest rates could punish further Spanish financial markets and overall economy.

It is hoped by many, these signposts and missed opportunities may now be heeded under the aegis of a renewed US and international banking and finance regulatory framework in the next G20 meetings to cope with the global financial melt-down even as experts anticipate a slow real recovery.


[1] George J. Benson, The Separation of Commercial and Investment Banking: the Glass-Steagall Act Revisited & Reconsidered (London, UK: The MacMillan Press Ltd., in association with the Dept. of Banking and Finance, City University Business School, 1990), p. 1

[2] Ibid, p. 41

[3] Lawrence S. Ritter, William L. Silber & Gregory F. Udell, Principles of Money, Banking & Financial Markets (New York: Addison Wesley, 2000) p. 303

[4] Ibid, p. 234

[5] Ibid, p. 303

[6] Regulation Q imposed interest rate ceilings which meant bank depositors could not get competitive market rates on their money. This circumstance propelled the rise of money market mutual funds, free to offer competitive market interest rates.

[7] Ibid, p. 205

[8] Ibid, p 208

[9] Ritter, Silber & Udell (2000), p. 303

[10] Alan Greenspan, ‘Subsidies & Powers in Commercial Banking’ in Proceedings of the 26th Annual Conference on Bank Structure & Competition (Chicago: Federal Reserve Bank of Chicago, 1990), p. 5 in Charles W. Calorimis, US Bank Deregulation in Historical Perspective (Cambridge: Cambridge University Press, 2000), p. 339

[11] Charles W. Calorimis, US Bank Deregulation in Historical Perspective (Cambridge: Cambridge University Press, 2000), p. 344

[12] Ibid, p. 347; See, e.g., ‘Europe’s banks Boost Plans for US-Style Loans Market’ Financial Times (July 28, 1997), p. 16

[13] G10 countries is composed of those 13 wealthiest countries by per-capita income.

[14] Kern Alexander, Rahul Dhumale & John Eatwell, Global Governance of Financial Systems: International Regulation of Systemic Risk (Oxford: Oxford University Press, 2006), p. 134

[15] Miguel Angel Noceda, ‘Ni Greenspan, ni el FMI, ni el BCE han funcionado bien’, El País (October 19, 2008) http://www.elpais.com/articulo/economia/Greenspan/FMI/BCE/han/funcionado/bien/elpepueco/20081019elpepieco_6/Tes (Last accessed November 4, 2008)

[16] Gillian Tett, ‘Time for central bankers to take Spanish lessons’, Financial Times (September 30, 2008), http://www.ft.com/cms/s/0/77409482-8e87-11dd-9b46-0000779fd18c.html (Last accessed November 4, 2008)

[17] ‘Spanish Steps’, International Banking Special Report, The Economist (May 15th, 2008), http://www.economist.com/specialreports/displaystory.cfm?story_id=11325484 (Last accessed November 5, 2008)

[18] Ibid

[19] See, Kern Alexander, Rahul Dhumale & John Eatwell, Global Governance of Financial Systems: International Regulation of Systemic Risk (Oxford: Oxford University Press, 2006), p. 50-51

[20] Ibid, p. 54

[21] Charles W. Calorimis, US Bank Deregulation in Historical Perspective (Cambridge: Cambridge University Press, 2000), p. 347

[22] David Walker ‘Interview with Bill Maher’, The Bill Maher Show (October 2008)

[23] CDS is a credit derivative contract between two counterparties. The buyer makes periodic payments to the seller, and in return receives a payoff if an underlying financial instrument defaults. CDS contracts have been compared to insurance, because the buyer pays a premium, and in return receives a sum of money if a specified event occurs. However, this is a slightly misleading comparison because the buyer of a CDS does not need to own the underlying security; in fact the buyer does not even have to suffer a loss from the default event; see http://en.wikipedia.org/wiki/Credit_default_swap; CDOs are an unregulated type of asset-backed security and structured credit product. CDOs are constructed from a portfolio of fixed-income assets. These assets are divided by the ratings firms that assess their value into different tranches: senior tranches (rated AAA), mezzanine tranches (AA to BB), and equity tranches (unrated). Losses are applied in reverse order of seniority and so junior tranches offer higher coupons (interest rates) to compensate for the added default risk. Since 1987, CDOs have become an important funding vehicle for fixed-income assets; see http://en.wikipedia.org/wiki/Collateralized_debt_obligation

[24] Miguel Angel Fernandez Ordonez interview ‘La desconfianza es total’, El Pais (December 21, 2008), http://www.elpais.com/articulo/economia/desconfianza/total/elpepueco/20081221elpepieco_1/Tes (last accessed October 18, 2009)

[25] Henry George, Progress & Poverty: An Inquiry into the Cause of Industrial Depressions & of Increase of Want with Increase of Wealth… the Remedy, 3rd Ed. (New York: Robert Schalkenbach Foundation, 1992)

Posted in Energy/Development | Leave a Comment »

Time to take sides in the Honduran crisis for the US?

Posted by Fernando Celaya on September 27, 2009

Honduras

Honduras

On September 21, former Honduran ousted President Manuel Zelaya was smuggled into the Brazilian embassy in Tegucigalpa. It was believed, in first instance, Zelaya would be on his way to the United Nations’ head-quarters in New York. However, Zelaya arrived in El Salvador on a Venezuelan jet, and then aided into Honduras. It appears players within the international community consent to an agenda that breaks all international norms regarding the principle of nonintervention in other countries’ internal affairs.

Spanish Security World recently discussed how Brazilian foreign policy in Latin America has evolved from its typical ‘calculated blasé attitude, seeking to downplay the problem by invoking the nonintervention principle and favoring multilateral and negotiated solutions’, to a more activist and interventionist one; the shelter provided to Zelaya inside the Brazilian embassy is a clear example of such dramatic evolution.

But, what is Brazil to gain from aiding Zelaya back into Honduras or even seeking the use of force to bring him back to power? And what has occurred within Brazilian foreign policy that has caused this interventionist view. It is not very clear to many observers, but it is a calculated risk President Lula da Silva is taking, at least in this particular case, considering few international community members have stepped up to legitimize the Honduran interim government or an electoral process bestowed by it. Furthermore, Lula shrugged off the Honduran interim government’s ultimatum to define the status of Zelaya inside the Brazilian embassy within ten days claiming a coup government is in no position to force ultimatums upon Brazil.

Several problematic questions arise from whatever outcome results from the Honduran stalemate. First, the violation of the principle of nonintervention and its standing. Secondly, if the Honduran Supreme Court’s previous opinions and decisions, as well as those of the Honduran parliament, regarding international security cooperation arrangements and treaties were accepted as valid and within the international legal norm, why their decision to find Zelaya guilty of disrupting the constitutional order is not acceptable now? For Honduras, it appears that, as one commentator once put it, ‘it is preferable to be wrong for the right reasons than right for the wrong ones’. The Honduran political establishment and the judiciary deposed Zelaya for the right reasons, and although his expulsion was illegal, Zelaya’s actions, along with those of many international community members are proving Honduras’ political and judicial elites right, as forcing Zelaya’s return may create civil disruption, vandalism and terrorism at a minimum. The idea that members of the international community may be responsible for creating such a situation when what applies is a negotiated settlement is almost unheard-of in diplomatic history and speaks volumes of the moral quality of such international community members. Regarding Brazil, in particular, its decision to house Zelaya in its embassy is a blatant provocation for violence. In this regard, the Washington Office on Latin America’s Senior Associate for Human Rights and Development, Vicki Gass stated that ‘tensions could escalate very quickly’ and ‘urged everyone to resist the use of violence’.[1]

Honduras’ refusal to accept the return of embassadors from Spain, Argentina, Mexico and Venezuela (who had unilateraly broken bilateral relations with Honduras), to mediate in the crisis and/or simply return to the embattled Central American country did not come as surprise considering these governments’ strong diplomacy advocating for sanctions against Honduras’ interim government in different international forums (i.e., the European Union, the Organization of American States, and the United Nations). In fact, an OAS five member mission and two diplomats from Spain were not allowed into Honduras.[2]  

The ambivalent US position has been a cause for stark criticism against the Obama administration’s diplomatic and security teams. While slapping Honduras with trade, financial aid,  and visa sanctions it has not taken a firm public standing regarding the crisis. Yet it would be surprising if the US condoned the implications of Zelaya’s return: (1) because his term in office is about to expire; (2) because he should not influence a new electoral process, considering he faces serious legal accusations before the Honduran courts; and (3) because findings within the latest Congressional Research Service (CRS) report from the US Library of Congress, writen by CRS senior foreign law specialist Norma C. Gutierrez, conclude ‘[a]vailable sources indicate that the judicial and legislative branches applied constitutional and statutory law in the case against President Zelaya in a manner that was judged by the Honduran authorities from both branches of the government to be in accordance with the Honduran legal system’.[3]

Notwithstanding the report’s findings, there is some disagreement regarding the legal foundation under which the constitutional removal was based. Rosemary A. Joyce from the University of California, Berkley, for example, exemplifies such dissent. For professor Joyce, the CRS report contains four serious errors of analysis and scholarly research:

(1) … [It] cites a single Honduran legal analyst as a source of personal communications “confirming” conclusions she draws. Her source is a known supporter of the de facto regime in Honduras, Guillermo Pérez-Cadalso, who testified on behalf of the de facto regime in July’s hearings in the US Congress. This is not a disinterested source. There are numerous Honduran law professors, as well as constitutional law authorities in the US and Spain, on record in writing finding the Honduran Congress exceeded its legal authority in claiming to remove President Zelaya from office on June 28. None of these authorities is cited.

(2) … [the report], rather than analyze the arguments made by the Honduran Congress, as the questions … would require, creates … [its] own novel theory: that the Honduran Congress used a constitutional power given it to interpret the Honduran Constitution so as to justify its removal of President Zelaya.

Specifically, … [the report] suggests that the Congress must have interpreted its Constitutional authority to “disapprove” of the actions of a president, extending the definition of “disapproval” to include “removal from office”. Such a claim was not, however, actually made by the Honduran Congress in its June 28 actions. This is a post-hoc rationalization for their actions proposed by Ms. Gutierrez, apparently with guidance from Mr. Pérez-Cadalso, who is cited as confirming this rationalization in a footnote citing a phone conversation.

(3) In fact, on May 7, 2003, the Honduran Supreme Court had nullified the claimed power of the Congress to interpret the Constitution. Thus, it is not surprising that the Honduran Congress made no such claim on June 28, since they no longer could assert such authority, which the Supreme Court had rejected.

(4) Even during the period when the Honduran Congress acted under the belief it had the power to interpret the Constitution, it was bound by procedures that required it to explicitly note that it was interpreting the constitution, and to define the circumstances of the definitions they proposed.[4]

Professor Joyce makes some strong points, yet her claims need to be adequately substantiated and supported, especially regarding Honduran legal specialists supporting Zelaya, when, in fact, ‘every major Honduran institution supported the move, even members in Congress of his [Zelaya's] own political party, the Catholic Church and the country’s human rights ombudsman’.[5] In addition there are as many pro-Zelaya legal jurists in Spain as there are those against. Yet considering the Spanish government’s position on the Honduran crisis, Spain pro-Zelaya jurists cannot be considered ‘disinterested’, and therefore, neutral actors. Without detaching this analysis from its topic, it is surprising, to say the least, how members of the international legal community condone behaviors that breach human rights at large in Venezuela and Cuba, for example, while bringing the heat to bear upon the Honduran higher democratic institutions; former partners in international cooperation within SICA and OAS primarily. In the final analysis, fundamentally contextualizing the Hondurean institutions’ decision regarding President Zelaya’s actions as well as his intentions to breach the constitutional order need to be considered.

For the US it is time to make a call; will it support one of the few partners it has relied on for many bilateral arrangements in the region or will it decide to drop it out in the cold versus forces that on the one hand trade with the US while demonizing its foreign policy. On the balance, it is understandable to seek to improve US image in the region to obtain favorable concessions for US business, but when considering long-term objectives, is it not more american to seek to ensure the rule of law and democracy while supporting a troubled ally? Why aid Colombia and not Honduras as some question?[6]

 

[1] ‘President Zelaya’s return to Honduras’, WOLA Press Release (September 21, 2009), http://www.wola.org/index.php?option=com_content&task=viewp&id=996&Itemid=8 (last accessed September 27, 2009)

[2] ‘Honduras impide la entrada de dos funcionarios espanoles y de una mision de la OEA’, El Mundo (September 27, 2009), http://www.elmundo.es/elmundo/2009/09/27/internacional/1254079239.html (last accessed September 27, 2009)

[3] ‘Honduras: Constitutional Law Issues’, US Law Library of Congress, Directorate of Legal Research, LL File No. 2009-002965 (August 2009), p. 9, http://www.tortugadigital.com/blog/CRS_2009-002965HNRPT.pdf (last accessed September 27, 2009)

[4] Rosemary Joyce, ‘Library of Congress Report on Honduras filled with flaws’, Upside-down World (September 25, 2009), http://upsidedownworld.org/main/content/view/2130/68/ (last accessed September 27, 2009); see also, ‘Honduras: ennaltece al fuerte, machaca al debil’, GEES (September 24, 2009), http://www.gees.org/articulo/6740/ (last accessed September 27, 2009)

[5] ‘The Honduras mess’, The Wall Street Journal (September 23, 2009), http://online.wsj.com/article/SB10001424052970204488304574427403985118892.html (last accessed September 23, 2009)

[6] Florentino Portero, ‘El enredo Hondureno’, GEES (September 25, 2009), http://www.gees.org/articulo/6742/ (last accessed September 27, 2009)

 

 

 

Posted in Diplomacy, Rule of Law | Leave a Comment »

Brazil strengthens military in landmark deal with France

Posted by Fernando Celaya on September 14, 2009

Presidents Sarkozy & Lula

Presidents Sarkozy & Lula

Though certainly not a Spanish speaking country, Brazil plays a pivotal role in Latin American foreign policy, being the largest economy in the region. Despite hosting a wide rich-poor divide, the governments of Luiz Inacio Lula Da Silva, first elected in 2002, and subsequently in 2006, have much improved Brazil’s social and economic outlook. In fact, Brazil no longer is recipient of IMF funds, but rather a lender country. Even before Lula’s rise to power, Goldman Sachs realized Brazil’s potential including it as one of the fastest growing economies within its assessment of BRIC (Brazil, Russia India, China) economies, which caused many within the international community to demand Brazil be given a permanent seat at the UN’s Security Council.

Brazil has rapidly become a leader in renewable energy development and has awed the international oil and gas markets in 2006 and in 2008, respectively, with the discoveries of the giant oil and gas off-shore fields of Tupi and Jupiter. According to PetroBras, Brazil’s state-owned energy giant, Tupi contains 5-8 billion barrels of recoverable oil. Similarly, Jupiter’s potential matches Tupi’s. And recently, El Guara field developed by the PetroBras-BG-Repsol YPF consortium, is expected to produce 1-2 billion barrels of light oil and gas.[1]  

Brazil’s economic growth has been matched by its growing strategic influence in the region. As Brazil expert Luis Bitencourt notes, ‘[i]n the aftermath of the Cold War, Brazil has been recast as a key regional player. In this new strategic reality, Brazil has been even more emphatically than in the past functioning as a buffer between the usually bold U.S. interpretation of regional security issues and the distinct security perceptions of the other countries in the region’. Yet as Bitencourt further explains:

Paradoxically, Brazil’s strategic aspirations have never included casting itself in these roles. Moreover, if there is any generalization to be made regarding the Brazilian perspective on regional security, it is one of apparent lack of interest on regional security issues. Indeed, when regional security is at stake, Brazilians at least those bestowed with official authority usually adopt a calculated blasé attitude, seeking to downplay the problem by invoking the nonintervention principle and favoring multilateral and negotiated solutions. Overall, this approach has worked to counterbalance the usually muscular U.S. approach to security issues. On occasion, however, it has also hindered efforts to modernize existing regional security arrangements, which have come under increased criticism during the 2 last decades.[2]

Bitencourt suggested in 2003 that it could not be conclusively argued whether Brasil favored a more active role in international security from its search for a seat at the security council alone. Yet Brazil’s regional foreign policy strategy regarding international security may have evolved since then. In February 2008 Brazil announced the purchase of French nuclear submarine technology for $600 million in a deal that would allow Brazil to manufacture nuclear submarines (Scorpene) in the future. Yet the Brazilian defense ministry’s upgrade was more expansive as it moved to upgrade its entire submarine fleet, granting Lockheed Martin’s Undersea Systems unit a $35 million contract to deliver new combat systems for Brazil’s four Tupi-class diesel-electric submarines, the more modern Tikuna, and a shore-based trainer system.[3] The government is already spending a similar sum to develop a submarine nuclear reactor to be completed by 2015.

By the close of 2008, Brazil and France signed a major defense contract worth $12 billion whereby Brazil would receive the technology to develop its own arms industry along with Latin America’s first nuclear submarine. Close to 80% of the contracts will go to French defense firms while the remaining 20% will be granted to Brazilian firms. As Reuters accurately reported, ’[u]nder the deal Brazil will buy 50 EC725 Super Cougar helicopters built locally by Helibras, Eurocopter’s subsidiary in Brazil. Eurocopter is the helicopter subsidiary of European aerospace group EADS. The helicopters, worth an estimated 1.9 billion euros, are to be delivered from 2010′.[4]

Brazil’s traditional calculated blasé attitude regarding security had caught the beat of a vibrant arms race in the region, led by Venezuela, as well as the indifference the Bush administration appeared to show regarding Latin American affairs, as opposed to the traditional U.S. muscular foreign policy in the region. Brasil had effectively realized it was the regional power and as such should prepare its strategy accordingly. France’s choice regarding Brazil’s perceived military needs was not a coincidence. Brazil chose France over Russia and the US to maintain its independence as it builds its arms industry. Similarly, it was a Solomonic decision that avoided a clash with Washington, considering Russian arms sales in the region had become increasingly expansionist. In fact, in 2007 ‘Rosoboronexport, Russia’s state arms export agency, participated in two armament exhibitions in Latin America; “Telexpo 2007” in March in Sao Paolo and “ExpoExercito 2007,” the International Land Forces Exhibition held in June in Caracas. Russian armaments exports to Latin America now include Venezuela, with Russia selling weapons to (or negotiating with) Colombia, Bolivia, Mexico, and Chile. The stage was now set for Russia to attempt to capture a portion of Brazil’s arms imports’.[5] This would not come to pass.

The deal includes the sale of numerous ships, aircraft and torpedoes, transforming the Brazilian navy into the most dominant in the region. The aircraft part of the multibillion dollar contract, worth $4 billion, had been heated and controversial as Sweden’s Saab and the U.S. Boeing lobbied hard to sell Brazil their Gripen NG and F/A 18 Super Hornet. Finally, France’s Dassault Aviation bagged a deal for the sale of 36 Rafale combat jets to be finalized in October.[6]

Although criticism has been levied against the military deal, considering it over pretentious at a time where this investment, Brazilian analysts note, could hinder direly needed social programs, it should not come as a surprise Brazil invests in its national defense as a result of the ‘winds of war’ flowing in the region envisioned by Venezuela’s Hugo Chavez.

  

[1] ‘Petrobras constata la alta productividad del pozo particupado por Respsol’, Libertad Digital (september 9, 2009), http://www.libertaddigital.com/economia/petrobras-constata-la-alta-productividad-del-pozo-participado-por-repsol-1276369995/ (last accessed September 14, 2009)

[2] Luis Bitencourt, ‘Securtiy Issues & Challenges to Regional Security Cooperation: A Brazilian Perspective’, Strategic Studies Institute (July, 2003), p. 13

[3] ‘Brazil Gets Ready to Build Its Own Nuclear Submarine’, Newsroom (February 6, 2008)

[4] ‘Brazil, France sign major defense pact’, Reuters, in the Star (December 24, 2008), http://thestar.com.my/news/story.asp?file=/2008/12/24/worldupdates/2008-12-24T010220Z_01_NOOTR_RTRMDNC_0_-371689-1&sec=Worldupdates (last accessed September 14, 2009)

[5] ‘Moscow loses Brasil submarine deal to Paris’, Jamestown Foundation (February 12, 2008), http://www.jamestown.org/single/?no_cache=1&tx_ttnews%5Btt_news%5D=33372 (last accessed September 14, 2009)

[6] ‘Sarkozy assiste a desfile militar em Brasília e assina acordo bilionário com governo brasileiro’, O Globo (September 7, 2009), http://oglobo.globo.com/pais/mat/2009/09/07/sarkozy-assiste-desfile-militar-em-brasilia-assina-acordo-bilionario-com-governo-brasileiro-767507062.asp (last accessed September 14, 2009); ‘Brazil: military deal with France strengthens multipolar focus’, Inter-Press Service (September 8, 2009), http://ipsnews.net/news.asp?idnews=48373 (last accessed September 14, 2009)

Posted in Military Affairs | Leave a Comment »

Mexico-US to monitor Merida Initiative progress with joint office in Mexico City

Posted by Fernando Celaya on September 8, 2009

Presidents Obama & Calderon

Presidents Obama & Calderon

During his four day stay in Mexico, David Johnson, US Assistant Secretary for International Narcotics and Law Enforcement Affairs, announced the creation of a joint Mexico-US office in Mexico City where  law enforcement authorities from both countries will work together to monitor Merida Initiative programs and develop new strategies to confront  mutual threats under funds disbursed by the US government. The new joint office will boost bilateral cooperation starting December 2009.  

According to the US Dept of State and as part of the Merida initiative, besides ‘equipment that has already been delivered to Mexico, including x-ray machines, armored vehicles and a forensic document lab, the Embassy expects to deliver five Bell helicopters for SEDENA [Secretaria de la Defensa Nacional], over $7 million in additional non-intrusive inspection equipment, and critical software for the PGR’s case tracking system before the end of the year [2009]‘.[1]

The announcement arrives at a time when President Felipe Calderon’s standing  in the latest survey by the journal La Reforma has increaed to 68% regarding his overall management and leadership. Unfortunately, the same survey suggests Mr. Calderon’s efforts regarding public security and the economy are unsatisfactory. The survey reveals that 37% of those interviewed believe the government is winning the ‘war on drugs’ when compared to only 22% in September 2008. Similarly, although 41% believe the ‘war on drugs’ is being won by Mexican Drug Cartels (MDC) and criminal organizations, this percentage evidences an improvement when compared to the astounding 61% who believed in 2008 criminals had the upper-hand over the state. Although the escalation in the fight against criminals has registered important dividends in terms of arrests and disruption to some MDC, notably against La Familia in Michoacan and against the Gulf Cartel, MDC violent activity in northern Mexico has increased and the percentage of abductions remains astoundingly high.[2]

On Saturday September 5 the latest high profile victim abducted was Assistant Prosecutor for Counternarcotics of the city of Monterrey, capital of the state of Nuevo Leon, Jorge Jogar Hobbs Flores. The official was abducted in a daring operation at a local night club before 2000 people when 12 gunmen, equiped with facemasks and bullet proof vests, abruptly broke into the club in a shooting spree. The law enforcement official’s abduction is payback from a local criminal organization led by drug lord ‘El Tiburon’ (the Shark), who was gunned down by Mexican military forces along with four of his peers. El Tiburon’s criminal organization challenged the SEDENA with retribution for every captured or killed organization member throughout the state of Nuevo Leon.[3] 

So far, although the Calderon administration fares moderately overall in the fields of security, education, and even healthcare despite the swine flu outbreak over the summer, Mexicans give the administration a poor mark on the economy as unemployment figures rise. La reforma survey reflects this sentiment as 47% believe the economy has deteriorated over the last year. 

This is a worrisome development for both the Mexican and US governments alike, for it is when unemployed and unable to meet their most basic needs when citizens are more vulnerable to the criminal world, including gangsterism. Experts tend to dissagree on the extent to which Mexican or other Spanish gangs are connected to MDC. While there is agreement on the fact that gangs may act as salesmen for MDC at the micro level, few concur when linking gangs to MDC at the operational level. Notwithstanding, findings in the FBI’s National Gang Threat Assessment (NGTA) 2009 suggest the association may have evolved, creating challenging law enforcement questions across Mexico and the US. According to Assistant Director Kenneth W. Kaiser, from the FBI’s Criminal Investigative Division, ’Gangs have long posed a threat to public safety, but as this study shows, gang activity is no longer merely a problem for urban areas. Gang members are increasingly moving to suburban America, bringing with them the potential for increased crime and violence’.[4]

Considering the US also faces its worst unemployment figures in 26 years there is reason to be worried and cooperate closely with local, state, federal and Mexican authorities to monitor this development and mitigate it. For all the Merida Initiative’s efforts, a strategy needs to be implemented within the US to meet the challenge of drug trafficking organizations (DTO) operating across the US-Mexico border and within the US itself.

  

[1] ‘Assistant Secretary Johnson Visits Mexico to Observe Merida Initiative Progress’, Embassy of the US, Mexico, Press Release (September 2, 2009), http://mexico.usembassy.gov/eng/releases/ep090902Johnson.html (last accessed September 7, 2009)

[2] ‘Apoyo a Calderón llega a 68 por ciento’, Agencia EFE in El Nuevo Herald (September 1, 2009),  http://www.elnuevoherald.com/210/story/532975.html (last accessed September 7, 2009); ‘La Policía mexicana detiene en una iglesia al principal traficante de drogas sintéticas’, El Mundo (August 4, 2009), http://www.elmundo.es/elmundo/2009/08/03/internacional/1249322939.html (last accessed September 7, 2009); ‘Ejército detiene a lugarteniente del cártel del Golfo’, El Universal (June 2, 2009), http://www.eluniversal.com.mx/notas/602145.html (last accessed September 7, 2009)

[3] ’secuestran a un vicefiscal antidroga en Mexico ante 2.000 testigos’, Libertad Digital (September 6, 2009), http://www.libertaddigital.com/mundo/secuestran-a-un-vicefiscal-antidroga-en-mexico-ante-2000-testigos-1276369678/ (last accessed September 7, 2009)

[4] ‘National drug Threat Assessment Issued’, US Federal Bureau of Investigation, Press Release (February 2, 2009), http://www.fbi.gov/pressrel/pressrel09/ngta020209.htm (last accessed September 7, 2009); ‘National Gang Threat Assessment’, National Gang Intelligence Center & National Drug Intelligence Center, US Federal Bureau of Investigation (February 2, 2009), http://www.fbi.gov/publications/ngta2009.pdf (last accessed September 7, 2009)

 

Posted in Rule of Law | Leave a Comment »

US Dept. of State punishes Honduras with sanctions

Posted by Fernando Celaya on September 5, 2009

Clinton & Zelaya

Clinton & Zelaya

Surprising many within the international community, US Dept of State spokesperson Ian Kelly announced the US has escalated sanctions against Honduras cutting ‘all non-humanitarian aid to the de facto government, about $32 million; revoked the visas of all civilian and military officials who backed the June 28 coup, and threatened not to recognize the results of the Nov. 29 elections unless Zelaya is returned to office’, as Time reported.[1]

So far no Hondurean accounts in the US have been frozen, yet the Obama administration is treading on a difficult rope by acquiescing Latin American leftist leaders while leaving Honduras, a traditional ally out in the cold, to boost its image amongst the wave of socialism spreading in the region led by Hugo Chavez. Recent elections in El Salvador and Guatemala are illustrating, though these countries have not criticized the US as Zelaya had since they won historic elections that voted them into office.

The decision has drawn a wedge within Obama administration foreign policy officials and Democrats and Repubicans alike. In July South Carolina Senator Jim DeMint criticized the Obama administration for supporting ousted President Zelaya, who had been critic with US policy. In July Senator DeMint linked Zelaya’s move to attempt to change the Hondurean Constitution to perpetuate hinmself in power to that which his Venezuelan counterpart had conducted in the past, despite the explicit prohibition contained within the Central American nation’s magna carta. DeMint argued ‘[t]he people of Honduras have struggled too long to have their hard-won democracy stolen from them by a Chavez-style dictator… The Honduran Congress, the Honduran Supreme Court, and the Honduran military have acted in accordance to the Honduran constitution and the rule of law’.[2] The US measure to stigmatize Honduras publicly without qualifying the removal of Zelaya as a ‘military coup’ contrasts with the latest decision to lift travel and limited commercial sanctions on Cuba.

The Hondurean interim government responded with dissapointment at the US decision, yet re-stated no foreign country or entity will interfere in Hondura’s internal affairs, following a decision by the Supreme Court and Congress to ensure democracy is upheld.[3] Notwithstanding, the Hondurean interim or future government should allow Zelaya’s return to Honduras so that he can face all the criminal charges he is charged with and its claim rise to high ground by virtue of applying a necessary due process.

 
[1] ‘Why Obama Won’t Use the M-Word for Honduras’ Coup’, Time (September 5, 2009), http://www.time.com/time/world/article/0,8599,1920725,00.html (last accessed September 5, 2009; ‘U.S. Cuts Aid To Honduras In Support Of Ex-Leader’, Associated Press (September 3, 2009),  http://www.npr.org/templates/story/story.php?storyId=112535467 (last accessed September5, 2009)

[2] ‘Republican criticizes Obama over Honduras’, Press TV (July 3, 2009), http://www.presstv.ir/detail.aspx?id=99663&sectionid=3510203 (last accessed September 3, 2009)

[3] ‘Honduras government says it doesn’t fear sanctions’, Salon.com (August 25, 2009),  http://www.salon.com/wires/ap/world/2009/08/25/D9AA7P580_lt_honduras_coup/

Posted in Diplomacy | Leave a Comment »