The Terror Finance Blog

Russia the Asymmetric Threat: A Potent Mixture of Energy and Missiles

I'm posting this on behalf of John Wood, regarding his new book, Russia the Asymmetric Threat: A Potent Mixture of Energy and Missiles

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By John Wood

 

Introduction

The current economic crisis offers the Obama administration a window of opportunity to embark upon a course of constructive engagement - reset. Mutual self interest in the arms control arena and the energy sphere should motivate both sides to cooperate.

 

Purpose of the Book

In February 2007, at the 43rd Munich Security Conference, then President Putin made the statement that Russia would respond to the United States asymmetrically. The purpose of the book is to explain what Putin meant by that statement. At the heart of Putin’s asymmetric strategy is the use of Russian energy and missiles.

 

Concept

Under Putin, Russia has emerged as the global energy superpower. The means by which it wishes to transform itself into a knowledge economy. Its military modernization program is designed to support its new national security doctrine. This is a doctrine that emphasizes the need to protect Russia’s energy interests. For Putin, the unipolar approach of the United States represents the greatest threat to the realization of this vision. Therefore, he has conceived an asymmetric response to the perceived U.S. threat: the creation of a new network of energy pipelines that will make Europe even more dependent on Russia than it already is, and will make Asia equally as dependent by 2020. In addition, in order to change the regional balance of power in his favor, Putin has employed a deft use of missile and aircraft arms sales to Russia’s energy partners, who are also not friends of the United States, such as Iran, Libya, Malaysia and Venezuela.

 

Overview

Due to low levels of debt, massive reserves and the pursuance of a course of fiscal responsibility, the World Bank in November 2008 predicted that Russia was in a good position to financially weather the current economic storm.

 

Russia holds the world’s largest natural gas reserves, the second largest coal and uranium reserves, and the eighth largest oil reserves. Europe is dependent on Russia for 25% of its oil and gas. Russia is also positioning itself to play a similar role with respect to China. 

 

Russia has embarked on a program of modernization of its military, the centerpiece of which is an overhaul of its aging strategic nuclear forces. The focus is on technologically advanced, but relatively inexpensive missile systems, which by comparison with their U.S. counterparts often exceed them in their capabilities.

 

From Putin’s perspective, America is in the process of imposing “absolute security” or as Joint Vision 2020 put it: “full spectrum dominance” over the world. As the sole remaining superpower, the United States enjoys a massive strategic imbalance in its favor, which it has used first to contain, but now with the intent to control the world. How? NATO expansion lays the groundwork for a U.S. global missile defense system to contain perceived adversaries, which in turn secures the dominance of America through its Prompt Global Strike capability (PGS) – the ability to strike anywhere on the planet with impunity within 90 minutes of the order being given by The President. Thus, PGS will be to the 21st Century, what British Gun Boat Diplomacy was to the 19th Century.

 

Potent? If either Israel and/or the United States attack Iran, they can expect to suffer losses of between 20%-40% of their non-stealth aircraft and missiles at the hands of Iran’s air defenses, including Russian S-300s, Tor-M1s and Pantsyr-S1s, as well as losses of civilian and naval ships in the Straits of Hormuz due to supersonic anti-ship missiles. Meanwhile, the world can expect a barrel of crude oil to cost $200.

 

Conclusion

Russia’s massive oil and gas reserves in the Arctic, Eastern Siberia and Far East, as well as its leading edge missile systems, make it a force to be reckoned with, rather than being ignored or dismissed by the West. Thus, the sooner the United States recognizes and comes to terms with this reality, the better it will be for her.

 

The book is available on Amazon.com: http://www.amazon.com/Russia-Asymmetric-Threat-United-States/dp/0313359415/ref=sr_1_1?ie=UTF8&s=books&qid=1246228394&sr=1-1

A Caliphate of Toxic Assets

By Alyssa A. Lappen
FrontPageMagazine.com | Monday, June 29, 2009

When a pro-terrorist organization announces its intention to launch a financial jihad against the West, it is well worth learning their methods — especially when they promote a religious pseudo-financial scheme through largely unregulated practices purported to be safer than the conventional. But ultimately, the new brand of assets are constructed with as little, and perhaps considerably less, transparency than the last wave of toxic assets that hit the economy, with catastrophic results.

The Muslim organization Hizb Ut Tahrir capitalizes on Muslim Brotherhood founder Hassan al-Banna's 20 ^th century derivative, encouraging followers to build a parallel financial structure. Al-Banna envisioned the resultant Shari'a-compliant finance as a “back door” into Western financial markets and institutions through which to supplant liberty and prosperity with Islam. Muslim clerics including MB spiritual leader Yusuf al-Qaradawi promote Shari'a finance as generally safer than Western investments, a diversification method to steady personal assets -- and a stable economic system that should replace capitalism. Call it “financial replacement theology,” if you wish.

In July, Hizb Ut Tahrir plans to launch its U.S. arm with a huge Chicago “Khalifah conference” heralding the coming Caliphate and global Islamic supremacism. After 9/11, Germany and Sweden outlawed Hizb Ut Tahrir. In July 2005, Pakistan's then-president Pervez Musharaf warned Britain not to tolerate its continued U.K. presence. But in the U.S., Hizb Ut Tahrir has proudly announced intentions to replace capitalism with Islam. 

Founded five years into Jordan's illegal occupation of East Jerusalem in 1953, Hizb Ut Tahrir labels itself “peaceful” but strategically objects to violence only for the time being. The group sympathizes with the Muslim Brotherhood, considers Europe's democracies “a farce” -- and deems the U.S., UK, and Israel works of “the devil” -- and seeks to impose Islamic law (Shari'a) worldwide.  

Major banks from Citigroup, HSBC, Chase, Bank of America and Lloyds TSB -- probably unaware of the etymology of Islamic finance -- established subsidiaries offering Shari'a-compliant products. Mutual funds at Principal Financial Group, UBS, Amana Funds and SEI Investments, among others, followed suit. Especially late last year as the devastating toll of sub-prime mortgage lending mounted, clients were assured that Islamic banking -- in many respects a dangerous financial fad -- was much safer than other banks and investment houses.  

Yet bad economic news has not escaped the supposedly secure Islamic investing sector. Islamic securities can also (like all other asset classes) go into default, moreover. Holders of East Cameron Partners LP's “safe,” asset-backed Islamic bonds (sukuk) now line up before a Louisiana bankruptcy judge with all the other hapless creditors of the Texas-based Easter Cameron Oil and Gas Co. that filed for Chapter 11 reorganization last October.  

The East Cameron default was no one-time Islamic finance anomaly, either. In May, Kuwait's Investment Dar Co. -- 50 percent owner of the Aston Martin Lagonda luxury car manufacturer -- defaulted on a $100 million sukuk. And in June Saad Group Islamic bonds traded at a quarter of their “face” value -- that is, the the roughly $650 billion price at which issued by Saudi billionaire Maan al-Sanea's company. The Saad Trading Contracting & Financial Services subsidiary, like East Cameron, went into financial restructuring, aka bankruptcy, after the Saudi Central bank froze the al-Sanea family accounts. 

As I've often previously warned, events now show that Shari'a banking may prove more susceptible to market dislocations than other financial sectors.  

Islamic bonds employ “some of the most complex” Western structured finance tools ever created. They transform liquid, traceable cash flows from interest-bearing debt into illiquid assets -- that cannot be easily unwound. In the 1980s, bond sponsors transformed trillions of dollars in cash flow claims on illiquid real assets into liquid, traceable mortgage-backed “pass-throughs” and “collateralized debt obligations” (CDOs).  

The Muslim Brotherhood quickly re-branded the “special purpose entities” (SPEs) -- that kind that, coincidentally, sank Enron -- as Islamic “special-purpose vehicles (SPVs).” Shari’a banks use these vehicles to “restructure interest-bearing debt, collecting interest [as] rent or [a] price mark-up.” Issuers of sukuk al-ijara -- Shari'a bonds like those now in default -- sell hard assets to SPVs, which sell share certificates to fund their investment and in turn lease the purchased assets back to the sukuk issuers, collecting the principal plus interest that they then pass to sukuk investors as “rent.” But now, sukuk issuers are defaulting on “rent,” implying that SPVs can't sell or return property to issuers when their sukuks mature.  

That means, in essence, Shari'a finance is a sham. “There is no such thing as interest free investment,” warns Columbia MBA Joy Brighton, echoing Rice University Islamic economics and finance chairman Mahmoud el-Gamal. “All Islamic finance today is interest based,” el-Gamal complained in the Financial Times two years ago. Furthermore, Islamic finance features a few other unique “complexities,” namely:

• “Shari'a regulations can override commercial decisions.”
• Documentation is not standardized
• Inter-creditor agreements can be complex

As U.S. financial institutions crumble, rattling markets, Congress has focused on regulating the opaque, previously unregulated securities called credit default swaps that Brighton describes as guaranteed boxes of counter-party risks. “One party pays a premium, the second guarantees payment, and a third guarantees the guarantor.” AIG, for example, guaranteed payment on billions of dollars worth of sub-prime mortgage loans. “The credit default swap is the guarantee, and AIG bore the default risk burden in exchange for upfront fees on maybe trillions of dollars in loans.” 

But credit default swaps are old news, Brighton says. “A new generation of toxic assets has not yet hit anyone's radar.” While touted as such, Islamic securities aren't immune to default. Many more Islamic issues are likely to succumb as the global economy worsens.  

“Islamic banking is in the toxic derivatives genre,” says Brighton. Each counter-party agreement within its complex “boxes” of interwoven counter-party risks, is a contract for “payment” and “delivery/receipt of funds.” Issuers create derivatives when they “peel off and resell pieces” from individual securities containing multiple counter-party contracts. One default by a party to any of the interwoven contracts in a “box” can cause its whole structure to collapse. 

Moreover, Islamic finance is doubly toxic. Many banking corporations have created Islamic subsidiaries, says Brighton -- segregated oil wealth managed by “outside money managers” and Islamic radicals who don't circulate money globally, but keep it “within the Islamic community, as a charity- and jihad-funding mechanism.” They're just another economic time bomb that financiers have blindly bought.

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Alyssa A. Lappen is a former Senior Fellow of the American Center for Democracy, former Senior Editor of Institutional Investor, Working Woman and Corporate Finance, and former Associate Editor of Forbes. Her website is www.AlyssaaLappen.org.

Morocco- A Muslim Nation's Successful Election

Commentary

(Appeared orginally at Forbes.com) 
Rachel Ehrenfeld, 06.17.09, 11:55 AM ET

It is 131 degrees Fahrenheit in Marrakesh, Morocco, yet a slow but steady stream of voters--many of whom are women--enter the schoolyard to cast their ballots at the polling stations for the municipal elections.

On June 12, 2009, 1,503 communities chose their representatives in orderly, transparent elections, according to Ahmed Herzenni, chairman of Morocco's human rights watchdog, CCDH. His opinion was shared by more than 150 foreign observers, including the International Strategic Studies Association from Washington, D.C., and the New York-based American Center for Democracy (ACD).

Unlike the Soviet-style election in April that led to the reelection of President Abdelaziz Bouteflika in Algeria, Morocco's eastern neighbor, or the controversial and violent presidential election in Iran, Morocco's election was "fair and free."

The meticulously planned and executed election marked an important step in King Mohammed VI's reform plans to decentralize governance and empower local communities. With 6% economic growth, large investment in education and development, $21.11 billion in foreign debt and $27.29 billion in reserve, Morocco has weathered the global economic storm better than most. In introducing a new form of governance, the king's reforms are designed to increase the participation of all citizens in political and economic systems.

Morocco's interior minister, Chakib Benmoussa, an MIT graduate, led the planning, preparing and training of election officials and volunteers. A budget of close to $62 million was allocated to plan, organize and administer the elections. Special efforts were made to include more women in local politics. To overcome the high level of illiteracy and encourage voting, the ballots included pictures of the political parties, which were well advertised in advance.

These efforts yielded impressive results: Local elections attracted 15.4% more voters than the last parliamentary elections, in 2007. More than 7 million voters (52.4%) elected 27,795 council members; 61% of these were newly elected. The number of women elected rose significantly, from 0.4% in the previous local elections in 2003 to 12.3%. Most of these women are under the age of 35, and 75% of them have higher than secondary education.

"We were impressed because we've seen very clearly that people were well-acquainted with the rules and were well-prepared for elections," noted Leslie Lebl, a senior ACD fellow, one of the international observers. "Everything took place in very good conditions."

Jean-Charles Brisard, a French observer, noted the "professionalism" of the election supervising teams and said he was impressed by the "great sense of responsibility" demonstrated by participating officials and volunteers.

Significantly, there was a high turnout of voters in the Moroccan Western Sahara region. Though this area is still the subject of international dispute, the local inhabitants' active participation demonstrated their self-identification as Moroccan citizens. The Saharans clearly prefer Morocco's reform-oriented government to Algeria's repressive regime.

Morocco's efforts to unify its diverse population of Arabs, Berbers, Jews and other small minorities are impressive. To attract more members, the Islamist Justice and Development party abended its religious rhetoric. Although it gained relatively more votes in the big cities, it came in sixth, with only 5% of the votes. In contrast, the royalist, modernist, and reform-oriented Authenticity and Modernity Party came in first with roughly 18% of the votes and won almost 22% of seats.

In this Muslim country--where Jews and Christians can practice their religions freely, conversion from Islam is permitted by law, a big church stands in the center of the capital Rabat, and alcohol is freely sold in the supermarkets--the regionalization reforms underway promise that Morocco will become even more tolerant. Indeed, Morocco should be used as model by its neighbors in the region and beyond.

Rachel Ehrenfeld, author of Funding Evil: How Terrorism is Financed and How to Stop It, is director of the American Center for Democracy.

Squelching free speech:Don't let 'lawfare,' legal ploys chill public debate on radical Islam

The following article was published in the Sunday, June 7, 2009 issue of the Press-Enterprise, and is reposted here due to its subject matter. 

Over the past 10 years, the world has seen a growing number of malicious lawsuits in American courts and abroad, filed by adherents of radical strains of Islam designed to punish and silence those who engage in public discourse about radical Islam, terrorism, and terrorist financing.

This pursuit of strategic aims through aggressive legal maneuvers is known as "lawfare." More recently, these legal maneuvers have been accompanied by attempts by the Organization of the Islamic Conference to redefine the very definition of free speech on a global scale in order to constrain the free flow of public information about radical Islam and terrorism. The 57-member conference's voter bloc dominates the U.N. General Assembly.

Even within the United States, despite the unparalleled protections of our First Amendment, lawfare lawsuits have resulted in many time-consuming and financially devastating cases against individuals who wrote about radical Islam and terrorism. These lawsuits have not spared Californians.

In 2002, the Anti-Defamation League's regional director and regional board chairman wrote and published a letter to California's schools superintendent urging investigation into whether state funding to the GateWay Academy charter school system was being illegally used to teach religion.

The letter called attention to the superintendent of the GateWay Academy, Khadija Ghafur, and her status as an officer of "Muslims of the Americas," an organization linked to the terrorist group Al-Fuqra. Ghafur then filed suit in San Francisco against the league and its officers, claiming that the public letter constituted libel against her.

Intimidating lawsuits

In 2007, Yale University Press published a book by counterterrorism expert Matthew Levitt of the Washington Institute for Near East Policy. Entitled "Hamas: Politics, Charity and Terrorism in the Service of Jihad," the book mentioned several U.S.-based charities as allegedly having funded the terrorist organization Hamas. Among the named organizations was Kids in Need of Development, Education and Relief Inc., better known as KinderUSA. KinderUSA sent a letter to Yale University Press demanding a retraction.

When the publisher refused, KinderUSA filed a libel lawsuit against Yale University Press, the Washington Institute and Levitt himself in Los Angeles.

All too many defendants in situations such as these have been forced to surrender, facing bankruptcy from legal fees long before their cases could be heard. However, both the Anti-Defamation League and Levitt were able to make use of a legal innovation enacted by the California Legislature in 1993. Known as an anti-SLAPP statute, it is a legal mechanism aimed at preventing lawsuits designed to hinder legitimate public dialogue. When the Anti-Defamation League made this motion, the trial court dismissed the lawsuit, a ruling that was upheld on appeal.

In the Yale University Press case, after the defendants filed the anti-SLAPP motion, KinderUSA dropped the lawsuit altogether, saying only that it had underestimated the costs involved.

Sadly, despite many successes when these cases have been heard on their merits, Islamist lawfare has carved a global swath through the public debate on radical Islam and terrorism. And lurking behind the scenes of world discussion (or lack thereof) on these subjects is the immensely powerful and far-reaching Organization of the Islamic Conference.

Over the past several years, the Islamic conference has gotten the U.N. Human Rights Council to issue resolutions condemning "defamation of religion," and continues to work toward suppressing or otherwise controlling any and all dialogue regarding radical Islam and terrorism under the guise of "human rights."

It should be ludicrous for a human rights group in any nation to claim that blaspheming a religious figure is a human rights violation. Yet Adel Al-Damkhi, chairman of the Kuwait Human Rights Society, has stated that "uttering profanities against Prophet Muhammad is the worst form of human rights violation in the world."

The Organization of the Islamic Conference's secretary-general himself has publicly stated that, in discussing Islamic rights, "These rights are part and parcel of the teaching of Islam that no ruler, government, assembly or authority can alter, curtail or violate in any way."

That statement does not prevent the conference from working to compel others to follow its politicized version of Islam, of course.

Defend open discourse

These issues have not met with significant news coverage, despite significant consequences for the entire world. However, that is not to say that no action has been taken. On May 19, the Legal Project of the Middle East Forum hosted a historic conference on libel lawfare in Washington, D.C., along with the Federalist Society, the Center for National Security Law and the Thomas Jefferson Center for the Protection of Free Expression.

With a morning panel on lawfare in the United States, luncheon presentations from individuals with direct experience in lawfare, and an afternoon panel on European and international aspects of the phenomenon, the conference brought together considerable and varied expertise in the field.

There was no single conference conclusion -- that was not its purpose. The conference achieved its purpose simply by engaging in precisely the type of speech that Islamists want to suppress so desperately: open discussion on these critical issues of public concern, without fear of threats or reprisal.

Aaron Eitan Meyer is assistant director at the Legal Project of the Middle East Forum.

Hamas still stealing international aid

by David Frankfurter

As I pointed out in my blog item Israel to open Gaza border crossings?, Hamas has once again been outed stealing international aid and diverting it to its nefarious military activities.  This time, the the official Palestinian Authority newspaper Al-Hayat Al-Jadida confirmed that thousands of tons of medical equipment - including 46 ambulances stripped of their equipment and painted black to be used as military vehicles - have been hijacked by Hamas for direct military use or for re-sale to the population after confiscation. 

Hat tip to Palestinian Media Watch.

Attacking Iran - Is the Price Too High to Pay?

By John Wood

Recently, Israel conducted a five-day emergency drill, the largest ever conducted by that nation. Just a year ago, in June 2008, the Israeli Air Force (IAF) conducted a massive 100 plane exercise over the Mediterranean. Both these events are seen as preparation for an imminent attack by Israel on Iran. Most believe that Israel will again emerge victorious. Some believe that Israel might only be able to degrade Iran’s widely dispersed and extensive nuclear industrial complex. Few have considered the cost to Israel, in particular, resulting from Russian made air defense systems, such as S-300s, Tor-M1s and Pantsyr-S1s; or the damage that could be inflicted by Russian and Chinese supersonic anti-ship missiles on international shipping in the Straits of Hormuz. For the first time ever, Israel faces the distinct possibility of losing 20% to 40% of its aircraft, a price it may not be willing to pay. And the world could face the prospect of oil at $200 a barrel, a price it may not be able to afford.

On February 19, 2009, the International Atomic Energy Agency (IAEA) reported that as of January 31, 2009, Iran had produced 1,010 kilograms of low enriched uranium. The President of the Institute for Science and International Security (ISIS) in Washington, D.C. David Albright, declared that Iran had achieved “breakout capability.” In other words, Iran had enough material to produce a nuclear bomb comprised of 20–25 kilograms of highly enriched uranium. Scott Kemp and Alexander Glaser, physicists and members of the research staff of the Woodrow Wilson School of Public and International Affairs, Princeton University, believe the process of converting the low enriched into highly enriched uranium will take somewhere between eight months and three years. As Albright points out, the time frame may be shorter if Iran has other covert facilities to assist in speeding up the process. Clearly, Israel’s time to act is running out.

Iran does not possess a nationwide integrated air-defense network. It will therefore have to rely on defending its key nuclear facilities, such as the enrichment facility at Natanz, the conversion facility at Esfahan, the heavy-water facility at Arak, and the Bushehr nuclear power plant. This means that Russian made air defense systems such as S-300s, Tor-M1s and Pantsyr-S1s will be critical to whether Iran is able to fend off Israel’s air attack against these nuclear facilities. The lethality of a weapon system is called its “kill probability.” The S-300 has a single-shot kill probability of 80% to 93% for aerial targets. The Tor-M1 has an aircraft kill probability of between 92% and 95%. The Pantsyr-S1 has a kill probability of 70% to 95% against all targets. The A. Burke Chair in Strategy, at the Center for Strategic and International Studies, Anthony Cordesman, estimates that Iran has 15,000 men deployed in air defense, manning 1,700 anti-aircraft guns and more than 250 major SAM launchers. In addition, Iran has large numbers of Russian and Chinese man-portable SAMs.

Thus,  the IAF will be greeted by a large number and variety of Iranian air defense systems and missiles, which in of itself will increase the likelihood that it will suffer losses higher than it has ever suffered before.

Cordesman also estimates that the Islamic Revolutionary Guard and Navy has a significant number of Chinese guided-missile patrol boats armed with anti-ship missiles. There are also a number of batteries of land-based anti-ship missiles in and around the Straits of Hormuz. Lastly, Iran has three ultra quiet Russian Kilo class submarines armed with Klub-S supersonic anti-ship missiles.

Iran’s anti-ship missile capability represents a clear and present danger to not just oil tankers, but also U.S. Navy vessels. Although the U.S. Navy is capable of handling Russian supersonic anti-ship missiles, according to Australian military expert Carlo Kopp, a salvo of six or more is likely to overcome even an Aegis warship’s defenses. The challenge is compounded by absence of a comprehensive U.S. Navy plan for dealing with supersonic anti-ship missiles.  Accordingly, the U.S. Navy can expect to suffer losses, perhaps, even that of an aircraft carrier, which would cost billions of dollars to replace.

In the final analysis, although an attack on Iran will be costly, the alternative, not just a nuclear Iran, but Saudi Arabia, Egypt, Libya and Syria, would exact an even higher price from Israel down the road.

John Wood is a Senior Fellow at the American Center for Democracy. He is also the author of “Russia the Asymmetric Threat: A Potent Mixture of Energy and Missiles” to be published by Praeger Security International on June 30, 2009, and available on Amazon.com.

U.S. Bails Out Palestinian Terrorism…Again

The U.S. is in a Hurry to Militarize the Palestinians

By Rachel Ehrenfeld

The May 28 meeting between President Barak Obama and Palestinian Authority leader, Mahmoud Abbas, confirms that this Administration, like its predecessors, refuses to learn from the past.

In yet another déjà-vu, the U.S. unconditional support to the Palestinians is persisting despite the fact that the Palestinians have never upheld any agreement to stop the violence against Israel.

Not even the economic downturn and financial instability in the U.S. have curtailed the Obama Administration’s financing of Palestinian terrorism.

A day after the Obama – Netanyahu meeting, U.S. Secretary of State, Hillary Rodham Clinton, reassured Al Jazeera viewers, that “the Obama Administration is not waiting.”

In addition to the $900 million the Administration offered the Palestinians on March 2, it is working to speed the establishment of regular Palestinian military and security forces. The U.S. has already trained 1,500 Palestinian soldiers costing the recession gripped American taxpayer $161 million. These newly trained forces says Lt. Gen. Keith Dayton, U.S. security coordinator for Israel and the PA, “are new men,” unlike the thousands trained by the U.S. since the creation of the Palestinian Authority (PA) in 1994.

The scheme behind the U.S. military initiative to organize and train the PA military forces is that these “new men” would help Abbas defeat Hamas. However, Abbas had already indicated that he “has agreed in principle to form a joint security force with …Hamas.” This does not seem to faze Dayton, who insists that the “new men,” are on a mission to "create a Palestinian state."

Abu Yusef, a member of the PA’s Chairman own security unit - Force 17, has an unambiguous view of the American military training of the Palestinians: “The operations of the Palestinian resistance would [not] have been so successful and "would not have killed more than 1,000 Israelis since 2000, and defeated the Israelis in Gaza without [American military] trainings,” he boasted in an interview in August 2007. "All the methods and techniques that we studied in these trainings, we applied them against the Israelis," he said.   

Abu Yusef explained that the American training helped the Palestinian forces to better snipe “at Israeli settlers and soldiers.” The special intelligence training they received from the U.S. instructors helped them “collect information on the movements of soldiers and settlers… the best timing to infiltrate our bombers inside Israel.” Abu Yusef specified: “We used weapons and we produced explosives, and of course the trainings we received from the Americans and the Europeans were a great help to the resistance."

If the past is of any indication, then the “new men” would join thousands of already well-trained and well-equipped Palestinians whose main goal remained to fight Israel. Yet, the U.S. is determined to expedite the training.

Furthermore, on May 27, a day before Obama’s meeting with Abbas, in a move to protect Hamas terrorists, the U.S. blocked Israel’s request for the AH-64D Apache Longbow attack helicopter, worried that the “helicopters would threaten Palestinian civilians in the Gaza Strip.”

While Mrs. Clinton assured the House Appropriations Committee: "No aid will flow to Hamas or any entity controlled by Hamas," PA Prime Minister and Finance Minister Salem Fayyad acknowledged many times that controlling Palestinian finances "is virtually impossible."

Furthermore, last February, despite Fatah-Hamas bloody disagreements, Fayyad diverted $21.5 million sent from Israel to pay PA employees’ salaries, to Hamas controlled Gaza, supposedly to rebuild buildings destroyed during Operation Cast Lead. This and millions of dollars Fayyad receives from Israel to pay the rapidly growing numbers of alleged PA employees in Gaza, pays Hamas loyalists instead. In addition, Hamas taxes the PA salaries and keeps the money in Gaza. All this amounts to millions of dollars each month to Hamas.

In December 2007, soon after Hamas takeover of Gaza, international donors pledged $7.4 billion to the PA, to help it fight Hamas. This did not stop Fayyad who declared the PA would give Hamas 40% ($3.1 billion) of the funds.  The PA did not get all that money, because most donors refused to send money to Hamas.

The $4.5 billion - $5.2 billion pledged in March 2009 to rebuild Gaza is held up for similar reason. But Mrs. Clinton insists the U.S. has “worked with the Palestinian Authority to install safeguards that will ensure our funding is only used where and for whom it is intended and does not end up in the wrong hands."

It seems that Mrs. Clinton is impressed with the PA’s much touted anti money laundering programs, while ignoring the PA’s actions of sending “clean” money into the hands of Hamas terrorists in Gaza.

The newly pledged international aid to the Palestinians would amount to $1,125- $1,300 dollars to each of the 4 million Palestinians in the West Bank and Gaza. This is on top of hundreds of millions of dollars in “humanitarian aid” sent by Israel, the U.S., European Union (EU), Saudi Arabia, Iran and other international organizations and to Hamas controlled Gaza, since December 2008.

In comparison, from 2003 to 2006 each of 2.5 million Darfur refugees received only $100 per person annually from the U.S. Agency for International Development (USAID).

As not to leave Obama in the dark for his meeting with Abbas on Thursday, May 28, the PA representative to the negotiations with Israel, Ahmed Qureia (Abu Ala), told the Israeli Daily Ha’aretz on May 26: “It's not fair to demand that we recognize you [Israel] as the state of the Jewish people…Our refusal is adamant."

Instead of demanding the Palestinians to officially recognize Israel, Obama placed the burden of the progress of Middle East peace on Israel.

Alas, such persistent statements and increasing violence against Israel since the creation of the PA in 1994 never stopped any American Administration from investing billions of dollars into the creation of well armed and trained radical Muslim Palestinian state. As with other failed entities, the Obama Administration seems resolute to bail out yet another losing venture - the Palestinian terrorist state.  

Dr. Rachel Ehrenfeld is director of the American Center for Democracy and author of Funding Evil: How Terrorism is Financed and How to Stop It