Monday, June 30, 2014

The Battle Between ISIS and al-Qaeda for Global Supremacy

Aaron Zelin at the Washington Institute recently provided us with a timely and interesting look at the battle between ISIS and al-Qaeda for supremacy in the global jihadist movement.

ISIS has its origins in Jamaat al-Tawhid wa-l-Jihad or JTWJ which was founded by Abu Musab al-Zarqawi in 1999.  Zarqawi, a charismatic militant Jordanian Muslim, came from a poor, less educated background than Osama bin Laden, the head of al-Qaeda which was founded in the 1980s during the Afghani jihad against the Soviet Union occupation of the country.  Zarqawi was sentenced to fifteen years in prison after a failed suicide bombing attempt in Jordan which was undertaken in 1993 to unseat the Hashemite Jordanian monarchy.  Zarqawi was released from prison in the spring of 1999 and went to Afghanistan.  The two key figures met in 1999 in Afghanistan; at that point, Osama bin Laden had the greatest leverage with the Afghani jihadists that were training in Taliban-controlled areas of the country.  Zarqawi wanted to set up his own training camps with discharged Jordanian prisoners and was provided with around $5000 in seed money by bin Laden.  Zarqawi's small group, headquartered in Herat, grew to between 2000 and 3000 members and quickly became a mobile army, ready to unleash acts of terror anywhere in the world.

At that time, the main goal of al-Qaeda was to overthrow what they viewed as apostate Arab regimes and liberate occupied Muslim territory.  By lending support to fighters, they would be able to "cut off the head of the snake", the United States and its western allies.  In contrast, the mission of JTWJ was to topple the Jordanian monarchy.

During the early 2000s and after the invasion of Iraq, Zarqawi became well known for a long series of attacks during the Iraq war including the execution of hostages by beheading and suicide bombings.  He declared war agains the Shiites in Iraq after Iraqi forces launched an offensive on a Sunni town.  As a result of his successes in the battlefield, Zarqawi's profile was raised and many fighters wanted to join JTWJ.  In order to prevent himself from becoming irrelevant in the jihadist movement, bin Laden entered negotiations with Zarqawi and the two groups merged.  JTWJ was renamed al-Qaeda in the Land of Two Rivers or more commonly al-Qaeda in Iraq (AQI).  As a result of the agreement, AQI gained control of the jihadist movement in Iraq and controlled the future generation of the jihad.  The merger gave the new group access to al Qaeda's sources of funding and recruitment.  What ended up separating AQI from al-Qaeda was the difference in age of their respective fighters; in the case of al-Qaeda, many of the fighters came of age in the 1980s and 1990s whereas the fighters in AQI (now ISIS) came of age in the first decade of the new millennium.

The ideological divide between Zarqawi and bin Laden can be attributed to one factor; Zarqawi believed that the only way to save the global Islamic community was to purge the apostates within it whereas bin Laden believed that salvation for Islam would not come through removing Muslims, rather it would come through the changing of apostate institutions.  Bin Laden's second in charge, Shaikh Ayman al-Zawahiri (now the leader of al-Qaeda) and Sheikh Atiyat Allah Abd al-Rahman al-Libi, al Qaeda's operations leader, both contacted Zarqawi and advised him to stop his over-enforcement of sharia law and accompanying violence because it was alienating Sunnis and hurting their global agenda.  In 2006, Zarqawi brought together several Iraqi insurgent factions and established Majlis Shura al-Mujahedin (MSM).

Zarqawi had a four-pronged strategy to defeat the coalition forces:

1.) Isolate United States forces by targeting its allies.
2.) Discourage Iraqi collaboration by targeting government personnel and institutions.
3.) Target reconstruction efforts by targeting civilian contractors and aid workers.
4.) Draw the United States into a Shia-Sunni civil war by targeting Shiites.

In the early years, the 15,000 members of ISI did not particularly have an easy time in Iraq.  Its policy of criminal punishment, often death, which were based on very narrow interpretations of sharia law, proved to be unpopular with Iraqis.  This led to a backlash and ISIS/AQI lost 2400 members that were killed by an alliance of U.S. troops and Sunni tribesmen and an additional 8800 captured.  Unfortunately, the weakening of ISI did not last and the group grew in both numbers and influence.  

Zarqawi was killed by American forces on June 7, 2006.  He was replaced by a senior AQI leader, Abu Hamza al Mujahir, an Egyptian with ties to al-Qaeda.  In October 2006, the group announced a rebranding with the establishment of the Islamic State of Iraq or ISI under the leadership of Abu Omar al-Baghdadi, who was replaced by the current leader, Abu Bakr al-Baghdadi after his death on April 18, 2010.  The current leader of ISIS has not pledged any sort of allegiance to the current leader of al-Qaeda, Shaikh Ayman al-Zawahiri.  The division between al-Qaeda and ISI grew in April 2013 when ISI announced that it was extending the Islamic State of Iraq into Syria and changing the group's name to the Islamic State of Iraq and al-Sham or ISIS.  On February 2, 2014, al-Qaeda announced that ISI was not a branch of Qaidat al-Jihad, the official name for al-Qaeda.  Both groups are now killing each other on the battlefield and a propaganda war has erupted with both groups using social media to lure fighters from one group to another.  ISIS views Zawahiri's leadership as illegitimate and its current path as deviant from the path of Osama bin Laden.  ISIS regards itself as the true heir of bin Laden's al-Qaeda as shown in this quote from April 2014:

"...the leaders of al-Qaeda deviated from the right manhaj, we say this as sadness overwhelms us and bitterness fills our hearts...Verily al-Qaeda today has ceased to be the base of jihad, rather its leadership has become an axe supporting the destruction of the project of the Islamic State and the coming khilafa (caliphate) now runs after the bandwagon of the majority and calls them as ‘the Umma,’ and softens in their stance at the expense of the religion, and the taghut (tyrants) of the Ikhwan (Muslim Brotherhood)..."

In an attempt to end the policies of ISIS that were proving to be troublesome for the worldwide holy war, in October 2013, al-Qaeda's current head, Shaikh Ayman al Zawahiri, released a pamphlet to codify the rules for how a jihadi should behave that you can find here.  Here are some quotes:

"Focus on spreading awareness amongst the general public so as to mobilize it. Similarly, focus on spreading a greater level of awareness and understanding amongst the Mujahid vanguard to create an organized, united, ideological, and aware Jihadi force that strongly believes in the Islamic faith, adheres to its rulings, shows humbleness to the believers and deals with the disbelievers with firmness. At the same time, full effort should be put in immediately to ensure that people with scholarly and propagational abilities come forth from within the ranks of the Mujahideen so that the our message & ideology may be preserved and the call to Jihad may be spread amongst Muslims.

In the military sector, focus should be maintained on constantly weakening the head of international disbelief (America) until it bleeds to death both militarily and financially, its human resources are drained and it withdraws to its own shell after reaching a stage of retreat and seclusion, (sooner rather than later, with the permission of Allah)...

Generally, avoid fighting or targeting those who have not raised arms against us or aided in any such hostile act and maintain focus primarily on the Crusader Alliance and then upon their local surrogates.

Refrain from killing and fighting against non-combatant women and children, and even if they are families of those who are fighting against us, refrain from targeting them as much as possible.

Refrain from harming Muslims by explosions, killing, kidnapping or destroying their wealth or property.

Refrain from targeting enemies in mosques, markets and gatherings where they mix with Muslims or with those who do not fight us." 

Isn't it nice that even terrorists now have a do's and don'ts list?

To summarize, it is interesting to see how ISIS and AQI both emerged from the ashes of Iraq after the U.S.-led invasion of Iraq.  When the delicate sectarian balance was disrupted after the removal of Saddam Hussein, the resulting insurgency provided very fertile ground for the establishment of anti-coalition forces.  It is also interesting to note that two key decisions made in May 2003 by the Coalition Provisional Authority, the transitional government established by the coalition forces, fed the insurgency.  The first order, disbanded the Iraqi security and armed forces, dismissing 250,000 security services personnel, and the second was banning the members of Saddam Hussein's Ba'ath Party from holding office.  Estimates suggest that unemployment in Iraq reached 60 percent in 2004.  The 30,000 jobs created by July 2004 were simply not sufficient to prevent Iraqis from joining the insurgency where they would get paid $100 just for planting a roadside bomb or shooting an American soldier.  The moves by the Coalition Provisional Authority created hundreds of thousands of angry Iraqis who had the arms and skills necessary to create the base for the terrorist movement in Iraq.

Oh, the tangled web we weave when we don't really understand the cultural ramifications of our actions. 

Friday, June 27, 2014

Bill and Hillary Clinton - They're Not Poor Anymore!

Thanks to legislation that ensures that key public figures in Washington declare their financial assets and the Open Secrets website that ensures that these declarations remain in the public eye, we have a good idea of what former President Clinton and his wife Hillary, the former Secretary of State were worth in 2012.

While Ms. Clinton maintains publicly that they were worth nothing when they entered the White House in 1992 and worth little more when they left the White House in 2000, the same cannot be said for 2012.  At that time, they had the following assets:

1.) My Life book worth between $50,001 and $100,000
2.) Back to Work worth between $100,001 and $1,000,000
3.) JP Morgan Custody Account (cash) worth between $5,000,0001 and $25,000,000
4.) Three life insurance policies with a total value of between $130,003 and $350,000

According to the mainstream media, President Clinton received a $15 million advance for his autobiography, My Life.  On top of this, it appears that Hillary Clinton received a $14 million advance from Simon & Schuster for her recently released book, Hard Choices.

Here is a screen capture showing the value of their assets:

The Clintons also disposed of their holdings in three Dreyfus bond funds that were inherited, worth between $15,001 and $50,000 each.  As well, they have United States Treasury notes worth between $50,001 and $100,000 as shown here: 

Now, let's look at their income stream.  The Clinton's most significant income came from President Clinton's honorariums for speaking at the following events in 2012:

National Retail Federation - $200,000
White and Case LLP - $200,000
Washington Hospital Center - $225,000
Leaders and Company - $700,000
KMPG International Cooperative - $200,000
UBS Wealth Management - $175,000
Bushnell Center - $180,000
St. Johns County Cultural Event Division - $175,000
Broward Center for the Performing Arts - $165,000
David A Straz Jr. Center for the Performing Arts - $165,000
M. Shanken Communications Inc. - $150,000
Pharmaceutical Care Management Association - $200,000
FOSUN - $200,000
UBS Wealth Management - $175,000
Craig Michaels, Inc. - $150,000
Fiserv Solutions, Inc. - $200,000
PriceWaterhouseCoopers LLP - $200,000
Hull International Business School - $150,000
Association for Advanced Life Underwriting - $200,000
Bay Area Council - $200,000
National Restaurant Association - $200,000
Mexican Insurance Association - $300,000
Terra Partners - $350,000
CTIA - The Wireless Association - $200,000
PriceWaterhouseCoopers - $200,000
Center for Global Dialogue and Cooperation - $500,000
IMD and Swiss Marketing - $200,000
World Management Limited - $165,500
Malmo Borsaiskap - $425,000
Ceska Energie A.S. - $400,000
Pershing LLC - $250,000
Edison Electric Institute - $200,000
Telstra - $150,000
BHP Billiton - $175,000
YPY Holdings Limited - $450,000
GTCR - $200,000
Global Business Travel Association - $250,000
CSP LLC - $250,000
Funadcao Brasiliera de Contabilidade - $450,000
Banco Itau BBA S.A. - $400,000
The Five Star Institute - $200,000
Solar Energy Trade Shows LLC - $200,000
C3 Summit LLC - $200,000
TECHNOGYM SpA - $500,000
Cambridge Speakers Series (Philadelphia) - $150,000
Cambridge Speakers Series (Boston) - $150,000
Cambridge Speakers Series (Pittsburgh) - $150,000
The Vanguard Group, Inc. - $200,000
Nat'l Ass'n of Hispanic Real Estate Prof'nals - $200,000
Deutsche Bank - $200,000
The Vanguard Group, Inc - $200,000
Cambridge Speakers Series (Baltimore) - $150,000
JP Morgan - $200,000
UBS Wealth Management - $175,000
Nuance Communications - $150,000
Mortgage Bankers Association of America - $200,000
The Goldman Sachs Group - $200,000
Pension Real Estate Association - $240,000
Oracle Corporation - $200,000
Bank of America - $200,000
World Management Limited - $200,000
Bond van Adverteerders - $150,000
New Albany Community Foundation - $200,000
American Society of Health System Pharmacists - $225,000
Let's Talk Entertainment, Inc. - $200,000
Society of Orators, LLC - $175,000
Foothill College Celebrity Forum Day 1 - $175,000
Foothill College Celebrity Forum Day 2 - $175,000
Foothill College Celebrity Forum Day 3 - $175,000
Dell Computer - $300,000
Wind on the Wires - $175,000
CoBank - $200,000
Samsung Electronics - $450,000

By my reckoning, that's a total of just under $15.9 million for 73 appearances over the full year 2012.  That works out to an average of $217,700 for each appearance.  On his junket to Europe between May 18, 2012 and May 24, 2012, the former President gave five speeches and raked in a substantial $1.7 million.

It is also interesting to note that the Clintons have an outstanding 30 year mortgage for between $1,000,001 and $5,000,000 at 5.375% on their personal residence.

Again, according to Ms. Clinton's tax releases for 2000 to 2006, over that time frame, the Clintons made $109.2 million in income and paid $33,783,507 in taxes and donated $10,256,741 to their family foundation.  Over the seven year period, President Clinton's Presidential Pension paid him $1,217,250, he made $29,580,525 from book sales and an additional $51,855,599 from public speaking.  Interestingly, in 2007, You can find the returns here.  Just for fun, here is page one from their joint 1040 showing their income stream for the tax years from 2000 to 2006:

While Ms. Clinton maintains that they know poverty, their tax returns show that they left poverty behind very quickly after exiting the White House.  Being firmly in the top 0.1 percent tends to make one forget certain things about their past...unless, of course, you happen to be a Democratic candidate for President.

Thursday, June 26, 2014

Why Sanctions Against Russia Won't Work

In general, economic sanctions against one nation by another nation (or, in this case, a group of nations) are a political tool that is used to weaken the target nation and/or its leadership.  The motives behind the sanctions are to punish, deter and eventually rehabilitate the nation that is the subject of the sanctions.  This is viewed as a non-military way to put an end to what is viewed as unacceptable behaviour.  By imposing the sanctions, it is hoped that the actions taken will do one or more of the following:

1.) deprive the target nation of access to foreign markets and foreign currencies.

2.) by depriving the target nation of certain goods and services, the target nation will have to pay more for substitute goods and services.

3.) by imposing financial sanctions (i.e. restricting aid, loans etcetera), the target nation may find that the interest rates on borrowing rise or that borrowed money is harder to access.

Trade sanctions generally have a strong negative impact on the target country's population, however, they may benefit the elites in the target nation who control access to goods through the black market.  Financial sanctions are more likely to negatively impact the target nation's political leadership.  Through all three of these mechanisms, it is hoped that the citizens of the target nation will rise up and, either peacefully through the ballot or violently through the use of demonstrations, overthrow their leadership, putting an end to the unacceptable behaviour.

The EU, Canada and the United States have been busily imposing what would be considered a rather toothless set of sanctions against certain individuals and enterprises in Russia in response to what they deem unacceptable behaviour by Russia in Ukraine.

I was recently on a trip to Russia.  While there, I noticed the following:

You'll notice that other than the Cyrillic lettering on the signs, the logos are quite recognizable to most of us that live in an advanced economy where there is a Starbucks or McDonalds on what seems to be every other street corner.

While in Russia, I also noticed streets full of vehicles manufactured by the major car manufacturing companies of Japan, the United States, Korea, the United Kingdom and Germany.  In fact, the streets of Moscow and St. Petersburg are positively overflowing with foreign-made/foreign-sourced vehicles.  Gone are the days of the Skoda and the Lada.

Let's go back to the American fast food/coffee house industry, both of which are strongly represented in urban Russia, for a moment.  From Open Secrets, here is a graph showing how much McDonald's Corp. PAC spent on each election cycle since 1990:

In the 2014 cycle, so far, McDonald's Corp. PAC has spent $635,468.  In the 2012 cycle, McDonald's Corp. PAC spent $777,652, 59 percent of which went to Republican candidates.

Here's how much McDonald's Corp. has spent on lobbying since 1998:

In the full year 2013, McDonald's Corp. spent $2.27 million on lobbying, their highest amount ever.

Now, let's look at how much Starbucks spent on each election cycle since 1994 noting that they do not have a PAC:

In the 2012 cycle, Starbucks contributed a total of $164,421, mainly to the Democrats.

Here's how much Starbuck's spent on lobbying since 2004:

For the full year 2013, Starbucks spent 2.19 million on lobbying.

Lastly, and because you probably have a good sense of where this is heading, here is how much Burger King Corporation PAC spent on each election cycle since 2002:

In the 2012 election cycle, Burger King Corporation PAC spent a rather paltry $47,549, most of which went to Republican candidates.

Here's how much Burger King spent on lobbying since 1998:

It would appear that Burger King thinks that it gets more political "bang for its buck" by lobbying rather than by directly assisting candidates during an election cycle.

In total, the food and beverage industry spent $30.35 million on lobbying in 2013, down from a record $57.716 million in 2009.  In 2013, McDonald's was the third highest spender on lobbying  after Coca-Cola and Pepsico (both of which are also in Russia) with Starbucks Corp. coming in fifth place.

According to McDonald's full year 2013 results, their fourth quarter 2013 sales in the United States declined by 1.4 percent and sales in the Pacific/Asia/Middle East Region dropped by 2.4 percent on a quarter-over-quarter basis.  On the other hand, sales in Europe rose by 1 percent for the fourth quarter, largely thanks to increased sales strength in the United Kingdom, France and Russia.  These three countries accounted for 67 percent of the company's European revenues and the company notes that its operations in Russia are in an expansion mode.  Starbucks' 2013 Annual Report notes that they have 65 stores in Russia; while this is a tiny fraction of their total of 1116 stores in Europe and the Middle East, Starbucks is planning to expand into the southern part of Russia.

Now, let's put all of this together.  Given that American companies are firmly entrenched in the post-Communist pro-profit Russia and that they are firmly entrenched in the American political system through both political contributions and lobbying, surely, they are using some of their political clout to prevent the Obama Administration from effectively imposing any sanctions against Russia that may interfere with their ongoing business plans and profits?  With the intertwining nature of the global economy today, one can't help but shoot oneself in the foot when imposing tough and meaningful economic sanctions on another nation.  While the sanctions against Russia, at some point, may impact the Russian man/woman on the street, those who are at the top of the oligarchy food chain are still driving (or being driven) around the streets of Moscow in their Bentleys, Range Rovers and Ferraris and not really caring about the impact of sanctions.