Pirates update

Drama on the high seas!

DAY 72 - FAINA crisis:
Saturday, December 06, 2008 04:25:44 PM


DAY 72 - 1708 hours into the FAINA crisis - UPDATE SUMMARY.

Efforts for a peaceful release continued, but the now over two months long stand-off concerning Ukrainian MV FAINA is not yet solved finally, though intensive negotiations have continued and local reports state that the financial agreement part has been concluded.

Kiev is concerned about an alleged intervention of a US based group, which tried to mediate independently with the captors of MV FAINA and seem to to have the interfered with the critical finalization of the delicate deal concerning the release of the vessel.

Mikhail Boytenko, editor of the Sovfracht maritime bulletin, said that according to various sources, including one in Kenya, "A vessel is approaching the Faina to pay the ransom." "The U.S. military has moved away from the Faina, to create a corridor for the ransom to be delivered, and to guarantee the pirates safe exit from the ship," he said.

"I cannot confirm or deny this information," he added. "Late yesterday evening I spoke to the ship's owner, and he said that talks had been concluded, but that certain details on the delivery of the ransom payment had to be cleared up." No details on who was paying the ransom, or the sum involved, were given, according the Russian agency RIA. Direct contacts could also not confirm this information.

Russian Navy spokesman Capt. 1st Rank Igor Dygalo said on Friday, the Northern Fleet's Neustrashimy (Fearless) frigate is currently escorting the Malbec, flying a Marshall Islands flag, with 21 Russians among the crew, along with the Dutch Kent Locomotion, the Singaporean Maersk, and the Liberian-flagged ELB Jarmani. The warship therefore seems to not stand in the way of a safe release of the Faina.

ECOTERRA Intl. renewed it's call to solve the FAINA and the SIRIUS STAR cases with first priority and peaceful in order to avert a human and environmental disasters at the Somali coast. Anybody encouraging hot-headed and concerning such difficult situations inexperienced and untrained gunmen to try an attempt of a military solution must be held responsible for the surely resulting disaster.

CLEARINGHOUSE: NEWS FROM OTHER ABDUCTED SHIPS

The captors of FV TIAN YU 8 don't find the right court. Those who captured the Kiribati flagged but Chinese operated fishing vessel first, which had been seized for illegally fishing in Somali waters and allegedly carrying illegal ivory had vowed to present the case, vessel and crew to a court of law in Somalia.

But it is reported that they themselves find it difficult to approach a local governance and jurisdiction in Somalia. Since the Islamic Court in Kismaayo would most likely also put the captors on trial for piracy, they have anchored the ship and according to the owner started negotiations for a release-sum directly. It has not been revealed yet to which fishing fleet the longliner belongs, but a Japanese link is presumed, since a Japanese fishing overseer is held among the otherwise Chinese, Taiwanese and Vietnamese crew members.

Negotiations for the safe release of crew and cargo of the vessel, MT BISCAGLIA, have begun a week after it was hijacked in Gulf of Aden. The manager of the vessel, Singapore-based Ishima, a ship management company, has appointed a professional negotiator to talk with the Somali captors, the National Union of Seafarers of India (NUSI) General Secretary Abdulgani Y Serang stated. The Liberian registered cargo ship was sea-jacked on November 28 and has 31 crew including 25 Indians. Its last port of call was Dumai in Indonesia.

The ship was on its way to Europe via Suez Canal. An Indian naval vessel in Gulf of Aden was refuelling as scheduled at the time of hijacking of this cargo vessel. The ship has now been anchored in Eyl, a town in Somalia, he said. This is the third ship with Indian crew that has been seized in the Gulf of Aden in recent weeks. Apart from 25 Indians, the ship had three Bangladeshis and three security guards as crew.

The two British and one Irish security men abandoned ship upon attack by jumping over board and were taken by helicopter to a naval vessel. Another ship Delight with seven Indian crew has been sea-jacked recently, while the Stolt Valor with 25 Indians on board has been released.

Katharine Houreld reported for AP from Mombasa: For more than two months, Somali pirates and their hostages aboard a Greek cargo ship, the MV CENTAURI. "And when they found out we were Filipino, they said, 'Filipino and Somali — friends!'" said crew member Alvin Genonangan with a laugh.

Together we played cards, caught fish under the blazing sun, and swapped tales of home. By the time all 25 hostages were released unharmed last week, the pirates even made one of the captives a startling offer: Would he like to join them? "Of course I said no. I was praying every day to be free," said crewman Edmundo Capatar, 32, the day after the ship docked in the Kenyan port of Mombasa.

"But I learned a little Somali. I talked a little to some of them. One said his whole family died in the war, that is why he became a pirate," Capatar said. The pirates did not let the crew telephone their families but treated them well, the sailors said, arranging deliveries of live goats to the ship for food, sharing their meals with the hostages, and encouraging them to work, fish and bake bread as a way of keeping busy. The pirates provided the flour, a luxury in impoverished Somalia, where nearly half the population is dependent on aid. Most of the pirates were young, averaging around 25, Tanada said.

They guarded the ship in shifts, with never fewer than 14 armed men on board, to be rotated every four or five days. The pirates slept on mats on the bridge and the deck, and the crew was not allowed above deck after dark. But as the hostages got to know their guards, the crew discovered that the Somalis played a card game similar to a Filipino game. They established the rules with hand signals. Genonangan said he beat the pirates sometimes — but not too often.

With the latest captures and releases still at least 16 foreign vessels with a total of around 354 crew members (of which 108 are Filipinos) are held and are monitored on our actual case-list, while several other cases of ships, which are observed off the coast of Somalia, have been reported or reportedly disappeared without trace or information, are still being followed. Over 115 incidences (including attempted attacks, averted attacks and successful sea-jackings) have been recorded to far for 2008 with until today 51 factual sea-jacking cases (incl. the presently held 16).

Several other vessels with unclear fate, who were reported missing over the last ten years in this area, are still kept on the watch-list, though in some cases it is presumed that they sunk due to bad weather or being unfit to sail.

FIRST VICTIM OF WAR IS THE TRUTH

Smells fishy: A Danish warship rescued a group of suspected pirates in the Gulf of Aden on Thursday after receiving a distress signal from the ship, which was floundering in heavy seas, the Danish Navy said. The Naval Operational Command said the Absalon was bound by international law to help the men and that Danish sailors had uncovered a number of weapons onboard the vessel similar to those often used in pirate attacks on merchant ships. "Due to the weather, it was not possible to take the troubled ship in tow and it was destroyed in the interest of shipping safety," the Navy said in a statement. The men were later handed over to authorities in Yemen.

Immediately serious questions sprung up, like: Will the Danish now destroy every fishermen's vessel in distress or because they carry weapons for self-defence with the same right the Danish do? Who oversees the Danish Navy action, who counter-checks? To balance the reporting it must be said that every Somali fisherman carries at least an AK47 rifle for self-defence to do his legitimate artisanal fishing in the waters of Somalia, because there is no government who could guarantee his safety by other means and the waters near Yemen are even more dangerous.

The Danish Ministry of Defence first didn't like to comment on the incident in the Gulf of Aden, we were told, but a contact to the Her Danish Majesty's Ship ABSALON was established. The Operations Officer on Absalon reveiled that the sunken vessel was a 7m small, white fibreglass boat with a single 60HP outboard engine, one of the typical Somali fishing boats, which were even produced as development aid by Sweden in Mogadishu. The vessel was observed by the naval ship as from 14h26 UTC on 04th December 2008 at position 13:20.1 N / 048:12.9 E.

It is very clear that the 7 men in the boat - all of presumed Somali origin - were not observed in any act or even attempted approach or attack against any other vessel, which would make them suspicious to or which would have constituted an act of piracy. They actually - and that was established by the Somali interpreter on board the Absalon - had been floating since 8 days on the waters because their outboard engine had failed and couldn't be repaired.

The Lt. Commander further explained that after the 7 Somalis were taken on board some first aid had to be provided and the whole case is seen as "sailors in distress" to whom help had to be extended. The Somalis however were found in the possession of not only 5 Kalashnikov rifles incl.

104 rounds but also were holding 4 RPGs (rocket propelled granades) incl. two launchers. The RPGs actually really made them suspicious of being up to no good, though for some Somalis today to carry an RPG launcher is just like one carries any other weapon in the struggle for survival. While the RPGs were destroyed together with the vessel, the 5 AKs were confiscated by the Danish, was stated by the naval officer. Critics might want to state, however, that it was not necessary to destroy the vessel in a filmed shooting exercise, which then was aired on Danish and international TV.

The comparatively tiny boat would certainly not have affected shipping safety and even in the most troubled waters it could have been an interesting exercise for the mariners to also rescue and lift the vessel on board of the Absalon with all its manpower and technical equipment available. The seven Somalis were in the meantime handed over to the Yemen coastguard near Mukallah. Their further fate could not yet be established.

"We had a situation where these guys were shipwrecked persons," Lieutenant Commander Jesper Lynge, a Danish Navy spokesman, told the Tribune. "But we haven't caught them in an act of piracy, and what their main purpose was — your guess is as good as mine." The commander of the HDMS ABSALON has reported the incident to his national command as well to the Combined Task Force overseer with the 5th US fleet in Bahrain, but the official post-incident report is not yet available.

All we are repeatedly asking for is that there must be an independent centre established, where these incident reports have to be filed and its full accountability, responsibility and transparency must be guaranteed and held superior, if the international navies want to maintain any credibility that they do this on behalf of the international community and the Somali governance. If nobody oversees such action room for intentional or unintentional atrocities is provided and such certainly will not contribute to any pacification of the Gulf of Aden.

Arbitrary findings of self-styled kangaroo-courts on the bridges of war-vessels who decide to extradite people from the waters of one nation into the jurisdiction of another state make a mockery of international human rights and international law. In this respect the actual rescue operation, for which the Danish must be applauded, could easily backfire, if the rescued Somalis didn't want to be extradited to Yemen, a country with an awful human rights record, since then handing-over turns into abduction and rendition.

The Danish certainly didn't have the right to hand them to Yemen against their will, but it could, however, not yet be established what the seven Somalis' will was and what happened to them today.

Investigations are ongoing if they are held in cells or if they will be repatriated to Somalia, where certainly an angry boat-owner will think next time twice before lending a boat to such youngsters - the oldest member of the group is 27.

The Danish Navy must be held fully responsible, if it commits atrocities in the once rich tuna-fishing grounds of Somalia. Danmark, whose breakaway Islands of the Faroe commit every year the most bloody slaughter of pilot whales in the world, itself is infamous for its trawlers illegally fishing in the Artic as well as in the Southern Ocean.

Denmark also is involved in the illegal trade in fish e.g. in the Southern Ocean, Greepeace established and implicates Denmark - among others - as home to pirate fishers. Denmark is known also for raiding other nations fishing grounds directly. Danish fishing vessels even dared to illegally fish in British waters, but there at least the Danish got arrested.

The German Navy allegedly warded off a suspected piracy attack on a German cruise ship in the Gulf of Aden, according to a report on Spiegel online Thursday. Two "suspect" speedboats travelling towards the German ocean liner MS Astor in the Gulf of Oman were fired on by machine guns on the frigate Mecklenburg-Vorpommern, according to the report presented to the German parliament this week. The Navy's Mecklenburg-Vorpommern frigate chased off two suspicious speed boats with warning shots last Friday, a spokesman for the mission commando in Postsdam confirmed.

A spokesman for Transocean Tours in Bremen, which is operating the cruise ship, said the 492 guests and crew on board the MS Astor had not noticed the incident. The cruise ship also had not asked for help. The suspicious boats disappeared quickly into Yemen's territorial waters, the report said. Transocean said the speed boats had approached about 3 sea miles distant, and the frigate intercepted them before they got to the cruise ship. The cruise ship was bound for Dubai, where it arrived on Tuesday. Hope remains that the Somali fishermen do not become now free-for-all shooting practice targets for bored and frustrated navies, who can do little once swift real pirate attacks have taken over a ship.

FISHING

Seychelles police launched an investigation on Friday into the deaths of five men killed in an ammonia leak on a French fishing vessel. France has the second largest tuna fleet in the region after Spain. The fishermen risk heavily-armed Somali pirates to trawl some of the world's best tuna stocks in the Gulf of Aden. "The deaths occurred at 3.30 pm (1130 GMT) on Wednesday on board Le Titan at Victoria port and were the result of an ammonia leakage," police spokesman Jean Toussaint told Reuters. "Post mortems will be carried out today."

Frenchman Jacques Sellin, 55, the vessel's chief mechanic, was among the dead. The other victims were a Seychellois and three Indians. Officials said the ship was owned by a Reunion-based company, SAPMER. Ammonia is used on fishing vessels to freeze the tuna out at sea. Tuna is a key source of foreign exchange for the Seychelles' heavily indebted economy. Canned tuna accounts for 46 percent of total exports, with more than 30,000 tonnes sold last year.

OTHER RELATED NEWS

There have been a total 84 reported pirate incidents in just the last three months, according to their account UNOSAT says. Half of them occurred in or around the shipping "corridor" sent up by the international community to protect commercial vessels. And that corridor didn't seem to do much to deter the pirates; their rate of successful attacks dipped only slightly (37 percent, versus 42 percent) inside the protected area. What the corridor did do was concentrate the pirate strikes. "The mean distance between reported attacks has fallen from 30.5km... to 24.6km after," UNOSAT says.

Using images taken from the Quickbird commercial imaging satellite, the group is plotting out exactly where ships are being captured, and where they are being held.(ECOTERRA Intl. - www.ecoterra-international.org)

Islamic militias gear up to take down pirates

Go get 'em boys, yeehhaa!! Sounds like operation "hijack oil tanker" has resulted in some blowback and there is now going to be a brutal showdown.

Sheikh Ahmed, a spokesman for the Shebab group in the coastal region of Harardhere, told the AFP news agency: "If the pirates want peace, they had better release the tanker."

The Sirius Star, a tanker carrying around $100m worth of crude oil and owned by Saudi Aramco, was hijacked by Somali pirates in the Indian Ocean on November 15.

Pirates have since anchored it off their base in Harardhere and have demanded a ransom of $25m be paid by November 30.

The Shebab (meaning "youth") armed group controls much of southern and central Somalia, and has positioned fighters in and around Harardhere in recent days.

Islamist leaders have stressed that piracy is a capital offence in Islam and officially condemned the surge in acts of piracy in Somalia's waters.

Sirius Star

Pirates on board the Sirius Star

A member of the pirate group holding the Sirius Star retorted that his own men were not afraid of the Shebab's threats.

Mohamed Said said: "We are the Shebab of the sea and we can't be scared by the Shebab of the land. If anybody attempts to attack, that would be suicide."

Mr Said reiterated that his group is demanding $25m to release the vessel, which is carrying the equivalent of almost a quarter of top producer Saudi Arabia's daily output.

Speaking to AFP by telephone he said: "I am not on the tanker at the moment because I am co-ordinating what is happening on the ground.

"There is a small Shebab vanguard on the ground but we also have a strong presence."

The pirate added: "Every Somali has great respect for the holy kingdom of Saudi Arabia. We have nothing against them but unfortunately what happened was just business for us and I hope the Saudis will understand."

Some residents in Harardhere have argued that the Shebab are divided over the issue of piracy and that some of the Islamist fighters have moved into the region only to claim a share of the ransom.

Authorities have played down the idea of attacking the ship on the grounds that it would be too dangerous and would probably result in the deaths of some or all of the hostage crew.

Marx Cafe tonight!

Hey all, I'll be playing some dope UKG tonight up in the Mount Pleasant. Music starts at 10pm. See ya there!

hijacked vessel carry acid

This problem is going to get worse until someone steps up to the plate and offers to fix Somalia.

STOLT TANKER HIJACKED

Tuesday, 11 November 2008

THE 33,209 dwt products tanker Stolt Venture has become the latest ship to be hijacked by Somali based pirates. The ship's charterers, Stolt Tankers BV, issued a statement this morning confirming reports of the hijacking. It says that the vessel was seized while transiting the Gulf of Aden off the coast of Somalia yesterday yesterday. It says: “We understand that the vessel was within the recognised Coalition corridor at the time of the seizure.”

The company adds: “There has been limited communication between the master and the ship manager and it has been confirmed that the fully Filipino crew is safe and accounted for. Stolt is in close communication with the vessel’s managers and owners and will do all it can to ensure the timely and safe return of the crew on board.”

The Stolt Strength was bound for Kandla on passage from Dakar with a cargo of phosphoric acid. Meanwhile, Indian Newspaper The Hindu reports, the Indian Navy has intervened to stop pirates boarding the Indian-flag, Great Eastern-owned bulk carrier Jag Arnav.

The Hindu quote naval sources as saying: "An armed helicopter with marine commandos was launched from the naval warship to intervene and prevent the pirates from boarding and hijacking the merchant vessel. This timely and successful intervention led to the pirates aborting their attempt."

As with other interventions by warships, it appears the Indian Navy did not try to sink or capture the pirate vessels. The ICC International Maritime Bureau is urging governments to set rules of engagement that allow warships to act robustly against pirate craft and especially the mother ships, typically large fishing vessels.

sATURDAY

THIS WILL BE HOT!!

MV FAINA update

Good to hear.

Crewmembers of Faina in satisfactory condition, says ship-owner

KYIV, November 4 /UKRINFORM/. The crewmembers of the Faina, a ship seized by Somali pirates, are in satisfactory condition. Drinking water and food (rice, spaghetti, sunflower oil, and fruit) were delivered to the ship on November 3, according to a press release about talks with the pirates provided by the company that owns the ship, UKRINFORM reported, referring to the Maritime Bulletin - Sovfracht Internet publication.

According to the document, the ship-owner and an intermediary company are making all efforts to complete the talks with the pirates successfully. It is stressed that "the situation requires a weighted approach and a comprehensive decision, involving all interested parties. Steps should be taken according to rules drafted by international practice and ragreement should be reached through a party empowered to hold the talks."

Moreover, the company owning the ship denied reports by the Al-Sharq al-Awsat, an Arabic newspaper being published in London, concerning a new date for the release of the Faina, the sum of a ransom and details about the negotiating process. The newspaper reported that the pirates could free the crew of the vessel for a USD 5 million ransom. According to the whip-owner, "this information does not represent the facts, and it is another attempt to spread misleading reports in the media. An impression arises that all this is being done on purpose to bring nervousness in the settlement process."

The press release reads that the company that owns the ship remains a reliable source of information in the situation, which "has not made and won't make any statements in public about the amount of a ransom and other demands."

As UKRINFORM reported, the Faina, a ship transporting ammunition and other weapons bought by the Defense Ministry of Kenya, was seized by pirates off the coast of Somali on September 25. A total of 17 Ukrainians, two Russians and one Latvian citizen are aboard the ship. The captain of the vessel, a Russian citizen, died of natural causes shortly after the seizure of the Faina.

this is what nintendo's webpage looks like right now

yeah, what a freakin' shame.

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Cocoon stacktrace[hide]
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context://noa3/jx/includes/global_head_content.xml - 64:72
context://noa3/jx/layout/simple.xml - 1:228
context://noa3/sitemap.xmap - 286:38
context://noa3/sitemap.xmap - 285:57
context://noa3/sitemap.xmap - 279:60

Java stacktrace[hide]

java.lang.UnsupportedOperationException: Not supported node test for attributes: node()
at org.apache.commons.jxpath.ri.axes.SimplePathInterpreter.getNodeIterator(SimplePathInterpreter.java:828)
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... 50 more

The Apache Cocoon Project

Pirate's stand firm.

This is the best article I have found that summarizes the standoff aboard the pirate ship.

30 Days MV FAINA Piracy Crisis – Background by Ecoterra
Dr. Muhammad Shamsaddin Megalommatis
October 25, 2008

In a summarizing paper, ECOTERRA Intl., the Global Society for ECOlogy and sound ECOnomy, an independent, international civil society organisation (CSO), presents the MV FAINA Piracy Crisis background and history. The first part covers the piracy case itself, whereas the second is focused on the arms sales affair. Herewith I publish the first part; in a forthcoming article, I will publish the second part.

MV FAINA - Background & History

The Actual Case:

The Ukrainian MV FAINA operated under cover of a Belize flag when it was hi-jacked on 25. September 2008 in the late afternoon by a gang of Somali pirates in three fast skiffs off the coast of Somalia on the way to its destination at the Kenyan harbour of Mombasa, where it was supposed to arrive in the early morning hours of the 27. September 2008. Reports claimed that Sudan and Russia had a hand in the capture of the ship.

The 21 men crew was taken hostage and the ship turned northwards again to reach the coastal pirate hideout at Eyl in North-Eastern Somalia. While first a smaller military vessel had shadowed the FAINA, the US-American guided missile destroyer USS HOWARD caught up, which caused that the FAINA stopped off the coastal village of Hinbarwaqo, north of the town of Hobyo.

Already at that time it was reported that the captain of the ship had suffered a heat-stroke. First communications were established with the pirates as well as with the first mate, Vladimir Nikolsky, who on 28th Sept. reported that one crew member had died on 27th due to hypertension and took over as captain.

While the ship's captain, Russian national Vladimir Kolobkov, died most likely of a cerebral hemorrhage caused by hypertension and a sun-stroke and not due to a heart attack, the psychological warfare imposed by the encircling warships with overflying helicopters and planes, loudspeakers and communications jamming, according to various reports caused already on Sunday night a problem between a more moderate part of the pirate gang, three Majerteen hailing from Puntland, and the hard-core Habrgedir with the result that all three Majerteen were killed in a shoot-out on board - luckily not affecting the crew. The pirates, however, deny any shooting. The re-enforced group of pirates consists of around 50 men with the youngest being only 14 years of age and is supported by a growing number of heavily armed militia warriors at the shore, believed to have now a strength of over 100 men. Another shooting which did not harm the crew was reported on Tuesday afternoon by Russian ITAR-TASS.

All Somalia experts, including the former Kenyan Ambassador to Somalia, Mohamed Affey, are convinced that in the case of the ill-fated FAINA a peaceful solution still can be achieved, which would avoid a military operation and the resulting humanitarian and environmental disaster.

Nyna Karpachyova, the Ukrainian parliament's human rights ombudsman, said that the real owner of the weapon-ship is an Israeli citizen with the name Vadim Alperin (alias Vadim Oltrena). It is extremely rare for ships to be registered to individual investors such as Mr Alperin. Vadim Alperin was further investigated to have acquired this ship from a Russian state auction during the era of Boris Yeltsin. The ship was refurbished and later conveniently registered to fly the Belize flag. Other ships by the same owner where found to be operating as casinos including one based in the Gulf to entertain rich Arab clients. Vadim Alperin was once quoted to be a "Mossad brother" running a number of clandestine front companies including one Kenyan Meat export company enjoying "good trade" with middle eastern countries, but covertly used for gathering intelligence from countries such as Egypt, Jordan and Saudi Arabia.

For many years, the Khartoum based Sudan government accused Israel of supplying arms and providing training to South Sudan rebels. Israel once supplied illicit weapons to South Sudan from within Ethiopia's territory, but had lost influence since the Eritrean independence. As relations between Eritrea and Ethiopia had soured, it became impossible to continue this route and Israel sought other alternative routes to get to its Uganda weapons storage for South Sudan militias through Kenyan territories.

The crew, set to make a delivery of cars and normal cargo, was allegedly called just a day before they sailed and they were only informed about its altered cargo when they were on board.

Mrs. Karpachyova also said that relatives of the hostages on board the ship would ask the Ukrainian government to prevent the liberation of the FAINA by force. Ukrainian and Russian citizens already are willing to collect money in order to assist with the ransom payment.

The pirates, who have been in communication with the operator Kaalbye Shipping Ukraine, the Panama registered ship-owner Waterlux AG, TOMAX Team Inc.- the Ukranian shipping agent, as well as the Ukrainian arms exporter Ukrspetzexport, Ukraine's state arms exports monopoly (the cargo belonged to Urkinmash, a subsidiary of Urkspetsexport) demand a ransom of in minimum 5 and maximum of 20 million US-dollar - having come down from an earlier demand of 35 million and peddled lately to the media a sum of 8 million. Like often the real people behind the ships, their management or their cargo are very difficult to establish even for the maritime authorities. The pirates likewise had at first serious problems to find the right people to talk to, because the diplomats, officials and business-people involved had not been really helpful for obvious reasons. Many shippers of clandestine goods drove the usually paid ransom, which the Somalis often call a fee for illegally entering the Somali waters, upwards to the present level, where at least 1-2 million US dollar have to be delivered for any vessel released by the pirates, who usually do not harm the crew.

However, the side-interferences were increasing on both sides every day which passed and complicated the direct negotiations. The captors then threatened on 6th October that they would sink the ship, if the negotiations are not forthcoming fast enough, while the US Navy reported the same day that all crew members are healthy and according to the circumstances all right.

Earlier the pirates on the MV FAINA already had threatened to rather die together with the crew of now two Russians, one non-resident Latvian and 17 Ukrainians, if the ship would be attacked.

Somali TFG President Abdullahi Yuusuf Ahmed gave on 1th October "special status" to the Russian war machinery and a Carte Blanche to engage in military operations in Somali waters as well as on land. Such horror-scenario would include the killing of all on board and the explosion of the ship together with the tank munitions-heads containing depleted uranium.

Many consider DU as extremely hazardous. The Nov. 2007 resolution entitled 'Effects of the use of armaments and ammunitions containing depleted uranium' was passed by 122 votes to six at the UN First Committee in New York; with 35 abstentions. The resolution urges UN member states to re-examine the health hazards posed by the use of uranium weapons. In May 2008 the European Parliament has passed its fourth and most far-reaching resolution yet against the use of uranium weapons. MEPs have called for an EU and NATO-wide moratorium and global ban. Among others the US-American Nuclear Society had criticized the US military for the extensive used of DU ammunition in the wars during the breaking up of former Yugoslavia.

Though Oleksandr Turchynov, the Ukrainian First Vice Prime Minister stated categorically: "Ukraine will never negotiate with pirates, terrorists, other criminals!", he noted at the same time that according to the international practice, the talks about a crew release and ship's further fate are held by the ship-owners with mediators and have started indeed. The ship owner of MV FAINA is the Panamanian Waterlux AG, while the company's manager is registered in Switzerland as stated by the Ukrainian government website. They all must come together and present one negotiator from the Ukrainian side.

"A deal might be sealed by Wednesday and then we will issue a statement regarding the end of the matter," said a "Jama Aden" on the phone of a "Sugule Ali" as spokesman for the captors, according to AP on 10th October, while a "Sugule Ali" told AFP the ransom demand had been reduced.

Though media even quoted uninvolved businessmen like a "Ahmed Omar" from Xaradheere commenting on a done deal, sources truly close to the negotiations reported the continuous struggle by both sides to really get into a straight line of negotiations with the right person without the persistent interferences from all sorts of sidelines. Since with the Ukrainians such focus seems to have been achieved, on the Somali side it still appears not to be clear who really has the final say.

Around 750 people - mainly women and children and old men - from the coastal Somali village of Xinbarwaaqo (Hinbarwago), closest to the weapons-ship MV FAINA, had together with their livestock left their homes already during the first week of the stand-off and shifted inland, where they camp out in makeshift shelters for fear of imminent military action or an explosion of the ship. Elders from another village Ceel Xur and from Obiyo town continue to debate on the question if also their population has to be evacuated. The whole population in the area is terrified, especially by the many night-flights of military aircraft without any lights buzzing or hovering above them. Due to several missile attacks in the recent past at several locations of civilian population in Somalia, the uninvolved and innocent local people are scared to death.

Meanwhile more militiamen from the Mogadishu area, from the Galgadud and even Gaalkacyo town in Mudug Region, mostly comprising of Habrgedir clan members (Ayr, Saad and Saleban) but also some Majerteen (Isse Mahamoud) from Eyl have arrived in the area of the coastal hinterland where the hi-jacked Ukrainian ship is in a stand-off with at least 9 foreign Navy vessels.

Elsewhere and even abroad large meetings of the Habrgedir clan have been held, who discussed solutions to the hi-jacking cases of ships and crews as well as individual foreigners and how to stop their clan-members from any abduction of people. Many expressed thereby that one of the underlying problems is that their clan has been marginalized, isolated and discriminated against and no support from the UN or the international community would reach their population.

Ukrainian and Russian media have called family members of the captured crew for a television campaign against the use of military means to rescue the ship.

They urge the Ukrainian and Russian governments to embrace diplomatic means.

Unfortunately, the Somali side was since Saturday 04th October entangled in and hampered by lengthy clan-based internal discussions, interferences by militia groups and the conclusion to the negotiations drag on, while speed is of the essence to also avoid the outbreak of hostilities at the coastal stretch near to the ship. Too much emphasis is given to the surrounding sagas for whom the weapons are, how the armada of joint navies should act or how Somali politicians and brokers, who have been helpless all along, should assist. Soon there will be no possibility any longer to cut a deal and walk away from it alive - for neither side.

Kenya's Foreign Minister Moses Wetangula said, according to BBC, force should be used to rescue the weapons from the pirates. He thereby stands isolated as the only person worldwide, who opts for a forceful solution, which would cause a major humanitarian and environmental disaster. Maybe he just hopes that thereby crucial evidence in that saga would also be destroyed.

According to PANA press agency, Wetangula said the use of force to free the ship was necessary, having been authorized by the United Nations Security Council, which ordered the use of force against any acts of piracy in the Horn of Africa region. "We are going to move with the Chinese and Indians to see that the hijack of the ship along the coast of Somalia (will) be the last in the country," Wetangula said in the PANA press release quoted by the French website www.afriquenligne.fr

It seems that there is some misinterpretation again on the Kenyan side, since the UN allowed, but did not order and specifically did not order to use force in an operation against the pirates of MV FAINA. It is believed and has been stated by the pirates that the ship and its explosive cargo has been prepared for any such attack in a more serious way than some of the other held ships, which are said to now be mined against commando operations.

"The pirates are holding hostages... human lives are at stake. Ultimately, force could result in casualties," warned Somali Foreign minister Ali Ahmed Jama in Nairobi on 7th October, thereby refuting that his Kenyan counterpart had specific permission to use force against the MV FAINA.

The families and relatives of the Ukrainian seafarers together with the rest of the world, this time including the United States of America, hope that the Ukrainian government stands strong on their decision to achieve a peaceful solution and can prevent any unwise action from any side.

The 20 crewmembers aboard the hijacked Ukrainian ship laden with combat tanks and ammunition are living in fear, the U.S. Navy said Thursday 09th October. "They want it to end peaceful and quickly," Lt. Nathan Christensen, a spokesman from the U.S. 5th Fleet in Bahrain, said and stated that the US-Navy is in regular contact with the crew of the MV FAINA via a satellite phone.

He said the US-Navy did not know when the stand-off might end, but said they would make sure the pirates do not take the heavy weapons ashore. Other contacts reported in addition that the crew is being treated well and the 20 men take regular meals prepared by their own chef, while the pirates are ready and prepare for a quick release.

Based on the Kenyan sabre-rattling a hostile response came on 10. October: "We held a consultative meeting for more than three hours today and decided to blow up the ship and its cargo - us included - if the ship owners did not meet our ransom demand," a "Sugule Ali" told the Associated Press allegedly from aboard MV FAINA and stated: "After three days, starting from tomorrow, the news of the ship will be closed. Either we achieve our goal and get the ransom or perish along with the ship, its crew and cargo." This was according to AP repeated to the Spanish news agency Efe.

The negotiations had continued positively and all sides, except one, were willing to safeguard the human lives at risk and to come now together for a quick solution including the rather complicated modalities, which have to be applied in this case for the release operation. The talks were getting closer, though there is still too much interference from the sidelines, which actually caused that the pirates sometimes spoke to the wrong people and have now the impression that the negotiations are willfully being extended to gain time for the preparation of a military operation. They therefore had given on 11th October an ultimatum of 3 days for the ransom to be paid.

"The talks between pirates and ship owners totally stopped yesterday (11. Oct.) after the pirates insisted that Somali brokers must be removed from the process to negotiate", said Ahmed Abshir Hasan, an elder in the pirates' lair of Harardhere to AFP, who reported also: "They said the process will resume in four days with new brokers", as being said by another elder Abdullahi Moalim Afrah. "We don't want any Somali broker to get involved in this deal and that is why we stopped the talks", added another pirate, who did not want to give out his name.

Somali brokers as well as interested sides from Sudan and other sidelines have interfered since the beginning of the stand-off, just being interested in their own agenda, which had a negative impact on direct negotiations between the one and only negotiator for the side of the hostages and the ship with the commander of the pirates on board.



"We believe that the pirates also have understood now that it doesn't help them to negotiate anything with third parties, who would not have the power to implement and guarantee the modalities for the release of the ship" an official close to the scene said. MV FAINA is pinned down and observed at the Somali coast by six US-American and at least four European warships.

The UN-AU panel warned Kenya on 11. October 2008 from intervening in the hijacked ship and said Kenya has no mandate over the ship. Former Kenya's special envoy to the Sudanese peace talks Lt-Gen Lazarus Sumbeiywo said the hijacking would have affected Kenya had the Ukrainian ship docked in Kenyan territorial waters adding that the services of the Kenyan Navy would then have been sought. "It affects Kenya when it is only in the port of Mombasa. If the international community requires help in the rescue operations, it will be in their interest not Kenya alone", said Sumbeiywo.

Observers feared since Sunday, 12th October 2008, that the vessel might soon run out of fuel for the generators, which produce electricity and thereby could loose main-engine-start, communication, navigation, lights, pumps, air-conditioning, the freshwater and toilet systems, essential units of the kitchen and the cool-room, where also the body of the deceased captain of the ship is kept. These fears were later confirmed and a tonne of fuel has been delivered to the ship, which will be enough for a few days. The pirates have so far refused to accept other support from third parties and ways of how to get food and safe drinking water for the crew are still worked on.

Either we receive our money by tomorrow, or never,'' Sugule Ali, a spokesman for the pirates, said by satellite phone, in comments posted on 13th October at the Web Site of Russian state broadcaster Vesti-24. He ``gave it to be understood'' that the ship, the MV FAINA, could be sunk tonight or tomorrow, Vesti said. Other sources, however, dispute that "spokesman Sugule Ali" really would speak for the Somali commander under whose order the group holding MV FAINA operate.

The crew members' relatives tried but so far failed to meet with Ukrainian President Viktor Yushchenko in Kiev over the ransom demand, which began at 35 million US$ and has since appeared to drop to below 10 million. They vowed not to leave the president's office.

Kenya will not give in to ransom demands, Foreign Affairs minister Moses Wetangula said on Monday during a reception at the Spanish Ambassador's residence in Nairobi and declared that Kenya would not pay the $10 million ransom the hijackers are reported to have agreed on. Somali Ambassador to Kenya Mohamed Ali Nur (nicknamed "Ali America") and the minister ruled out chances of the pirates blowing the ship up.

However, risk analysts raised their eye-brows upon such "insurances" and stated that neither scenario could be ruled out so easily, which either would take the possibility into consideration that meanwhile suicidal jihad fighters could have been brought on board together with the enforcement of the pirates or would evaluate the likelihood that a torpedo or a clandestine commando attack by outside forces could blow up the vessel to "sink the problem", which causes so much governmental embarrassment and diplomatic rows. "In both cases the pirates would anyway be blamed by the world" and "Also the suicide attack against the USS Cole at the coast of Yemen should not be forgotten", one analyst reminded, where two suicide bombers detonated their explosives-packed boat next to the U.S. warship as it re-fuelled on 12th October 2000 in Aden harbour at Yemen's southern tip, killing 17 U.S. sailors, wounding 39 and causing a repair damage of over 150 million US $, not including the only 8 million dollar compensation the families of the dead soldiers still are waiting for. On March 14, 2007, a federal judge in the United States ruled that the Sudanese government (Khartoum) was liable for the bombing. Sudan's hand is felt in the case of the FAINA now also inside Somalia already.

On 14th October the Islamic Courts Union of Somalia (ICU) declared war against western warships in Somali waters accusing them of wanting to re-colonize and spread Christianity in Somalia, ICU spokesperson Abdirahiim Isse Addow stated. Speaking during an interview with African Press Agency (APA), the ICU spokesperson said the US and other western warships, including NATO, are helping the deployment of what he called "Christian soldiers into Somalia and their aim is to re-colonize Somalia."

Meanwhile Prof. Abdulgafur H.S. El-Busaidy, SUPKEM (Supreme Council of Kenya Muslims) chairman and outstanding scholar, as well as many Somali religious leaders warned that the MV FAINA must not be exploded by any side and said it would be an outrageous crime and a big sin (Xaram / Haram) since the destruction of life is not permissible and the consequences for all life forms would be horrible in this case.

A "Sugule Ali" as spokesman for the Somali pirates stated on 15th October they have withdrawn their threat (to blow up the vessel if the ransom would not have been paid by today), because they are again negotiating the release of crew, ship and cargo. He said also negotiations are going very well. "We have withdrawn it," Ali stated, referring to the threat. He spoke to AP via satellite phone from the MV FAINA.

A Ukrainian opposition party said on 15th October it had started a fundraising campaign to raise the $8 million ransom demanded by Somali pirates for the release of the MK FAINA vessel and its crew. The fund-raising campaign was launched by the Party of Regions, led by Russia-friendly Viktor Yanukovych.

A pirate speaking by satellite phone said Wednesday 15th October that an excessive number of mediators had been hampering the negotiations, but that the pirates did not plan to harm the crew. People on shore near the ship said that the pirates had recently hauled aboard enough spaghetti, rice and goat meat to last them several months.

Field observers reported on 16th October renewed attempts by various factions to link up with the pirates on MV FAINA in order to engage into sideline-deals involving the offloading of at least some of the weapons.. Money has allegedly be offered for light arms and ammunition as well as for some weapons-systems on board. Experience from the MV THOR STAR, which has been looted before release, make such claims believable.

Despite increased negotiation efforts, the stand-off concerning Ukrainian MV FAINA was on 17th October still not yet solved, but intensive negotiations have continued and both sides are striving to finalize the safe release, though Ukraine itself is in turmoil. It is believed, however, that the call by Ukrainian President Viktor Yuschenko for a snap parliamentary election after his coalition collapsed will not affect the release-negotiations concerning MV FAINA.

Ukrainian President Viktor Yushchenko had dissolved the legislative body - the Supreme Council (Verkhovna Rada) - on Wednesday morning and called early polls for December 7 after his ruling "orange" coalition with Prime Minister Yulia Tymoshenko's bloc collapsed after the premier's party sided with the opposition in passing a law to cut the president's powers. Yushchenko and Tymoshenko, leaders of the 2004 "Orange Revolution," have drifted apart and are bitter adversaries over a host of issues, including Russia's war with Georgia in August.

The government refused Tuesday to allocate election campaign funds of $80 million from the state reserve and urged President Yushchenko to reverse a decision calling for early parliamentary polls. In a major turnaround, Ukraine's prime minister said on Thursday she was ready to accept any conditions set by the president and his team to salvage the ruling coalition and avoid early parliamentary elections. Both are expected to run for president in 2010. The Ukrainian Cabinet of Ministers approved now state budget amendments to allocate funding for early parliamentary elections, the country's defense minister, Yuriy Yekhanurov, said earlier Thursday, but Madam Yulia Tymoshenko stated the International Monetary Fund (IMF) was ready to grant Ukraine a loan of between $3 billion and $14 billion to help the country overcome the financial crisis, though the credit would only be provided if the early elections were postponed.

On 17th October Ukrainian President Viktor Yushchenko's office held a special meeting, with officials saying afterwards that they were working "every hour" to liberate the Ukrainian sailors on board the ship.

Relatives of 17 Ukrainians on the ship have collected money for the ransom, media reports said on Saturday. "The negotiations are ongoing. We still haven't handed over the money but it's all leading up to that," Olga Girzheva, the mother of one of the hostages, told Ukrainian media, without giving a final figure for the ransom. Relatives told reporters that most of the ransom money had come from leading politicians including Viktor Yanukovych, a former prime minister who leads Ukraine's main opposition party, the pro-Russian Regions Party.

While one tonne of fuel could be provided earlier, specific food and fresh-water supplies for the crew have not yet been allowed on board. Emergency electricity also can be produced by the three wind-turbines which the ship is equipped with.

Most recently on 19th October US-American Navy spokesman Lt. Nathan Christensen said that the crew of the MV FAINA looked healthy. The pirates who seized the ship three weeks ago allowed the mostly Ukrainian crew to line up on the deck so U.S. sailors on nearby vessels could see and photograph them together with their mostly extremely young Somali captors.

See: http://www.navy.mil/management/photodb/photos/081019-N-1082Z-082.jpg

A missile frigate from Russia's Baltic Fleet was passing through the Suez Canal on 21st October en route to the coast of Somalia in order to join an international naval group fighting sea piracy in the region, a senior Russian Navy official said. "The task of the destroyer Neustrashimy (Unchallengeable) is to escort and protect Russian vessels or ships with Russian crew-members on board from pirate attacks," Russian Navy spokesman Capt. Igor Dygalo said according to RIA Novosti. Other maritime sources, however, claimed the Russian warship had already arrived in Somali waters. The Russian deployment has raised media speculation that Moscow, which has dealt harshly with hostage-takers in the past, could use force to free the crew of the MV FAINA. Russia's central command, however, had earlier ruled out a direct military engagement with the situation concerning the weapon-laden ship pinned down at the Somali coast by several US and EU navy ships plus a submarine in the area, which regularly is also spotted further South near Mogadishu harbour.

Relatives of the mostly-Ukrainian crew held hostage aboard the ship are preparing to pay a ransom demanded by pirates, a crew spokeswoman told the Ukrainian Fakty newspaper on 21th October. Nina Karpecheva, Ukrainian member of parliament and human rights ombudsperson, is in Kenya since 21th of October to attend a SIDA sponsored conference for National Human Rights Organizations. She is said to be in regular contact with the pirate negotiators as well as with diplomats on the scene.

A spokesman for the shipowners said that the crew ran out of food and water a week ago and the pirates had been feeding the sailors up to October 21 with supplies brought from the mainland.

Ukraine's Segodnya newspaper and RIA Novosti, the Russian news agency, must have misunderstood the Somali pirates holding the MV FAINA when they published on 22nd October that the pirates had threatened to kill the crew tomorrow, quoting: "Tell everybody that the crew will die. Possibly, tomorrow". The group holding the FAINA most likely wanted to simply express that due to the critical food, water and fuel situation serious suffering among the crew can not be ruled out from tomorrow.

The relatives of the crew, a majority of them Ukrainian, are preparing for the payment of ransom. The situation on the FAINA, however, is critical, as reserves of water, food and fuel, including diesel fuel for the ship's generators, will last less than 30 hours, Channel 5 reported on Oct.22, with reference to Verkhovna Rada Human Rights Commissioner Mme. Nina Karpachova.

The operators of the FAINA had said on 23rd October that they had not raised enough money to meet the pirates´ multimillion-dollar ransom demand. Viktor Murenko, the head of Tomex Team, which operates the cargo ship, said the company had accumulated only $1 million toward the ransom. Mr. Murenko said the FAINA´s crew members had received food and water and were in satisfactory condition.

Most importantly, the Ukrainian Foreign Ministry renewed on 23rd October its guarantee to save the lives of the hostages on the seized ship as priority in talks with pirates.

A spokesman for those holding the Ukrainian arms ship warned if the ship was attacked by NATO forces its 20-man crew would be among those killed and vowed on 23rd October to fight back if attacked, regardless of the impending arrival of a flotilla of NATO warships. "Either we get the money or hold onto the ship. And if attacked, we will fight back to the bitter end," s "Sugule Ali" told AP via satellite telephone. "The important thing, though, is if we die they will die too," he added, referring to the FAINA's crew.

The Ukrainian Foreign Ministry and other central executive authorities are taking all of the necessary measures aimed at the peaceful settlement of the situation with hostages on the FAINA. "We would like to note that Ukraine as a state cannot be a party in the negotiating process with the pirates. According to the international practice, if pirates hijack ships, government structures don't participate in talks directly with assailants. The mechanism of holding the negotiations foresees talks between a ship-owner or a company managing [the ship] and pirates, directly or through mediators. According to this practice, the FAINA shipowner empowered a professional legal company to hold the talks with the pirates", reads the statement.

"To ensure freedom of actions to fight piracy directly in Somalia's territorial waters, the Foreign Ministry of Russia has requested the agreement of the Interim Federal Government of the Somali Republic to grant the Russian Federation 'cooperating state' status," the ministry said in a statement.

"In cooperation with other nations, the Russian side intends to undertake all measures sanctioned by the United Nations Security Council to improve maritime situation in this region. Russia's navy ship Neustrashimy is already on its way there". "`The Russian side nevertheless considers that the joint efforts of all participants will lead to a successful outcome of the crisis and the freeing of the crew and of the ship", the ministry said.

It is hoped that the crew of the approaching Russian guided missile frigate Neustrashimy is also invited to join the R&R of their NATO naval counterparts at the French Navy Resort in Djibouti and gives the negotiators a few more days to conclude the peaceful deal concerning the MV FAINA. Once released with their crew alive the Russian warship can escort the vessel back home from this ill-fated trip. Russia's foreign ministry said it was "deeply concerned" over the fate of the ship's crew, which includes two of the original three Russian nationals. The Russian captain died after a sun-stroke. "Unfortunately, and because of the pirates' unacceptable conditions, the attempt to secure the assistance of the ICRC and U.S. colleagues in handing over the body of the dead Captain Vladimir Kolobkov have been unsuccessful at the present stage.

Note

Picture: All eyes on MV FAINA

http://www.newsmax.com/international/af_somalia_piracy/2008/10/01/136260.html

Palin's a hypocrite, sorta.

"Caribou barbie" actually a communist!

Fact Check: Palin's Alaska spreads its wealth

By RITA BEAMISH – 22 hours ago

Republicans John McCain and Sarah Palin summon antidemocratic images of a communist state to attack Democrat Barack Obama's tax plan and his comment about spreading the wealth around. But in her home state, Palin embraces Alaska's own version of doing just that.

Palin and McCain seized on a comment Obama made to Ohio plumber Joe Wurzelbacher, who asked about his tax plans.

Obama wants to raise taxes on families earning $250,000 to pay for cutting taxes for the 95 percent of workers and their families making less than $200,000. "I think when you spread the wealth around, it's good for everybody," he told Wurzelbacher.

McCain said that sounds "a lot like socialism" to many Americans. Palin has derided the Illinois senator as "Barack the Wealth Spreader."

But in Alaska, Palin is the envy of governors nationwide for the annual checks the state doles out to nearly every resident, representing their share of the revenues from the state's oil riches. She boosted those checks this year by raising taxes on oil.

McCain campaign spokesman Taylor Griffin said Thursday that spreading wealth through Obama's tax plan and doing it through Alaska's oil-profit distribution are not comparable because Alaska requires the state's resource wealth to be shared with residents, but it's not taxing personal income.

"It's how the revenue is shared between the oil companies and the state."

A look at Palin's and McCain's comments and the record in Alaska:

THE SPIN:

"Barack Obama calls it spreading the wealth. Joe Biden calls higher taxes patriotic," Palin told a crowd in Roswell, N.M., and elsewhere. "But Joe the Plumber and Ed the Dairyman, I believe they think it sounds more like socialism.

"Friends, now is no time to experiment with socialism."

In Ohio, she asked, "Are there any Joe the Plumbers in the house?" To cheers, she said, "It doesn't sound like you're supporting Barack the Wealth Spreader."

McCain told a radio audience that Obama's plan "would convert the IRS into a giant welfare agency, redistributing massive amounts of wealth at the direction of politicians in Washington."

"Raising taxes on some in order to give checks to others is not a tax cut; it's just another government giveaway."

THE FACTS:

In Alaska, residents pay no income tax or state sales tax. They receive a yearly dividend check from a $30 billion state investment account built largely from royalties on its oil. When home fuel and gas costs soared last year, Palin raised taxes on big oil and used some of the money to boost residents' checks by $1,200. Thus every eligible man, woman and child got a record $3,269 this fall.

She also suspended the 8-cent tax on gas.

"We can afford to share resource wealth with Alaskans and to temporarily suspend the state fuel tax," she said at the time.

Much as Obama explains his tax hike on the rich as a way to help people who are struggling, Palin's statement talked about the energy costs burdening Alaskans:

"While the unique fiscal circumstances the state finds itself in at the end of this fiscal year warrant a special one-time payment to share some of the state's wealth, the payment comes at a time when Alaskans are facing rising energy prices. High prices for oil are a double-edged sword for Alaskans. While public coffers fill, prices for heating fuel and gasoline have skyrocketed over the last six months and are now running into the $5- to $9-a-gallon range for heating fuel and gasoline across several areas of the state."

In an interview with The New Yorker last summer Palin explained that she would make demands of a new gas pipeline "to maximize benefits for Alaskans":

"And Alaska we're set up, unlike other states in the union, where it's collectively Alaskans own the resources. So we share in the wealth when the development of these resources occurs."

Copyright © 2008 The Associated Press. All rights reserved.

economic crisis caused by quadrillion dollar derivative mess

What is a derivative? It's a financial instrument roughly analogous to placing bets with a bookie. The vast majority of which are not recorded on any balance sheet. These wildly speculative bets are at the heart of the ongoing global economic crisis from which there is no plausible way out as the sums involved are simply to large.

read more | digg story

VPGILF A Ron Paul Fan

Wow, she compares herself to ron paul? awesome!

Published by MTV News on Friday, August 29, 2008 at 1:58 pm.

Sarah PalinBy Jocelyn Vena, with reporting by Dani Carlson

Back in February, on Super Tuesday, MTV News Street Teamer Dani Carlson did a Flixwagon interview with Alaska Governor — and now presumptive Republican vice-presidential candidate — Sarah Palin, who had some interesting things to say about energy policy and the “party machinery.”

In this interview, Palin calls controversial Republican presidential hopeful Ron Paul “cool.” “He’s a good guy,” she added. “He’s so independent. He’s independent of the party machine. I’m like, ‘Right on, so am I.’ ”

She also spoke about feeling allegiance with former presidential hopeful Mitt Romney. “He said all the right things about resource development in Alaska,” she said. “I didn’t have an opportunity to speak to all the candidates, but again, it’s not my job to speak to all the candidates and tell Americans who to vote for. That’s Americans’ jobs, to figure out what candidates are standing for. That’s the voters’ jobs.”

Check out Dani Carlson’s video interview with Gov. Sarah Palin after the jump!

She went on to say that she hoped the needs of her state would be addressed in Washington. “I talk about involvement by Americans having a say in where the nation is going to go,” she said. “This is an exciting day. And for Alaska, you know, I hope we register on somebody’s radar screen.”

She also spoke about Alaska’s natural resources, and urged the next president to look to her state for relief from the country’s reliance on foreign oil. “We have so much oil we are just sitting on,” she said. “We would be less reliant on foreign sources of energy [if we utilized that] — we need to have the ability to tap into it and produce for rest of the United States.”

Krugman's vision, the destruction of progress.

Sounds like a recipe for disaster.

Op-Ed Columnist
The Great Illusion

By PAUL KRUGMAN
Published: August 14, 2008

So far, the international economic consequences of the war in the Caucasus have been fairly minor, despite Georgia’s role as a major corridor for oil shipments. But as I was reading the latest bad news, I found myself wondering whether this war is an omen — a sign that the second great age of globalization may share the fate of the first.

If you’re wondering what I’m talking about, here’s what you need to know: our grandfathers lived in a world of largely self-sufficient, inward-looking national economies — but our great-great grandfathers lived, as we do, in a world of large-scale international trade and investment, a world destroyed by nationalism.

Writing in 1919, the great British economist John Maynard Keynes described the world economy as it was on the eve of World War I. “The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth ... he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world.”

And Keynes’s Londoner “regarded this state of affairs as normal, certain, and permanent, except in the direction of further improvement ... The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions, and exclusion ... appeared to exercise almost no influence at all on the ordinary course of social and economic life, the internationalization of which was nearly complete in practice.”

But then came three decades of war, revolution, political instability, depression and more war. By the end of World War II, the world was fragmented economically as well as politically. And it took a couple of generations to put it back together.

So, can things fall apart again? Yes, they can.

Consider how things have played out in the current food crisis. For years we were told that self-sufficiency was an outmoded concept, and that it was safe to rely on world markets for food supplies. But when the prices of wheat, rice and corn soared, Keynes’s “projects and politics” of “restrictions and exclusion” made a comeback: many governments rushed to protect domestic consumers by banning or limiting exports, leaving food-importing countries in dire straits.

And now comes “militarism and imperialism.” By itself, as I said, the war in Georgia isn’t that big a deal economically. But it does mark the end of the Pax Americana — the era in which the United States more or less maintained a monopoly on the use of military force. And that raises some real questions about the future of globalization.

Most obviously, Europe’s dependence on Russian energy, especially natural gas, now looks very dangerous — more dangerous, arguably, than its dependence on Middle Eastern oil. After all, Russia has already used gas as a weapon: in 2006, it cut off supplies to Ukraine amid a dispute over prices.

And if Russia is willing and able to use force to assert control over its self-declared sphere of influence, won’t others do the same? Just think about the global economic disruption that would follow if China — which is about to surpass the United States as the world’s largest manufacturing nation — were to forcibly assert its claim to Taiwan.

Some analysts tell us not to worry: global economic integration itself protects us against war, they argue, because successful trading economies won’t risk their prosperity by engaging in military adventurism. But this, too, raises unpleasant historical memories.

Shortly before World War I another British author, Norman Angell, published a famous book titled “The Great Illusion,” in which he argued that war had become obsolete, that in the modern industrial era even military victors lose far more than they gain. He was right — but wars kept happening anyway.

So are the foundations of the second global economy any more solid than those of the first? In some ways, yes. For example, war among the nations of Western Europe really does seem inconceivable now, not so much because of economic ties as because of shared democratic values.

Much of the world, however, including nations that play a key role in the global economy, doesn’t share those values. Most of us have proceeded on the belief that, at least as far as economics goes, this doesn’t matter — that we can count on world trade continuing to flow freely simply because it’s so profitable. But that’s not a safe assumption.

Angell was right to describe the belief that conquest pays as a great illusion. But the belief that economic rationality always prevents war is an equally great illusion. And today’s high degree of global economic interdependence, which can be sustained only if all major governments act sensibly, is more fragile than we imagine.

Julia Child. a spook?!?!

Always knew that broad wasn't on the level.

Newly released files show Julia Child was a spy
WASHINGTON—Before Julia Child became known to the world as a leading chef, she admitted at least one failing when applying for a job as a spy: impulsiveness.

At 28 as an advertising manager at W&J Sloane furniture store in Beverly Hills, Calif., Child clashed with new store managers and left her job abruptly.

"I made a tactical error and was out," she explained in a handwritten note attached to her application to join the Office of Strategic Services, a World War II-era spy agency. "However, I learned a lot about advertising and wish I had been older and more experienced so that I could have handled the situation, as it was a most interesting position."

Child was not yet married and was applying for the job under her maiden name, McWilliams, according to previously top-secret records released by the National Archives on Thursday. She was hired in the summer of 1942 for clerical work with the intelligence agency and later worked directly for OSS Director William Donovan, the personnel records show.

Details about Child's background and nearly 24,000 other OSS employees are revealed in the newly released documents, withheld from public view as classified records for decades by the CIA.

The 750,000 documents identify the vast spy network managed by the OSS, which later became the CIA. President Franklin Roosevelt created the OSS, the country's first centralized intelligence operation.

The OSS files offer details about other agents, including Supreme Court Justice Arthur Goldberg, major league catcher Moe Berg, historian Arthur Schlesinger Jr. and film actor Sterling Hayden.

Other notables identified in the files include John Hemingway, son of author Ernest Hemingway; Kermit Roosevelt, son of President Theodore Roosevelt; and Miles Copeland, father of Stewart Copeland, drummer for the band The Police.

Some of those like Child on the list have been identified previously as having worked for the OSS, but their personnel records never have been available before. Those records would show why they were hired, jobs they were assigned to and perhaps even missions they pursued while working for the agency.

The release of the OSS personnel files unmasks one of the last secrets from the short-lived wartime intelligence agency, which for the most part was later folded into the CIA after President Truman disbanded it in 1945.

"I think it's terrific," said Elizabeth McIntosh, 93, a former OSS agent now living in Woodbridge, Va. "They've finally, after all these years, they've gotten the names out. All of these people had been told never to mention they were with the OSS."

The CIA long resisted releasing the records. But a former CIA director, William Casey, himself an OSS veteran, cleared the way for transfer of millions of OSS documents to the National Archives when he took over the spy agency in 1981. The personnel files are the latest documents to be made public.

Information about OSS involvement was so guarded that relatives often could not confirm a family member's work with the group.

Walter Mess, who handled covert OSS operations in Poland and North Africa, said he kept quiet for more than 50 years, only recently telling his wife of 62 years about his OSS activity.

"I was told to keep my mouth shut," said Mess, now 93 and living in Falls Church, Va.

The files provide new information even for those most familiar with the agency. Charles Pinck, president of the OSS Society created by former OSS agents and their relatives, said the nearly 24,000 employees included in the archives far exceed previous estimates of 13,000.

The newly released documents will clarify these and other issues, said William Cunliffe, an archivist who has worked extensively with the OSS records at the National Archives.

"We're saying the OSS was a lot bigger than they were saying," he said.

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On the Net:

CIA OSS page: http://tinyurl.com/6bvmhf

Index to National Archives OSS personnel files: http://www.archives.gov/research/arc/
© Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

The EMP Threat

How hard it is to make one of these?

REVIEW & OUTLOOK

The EMP Threat
August 9, 2008; Page A10

Imagine you're a terrorist with a single nuclear weapon. You could wipe out the U.S. city of your choice, or you could decide to destroy the infrastructure of the entire U.S. economy and leave millions of Americans to die of starvation or want of medical care.

The latter scenario is the one envisioned by a long-running commission to assess the threat from electromagnetic pulse, or EMP. The subject of its latest, and little discussed, report to Congress is the effect an EMP attack could have on civilian infrastructure. If you're prone to nightmares, don't read it before bedtime.

An EMP attack occurs when a nuclear bomb explodes high in the Earth's atmosphere. The electromagnetic pulse generated by the blast destroys all the electronics in its line of sight. For a bomb detonated over the Midwest, that includes most of the continental U.S. Few, if any, people die in the blast. It's what comes next that has the potential to be catastrophic. Since an EMP surge wipes out electronics, virtually every aspect of modern American life would come to a standstill.

The commission's list of horribles is 181 pages long. The chapter on food, for instance, catalogs the disruptions up and down the production chain as food spoils or has no way to get to market. Many families have food supplies of several days or more. But after that, and without refrigeration, what? The U.S. also has 75,000 dams and reservoirs, 168,000 drinking water-treatment facilities, and 19,000 wastewater treatment centers -- all with pumps, valves and filters run by electricity.

Getting everything up and running again is not merely a matter of flipping a switch, and the commission estimates that many systems could be out of service for months or a year or more -- far longer than emergency stockpiles or batteries could cover. The large transformers used in electrical transmission are no longer built in the U.S. and delivery time is typically three years. "Lack of high voltage equipment manufacturing capacity represents a glaring weakness in our survival and recovery," the commission notes.

Many industries rely on automated control systems maintained by small work forces. In emergencies -- say, during a blackout -- companies often have arrangements in place to borrow workers from outside the affected area to augment the locals and help with manual repairs. After an EMP attack, those workers would be busy in their home regions -- or foraging for food and water for their families.

The commission offers extensive recommendations for how industry and government can protect against the effects of an EMP attack and ensure a quicker recovery. They include "hardening" more equipment to withstand an electromagnetic pulse; making sure replacement equipment is on hand; training recovery personnel; increasing federal food stockpiles; and many others.

If not, our vulnerability "can both invite and reward attack," the commission's chairman, William Graham, told Congress last month. Iran's military writings "explicitly discuss a nuclear EMP attack that would gravely harm the United States," he said. James Shinn, an assistant secretary of defense, has said that China is developing EMP weapons. The commission calls an EMP attack "one of a small number of threats that can hold our society at risk of catastrophic consequences." The threat is real. It's past time to address it.

See all of today's editorials and op-eds, plus video commentary, on Opinion Journal.

And add your comments to the Opinion Journal forum.

the shrinking world

It's all getting smaller.

Cost of Living
The Price Is the Same; It’s the Size That Shrinks

By M. P. DUNLEAVEY
Published: August 8, 2008

IMAGINE what would happen if the price of gasoline remained the same, but instead of selling it by the gallon, gas stations knocked down the size a few ounces.

It might seem that you were paying the same amount — about $4 a gallon — but you wouldn’t be. You would be getting, say, a mere 120 ounces instead of 128, and you would be paying more for gas.

If gas stations labeled the change clearly, would there be riots in the street? Would weary consumers simply shrug and pay the same for less at the pump?

We don’t really know how people would react. But something very much like this is already occurring at the supermarket, what Tod Marks, a senior editor at Consumer Reports, calls “the incredibly shrinking package” strategy.

The repackaging trick isn’t new. Who hasn’t opened a box of cereal or a bag of chips and marveled at the abundance of air with the food? But Mr. Marks, who tracks the grocery industry, said, “It’s definitely happening a lot more than it used to.”

According to a study conducted this summer by the Consumer Reports National Research Center, shrinkage is occurring across a broad spectrum of goods, Mr. Marks said. The study will be published by Consumer Reports in October.

Some of the worst offenders are canned tuna, paper towels, chewing gum, butter-type spreads, candy bars — and, perhaps most drastically, coffee and ice cream. In many cases, he said, the traditional one-pound can of coffee has dwindled to 10 or 11 ounces. And many ice cream containers have shrunk from a half-gallon to 1.5 quarts.

Having just bought what I thought was a half-gallon of ice cream, I checked my freezer and was taken aback when I read the label. No 64 ounces here, just a mere 48 ounces dolled up to look like a half-gallon.

I felt snookered, but it was my own fault. I had not checked the container’s actual size or the unit pricing label, steps Mr. Marks says are essential if you are going to get your money’s worth in groceries these days.

Also, he advises, look sideways at a package before you buy it. “Companies won’t change the height or length of a container. It’s the width,” he said. “The Hershey’s bar you pick up at the register looks like the old 3-ounce bar but it’s only 1.5 ounces. Hold it up. It’s as thin as a wafer.”

THE incredible shrinking package game is hardly amusing when one contemplates a rapidly expanding grocery bill. But, in a funny way, it may be a good idea for food manufacturers and shoppers alike, said Harry Balzer, a vice president of the NPD Group, a marketing research firm based in Port Washington, N.Y.

With the soaring cost of wheat, corn, eggs, milk and other staples, grocery producers are faced with a dilemma, said Mr. Balzer, who studies food consumption. “People hate paying more for groceries. How do manufacturers deal with rising food costs without passing it along directly to the consumer?

“One option that you’re seeing, they keep the price the same but lower the amount. In effect, it’s a price increase,” he said, “but it’s not an increase in out-of-pocket expenses.”

Actually, I pointed out to Mr. Balzer, it is certainly an increase in what I pay out of pocket if my half-gallon of ice cream lasts only 1.5 quarts’ worth of servings or my box of cereal runs out after a week instead of two.

Mr. Balzer agreed. “There’s no question that you’re paying more for food,” he said. But, he added, consider the challenge facing food producers. “They have to make a decision: Do you raise the price of a product and risk that customers may not buy it, or do you modify the packaging and risk that people might feel deceived?”

As flawed as the system sounds, Mr. Marks of Consumer Reports believes that the grocery dance keeps everyone happy, more or less. “In effect, grocery manufacturers are still raising prices, yet people are paying the same — which is somehow appealing to the American psyche.”

M. P. Dunleavey is the author of “Money Can Buy Happiness” (Broadway Books, 2007).

White House spy scare?

SPOOKY!!

Robert Eringer

August 2, 2008 12:00 AM

The Investigator

Few noticed that President George W. Bush quietly revamped the role of the President's Foreign Intelligence Advisory Board earlier this year. But nobody knows, until now, that a spy scare was one of the reasons to precipitate this change.

The role of the advisory board, which President Eisenhower created in 1956, has been to monitor U.S. intelligence services and offer non-partisan, expert advise to the president on its conduct. In the mid-1970s, after the exposure of CIA abuses by the Church Committee, PFIAB's clout expanded to investigate crimes within the intelligence community, empowered by President Ford to report criminal activity directly to the attorney general.

On Feb. 29, President Bush signed an executive order that diminishes PFIAB's authority and transfers the investigative powers to the director of national intelligence.

This followed a lengthy FBI counterintelligence investigation into the activities of a retired U.S. Air Force colonel who they suspected of spying on PFIAB for Russia.

It is believed in some quarters that Russian Prime Minister Vladimir Putin personally recruited this colonel while Mr. Putin was posted to Dresden, East Germany, as a KGB intelligence officer. From 1985 to 1990 it was Mr. Putin's job to recruit spies in Germany, where U.S. military officers serving at NATO air bases were considered high priority targets.

At that time, the colonel was based at Borfink Air Force Base, where he supervised top-secret U-2 and SR-71 reconnaissance flights over the Soviet Union.

Soon after retiring from the Air Force, this colonel, in 1992, organized a trade delegation of Russians to the Principality of Monaco. Included in this delegation was an obscure political functionary from St. Petersburg. His name was Vladimir Putin. (Mr. Putin had resigned from the KGB a year before.) This delegation marked a Russian entry into Monaco, a tax haven that provides a variety of shielded opportunities to the very rich.

A Russian presence in Monaco has greatly proliferated during the past two years. As if to consummate the relationship, Prince Albert II of Monaco last August vacationed for a week in Russia with Mr. Putin, as the Russian president's guest. More recently, the Russian state "gifted" Prince Albert with a two-story, three-bedroom dacha, which Russian builders constructed from scratch on the grounds of Roc Agel, the bachelor prince's country hideaway in the French Alps, high above his glamorous principality.

Back to the mid-1990s, the Air Force colonel created a business entity in Monaco with a member of a prominent Monegasque family. Over a five-year period this entity is understood to have laundered $600 million through Monaco's banks for corrupt Russian interests -- funds reputedly channeled into real estate around Western Europe and further laundered through coded accounts at banks in Malta, the Bahamas, and the Turks & Caicos Islands. An estate in Ireland was allegedly purchased on behalf of one "Andrey Vasiliyev," an alias that Mr. Putin, while president, was known to use in correspondence with his intelligence chiefs.

The colonel was also known to carry suitcases full of cash -- presumably on behalf of Russians, maybe for Mr. Putin personally -- from Switzerland to Monaco for deposit in local banks.

Although his last annual salary in the Air Force as an attachè was about $60,000 -- and that by his own admission he "retired broke" -- the colonel quickly amassed $10 million worth of real estate in Monaco, London, Malibu and Whistler, Canada, plus luxury cars, and a collection of ultra-pricey Ming Dynasty antiques.

One of the Russians who figured into the colonel's Monaco-based Russian money laundering scheme was Viktor Bout, a former major in the GRU (Soviet military intelligence), nicknamed "The Bill Gates of Arms Dealing" and now in custody in Thailand, fighting extradition to the United States.

Trouble for both the colonel and Mr. Bout, 41, first began in February 2001 when a prosecutor in Belgium, under pressure from the United States government, issued an arrest warrant for Mr. Bout alleging that this merchant of death had laundered millions of dollars from illegal arms sales, including the sale of Russian military aircraft to the Taliban in Afghanistan, pre-9/11.

The colonel and his Monegasque partner, who has since died, liquidated their entity four months later and are understood to have destroyed the company's documentation. The colonel then left Monaco to lay low in his other homes.

However, the colonel still maintained a link to PFIAB, whose meetings he had occasionally attended while in the Air Force to "flap charts" for senior officers conducting presentations. The colonel, in retirement, had been known to boast to others that he was attached to PFIAB, and that he was engaged in running secret missions on its behalf.

But he was lying. The colonel neither sat on PFIAB's 16-member board nor was he on its staff; nor does PFIAB have operational authority or capability to run missions.

Yet when annual PFIAB meetings rolled around every December, the colonel traveled first-class to Washington, D.C., for precisely the same dates and holed up in five-star hotels -- The Willard or the Hay Adams -- a stone's throw from PFIAB's venue, the Old Executive Office Building adjacent to the White House.

It is believed the colonel knew someone at PFIAB -- a board member or staffer -- whom he wined and dined at expensive restaurants and from whom he weaseled intelligence gossip about PFIAB briefings and discussions. And then reported everything he collected to the Russians.

The colonel has apparently gotten off scot-free, unless the FBI turned him into a double agent. Obviously, they're not saying, and are otherwise preoccupied celebrating their 100th anniversary with a PR campaign.

A call from The Investigator to PFIAB for comment was referred to the White House Media Office, which did not call back.

If you have a story idea for The Investigator, contact him at reringer[at]newspress.com. State if your query is confidential.

marx cafe tonight?

damn good question. I'm willing to bet that Marx hasn't gotten their permit issue sorted, one has to stop and wonder if I'll ever be dropping records there again. I'll most likely still be there tonight, for a bite to eat and some beers. -m

kiss the dollar menu goodbye!!

An amazingly tragic reversal of fortune for those dollar-menu-aires!!

McDonald's Tests Changes
In $1 Burger As Costs Rise
By JANET ADAMY
August 4, 2008; Page B1

OAK BROOK, Ill. -- McDonald's Corp. is testing modifications to its popular $1 double cheeseburger, and higher prices for the sandwich, as it prepares to change its Dollar Menu by next year.

In an interview, Don Thompson, president of McDonald's U.S. business, said the company has tested ways to make the burger less expensive to make. Some restaurants are selling it with one slice of cheese instead of two, and billing it as a "double hamburger with cheese." Others are offering a double hamburger without cheese. Some are selling the traditional double cheeseburger at prices ranging from $1.09 to $1.19.

The company is also considering expanding what it considers the middle tier of its menu, items ranging from about $1.30 to $2. "We know customers are facing tough times in this economy," Mr. Thompson said.

Launched in 2003, the Dollar Menu has been a key driver of sales at McDonald's 14,000 U.S. restaurants and has helped it ride out dips in consumer spending. But recently, franchisees have complained that the menu has brought too much unprofitable traffic into their restaurants.

The biggest question for the eight-item menu is what to do with the double cheeseburger, considered its anchor. High dairy prices have pushed up the cost of cheese, and McDonald's predicts more pressure because its beef costs will be higher this year. Mr. Thompson said if McDonald's moves the double cheeseburger off that menu, there would still be some type of $1 burger.

Internal sales documents reviewed by The Wall Street Journal show that, as of late June, sales of the chain's lattes, cappuccinos and other espresso drinks were off their peak in several main markets where they're being sold. Mr. Thompson said "the numbers really don't tell the story."

Lower-priced beverages, including $1.89 iced coffee and a $1 fountain-drink and sweet-tea promotion, have pulled some sales away from the espresso drinks, which range from about $2 to $3. That was something the company hadn't anticipated, he said.

McDonald's overall beverage expansion, adding espresso drinks, smoothies, cold tea, bottled drinks and ice-blended coffee beverages at U.S. locations, is on track to exceed the company's goal of adding $125,000 a year in sales per restaurant, even though it doesn't yet have national advertising behind it, Mr. Thompson said. He sees McDonald's target of the drinks adding $1 billion a year to the company's sales as "definitely achievable." The rollout will be complete at the end of 2009.

Write to Janet Adamy at janet.adamy@wsj.com

the fed steps in

Oh great, now with the Federal Reserve backing up the FDIC we can just print more money to cover for the debt crisis.

Fed Loans to Banks Made Easier By Fannie Mae Rescue (Update1)

By Craig Torres
More Photos/Details

July 31 (Bloomberg) -- The Federal Reserve will be able to lend more easily to failed banks under government control because of a provision in legislation that bailed out Fannie Mae and Freddie Mac.

In the rescue signed into law by President George W. Bush yesterday, the Fed will no longer have to pay penalties on loans it makes to institutions taken over by the Federal Deposit Insurance Corp.

The measure may mean more use of the central bank's balance sheet to prop up the U.S. financial system, after the Fed began lending to investment banks in March, analysts said. The FDIC has taken over seven banks this year, with 90 on a watch-list of troubled firms as lenders are hit by the surge in credit losses.

``We are pushing forward the line on what the government will backstop, and what the Federal Reserve will backstop,'' said Vincent Reinhart, former director of the Fed's Monetary Affairs Division who is now at the American Enterprise Institute in Washington.

Fed officials yesterday also extended their two lending programs to Wall Street through January, after judging that markets are still ``fragile.''

The Federal Reserve Act's Section 10B penalizes the Fed for loans to undercapitalized institutions exceeding specific time periods. The original provision was aimed at preventing the central bank from keeping failing banks open.

FDIC Request

The exemption in the new law, which was requested by the FDIC without objection by the Fed's Board of Governors, was aimed at making clear that once banks are taken over by the FDIC, capital rules no longer apply because they are effectively owned, operated and in liquidation by the government.

``It is more of a clarification,'' said FDIC spokesman Andrew Gray in Washington. ``It removes any ambiguity from the current statutory language.''

Fed spokesman David Skidmore declined to comment.

For some, the exemption opens up the Fed to more political pressure to lend to government agencies, instead of forcing Congress, the FDIC, or the Treasury to explain to taxpayers why they need more money.

``Once the Fed starts lending to a bridge bank, or indirectly to the FDIC, where is the incentive to ever stop?'' said Walker Todd, a former Cleveland Fed attorney and visiting research fellow at the American Institute for Economic Research in Great Barrington, Massachusetts.

Raise Money

The FDIC had $52.8 billion in its deposit-insurance fund as of March 31. The FDIC could raise more money by tapping a $40 billion credit line it has with the U.S. Treasury, increasing assessments on its members, or turning to Congress.

``Throughout this crisis, the government is gradually taking care of anybody who is not insured,'' said Tom Gallagher, senior managing director at ISI Group in Washington. ``The Fed seemed to be limiting its role after Bear Stearns. Now, there seems to be some backsliding.''

``Like any open depository institution, there will be short-term borrowing needs by the bridge bank,'' which may need to ``tap the discount window,'' Gray said, referring to the name for the Fed's direct loans to commercial banks. ``Longer-term borrowing needs would typically be met by a loan from the FDIC.''

The Fed enjoys wide discretion in discount-window lending, and demands collateral, sometimes in excess of the loan's value, to insure against the risk of default.

A request by the FDIC could always be rejected by the central bank. Still, the removal of the penalties may open up the Fed to more political pressure, possibly encroaching on its independence, analysts said.

`Costly and Difficult'

``Why should they be doing it?'' said Robert Eisenbeis, former Atlanta Fed research director and now chief monetary economist at hedge fund Cumberland Advisors LLC. ``The whole idea'' of the rules in the Federal Reserve Act is ``to make it costly and difficult to support an insolvent institution.''

This month, the Fed board voted unanimously to allow direct lending to government-sponsored housing agencies Fannie Mae and Freddie Mac ``should such lending prove necessary,'' at the request of U.S. Treasury Secretary Henry Paulson.

Yesterday the central bank extended until Jan. 30 the Primary Dealer Credit Facility for direct loans to securities firms and the Term Securities Lending Facility for loans of Treasuries, both begun in March. The programs will be canceled when the Fed deems that markets ``are no longer unusual and exigent,'' according to a statement from the central bank.

The Fed will start auctions of options of as much as $50 billion in the TSLF on top of the $200 billion program, which loans Treasuries to securities firms in exchange for asset- backed securities and other collateral.

New York Fed officials plan to consult with the primary dealers of U.S. government bonds on the TSLF options program, the district bank said in a statement yesterday. The options plan is aimed at providing liquidity for two weeks or less surrounding key financing periods to be identified. Further details are planned on or before Aug. 8, the New York Fed said.

To contact the reporter on this story: Craig Torres in Washington at ctorres3@bloomberg.net
Last Updated: July 31, 2008 11:20 EDT