Do conhecido comentarista politico e filósofo Olavo de Carvalho. Independentemente do que se possa pensar de suas tomadas de posição anti-comunistas -- que pessoalmente acho exageradas, posto que os comunistas de hoje, no Brasil, só estão pensando em se locupletar com o dinheiro do Estado e da burguesia -- creio que vale refletir sobre o que ele expõe, como fatos, e depois sobre os seus argumentos, inteligentes, como sempre.
Atenção: se você adora Pierre Bourdieu -- e não acha ele um chato pedante como eu -- não leia. Acho que vai se decepcionar. Mais chato do que ele, só esses acadêmicos brasileiros que ficam repetindo boçalmente Bourdieu, sem pensar com a sua própria cabeça...
PRA
Um guru da educação brasileira
Olavo de Carvalho
Diário do Comércio, 4 de fevereiro de 2009
Uma das idéias mais influentes e respeitadas na educação brasileira é a teoria da “violência simbólica”, criada por Pierre Bourdieu (v. Pierre Bourdieu e Jacques Passeron, A Reprodução. Elementos para uma Teoria do Sistema de Ensino, trad. Reynaldo Bayrão, 3ª. ed., Rio, Francisco Alves, 1992). Por esse termo ele entende “a violência que extorque submissão não percebida como tal, baseada em ‘expectativas coletivas’ ou crenças socialmente inculcadas”. Violência simbólica é toda forma de dominação mediante impregnação inconsciente de hábitos, símbolos e valores que ao mesmo tempo impõem essa dominação e a encobrem aos olhos dos dominados, de modo que a violência é tanto mais efetiva quanto menos reconhecida.
Todo sistema educacional, desta ou de outras épocas, constitui-se, segundo Bourdieu, de “atos pedagógicos” destinados a impor um conjunto de valores culturais, sempre arbitrários e injustificáveis, por meio de “violência simbólica”. As noções de “violência” e “arbitrário” estão interligadas: “A seleção de significações que define objetivamente a cultura de um grupo ou de uma classe como sistema simbólico é arbitrária na medida em que a estrutura e as funções dessa cultura não podem ser deduzidas de nenhum princípio universal, físico, biológico ou espiritual, não estando unidas por nenhuma espécie de relação interna à ‘natureza das coisas’ ou a uma ‘natureza humana’.”
A premissa aí oculta é que, se o sistema simbólico refletisse princípios universais, a ação pedagógica não seria violência simbólica e sim persuasão racional . Mas isso, segundo Bourdieu, jamais acontece: “Toda ação pedagógica é objetivamente uma violência simbólica enquanto imposição, por um poder arbitrário, de um arbitrário cultural.”
Mas, se a cultura não tem fundamento, nem por isso deixa de ter utilidade – para alguns, é claro: “A seleção de significações que constitui objetivamente a cultura de um grupo ou classe como sistema simbólico é sociologicamente necessária na medida em que essa cultura deve sua existência às condições sociais das quais ela é o produto.” O esquema dominante (as “condições sociais”) não se limita a “produzir” o sistema simbólico – ele se serve dele para seus próprios fins: “...O arbitrário cultural que as relações de força entre os grupos ou classes... colocam em posição dominante... é aquele que exprime o mais completamente, ainda que sempre de maneira mediata, os interesses objetivos (materiais e simbólicos) dos grupos ou classes dominantes.”
Bourdieu apresenta esses parágrafos como uma lição de sociologia, isto é, uma descrição de como as coisas funcionam nas sociedades existentes, inclusive e primordialmente, é claro, a sociedade burguesa. Ele pretende, portanto, que a classe burguesa, na busca de seus próprios interesses, criou um sistema de significações a ser inculcado por meio de atos pedagógicos de violência simbólica nas mentes dos dominados, de tal modo que não só essas significações, mas também aqueles interesses, e a relação de poder que os atende, permaneçam invisíveis. É, convenhamos, uma operação de engenharia psicológica das mais complexas. Para realizá-la, é preciso, primeiro, agentes humanos qualificados. Uma “classe”, afinal, abrange milhões de pessoas e não é possível que todas elas participem do empreendimento. É preciso que, dentre elas, se destaquem uns quantos especialistas, os “educadores”, que estes sejam aceitos como legítimos representantes da classe, que entrem num consenso ao menos aproximado quanto aos interesses da classe que representam; é preciso ainda que esse consenso corresponda de fato aos tais interesses e obtenha, uma vez formulado, a aprovação da classe que nomeou os educadores. Partindo, pois, dessa representação meramente esquemática da situação social, eles teriam de selecionar e organizar os símbolos, estratégias e esquemas mentais mais propícios não só a produzir obediência nos dominados, mas também a manipulá-los e ludibriá-los de tal modo que não percebessem estar obedecendo a uma classe dominante, e nem mesmo a seres humanos, mas acreditassem seguir espontaneamente a natureza das coisas ou a vontade divina.
Vocês conseguem imaginar quantas assembléias, quantos grupos de trabalho, quantas pesquisas científicas, quantos projetos técnicos, quantas tentativas e erros seriam necessários para um plano dessa envergadura? Já imaginaram a imensa capacidade organizativa, os incalculáveis recursos orçamentários e, no topo da hierarquia, a mão de ferro necessária para manter a ordem, controlar o fluxo de trabalho e assegurar a produtividade num empreendimento todo feito de sutilezas psicológicas infinitamente evanescentes? Se algo dessa natureza tivesse um dia sido concebido, os trabalhos preparatórios deveriam ter deixado uma multidão de rastros: monografias acadêmicas, atas, publicações periódicas, regulamentos, ordens de serviço, etc, etc. O problema é o seguinte: nada disso existe, nada disso existiu jamais.
Se vasculharmos todas as bibliotecas, todos os registros, todos os arquivos sobre a história da educação burguesa, não encontraremos um só documento, um só memorando, uma só ata onde apareça, mesmo indiretamente, uma discussão nestes termos: “Os interesses objetivos da nossa classe são tais e quais, os meios de forçar as pessoas a trabalharem para nós são estes e aqueles, e os meios de camuflar toda a operação são x e y.” Nenhum educador, ministro da educação, professor ou inspetor do ensino primário, médio ou superior jamais disse uma coisa dessas, ou pelo menos não há documento que o registre.
Eles falam, sim, de valores, de fins da educação, de aprimoramento da inteligência humana, de virtudes cívicas, etc., mas nunca, jamais, de uma operação para forçar invisivelmente os dominados a uma conduta que, alertados, eles poderiam não aprovar. Como é possível que uma operação tão delicada não deixasse o menor rastro, senão numa linguagem tão desligada, aparentemente, de qualquer intenção manipulatória, de qualquer imposição camuflada, de qualquer “violência simbólica”? Se admitimos que essa intenção existiu, então só há, para explicar a inexistência de registros, as seguintes hipóteses:
Hipótese 1. Além de conceber um sistema de camuflagens para ludibriar os dominados, os malditos educadores burgueses ainda criaram, em cima dele, uma segunda rede de disfarces verbais para enganar os observadores futuros, isto é, nós. Mas esta segunda operação, sendo ainda mais complexa e trabalhosa do que a primeira, e só podendo ser levada a cabo depois que esta estivesse pronta, pela simples razão de que não se pode camuflar o que não existe, também não deixou para os historiadores o menor registro, o que supõe que, além da primeira camuflagem e da segunda, houve em seguida uma operação-sumiço ainda mais gigantesca do que as outras duas.
Hipótese 2. Ao planejar a manipulação dos dominados, os educadores burgueses não tinham conscientemente essa intenção, mas, enquanto serviam aos interesses objetivos da burguesia, acreditavam piamente trabalhar por valores culturais sublimes, pelo aprimoramento da inteligência etc. Isolados da realidade pelo seu próprio véu ideológico que encobria os verdadeiros interesses em jogo, planejaram inconscientemente a manipulação do inconsciente alheio e, embora trabalhassem totalmente às cegas, produziram um sistema tão organizado, racional e eficiente que conseguiram realmente fazer-se obedecer por milhões de paspalhos ainda mais inconscientes que eles – a multidão dos “dominados”. Não me perguntem como é possível uma operação tão vasta e complexa atingir miraculosamente os fins desconhecidos que, por vias ignoradas e inapreensíveis, atendem aos interesses de classe postulados, também inconscientemente, no início do processo.
Quando vemos o gênero de tolice em que os responsáveis pelas nossas escolas públicas devotamente acreditam, torna-se bem fácil explicar por que os alunos dessas escolas tiram sempre os últimos lugares nos testes internacionais.
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Paranóia sociológica
Olavo de Carvalho
Diário do Comércio, 12 de fevereiro de 2009
Terminei o antigo anterior dizendo que a teoria da “violência simbólica” pressupunha ou uma megaconspiração cujos traços documentais desapareceram para sempre, ou o milagre de uma intenção inconsciente ser capaz de manipular o inconsciente alheio com a precisão de um cálculo matemático. Se as duas hipóteses são francamente dadaístas, à segunda vem acrescentar-se ainda mais um fator complicante. Para que os educadores fossem induzidos a trabalhar inconscientemente para os interesses da burguesia, teria sido preciso que a burguesia os manipulasse para esse fim, o que supõe que os capitalistas fossem educadores ainda mais hábeis do que os educadores profissionais, impondo a estes, por meio de “violência simbólica”, as normas e padrões de uma violência simbólica de segundo grau que, inconscientemente, eles deveriam repassar à multidão dos dominados. Também não há registro histórico de que isso jamais tivesse acontecido, é claro.
Ora, se a teoria da educação como “violência simbólica” não corresponde a nenhum fato objetivo, a nada que tenha acontecido historicamente, de onde é que ela extrai sua força de persuasão, a aparência de verossimilhança que a torna aceita, de umas décadas para cá, como uma grande verdade sociológica?
A resposta é escandalosamente simples. Toda a documentação que não existe sobre o planejamento da manipulação psicológica burguesa existe, em abundância, sobre a manipulação educacional revolucionária e socialista. Milhares, centenas de milhares de livros, artigos acadêmicos, atas de assembléias de professores e estudantes, revistas educacionais, circulares de sindicatos, filmes, vídeos etc., sem contar as obras completas de Antonio Gramsci e do próprio Pierre Bourdieu, atestam a existência de enormes trabalhos empreendidos para implantar na cabeça das crianças os valores e condutas que os revolucionários julgam convenientes para transformar os estudantes em massa de militantes ou simpatizantes da causa revolucionária, bem como para fazer com que os agentes desse empreendimento passem despercebidos e os efeitos de suas ações sejam vivenciados como transformações espontâneas do processo histórico. E isto não é uma interpretação que eu esteja fazendo. Os próprios revolucionários declaram que esse trabalho tem de ser feito e explicam como ele deve ser feito. A frase de Antônio Gramsci citada no artigo anterior é o resumo da coisa toda. A “revolução cultural” opera-se por meio de mudanças sutis e quase imperceptíveis do imaginário popular – do “senso comum” como o chama Gramsci –, de tal modo que tudo pareça espontâneo e que a vontade do Partido não se imponha como ditado autoritário de uma organização política em particular, mas como decorrência involuntária e anônima da natureza das coisas, como “autoridade onipresente e invisível de um imperativo categórico, de um mandamento divino”.
Mais do que pôr em prática a máxima leninista “acuse-os do que você faz, xingue-os do que você é”, Bourdieu inventa seu inimigo à imagem e semelhança do que ele próprio está fazendo. A famosa “violência simbólica” da cultura burguesa, não existe senão como projeção invertida da educação revolucionária. Ela é, em toda a linha, uma criatura do imaginário militante. É precisamente por só existir como fantasma na alma doente dos revolucionários que a pedagogia burguesa não apenas deixa de oferecer qualquer resistência visível ao avanço da educação revolucionária, mas ainda a protege e fomenta, oferecendo ao educador antiburguês todos os meios de ação disponíveis, acompanhados de honrarias e recompensas. Não há establishment educacional no mundo burguês que não tenha em Pierre Bourdieu o seu queridinho, o seu enfant gâté, infinitamente badalado e paparicado. Na verdade, a maioria dos educadores de grande sucesso no mundo burguês são todos revolucionários – John Dewey, Celestin Freinet, Paulo Freire, Jean Piaget, Emilia Ferrero e tutti quanti –, e é inconcebível que a astúcia maquiavélica dos burgueses que montaram a operação de manipulação invisível descrita por Pierre Bourdieu não tivesse percebido isso e, como uma sonsa, consentisse em promover seus inimigos em vez de seus porta-vozes fiéis.
A “sociologia da educação” de Pierre Bourdieu é não somente uma idiotice: é uma projeção psicótica das ações do próprio Bourdieu e de seus correligionários sobre uma realidade inexistente. É uma doença mental, e seu sucesso se deve precisamente a isso: é mais fácil transmitir o vírus de uma moléstia incapacitante do que algum conhecimento da realidade.
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sábado, fevereiro 14, 2009
quinta-feira, fevereiro 12, 2009
408) Milton Friedman e a Grande Depressao dos anos 1930
The Great Depression According to Milton Friedman
Ivan Pongracic, Jr. [1] teaches economics at Hillsdale College. He extends special thanks to Lawrence H. White and Ivan Pongracic, Sr. for their helpful comments.
Few events in U.S. history can rival the Great Depression for its impact. The period from 1929 to 1941 saw fundamental changes in the landscape of American politics and economics, including such monumental events as America 's going off the gold standard and the founding of Social Security. It was a watershed for the growth of the federal government.
The Great Depression created a widespread misconception that market economies are inherently unstable and must be managed by the government to avoid large macreconomic fluctuations, that is, business cycles. This view persists to this day despite the more than 40 years since Milton Friedman and Anna Jacobson Schwartz showed convincingly that the Federal Reserve's monetary policies were largely to blame for the severity of the Great Depression. In 2002 Ben Bernanke (then a Federal Reserve governor, today the chairman of the Board of Governors) made this startling admission in a speech given in honor of Friedman's 90th birthday: "I would like to say to Milton and Anna: Regarding the Great Depression, you're right. We did it. We're very sorry."
Friedman, the great free-market champion of the last 50 years and one of the most influential economists of the last 200 years, died in November 2006 at 94. He left us an immense intellectual legacy, including his explanation of the Great Depression, which, while persuading a majority of the economics profession, has yet to fully trickle down to the public. It is truly a great mystery why Friedman's explanation has not been more widely recognized and accepted, especially given its influence among economists. Maybe the reason is that it does not lend itself to quick sound bites by politicians eager to justify more power. Or maybe it is usually presented in a way that makes it too difficult for the layperson to understand. Or maybe it is just that people find it easier to blame the "capitalists" rather than the hallowed Federal Reserve. Whatever the case, it would be beneficial to revisit Friedman's argument.
The standard explanation of the Great Depression, found in most American high-school history texts, is that it was created by the wild and irrational stock-market speculation that ultimately led to the Great Crash of October 1929. Investor speculations were so excessive—so the story goes—that once the bubble popped, it triggered the most severe decline in economic activity in U.S. history. The key point of this story is that the crash and the subsequent depression were due to factors that are innate to the capitalist system, unchecked under the supposedly laissez-faire policies of Herbert Hoover. It was only once Franklin Delano Roosevelt came into office that the government jump-started the recovery. It is thus claimed that FDR's policies were responsible not only for the recovery, but in fact for "saving capitalism from itself" when many Americans were willing to consider adopting full-blown socialism in the 1930s as a way to deal with the downturn.
Most people do not realize how much of this explanation had been shaped by Keynesian economics, the dominant economic paradigm from the 1940s to the 1970s. Keynesian economics got its start with the publication of John Maynard Keynes's General Theory of Employment, Interest, and Money in 1936. There Keynes proposed a view of the Great Depression that was at odds with the rest of the economics profession at the time. Most economists of the era tended to agree that market economies are "self-adjusting" and that they cannot get stuck in a recession for very long. However, this view seemed to be at odds with the ugly reality of the time: persistent unemployment rates of 20 percent and more, even as high as 25 percent in 1933—with no end in sight.
Keynes seemed to be the right man for the time as he was reflecting the increasingly common view that blamed the capitalists themselves for the situation. In the General Theory Keynes rejected the view that the boom-bust cycle was due to over-expansive government monetary policy and that the stubbornness of the Depression was due to government interference with market mechanisms. He labeled all economists who believed such views as "classical"—in other words, hopelessly out of touch with reality. Instead, Keynes proposed a "general theory" that he thought capable of explaining not only the good times but also the bad.
According to Keynes, what drives the economy is aggregate demand or aggregate expenditures. Aggregate demand can be broken down into three main components: personal consumption (C), private investment (I), and government expenditures (G). The relationship can be summed up with this formula: AD = C + I + G. If Aggregate Demand is strong, the economy will be strong. However, if Aggregate Demand falters, businesses will end up with large unsold inventories and will cut back on production to avoid surpluses in the future. As they cut back they will of course need fewer inputs—including labor—and high unemployment will result.
The culprit in this story, the element that throws the entire system out of whack, is private investment. Private investment consists of business expenditures on machines, buildings, factories, and so on. In other words, investment is capital formation. Keynes claimed that private investment is inherently unstable due to what he called the "animal spirits" of businessmen/capitalists. He believed that businessmen are ultimately irrational and prone to herd-like behavior. Like sheep that blindly follow other sheep in the herd, it is easy for businessmen to become "irrationally exuberant"—as well as irrationally lethargic. Investment lethargy would trigger a large decrease in private investment, thus decreasing aggregate expenditures and triggering an economic downturn.
From Downturn to Depression
How do we go from this downturn to a full-blown recession or even a depression? As the economy slows down, unemployment rises and leads to a loss of consumer confidence. Consumer pessimism will lead to more saving and less spending, thus decreasing the personal-consumption component of aggregate demand, exacerbating the downturn. Notice that both I and C are therefore driven by the expectations of private individuals (irrational in the case of business investors): if both investors and consumers become pessimistic and expect a recession, they will cut back on their expenditures and thus cause the aggregate demand to be too low to bring about full employment of available resources. According to Keynes, a recession is, in a nutshell, a self-fulfilling prophecy.
The Great Depression was therefore a long stubborn period of dismally low aggregate expenditures, and according to Keynes, there were no economic forces working to pull the economy out of this situation automatically. In other words, he thought there is no self-corrective mechanism (or invisible hand) in a free-market economy. Instead, irrational changes in expectations would regularly lead to wide and destructive fluctuations in the macroeconomy. So we see that the business cycle is the natural and expected consequence of the unfettered operation of a market economy. Therefore if an unfettered market economy results in depressions, it is clearly undesirable. It also should be obvious now that the standard high-school history-book explanation is basically just a simplified version of this Keynesian story.
What is required to avoid a recession, then, is for the government to insure that the aggregate expenditures are enough to achieve full employment. The government can do that through either fiscal policy (taxation and government spending) or monetary policy (control of the money supply). Keynes favored fiscal policy and recommended that the government engage in massive deficit spending. Deficit spending would allow for an increase in government spending without an offsetting increase in the tax burden on private individuals and businesses. Thus increased government spending could neutralize any decreased expenditures in the private sector, preserving employment and incomes and ultimately reversing the pessimistic expectations that led to the downturn in the first place. Keynesian "demand management" clearly prescribed an important role for the government.
Keynes's explanation, in addition to creating a new way of analyzing the economy as a whole, heavily influenced policymakers and ordinary people around the world. It was soon accepted that the government must engage in a countercyclical policy of demand management to stabilize the market economy. Both FDR and Keynes were proclaimed the "saviors of capitalism"!
Friedman Follows the Facts
In the 1950s, Friedman and Anna Schwartz began compiling historical data on monetary variables without any particular agenda or intention of overturning the dominant explanation of the Great Depression. But it became obvious that the data were at odds with the standard Keynesian explanation. So in their 1963 book, A Monetary History of the United States, 1867–1960, they presented the empirical evidence that led them to a completely different explanation.
As a result of examining more closely the key years between 1929 and 1933, Friedman and Schwartz first concluded that the Great Depression was not the necessary and direct result of the stock-market crash of October 1929, which they attribute to a speculative investment bubble. (The popping of the "bubble" may have been instigated by the Federal Reserve's raising of the discount rate—the interest rate the Fed charges on loans to commercial banks—in August 1929. The cause of the speculative bubble that led to the crash is a somewhat controversial topic. Whereas Friedman and Schwartz accepted that the bubble was caused by investors, seemingly endorsing—at least partly—the Keynesian "animal spirits" explanation, Austrian economists have argued otherwise.) In fact, they believed that the economy could have recovered rather rapidly if only the Fed—the central bank of the United States —had not engaged in a series of disastrous policies in the aftermath of the crash.
The Fed had only been in existence for 15 years at the time of the crash, having opened its doors in 1914. The United States had two central banks before the Fed (the Bank of United States, 1792–1812; and the Second Bank of the United States, 1816–1836), but had been without a central bank of any sort for over 75 years until the creation of the Fed. It was created primarily to act as a "lender of last resort" from which private banks could borrow money in times of crisis. The need for a lender of last resort in the U.S. banking system was due to a systemic weakness caused unintentionally by state and federal banking regulations. ( Canada , with a freer banking system, had no such systemic weakness and no need for a lender of last resort.) Weak banks are subject to crisis when their depositors are no longer confident that their bank holds sufficient reserves to satisfy all withdrawal demands at a certain time. This can trigger a "bank run," where depositors attempt to get to the bank before the other depositors in order to withdraw their money before the bank's limited reserves run out. A run on a bank can easily generate other bank runs as depositors become worried about the financial health of their own similarly weak banks.
The problem with bank runs is that when depositors withdraw money and stuff it under their mattresses rather than trust it to other banks, the money supply shrinks. To understand this phenomenon, we have to explain how we measure the money supply. The simplest measures include not only currency but also checking deposits, since they are commonly used to make payments. What complicates things is that fractional-reserve banking leads to a multiple expansion of deposits. When someone puts money in a bank his checking account reflects the deposit, but the bank does not keep all the money on hand—it's not a warehouse. Instead, it keeps only a fraction as "reserves" and lends the rest to a borrower, who in turn buys goods or services. The seller then deposits her new income in a bank, where she gets a checking account. The money supply increases by the amount of the new deposit. This process will continue, though in ever-decreasing amounts since banks have to keep some part of the new deposits as reserves. Yet each cycle will increase the money supply by increasing the overall amount of deposits held at banks.
This process works in reverse too. When banks lose reserves due to bank runs, the economy experiences a multiple contraction of deposits. The deposits that are removed from the economy greatly exceed the additional currency that the public now holds, so the money supply decreases.
The stock-market crash of October 1929 made it more difficult for many businesses to repay their loans to the banks, and many banks found their balance sheets impaired as a result. But the most important cause of the bank runs that began in October 1930 was bad times in the farm belt, where the banks were especially weak and poorly diversified. The number of bank runs increased exponentially in December 1930—in that single month 352 banks failed. Most of the failing banks were in the Midwest , their failures caused by farmers who defaulted on their loans because they were hit hard by the economic downturn. No sooner did the first wave of bank runs subside than another got underway in the spring of 1931, creating what Friedman and Schwartz described as a "contagion of fear" among bank depositors. Bank crises continued to come in waves until the spring of 1933.
Roosevelt Comes In
FDR was inaugurated on March 4, 1933, and two days later he declared a "bank holiday," allowing banks legally to refuse withdrawals by depositors; it lasted ten days. With his famous phrase, "The only thing we have to fear is fear itself," he intended to dissuade depositors from running on their banks, but by then it was far too late. In 1929 there were a total of 25,000 banks in the United States. As the bank holiday ended, only 12,000 banks were operating (though another 3,000 were to reopen eventually). The effect on the money supply was equally dramatic. From 1929 to 1933 it fell by 27 percent—for every $3 in circulation in 1929 (whether in currency or deposits), only $2 was left in 1933. Such a drastic fall in the money supply inevitably led to a massive decrease in aggregate demand. People's savings were wiped out so their natural response was to save more to compensate, leading to plummeting consumption spending. Naturally, total economic output also fell dramatically: GDP was 29 percent lower in 1933 than in 1929. And the unemployment rate hit its historic high of 25 percent in 1933.
Friedman and Schwartz argued that all this was due to the Fed's failure to carry out its assigned role as the lender of last resort. Rather than providing liquidity through loans, the Fed just watched as banks dropped like flies, seemingly oblivious to the effect this would have on the money supply. The Fed could have offset the decrease created by bank failures by engaging in bond purchases, but it did not. As Milton and Rose Friedman wrote in Free to Choose:
The [Federal Reserve] System could have provided a far better solution by engaging in large-scale open market purchases of government bonds. That would have provided banks with additional cash to meet the demands of their depositors. That would have ended—or at least sharply reduced—the stream of bank failures and have prevented the public's attempted conversion of deposits into currency from reducing the quantity of money. Unfortunately, the Fed's actions were hesitant and small. In the main, it stood idly by and let the crisis take its course—a pattern of behavior that was to be repeated again and again during the next two years.
According to Friedman and Schwartz, this was a complete abdication of the Fed's core responsibilities—responsibilities it had taken away from the commercial bank clearinghouses that had acted to mitigate panics before 1914—and was the primary cause of the Great Depression.
The obvious question is: Why didn't the Fed act? We don't know for sure, but Friedman and Schwartz proposed several possible explanations: 1) the Fed officials did not fully understand the disastrous consequences of letting so many banks go under. Friedman and Schwartz wrote that Fed officials may have "tended to regard bank failures as regrettable consequences of bank management or bad banking practices, or as inevitable reactions to prior speculative excesses, or as a consequence but hardly a cause of the financial and economic collapse in process"; 2) Fed officials may have been acting out of their own self-interest since many of them were affiliated with large Northeastern banks. Bank failures, at least in the early stages, "were concentrated among smaller banks and since the most influential figures in the system were big-city bankers who deplored the existence of smaller banks, their disappearance may have been viewed with complacency"; 3) The inactivity may have been caused by political infighting between the Federal Reserve Board in Washington, D.C., and regional Fed banks, in particular the New York district bank, which was the most important part of the system at that time. But we may never know the real reason.
Dangers of Centralized Power
There is an important lesson to be learned from this episode: When we centralize great responsibility and power in one institution, its failure will have far-reaching and terrible consequences. The Fed was instituted to act decisively in the exact circumstances that occurred in 1930–33. Friedman and Schwartz pointed out that the Fed's failure was all the more serious and difficult to understand given how easily it could have been avoided:
At all times throughout the 1929–1933 contraction, alternative policies were available to the system by which it could have kept the stock of money from falling, and indeed could have increased it at almost any desired rate. Those policies did not involve radical innovations. They involved measures of a kind the system had taken in earlier years, of a kind explicitly contemplated by the founders of the system to meet precisely the kind of banking crisis that developed in late 1930 and persisted thereafter. They involved measures that were actually proposed and very likely would have been adopted under a slightly different bureaucratic structure or distribution of power, or even if the men in power had had somewhat different personalities.
This is the most worrisome fact. The institution failed because of the people within it. And given the immense power and influence it had over the economy, its failure was disastrous. It is important to understand that the Great Depression could have been avoided if the Fed had not so badly botched its monetary policy. In fact, Friedman and Schwartz claimed that the depression would not have been a Great Depression if there had been no Federal Reserve in the first place: "[I]f the pre-1914 banking system rather than the Federal Reserve System had been in existence in 1929, the money stock almost certainly would not have undergone a decline comparable to the one that occurred."
That point was effectively elaborated by Milton and Rose Friedman in Free to Choose:
Had the Federal Reserve System never been established, and had a similar series of runs started, there is little doubt that the same measures would have been taken as in 1907—a restriction of payments. That would have been more drastic than what actually occurred in the final months of 1930. However, by preventing the draining of reserves from good banks, restriction would almost certainly have prevented the subsequent series of bank failures in 1931, 1932, and 1933, just as restriction in 1907 quickly ended bank failures then. . . . The panic over, confidence restored, economic recovery would very likely have begun in early 1931, just as it had in early 1908.
The existence of the Reserve System prevented the drastic therapeutic measure: directly, by reducing the concern of the stronger banks, who, mistakenly as it turned out, were confident that borrowing from the System offered them a reliable escape mechanism in case of difficulty; indirectly, by lulling the community as a whole, and the banking system in particular, into the belief that such drastic measures were no longer necessary now that the System was there to take care of such matters.
In the February 15, 2007, New York Review of Books economist and columnist Paul Krugman charged Friedman with "intellectual dishonesty" because Friedman repeatedly called for a significant reduction of the Fed's power or even its outright abolition as a result of his work on the Great Depression. Krugman, however, concluded that the real lesson to be learned from Friedman's explanation is that government institutions should be more active, not less. Krugman believes his conclusion to be so obvious that he is convinced that Friedman's contrary recommendation must be driven by an ideological agenda and thus is an example of intellectual dishonesty. However, Krugman is clearly missing the point.
Friedman's conclusion was perfectly logical given his belief that had the Fed not been created, the downturn of 1929 would not have become a major depression. Friedman claims in the paragraph above that without the Fed "the same measures would have been taken [in 1930] as in 1907—a restriction of payments," which he believes would have prevented the crisis from spreading to "stronger banks," those not guilty of overextending themselves through over-risky loans. Monetary economist Lawrence H. White of the University of Missouri-St. Louis filled in the blanks in Friedman's "institutional counter-factual" on the Division of Labour blog (March 12, 2007):
Friedman understood . . . that before the Federal Reserve Act financial panics in the US were mitigated by the actions of private commercial bank clearinghouses. Friedman and Schwartz's view of the 1930's was that the Fed, having nationalized the roles of the clearinghouse associations [CHAs], particularly the lender-of-last-resort role, did less to mitigate the panic than the CHAs had done in earlier panics like 1907 and 1893. In that sense, the economy would have been better off if the Fed had not been created. This position is perfectly consistent with the position that, provided we take the Fed's nationalization of the clearinghouse roles for granted, the Fed was guilty of not doing its job.
Thus the Fed's failure in the early '30s shows the dangers of excessive centralization of important market functions that were previously dispersed among multiple private institutions. Friedman's bottom line remains intact: The Fed caused the Great Depression.
The Perfect Storm
In the decades following Friedman and Schwartz's work economists started examining other government-policy failures in the aftermath of the crash. They have found an abundant supply of them. Here are several key examples of these bad policies: 1) In response to a sharp decrease in tax revenues in 1930 and 1931 (caused by a slowdown of economic activities), the federal government passed the largest peacetime tax increase in the history of the United States, which clearly applied the brakes on any recovery that could have taken place; 2) the federal government also passed the Smoot-Hawley Tariff Act in 1930, substantially increasing tariffs and leading to retaliatory restrictions by trading partners, which resulted in a considerable decrease in demand for U.S. exports and a further slowdown in production (not to mention a loss of mutually advantageous division of labor); 3) the federal government also instituted all sorts of "public works" programs, beginning under Herbert Hoover and increasing dramatically under FDR; the programs removed hundreds of thousands of people from the labor market and engaged them in economically wasteful activities, such as carving faces of dead presidents into the sides of a mountain, preventing or delaying necessary labor-market adjustments; 4) another federal policy that prevented (labor and other) market adjustments was the price and wage controls enacted under the National Recovery Administration and in effect from 1933 until 1935 (when ruled unconstitutional); this policy massively distorted relative market prices, impairing their ability to function as guides to entrepreneurs; 5) the Fed was not blameless after 1933 either. It increased bank-reserve requirements in three steps in 1936 and 1937, leading to another significant decrease in the money supply. The result was the 1937–38 recession within the Depression, adding insult to injury.
Economists have come to understand the Great Depression as a "perfect storm" of policy failures. A truly frightening number of destructive policies were carried out nearly simultaneously. In retrospect it seems as though whenever the economy began showing the slightest inkling of recovery, a policy would be enacted that would put a quick stop to it.
The better explanation of the Great Depression revealed it was not caused by unfettered market forces. There is nothing in the operation of free markets that would create depressions or even recessions. Rather, we now know that we must look for causes of these phenomena in mismanaged and erroneous government policies. And much of the credit for this change in the way economists look at the Depression must go to Friedman and Schwartz's groundbreaking work on the Fed's role. Friedman provided—and ultimately persuaded most economists of—this alternate explanation because of his insistence on honest intellectual inquiry, untainted by ideological biases. It was a courageous thing to do at the time of absolute Keynesian dominance of the economics profession, and it could have been damaging or even destructive to his career. But Friedman's personal strength of character and intellectual honesty obliged him to stick to the truth, and we are all much better for it today.
Ironically, as a result of the banking crisis of 1930–33, the Fed was granted more responsibilities and more control over banking. As is often the case in politics, failure was used to justify an expansion of power. That expansion of the Fed's power resulted in a great amount of economic destruction through the subsequent decades. In 1980 Milton and Rose Friedman wrote of the Fed's record over the 45 years after the banking crisis of 1930–33:
Since 1935 the [Federal Reserve] System has presided over—and greatly contributed to—a major recession of 1937–38, a wartime and immediate postwar inflation, and a roller coaster economy since, with alternate rises and falls in inflation and decreases and increases in unemployment. Each inflationary peak and each temporary inflationary trough has been at a higher and higher level, and the average level of unemployment has gradually increased. The System has not made the same mistake that it made in 1929–1933—of permitting or fostering a monetary collapse—but it has made the opposite mistake, of fostering an unduly rapid growth in the quantity of money and so promoting inflation. In addition, it has continued, by swinging from one extreme to another, to produce not only booms but also recessions, some mild, some sharp.
The Fed's performance has improved since 1980, but that does not mean it is no longer capable of mistakes that would have devastating consequences for our lives. Friedman's work should serve as a warning of what can happen when so much power is artificially concentrated in one institution. It is for this reason that it is so vitally important that people today be taught the real story of the Great Depression. Their faith in government institutions might be considerably undermined if they understood what really happened.
Ivan Pongracic, Jr. teaches economics at Hillsdale College
(e-mail)
Ivan Pongracic, Jr. [1] teaches economics at Hillsdale College. He extends special thanks to Lawrence H. White and Ivan Pongracic, Sr. for their helpful comments.
Few events in U.S. history can rival the Great Depression for its impact. The period from 1929 to 1941 saw fundamental changes in the landscape of American politics and economics, including such monumental events as America 's going off the gold standard and the founding of Social Security. It was a watershed for the growth of the federal government.
The Great Depression created a widespread misconception that market economies are inherently unstable and must be managed by the government to avoid large macreconomic fluctuations, that is, business cycles. This view persists to this day despite the more than 40 years since Milton Friedman and Anna Jacobson Schwartz showed convincingly that the Federal Reserve's monetary policies were largely to blame for the severity of the Great Depression. In 2002 Ben Bernanke (then a Federal Reserve governor, today the chairman of the Board of Governors) made this startling admission in a speech given in honor of Friedman's 90th birthday: "I would like to say to Milton and Anna: Regarding the Great Depression, you're right. We did it. We're very sorry."
Friedman, the great free-market champion of the last 50 years and one of the most influential economists of the last 200 years, died in November 2006 at 94. He left us an immense intellectual legacy, including his explanation of the Great Depression, which, while persuading a majority of the economics profession, has yet to fully trickle down to the public. It is truly a great mystery why Friedman's explanation has not been more widely recognized and accepted, especially given its influence among economists. Maybe the reason is that it does not lend itself to quick sound bites by politicians eager to justify more power. Or maybe it is usually presented in a way that makes it too difficult for the layperson to understand. Or maybe it is just that people find it easier to blame the "capitalists" rather than the hallowed Federal Reserve. Whatever the case, it would be beneficial to revisit Friedman's argument.
The standard explanation of the Great Depression, found in most American high-school history texts, is that it was created by the wild and irrational stock-market speculation that ultimately led to the Great Crash of October 1929. Investor speculations were so excessive—so the story goes—that once the bubble popped, it triggered the most severe decline in economic activity in U.S. history. The key point of this story is that the crash and the subsequent depression were due to factors that are innate to the capitalist system, unchecked under the supposedly laissez-faire policies of Herbert Hoover. It was only once Franklin Delano Roosevelt came into office that the government jump-started the recovery. It is thus claimed that FDR's policies were responsible not only for the recovery, but in fact for "saving capitalism from itself" when many Americans were willing to consider adopting full-blown socialism in the 1930s as a way to deal with the downturn.
Most people do not realize how much of this explanation had been shaped by Keynesian economics, the dominant economic paradigm from the 1940s to the 1970s. Keynesian economics got its start with the publication of John Maynard Keynes's General Theory of Employment, Interest, and Money in 1936. There Keynes proposed a view of the Great Depression that was at odds with the rest of the economics profession at the time. Most economists of the era tended to agree that market economies are "self-adjusting" and that they cannot get stuck in a recession for very long. However, this view seemed to be at odds with the ugly reality of the time: persistent unemployment rates of 20 percent and more, even as high as 25 percent in 1933—with no end in sight.
Keynes seemed to be the right man for the time as he was reflecting the increasingly common view that blamed the capitalists themselves for the situation. In the General Theory Keynes rejected the view that the boom-bust cycle was due to over-expansive government monetary policy and that the stubbornness of the Depression was due to government interference with market mechanisms. He labeled all economists who believed such views as "classical"—in other words, hopelessly out of touch with reality. Instead, Keynes proposed a "general theory" that he thought capable of explaining not only the good times but also the bad.
According to Keynes, what drives the economy is aggregate demand or aggregate expenditures. Aggregate demand can be broken down into three main components: personal consumption (C), private investment (I), and government expenditures (G). The relationship can be summed up with this formula: AD = C + I + G. If Aggregate Demand is strong, the economy will be strong. However, if Aggregate Demand falters, businesses will end up with large unsold inventories and will cut back on production to avoid surpluses in the future. As they cut back they will of course need fewer inputs—including labor—and high unemployment will result.
The culprit in this story, the element that throws the entire system out of whack, is private investment. Private investment consists of business expenditures on machines, buildings, factories, and so on. In other words, investment is capital formation. Keynes claimed that private investment is inherently unstable due to what he called the "animal spirits" of businessmen/capitalists. He believed that businessmen are ultimately irrational and prone to herd-like behavior. Like sheep that blindly follow other sheep in the herd, it is easy for businessmen to become "irrationally exuberant"—as well as irrationally lethargic. Investment lethargy would trigger a large decrease in private investment, thus decreasing aggregate expenditures and triggering an economic downturn.
From Downturn to Depression
How do we go from this downturn to a full-blown recession or even a depression? As the economy slows down, unemployment rises and leads to a loss of consumer confidence. Consumer pessimism will lead to more saving and less spending, thus decreasing the personal-consumption component of aggregate demand, exacerbating the downturn. Notice that both I and C are therefore driven by the expectations of private individuals (irrational in the case of business investors): if both investors and consumers become pessimistic and expect a recession, they will cut back on their expenditures and thus cause the aggregate demand to be too low to bring about full employment of available resources. According to Keynes, a recession is, in a nutshell, a self-fulfilling prophecy.
The Great Depression was therefore a long stubborn period of dismally low aggregate expenditures, and according to Keynes, there were no economic forces working to pull the economy out of this situation automatically. In other words, he thought there is no self-corrective mechanism (or invisible hand) in a free-market economy. Instead, irrational changes in expectations would regularly lead to wide and destructive fluctuations in the macroeconomy. So we see that the business cycle is the natural and expected consequence of the unfettered operation of a market economy. Therefore if an unfettered market economy results in depressions, it is clearly undesirable. It also should be obvious now that the standard high-school history-book explanation is basically just a simplified version of this Keynesian story.
What is required to avoid a recession, then, is for the government to insure that the aggregate expenditures are enough to achieve full employment. The government can do that through either fiscal policy (taxation and government spending) or monetary policy (control of the money supply). Keynes favored fiscal policy and recommended that the government engage in massive deficit spending. Deficit spending would allow for an increase in government spending without an offsetting increase in the tax burden on private individuals and businesses. Thus increased government spending could neutralize any decreased expenditures in the private sector, preserving employment and incomes and ultimately reversing the pessimistic expectations that led to the downturn in the first place. Keynesian "demand management" clearly prescribed an important role for the government.
Keynes's explanation, in addition to creating a new way of analyzing the economy as a whole, heavily influenced policymakers and ordinary people around the world. It was soon accepted that the government must engage in a countercyclical policy of demand management to stabilize the market economy. Both FDR and Keynes were proclaimed the "saviors of capitalism"!
Friedman Follows the Facts
In the 1950s, Friedman and Anna Schwartz began compiling historical data on monetary variables without any particular agenda or intention of overturning the dominant explanation of the Great Depression. But it became obvious that the data were at odds with the standard Keynesian explanation. So in their 1963 book, A Monetary History of the United States, 1867–1960, they presented the empirical evidence that led them to a completely different explanation.
As a result of examining more closely the key years between 1929 and 1933, Friedman and Schwartz first concluded that the Great Depression was not the necessary and direct result of the stock-market crash of October 1929, which they attribute to a speculative investment bubble. (The popping of the "bubble" may have been instigated by the Federal Reserve's raising of the discount rate—the interest rate the Fed charges on loans to commercial banks—in August 1929. The cause of the speculative bubble that led to the crash is a somewhat controversial topic. Whereas Friedman and Schwartz accepted that the bubble was caused by investors, seemingly endorsing—at least partly—the Keynesian "animal spirits" explanation, Austrian economists have argued otherwise.) In fact, they believed that the economy could have recovered rather rapidly if only the Fed—the central bank of the United States —had not engaged in a series of disastrous policies in the aftermath of the crash.
The Fed had only been in existence for 15 years at the time of the crash, having opened its doors in 1914. The United States had two central banks before the Fed (the Bank of United States, 1792–1812; and the Second Bank of the United States, 1816–1836), but had been without a central bank of any sort for over 75 years until the creation of the Fed. It was created primarily to act as a "lender of last resort" from which private banks could borrow money in times of crisis. The need for a lender of last resort in the U.S. banking system was due to a systemic weakness caused unintentionally by state and federal banking regulations. ( Canada , with a freer banking system, had no such systemic weakness and no need for a lender of last resort.) Weak banks are subject to crisis when their depositors are no longer confident that their bank holds sufficient reserves to satisfy all withdrawal demands at a certain time. This can trigger a "bank run," where depositors attempt to get to the bank before the other depositors in order to withdraw their money before the bank's limited reserves run out. A run on a bank can easily generate other bank runs as depositors become worried about the financial health of their own similarly weak banks.
The problem with bank runs is that when depositors withdraw money and stuff it under their mattresses rather than trust it to other banks, the money supply shrinks. To understand this phenomenon, we have to explain how we measure the money supply. The simplest measures include not only currency but also checking deposits, since they are commonly used to make payments. What complicates things is that fractional-reserve banking leads to a multiple expansion of deposits. When someone puts money in a bank his checking account reflects the deposit, but the bank does not keep all the money on hand—it's not a warehouse. Instead, it keeps only a fraction as "reserves" and lends the rest to a borrower, who in turn buys goods or services. The seller then deposits her new income in a bank, where she gets a checking account. The money supply increases by the amount of the new deposit. This process will continue, though in ever-decreasing amounts since banks have to keep some part of the new deposits as reserves. Yet each cycle will increase the money supply by increasing the overall amount of deposits held at banks.
This process works in reverse too. When banks lose reserves due to bank runs, the economy experiences a multiple contraction of deposits. The deposits that are removed from the economy greatly exceed the additional currency that the public now holds, so the money supply decreases.
The stock-market crash of October 1929 made it more difficult for many businesses to repay their loans to the banks, and many banks found their balance sheets impaired as a result. But the most important cause of the bank runs that began in October 1930 was bad times in the farm belt, where the banks were especially weak and poorly diversified. The number of bank runs increased exponentially in December 1930—in that single month 352 banks failed. Most of the failing banks were in the Midwest , their failures caused by farmers who defaulted on their loans because they were hit hard by the economic downturn. No sooner did the first wave of bank runs subside than another got underway in the spring of 1931, creating what Friedman and Schwartz described as a "contagion of fear" among bank depositors. Bank crises continued to come in waves until the spring of 1933.
Roosevelt Comes In
FDR was inaugurated on March 4, 1933, and two days later he declared a "bank holiday," allowing banks legally to refuse withdrawals by depositors; it lasted ten days. With his famous phrase, "The only thing we have to fear is fear itself," he intended to dissuade depositors from running on their banks, but by then it was far too late. In 1929 there were a total of 25,000 banks in the United States. As the bank holiday ended, only 12,000 banks were operating (though another 3,000 were to reopen eventually). The effect on the money supply was equally dramatic. From 1929 to 1933 it fell by 27 percent—for every $3 in circulation in 1929 (whether in currency or deposits), only $2 was left in 1933. Such a drastic fall in the money supply inevitably led to a massive decrease in aggregate demand. People's savings were wiped out so their natural response was to save more to compensate, leading to plummeting consumption spending. Naturally, total economic output also fell dramatically: GDP was 29 percent lower in 1933 than in 1929. And the unemployment rate hit its historic high of 25 percent in 1933.
Friedman and Schwartz argued that all this was due to the Fed's failure to carry out its assigned role as the lender of last resort. Rather than providing liquidity through loans, the Fed just watched as banks dropped like flies, seemingly oblivious to the effect this would have on the money supply. The Fed could have offset the decrease created by bank failures by engaging in bond purchases, but it did not. As Milton and Rose Friedman wrote in Free to Choose:
The [Federal Reserve] System could have provided a far better solution by engaging in large-scale open market purchases of government bonds. That would have provided banks with additional cash to meet the demands of their depositors. That would have ended—or at least sharply reduced—the stream of bank failures and have prevented the public's attempted conversion of deposits into currency from reducing the quantity of money. Unfortunately, the Fed's actions were hesitant and small. In the main, it stood idly by and let the crisis take its course—a pattern of behavior that was to be repeated again and again during the next two years.
According to Friedman and Schwartz, this was a complete abdication of the Fed's core responsibilities—responsibilities it had taken away from the commercial bank clearinghouses that had acted to mitigate panics before 1914—and was the primary cause of the Great Depression.
The obvious question is: Why didn't the Fed act? We don't know for sure, but Friedman and Schwartz proposed several possible explanations: 1) the Fed officials did not fully understand the disastrous consequences of letting so many banks go under. Friedman and Schwartz wrote that Fed officials may have "tended to regard bank failures as regrettable consequences of bank management or bad banking practices, or as inevitable reactions to prior speculative excesses, or as a consequence but hardly a cause of the financial and economic collapse in process"; 2) Fed officials may have been acting out of their own self-interest since many of them were affiliated with large Northeastern banks. Bank failures, at least in the early stages, "were concentrated among smaller banks and since the most influential figures in the system were big-city bankers who deplored the existence of smaller banks, their disappearance may have been viewed with complacency"; 3) The inactivity may have been caused by political infighting between the Federal Reserve Board in Washington, D.C., and regional Fed banks, in particular the New York district bank, which was the most important part of the system at that time. But we may never know the real reason.
Dangers of Centralized Power
There is an important lesson to be learned from this episode: When we centralize great responsibility and power in one institution, its failure will have far-reaching and terrible consequences. The Fed was instituted to act decisively in the exact circumstances that occurred in 1930–33. Friedman and Schwartz pointed out that the Fed's failure was all the more serious and difficult to understand given how easily it could have been avoided:
At all times throughout the 1929–1933 contraction, alternative policies were available to the system by which it could have kept the stock of money from falling, and indeed could have increased it at almost any desired rate. Those policies did not involve radical innovations. They involved measures of a kind the system had taken in earlier years, of a kind explicitly contemplated by the founders of the system to meet precisely the kind of banking crisis that developed in late 1930 and persisted thereafter. They involved measures that were actually proposed and very likely would have been adopted under a slightly different bureaucratic structure or distribution of power, or even if the men in power had had somewhat different personalities.
This is the most worrisome fact. The institution failed because of the people within it. And given the immense power and influence it had over the economy, its failure was disastrous. It is important to understand that the Great Depression could have been avoided if the Fed had not so badly botched its monetary policy. In fact, Friedman and Schwartz claimed that the depression would not have been a Great Depression if there had been no Federal Reserve in the first place: "[I]f the pre-1914 banking system rather than the Federal Reserve System had been in existence in 1929, the money stock almost certainly would not have undergone a decline comparable to the one that occurred."
That point was effectively elaborated by Milton and Rose Friedman in Free to Choose:
Had the Federal Reserve System never been established, and had a similar series of runs started, there is little doubt that the same measures would have been taken as in 1907—a restriction of payments. That would have been more drastic than what actually occurred in the final months of 1930. However, by preventing the draining of reserves from good banks, restriction would almost certainly have prevented the subsequent series of bank failures in 1931, 1932, and 1933, just as restriction in 1907 quickly ended bank failures then. . . . The panic over, confidence restored, economic recovery would very likely have begun in early 1931, just as it had in early 1908.
The existence of the Reserve System prevented the drastic therapeutic measure: directly, by reducing the concern of the stronger banks, who, mistakenly as it turned out, were confident that borrowing from the System offered them a reliable escape mechanism in case of difficulty; indirectly, by lulling the community as a whole, and the banking system in particular, into the belief that such drastic measures were no longer necessary now that the System was there to take care of such matters.
In the February 15, 2007, New York Review of Books economist and columnist Paul Krugman charged Friedman with "intellectual dishonesty" because Friedman repeatedly called for a significant reduction of the Fed's power or even its outright abolition as a result of his work on the Great Depression. Krugman, however, concluded that the real lesson to be learned from Friedman's explanation is that government institutions should be more active, not less. Krugman believes his conclusion to be so obvious that he is convinced that Friedman's contrary recommendation must be driven by an ideological agenda and thus is an example of intellectual dishonesty. However, Krugman is clearly missing the point.
Friedman's conclusion was perfectly logical given his belief that had the Fed not been created, the downturn of 1929 would not have become a major depression. Friedman claims in the paragraph above that without the Fed "the same measures would have been taken [in 1930] as in 1907—a restriction of payments," which he believes would have prevented the crisis from spreading to "stronger banks," those not guilty of overextending themselves through over-risky loans. Monetary economist Lawrence H. White of the University of Missouri-St. Louis filled in the blanks in Friedman's "institutional counter-factual" on the Division of Labour blog (March 12, 2007):
Friedman understood . . . that before the Federal Reserve Act financial panics in the US were mitigated by the actions of private commercial bank clearinghouses. Friedman and Schwartz's view of the 1930's was that the Fed, having nationalized the roles of the clearinghouse associations [CHAs], particularly the lender-of-last-resort role, did less to mitigate the panic than the CHAs had done in earlier panics like 1907 and 1893. In that sense, the economy would have been better off if the Fed had not been created. This position is perfectly consistent with the position that, provided we take the Fed's nationalization of the clearinghouse roles for granted, the Fed was guilty of not doing its job.
Thus the Fed's failure in the early '30s shows the dangers of excessive centralization of important market functions that were previously dispersed among multiple private institutions. Friedman's bottom line remains intact: The Fed caused the Great Depression.
The Perfect Storm
In the decades following Friedman and Schwartz's work economists started examining other government-policy failures in the aftermath of the crash. They have found an abundant supply of them. Here are several key examples of these bad policies: 1) In response to a sharp decrease in tax revenues in 1930 and 1931 (caused by a slowdown of economic activities), the federal government passed the largest peacetime tax increase in the history of the United States, which clearly applied the brakes on any recovery that could have taken place; 2) the federal government also passed the Smoot-Hawley Tariff Act in 1930, substantially increasing tariffs and leading to retaliatory restrictions by trading partners, which resulted in a considerable decrease in demand for U.S. exports and a further slowdown in production (not to mention a loss of mutually advantageous division of labor); 3) the federal government also instituted all sorts of "public works" programs, beginning under Herbert Hoover and increasing dramatically under FDR; the programs removed hundreds of thousands of people from the labor market and engaged them in economically wasteful activities, such as carving faces of dead presidents into the sides of a mountain, preventing or delaying necessary labor-market adjustments; 4) another federal policy that prevented (labor and other) market adjustments was the price and wage controls enacted under the National Recovery Administration and in effect from 1933 until 1935 (when ruled unconstitutional); this policy massively distorted relative market prices, impairing their ability to function as guides to entrepreneurs; 5) the Fed was not blameless after 1933 either. It increased bank-reserve requirements in three steps in 1936 and 1937, leading to another significant decrease in the money supply. The result was the 1937–38 recession within the Depression, adding insult to injury.
Economists have come to understand the Great Depression as a "perfect storm" of policy failures. A truly frightening number of destructive policies were carried out nearly simultaneously. In retrospect it seems as though whenever the economy began showing the slightest inkling of recovery, a policy would be enacted that would put a quick stop to it.
The better explanation of the Great Depression revealed it was not caused by unfettered market forces. There is nothing in the operation of free markets that would create depressions or even recessions. Rather, we now know that we must look for causes of these phenomena in mismanaged and erroneous government policies. And much of the credit for this change in the way economists look at the Depression must go to Friedman and Schwartz's groundbreaking work on the Fed's role. Friedman provided—and ultimately persuaded most economists of—this alternate explanation because of his insistence on honest intellectual inquiry, untainted by ideological biases. It was a courageous thing to do at the time of absolute Keynesian dominance of the economics profession, and it could have been damaging or even destructive to his career. But Friedman's personal strength of character and intellectual honesty obliged him to stick to the truth, and we are all much better for it today.
Ironically, as a result of the banking crisis of 1930–33, the Fed was granted more responsibilities and more control over banking. As is often the case in politics, failure was used to justify an expansion of power. That expansion of the Fed's power resulted in a great amount of economic destruction through the subsequent decades. In 1980 Milton and Rose Friedman wrote of the Fed's record over the 45 years after the banking crisis of 1930–33:
Since 1935 the [Federal Reserve] System has presided over—and greatly contributed to—a major recession of 1937–38, a wartime and immediate postwar inflation, and a roller coaster economy since, with alternate rises and falls in inflation and decreases and increases in unemployment. Each inflationary peak and each temporary inflationary trough has been at a higher and higher level, and the average level of unemployment has gradually increased. The System has not made the same mistake that it made in 1929–1933—of permitting or fostering a monetary collapse—but it has made the opposite mistake, of fostering an unduly rapid growth in the quantity of money and so promoting inflation. In addition, it has continued, by swinging from one extreme to another, to produce not only booms but also recessions, some mild, some sharp.
The Fed's performance has improved since 1980, but that does not mean it is no longer capable of mistakes that would have devastating consequences for our lives. Friedman's work should serve as a warning of what can happen when so much power is artificially concentrated in one institution. It is for this reason that it is so vitally important that people today be taught the real story of the Great Depression. Their faith in government institutions might be considerably undermined if they understood what really happened.
Ivan Pongracic, Jr. teaches economics at Hillsdale College
(e-mail)
quinta-feira, fevereiro 05, 2009
407) Conflito Israel-palestinos: uma visao realista
Creio que esse jornalista palestino corre algum risco de vida, dos dois lados, ou de todos os lados, inclusive no Egito.
El começou escrevendo para um jornal da Organização para Libertação da Palestina e hoje é repórter do Jerusalem Post. É impossível enquadrá-lo em um ou outro lado do espectro político.
Dizer as coisas como elas sao nem sempre é bem recebido. Tem gente que tem o costume de matar o mensageiro...
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Paulo Roberto de Almeida
A Minority Report from the West Bank and Gaza
http://www.michaeltotten.com/archives/2009/02/a-minority-repo.php#comments
Khaled Abu Toameh is not your typical Palestinian journalist. He began his career at one of Yasser Arafat's newspapers and today he writes for the Jerusalem Post. He has produced video for European TV stations, and even blogged for a while at Commentary Magazine in New York. It's impossible to cram Toameh into a convenient ideological box, though that doesn't stop some people from trying.
I met him briefly a few weeks ago on my trip to Israel sponsored by the American Jewish Committee when he gave a talk to me and my colleagues and answered some questions at the end. I'm reproducing the entire transcript here because I think he deserves a full hearing.
Hamas, Fatah, Americans, Israelis, Europeans, Arab governments, American foreign correspondents – just about everybody involved in any way with the conflict comes under some well-deserved fire. There's something here for just about everybody to like and dislike, and I'm publishing what he said without quote-shopping or cherry-picking his words for convenience.
*
Khaled Abu Toameh: When I finished high school the PLO offices hired me as a correspondent, and I worked for a PLO newspaper for seven years during which time I attended university in Jerusalem. After I graduated I had to make a decision: do I go back and work for the PLO, or do I try to become a real journalist? It took me about two seconds to make that decision. I decided to work with the international media and the Israeli media.
When I say "work with the international media," what does that mean? We have hundreds of foreign journalists who come to this part of the world – every year, every month, and sometimes every week – to cover the stories here. Now there are two stories here. There's the one that's happening inside Israel, and there's the one that's happening inside the Palestinian areas.
Fortunately for us, Israel is an open country that allows people to write whatever they want, criticize the prime minister, the defense minister, the IDF. You can write all these horrible things against Israel and still walk in downtown Jerusalem. But when it comes to covering the Palestinian territories, the story is completely different. You can't wake up in the morning as a foreign journalist and drive on your own into a Palestinian village. You can't just show up and say "Good morning, I work for the New York Times, can I speak to Hamas please." It doesn't work like that for a number of reasons. You don't know the language and need a translator. You don't know your way around. And most important, it's not safe.
So foreign journalists who want to cover stories in the Palestinian areas rely on fixers. And that's where I fit in. For the past twenty years or so I've been working as a fixer, translator, advisor – call it whatever you want – with most of the foreign media. And of course in this work with the international media I got myself a number of jobs, one of which I'm still doing. I even have colleagues here. For the past twenty years I've been working with NBC News, and I was blogging for Commentary Magazine also. I was writing for U.S. News and World Report, occasionally for the Wall Street Journal, and a number of British tabloids. In the course of this work with the international media I became a writer and analyst of Palestinian affairs and a film producer for the BBC.
About eight years ago, when the Second Intifada started, I started writing for the Jerusalem Post about Palestinian issues. And I still work with the international media. My job is to serve as the eyes and ears of the international media.
Some of you may be wondering what's going on with this guy who started working as a journalist for the PLO and ends up writing for a Jewish newspaper. Some people ask me "when did you become a Zionist? When did you become pro-Israel?" Well, I'm not pro-anything other than the facts and the truth. As a journalist I don't have any problem working for any newspaper that provides me with a platform. I don't care if it's Jewish, Christian, Muslim, or even Buddhist.
And to be honest with you, I find it ironic that as an Arab Muslim living in this part of the world that I have to work for a Jewish newspaper or for the international media in order to be able to practice any kind of real journalism. Why? Because we don't have any free media. In the Palestinian areas we didn't have it when I was working there in the 1970s and 1980s, we didn't get one when we brought Yasser Arafat in to start the Palestinian Authority, and of course we don't have a free media today under Fatah, Hamas, and the rest of the gangs that are running the show out there. And this is very sad.
Sometimes I wish the problem with the media was the only problem that we have over there, but as you all know it's a very messy situation. I'm one of those who has been arguing for the past fifteen years that things have been going in the wrong direction in this part of the world. For a few months after signing Oslo we reached the point where many Jews and many Arabs missed the good old days before the peace process began.
Now, what do I mean by that? Oslo was not bad. Oslo was based on the idea of a two-state solution and ending the military occupation in one way or another. So the idea of Oslo was not bad. Separation between Jews and Palestinians who did not want to live together. And as such I supported it. I thought it was a good idea.
But the way Oslo was implemented brought disaster on both Jews and Arabs. The assumption back then in the U.S., in Israel, and in many places in Europe, was that if you bring the PLO and thousands of PLO fighters and you dump them into the West Bank and Gaza and you give them millions of dollars and guns that they will do the dirty job of policing the West Bank and Gaza. They would replace the occupation and fight Hamas and Islamic Jihad. They would do all these wonderful things. Why? Because they're on our payroll.
So the international community and Israel gathered all these PLO fighters from around the world, released thousands of PLO fighters from Israeli prisons, gave them uniforms and guns, and called them security forces. And the result was the people who had never received any basic training, people who had never finished high school, became colonels and generals in Yasser Arafat's Authority. He established sixteen different security forces with the help of the Americans, the Europeans, and the Israelis. And they started pouring money into this regime that they called the Palestinian Authority. Billions of dollars with the hope that Arafat would deliver.
Now, there's no need to elaborate. As you all know, Arafat turned out to be a crook. Most of the money that was sent to the Palestinian Authority literally went down the drain and supported the shopping sprees of Arafat's wife who was living in Paris. Instead of building us a hospital, Arafat built a casino in Jericho, as if the Palestinian revolution aspired for forty years to get us a casino. And the chutzpah was that he built that casino across the street from a refugee camp. So Palestinians did not see the fruits of peace.
My argument is as follows. The fact that Arafat was crooked didn't surprise us Palestinians. We were only surprised by the fact that the international community kept giving him money and refused to hold him accountable when he stole our money. Why didn't they invest something? They didn't want to believe it.
When I tried to alert my foreign colleagues in 1995, 1996, and 1997, to the fact that there was corruption in the Palestinian Authority, many of them asked me if I was on the payroll of the Jewish Lobby. I wanted to know where was this Jewish Lobby? If there was one maybe they would pay me.
I told them: "This is what I am hearing. The writing is on the wall. Come and listen to what Palestinians are saying." And they told me they weren't interested in that story. They told me they wanted anti-Israel stories because it made their lives so much easier. They told me they didn't want to write anything bad about Palestinians, that Arafat was a man of peace and should be given a chance. I heard this from major American journalists, by the way. Leading American journalists. I don't want to give you their names right now, but I was really frustrated. And angry.
Listen. For all these years we've been attacking the military occupation. So why is it that when I tell you something that Arafat is doing, suddenly you don't want to report it and think it's Jewish propaganda? Most of these journalists did not even want to make any effort.
By depriving these people of money, what did Arafat do? He radicalized the Palestinians who did not see the fruits of peace. So that's reason number one why Palestinian society is radicalized.
But there are other reasons. Reasons number two is that you gave Yasser Arafat guns so that he could kill Hamas and Islamic Jihad, but instead he directed those guns against anyone who said they wanted reform or democracy. Arafat used your guns, your weapons, provided by the United States of America, to suppress the leaders of a new leadership.
Let me give you an example. In 1997, 29 Palestinian professors signed a petition demanding Yasser Arafat end the corruption. They found themselves either shot or killed or thrown into jail or they had to run away from the country. And of course this is not a story you would see on CNN. I don't think even the New York Times reported that.
So Arafat cracked down on the reformists and the democrats and the people who wanted good government. And he sent the rest of the people into the open arms of Hamas. He cracked down on the reformists and he refused to crack down on Hamas and Islamic Jihad.
Reason number three. You gave Yasser Arafat money to open a TV and radio station. And on this TV and radio station Arafat said "Jihad, jihad, kill the crusaders, kill the Jews, kill the infidels, kill everyone but me." Now you may ask yourself why Arafat was inciting against his peace partners in Israel, why was he inciting against the Americans and Europeans who were feeding him? It doesn't make sense.
Well, to us it does make sense. This is how our Arab dictators survive. They constantly blame the miseries of our people on the Jews and the West and the Crusaders and the infidels and the Zionist lobby and the imperialists. They use all these slogans. Arab leaders always need to make sure that their people are busy hating somebody else, preferably the Jews and the Americans. Otherwise their people might rebel, and God forbid they might demand reforms and democracy.
This is exactly what Arafat did, but he did it in Arabic. The international community – and even Israelis – did not want to listen to what Arafat was saying in Arabic. They only cared what he said in English. They said that what he said in English was good.
I said "Excuse me, folks, but in Arabic Arafat is telling people to kill you." But they did not want to listen to the incitement. They underestimated it. They said "you Arabs are all corrupt and don't know anything about democracy so you deserve a dictatorship."
This incitement drove people into the open arms of Hamas. Arafat was telling people how evil the Jews are, and people then said "Hamas is right, Jews are the sons of monkeys and pigs. Why should we make peace with them?"
A fourth reason, which is a lot less important in my view, is that Israelis brought the PLO into the Palestinian areas, armed the PLO, helped create all these security militias and gangsters and mafias, and then said they needed to protect themselves from their peace partners. And how did they protect themselves? By imposing restrictions and curfews, by surrounding Palestinian communities with checkpoints. Why? Because they needed to protect themselves from the militias and mafias that they brought into the West Bank and Gaza. So Palestinians lost faith in the peace process.
All this radicalized Palestinian society to the point that when Hamas decided to run in free and democratic elections under the banner of "change" and "reform" they won. It was all very obvious. The writing was clear on the wall that anyone who challenged Arafat back then....believe me that if even Ehud Olmert had run in the Palestinian elections promising change and reform and democracy he would have won. Because in January of 2006, the parliamentary elections that were held in the Palestinian Authority were largely about internal reforms in the Palestinian areas. Hamas was ready to deliver. What did they do? They came to the Palestinians and said "Listen, folks. You've tried all these PLO people. They're corrupt. They're bad. Arafat was a thief. Abu Mazen is also a total failure. These guys stole your money. These guys are US agents, they are CIA. Why don't you try us now? We will show you that we can establish good government. And, by the way, look at what we've done for you since 1988. We've established a vast network of educational, social, health, and economic services. Arafat built a casino, and we built two universities. Arafat gave his wife 100,000 dollars a month so she can do her shopping while we gave poor people money. Arafat built bars and restaurants in Ramallah while we built orphanages and charities." So the Palestinians said "Let's try Hamas. If they come to power there is nothing left to steal. They can't be more corrupt than the PLO."
That was the basic line. I'm not saying all those who voted for Hamas in 2006 were registering a vote of protest. We have to be very careful. Hamas does have a lot of supporters. What I'm saying is that had it not been also a vote of protest against the PLO , Hamas would not have won. Why? Because I know Christians who voted for Hamas. I know centrist Palestinians who voted for Hamas. I even know PLO people who voted for Hamas because the name of the game back then was "Let's punish the PLO." And how do you do it? By voting for Hamas, their main rivals. And it worked. And Hamas came to power.
What has been happening since then is also very interesting. The U.S. government, with the help of some Europeans and some Israelis, after Hamas won the election, they went to the guys who lost the election and said "folks, here are guns and here is some money. Go bring down this democratically elected government." And what was the result of this U.S. meddling in Palestinian affairs? It backfired. It played into the hands of Hamas and even boosted Hamas' popularity on the street.
What did Palestinians think when they saw Condoleeza Rice and George W. Bush openly campaigning against this democratically elected government? Their sympathies went to this democratically elected government even though it was Hamas. And when Palestinians see PLO people, the Fatah people, openly conspiring with the Americans and the Israelis to bring down a democratically elected government, they're going to hate the PLO even more.
So U.S. and European meddling in Palestinian affairs in the aftermath of the Hamas victory further strengthened Hamas to the point where in June 2007 Hamas says "Everyone is trying to bring me down. No one is giving me a chance. The whole world is against me. You corrupt PLO people are conspiring against me. I won in a free and democratic election. If you don't believe me, ask Jimmy Carter. He supervised the election. What does everyone want from me?"
And they staged a coup. Some people call it a coup. They threw the Fatah people out of Gaza. Fewer than 10,000 Hamas fighters defeated more than 70,000 American-backed Fatah policemen. The question is, how did they do it?
The answer is very simple. As soon as Hamas started shooting, these people did not fight. They ran away. They surrendered to Hamas. They basically went to Hamas and said "No, no, Hamas, please. We will give you all the guns, everything. Just leave us alone." And they ran away.
First they tried to run away toward Egypt. But Mubarak is not stupid. He sealed the border. I was there when it happened.
Israel was the only country in the world that sent troops and helicopters and gunships and ambulances to save Muslims from being slaughtered by Muslims, to save the PLO people from being slaughtered by Hamas. Israel took them and dumped them in the West Bank.
And where are we standing today? I told you before that I'm one of those people who support a two-state solution. I think it's a wonderful solution. But in the end we're getting a different kind of two-state solution. We have two separate entities. One in Gaza, and one in the West Bank.
The one in Gaza is an Islamic state run by Hamas and supported by Ahmadinejad, Syria, Hezbollah, and some people say Al Qaeda and the Muslim Brotherhood. It's a very dangerous situation, and as a moderate Muslim that's the last place I want to live on this earth.
What we have in the West Bank is the secular, corrupt, powerless regime of the PLO. Abu Mazen, Abu Shmazen, all these Abus. The Arafat cronies who failed their people over the past fifteen years. Who lost the election in January 2006 because of the corruption. Who were kicked out of Gaza because they failed. Who have lost control over half the Palestinians who live in this part of the world. And they are sitting in Ramallah. These people are in power only thanks to the presence of the IDF in the West Bank. If the Israeli army were to leave the West Bank tomorrow morning these PLO people would collapse in five minutes and Hamas would take over.
The question we should ask ourselves in the wake of this scenario is whether or not there is really a partner on the Palestinian side for any deal, let alone a peace agreement. Any kind of deal. Is there really a partner on the Palestinian side? And the answer is simple. No.
Hamas is not a partner for any peace agreement because Hamas is not going to change. All these people who believe that Hamas will one day change its ideology, that pragmatic leaders will emerge in Hamas, these people are living under illusions. Hamas is not going to change. To their credit we must say that their message has been very clear. It's the same message in Arabic and in English. They're being very honest about it. They're saying "Folks, we will never recognize Israel. We will never change. We will not abandon the path of the resistance." They're very clear about it.
After they won the election, by the way, the international community went to Hamas and said "Listen. If you want us to deal with you, accept Israel and everything will be okay." And Hamas was very honest. They said "No. We are not going to renounce terrorism. We are not going to recognize previous agreements between Palestinians and Israel. And we are not going to recognize Israel's right to exist." They were very clear about it. And they say the same thing today.
Ten days before the Hamas coup in Gaza I was invited by some U.S. diplomats to tell them about what was happening. I told them "Hamas is about to kick the PLO people out of Gaza because you are openly with the PLO and it has discredited them on the street. You're making them look like CIA agents."
The U.S. diplomats said "You don't know what you're talking about. The PLO has 70,000 people. Who is Hamas? They will crush them. You will see."
My prediction was not 100 percent accurate because I expected it to happen in three weeks. It happened ten days later. The writing was very clear on the wall.
There are so many things that are obvious in this part of the world that international leaders, diplomats, all these people in the West who are dealing with the Palestinian issue turn a blind eye to and don't want to see. Before we go to the Q&A and I take your questions, I want to give you one small example of how people in the West don't want to understand what's going on over here.
Before the January 2006 parliamentary election, the PLO people went to Condoleeza Rice and said "You are making a huge mistake by forcing us to go and have a free and democratic election. Our people don't trust us. We are corrupt and we will lose. Hamas will win. So please let's not hold an election. This is not the right time."
"No, don't worry," she said. "Let Hamas participate in the election. Hamas will not win. Everything will be okay."
They asked her how she knew Hamas was not going to win. She said she warned the Palestinians that if they vote for Hamas, she will punish them.
That warning, by the way, gave Hamas ten more points in the election. Hamas took Rice's statement and made huge banners out of it that said Condoleeza Rice says no to Hamas.
So Rice, knowing that Hamas is a terrorist organization, did not set any preconditions for Hamas' participation in the election. Even in Israel, by the way, Hamas candidates were openly campaigning in Israel, in Jerusalem. In East Jerusalem, okay, but in Israel. They were campaigning openly. They were saying "reforms, democracy, and by the way we want to destroy Israel."
What made Rice, after they won the election, say Hamas is a terrorist organization? Before the election they were not a terrorist organization? She bears responsibility for the fact that Hamas is in power. It was a huge mistake. Instead of learning from their mistakes after Hamas came to power, they continued with the same mistakes. And look at the mess we are in now.
I don't know how to solve this problem. Talking about a Palestinian state today is a joke. Where would that state be established? Israel controls nearly half of the West Bank. These PLO people can't deliver. If Israel gives up the West Bank, you will have to go to Cairo or Amman to take a flight back to America because snipers will be sitting on the hilltops above Ben-Gurion airport.
If you keep up this policy of supporting one party against the other, Gaza will move to the West Bank and we will end up with more anarchy and lawlessness and God knows what else is going to happen. It's a very unpleasant picture. It's very gloomy, I know.
Anthony Cordesman, Center for Strategic and International Studies: Let's see if we can steer this back to the Gaza issue. Given what you've said, what will the impact be on this fighting in Gaza and in the West Bank?
Khaled Abu Toameh: All those talking about how Hamas is finished or on the verge of collapse or that it's only a matter of time before the Palestinians in the Gaza Strip revolt against Hamas, I'm sorry to tell you that I don't share these assessments. Hamas may have suffered a major blow. Many of its institutions have been destroyed. It has been undermined in many ways. But what worries me is that Hamas still enjoys a lot of political support. Hamas continues to be as strong as it was in Gaza.
Why? I've been saying this for a long time: the only way to undermine Hamas and eventually bring about its collapse is to offer the Palestinians a greater alternative to Hamas. Not by bombing their headquarters and destroying their military arsenal. That's good, but it's not enough.
If I were the Americans and the Europeans after Hamas came to power, I would have gone to the PLO people who lost the election and, instead of giving them guns and money, I would have told them "Listen, folks. Hamas is in power because of your corruption, your mismanagement, and because you guys are thieves. Why don't you guys reform yourselves? Get rid of all these corrupt people in the PLO and Fatah. Form a youth party and challenge Hamas in the next election." That's one way.
But I'm afraid that under the current circumstances Hamas is going to be around for a long time. Many Palestinians today will tell you that Mahmoud Abbas is a traitor, that all these people were actually in the IDF headquarters watching the war. Hamas is already saying that Mahmoud Abbas was passing information to the Israeli about the whereabouts of Hamas leaders.
These allegations are very serious, by the way. I don't know if you saw my story today in the Jerusalem Post about how Hamas in the past 48 hours has been waging a massive crackdown on Fatah in Gaza. They've killed or wounded maybe 100 Fatah people. They're dragging them into the streets and shooting them in the legs. They've even gouged the eyes of some of them out. Maybe you're going to have lunch later, so I don't want to go into graphic descriptions of what's happening to Fatah over there. But Fatah is really under attack, and I don't see anyone moving to save them.
I don't see a mass movement rising against Hamas. Not now. I've been talking to many people in Gaza. I haven't heard one person there blaming Hamas for the destruction of his house. I'm hearing a lot of voices against Israel and against the Arab states. And much of the anger is being directed against Mahmoud Abbas. This operation makes the moderate Arabs look like fools. It makes them look as if they were on the wrong side. When you have Al Jazeera, the most popular TV station in the Arab world, daily and nightly inciting against the Arab leaders and giving a platform for people who are saying our Arab leaders are traitors, that our Arab leaders are in collusion with the Israelis, that our Arab leaders were hoping to enter Gaza in Israeli tanks...you know, this is reverberating. Most of the protests on the Arab street in Cairo, in Khartoum, in Yemen, wherever you go, you will hear people chanting slogans against Arab leaders and Mahmoud Abbas before they chant slogans against Israel and America.
And now there's all this talk of bringing Mahmoud Abbas to Gaza. Excuse me, but if Mahmoud Abbas enters Gaza he will be executed in the public square within minutes. You have all these militias roaming the streets. Most of them weren't fighting. They were hiding. They became "civilians" as soon as the Israelis launched their attack. They were all in hiding or they were all dressed as civilians. When they were brought to hospitals they were without their guns. They were counted as civilians.
We don't know exactly what's happening over there, but I don't see any attempt by the local Palestinians or other forces to challenge Hamas openly.
Max Boot, Council on Foreign Relations: What about the Israeli expectation that with these attacks they will have established deterrence against Hamas? Do you think that's true?
Khaled Abu Toameh: Yes. Yes. Look. The West Bank was quiet during the attack in Gaza. Now, I was talking to many people. You know what they were saying? And this is the funny part. "You know what?" they said. "The Jews have gone mad. This is not the time to mess around with them." And, you know, when you hear this from the man on the street, it really does create deterrence. I would rather see deterrence created in another way, but there is this perception on the Arab street today that the Jews have gone crazy, there are no more red lines, nothing, they don't care, and we should be careful. So in that sense, yes, there is some kind of deterrence, for the short term at least.
Before this war, four days before the war, I interviewed a number of Hamas guys. I published it in the Jerusalem Post. And the headline was Hamas Mocks Israel's Nonresponse to Qassam Attacks. What were they saying, the Hamas leaders? Basically that the Jews are cowards.
They think Israel ran away from Lebanon, that Hezbollah defeated them. They thought the Jews were scared and would not come into Gaza. They were really confident that Israel wouldn't fight back. Really. They were. They thought at most that Israel would send a few tanks into open fields just to calm Israeli public opinion. So the response really caught them by surprise, especially the first day.
So yes, there is this perception today in the Arab world that our neighbor has gone mad.
Anthony Cordesman: I was in the West Bank this summer, and it's amazing what they've achieved even though an awful lot of that money is still going to senior officials and not to the Palestinian people.
Khaled Abu Toameh: The other day someone came for the first time ever to this part of the world, and he called me and asked me to take him to Ramallah. So I drove him to downtown Ramallah and we stopped there. The man was shocked. He said "Where are the refugee camps? Where are the mud houses? Where's the poverty?"
I said "Why are you asking me these questions?"
He said "I'm shocked. Look how nice it is."
You know, there are things that are contradictory and don't make sense over there. Some of the restaurants in Ramallah are more expensive than the restaurants in Tel Aviv. There are people with a lot of money.
The corruption hasn't been stopped, but it has been reduced. Some Americans and Europeans continue to pour money on the PLO people without holding them accountable under the pretext that this money will produce a moderating effect.
Max Boot: There does seem to be this sense that the West Bank has been doing better economically.
Khaled Abu Toameh: Yes.
Max Boot: Does that translate into better politics?
Khaled Abu Toameh: No.
Mario Loyola, National Review Magazine: One American strategy in the Bush Administration's foreign policy has been to make conditions in the West Bank so much better than in Gaza that the people in Gaza start to say, "Look, it's better under Fatah."
Khaled Abu Toameh: They are saying that. But at the end of the day they're not going to vote for Fatah. Why? Look. People won't do that for two reasons, or they will vote for Hamas for two reasons.
One, Hamas is not corrupt in power, they didn't steal money. No one gave them a chance, so Palestinians won't hold it against them. Hamas are victims in the eyes of the Palestinians. And as such people's sympathies go to Hamas.
Two, when they look at the PLO guys, all these Abus sitting in Ramallah, they don't see any change. They don't see that the PLO people, the Fatah people, have drawn any conclusions from their own defeat. Fatah has been trying to hold internal elections for the past eighteen years, and they've failed. Mahmoud Abbas promised to hold general elections inside Fatah, two years ago, three years ago, fours years ago. The power struggle between the old guard and the young guard inside Fatah has been ongoing. People look at Fatah and don't see that there is a viable alternative to Hamas.
General Tom McInerney, Fox News Military Analyst: Is there a solution to this problem?
Khaled Abu Toameh: You Americans are always asking us that. Why are Americans always asking me if there is a solution? A solution to what?
Michael J. Totten: The whole thing.
Khaled Abu Toameh: What is the whole thing?
Anthony Cordesman: Is there anything useful that could be done this year?
Khaled Abu Toameh: Listen. Look. We must stop dreaming about the New Middle East and coexistence and harmony and turning this area into Hong Kong and Singapore. If anyone thinks a Palestinian will wake up in the morning and sing the Israeli national anthem, that's not going to happen. If anyone thinks an Israeli Jew will go back to doing his shopping in downtown Ramallah or to see his dentist in Bethlehem or eat fish in Gaza City, that's not going to happen. There has been a total divorce between Jews and Palestinians. We don't want to see each other.
I think that's good. Separation is good. Separation doesn't need harmony and coexistence. Forget about that. That's not going to happen. Let's focus on managing the conflict. Instead of talking about real peace, let's first of all try to stop the violence, reduce the level of bloodshed, and maybe that will pave the way for future peace. The only solution now is total separation between these two communities. Israel should not be involved in the internal affairs of the Palestinians, but at the same time Israel has the right to look after its own security. They should disengage from the Palestinians completely and tell them, "Listen, folks. Don't mess around with us anymore. We're going to strike back if you fire rockets at us. And if you want to have Hamas, Fatah, or whomever, go and do it over there without our help." That's the only way. I don't see a real peace emerging over here. We should stop talking about it.
Max Boot: But earlier you said that if Israel disengages from the West Bank, Hamas will be in power in five minutes.
Khaled Abu Toameh: I mean the Israelis should disengage under the proper circumstances. Under the current circumstances, they should not disengage. Only if they have a partner on the Palestinian side.
Max Boot: The circumstances aren't going to change any time soon.
Khaled Abu Toameh: Yes. Okay. So don't do anything. You know what? Some Israelis ask me what they should do. I say "Nothing. You just sit there. And wait."
If I were an Israeli Jew I would go to the Palestinians and say "Listen, folks. I'm prepared to give you a Palestinian state and the Israeli majority approves of that, not because we love the Palestinians, but because we want to be rid of the Palestinians."
There's a majority of Jews today who want to disband most of the settlements and take only two percent of the West Bank. My Israeli Jewish friends say to me, "You know, Khaled. You Arabs can take whatever you want. Just leave us alone. It's no longer a territorial dispute for us. We'll give you anything you want if you just go and leave us alone." Some of them even go further than that. Some of them say "Just leave us Tel Aviv, the airport, and the beach."
In the wake of these positive changes that have happened inside Israel, all you need is a strong partner on the Palestinian side. There is some hope, but only if there is a strong partner on the Palestinian side.
General Tom McInerney: But not Hamas.
Khaled Abu Toameh: I don't care. If I were Israeli I would talk to any Palestinian who wants to talk to me, and I would shoot any Palestinian who shoots at me. I wouldn't ask if they were Hamas. You know what? Believe me, if you listen to Hamas and Fatah in Arabic there isn't much of a difference, especially these days. Fatah fought alongside Hamas in Gaza. Today they said they lost 36 fighters and fired 900 rockets at Israel. Fatah.
Mario Loyola: Hamas pretends its casualties are lower, and Fatah pretends its casualties are higher.
Khaled Abu Toameh: Look. Look. As I said before, let's stop saying "Fatah" and "Hamas." Talk to anyone who wants to talk. Talking to Hamas does not mean that you recognize Hamas or that they become your buddies. The funny thing is that Israel went to war against a party that it doesn't recognize. And in the end Israel made a cease-fire unilaterally and negotiated with the Americans and the Egyptians for how to end it. And Hamas is still sitting there.
There's nothing wrong with Israel talking to Hamas if they want a ceasefire. Israelis can't ignore the fact that Hamas is in power. And Hamas continues to enjoy tremendous support over there.
Dr. Barry Posen, MIT Security Studies Program: I'm interested in going back a couple of steps and asking for your assessment of Hamas' strategy to let the ceasefire lapse and accelerate the firing of rockets. You already mentioned that they miscalculated the Israeli reaction, but what were they hoping to benefit? And what does that tell us about deterring Hamas in the future?
Khaled Abu Toameh: I think this is something many people in Israel and the West don't hear. I hear it in Arabic, and I hear it directly from them.
Dr. Barry Posen: That's why I'm asking you.
Khaled Abu Toameh: Just before the ceasefire expired, Hamas went to Egypt and said "Listen, folks. We agreed to the previous ceasefire because you, the Egyptians, promised us you would open the Rafah border crossing. And it didn't happen. And we, Hamas, were committed to this. We did our best to honor the ceasefire."
Okay, there were some violations here and there, but Hamas did in a way honor the ceasefire. They arrested people who were firing at Israel.
Mubarak said "To hell with it. I'm not going to open the Rafah border crossing unless you allow Mahmoud Abbas to come back into Gaza. Do whatever you want. I'm under pressure from the Israelis, the Americans, and Mahmoud Abbas not to open the Rafah border crossing."
Mahmoud Abbas went to Mubarak before the ceasefire expired and said "President Mubarak, please don't reopen the Rafah border crossing because that will strengthen Hamas. If you want it to be open, only give it back to me in line with the 2005 US-brokered agreement."
And so, if you think about it, Mahmoud Abbas and Hosni Mubarak bear indirect responsibility for this war. When Hamas saw that they weren't going to open the borders, Hamas said "To hell with the ceasefire" and started firing rockets again. Israel reacted and now we are where we are today.
So now we are back to square one. Hamas is still making the same demand. They said "Okay, we agree to a ceasefire, but reopen the border." They keep saying "reopen the border."
Max Boot: Do you think there is going to be any change in Mubarak's attitude? Is he going to do anything to help out that he wasn't doing before?
Khaled Abu Toameh: No. We're back to square one. Look. For Mubarak it's better if these weapons go into Gaza and kill Jews, because if these weapons don't go into Gaza to kill Jews they might end up on the streets of Cairo. They might end up in the hands of the Muslim Brotherhood.
Smuggling is a business. We're doing Hamas an injustice by saying they're the ones who established the tunnels. These tunnels have been there since 1967. In the 1970s I visited some of the tunnels. In the 1980s I visited the tunnels. When Arafat was there I visited the tunnels. These tunnels are part of the culture. It's a cultural thing over there. If you have your own tunnel it's like you have your own business. Hamas now takes taxes and gives people a license to build their tunnel.
Listen. The Egyptians are hypocrites. They are busy killing African refugees who are trying to get asylum in Israel. They opened fire on an African mother and son who were trying to run away from Sudan and were trying to seek refuge inside Israel. I haven't heard that the Egyptians are destroying tunnels or anything. I haven't heard it.
Dr. Barry Posen: What was Hamas' theory about how the rocket fire would work? Was the rocket fire meant to being hawks to power in the election here? Were they trying to bring back attention? Were they trying to affect Israeli-Egyptian elections? Because in a weird way it seems to me that this war had a funny objective, that both Israelis and Hamas were fighting for Egypt.
Khaled Abu Toameh: Look. I believe this war could have been prevented. Really. Had we gone to Hosni Mubarak and the Americans and said "Okay, let's forget about the 2005 agreement. Let's come up with a new agreement." Hamas would have agreed to have some Palestinian Authority representatives at the border in return. But no one wanted to listen. They all said "Bring down Hamas, bring down Hamas."
To answer your question, Hamas thought that if they fire rockets at Israel that the Israeli public would revolt and start complaining and would go to their leaders and say "Go and find some kind of solution." Israelis don't want war and can't afford to have war on the eve of elections. So they thought the Israeli public would revolt, that the Egyptian government would come back and negotiate a new ceasefire of Hamas' terms. They really thought these rockets would bring about some kind of international response or a response from the Israeli public.
Mario Loyola: Isn't violence for Hamas both a means and an end?
Khaled Abu Toameh: Of course. Of course. But in this specific case they used the rockets to put pressure on Israel and the West and the Egyptians with the hope that they could extract some concessions. Hamas believes they have created a balance of terror with Israel, and they're trying to imitate Hezbollah.
Anthony Cordesman: What are Palestinian attitudes going to be toward Iran and Syria? And what are Palestinians going to think about Europeans?
Khaled Abu Toameh: First of all, Hamas and Fatah are fighting over who is going to receive the international aid. This is very bad, and they are already accusing each other of stealing some of the aid that has come in from the West and from the Arab countries.
Now Iran, Syria, Hezbollah, Al Qaeda, Islamic Jihad, the Muslim Brotherhood, all these people are playing a very negative role in this part of the world. Iran did not want Hamas to sign the ceasefire. Iran wants to fight to the last Palestinian. And they will do it through Hamas, through Hezbollah. They have their own agenda, these Iranians. Hamas could not have taken control of the Gaza Strip in 2007 had it not been for support from Iran and Syria. They had logistical and financial support, which means weapons. Most of the weapons coming into Gaza are being financed by Iran and facilitated by Syria.
So how do the Palestinians relate to them? They are some Palestinians who will tell you that the Iranians are bad, that we don't want them meddling in our affairs, look what they've done, these Iranians and Syrians are responsible for the divisions among Palestinians, they are inciting Hamas. Others will tell you they welcome Iran. There are mixed views. But I don't think the majority would like to see aid from Norway, Switzerland, or Canada instead of from Iran and Hezbollah.
El começou escrevendo para um jornal da Organização para Libertação da Palestina e hoje é repórter do Jerusalem Post. É impossível enquadrá-lo em um ou outro lado do espectro político.
Dizer as coisas como elas sao nem sempre é bem recebido. Tem gente que tem o costume de matar o mensageiro...
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Paulo Roberto de Almeida
A Minority Report from the West Bank and Gaza
http://www.michaeltotten.com/archives/2009/02/a-minority-repo.php#comments
Khaled Abu Toameh is not your typical Palestinian journalist. He began his career at one of Yasser Arafat's newspapers and today he writes for the Jerusalem Post. He has produced video for European TV stations, and even blogged for a while at Commentary Magazine in New York. It's impossible to cram Toameh into a convenient ideological box, though that doesn't stop some people from trying.
I met him briefly a few weeks ago on my trip to Israel sponsored by the American Jewish Committee when he gave a talk to me and my colleagues and answered some questions at the end. I'm reproducing the entire transcript here because I think he deserves a full hearing.
Hamas, Fatah, Americans, Israelis, Europeans, Arab governments, American foreign correspondents – just about everybody involved in any way with the conflict comes under some well-deserved fire. There's something here for just about everybody to like and dislike, and I'm publishing what he said without quote-shopping or cherry-picking his words for convenience.
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Khaled Abu Toameh: When I finished high school the PLO offices hired me as a correspondent, and I worked for a PLO newspaper for seven years during which time I attended university in Jerusalem. After I graduated I had to make a decision: do I go back and work for the PLO, or do I try to become a real journalist? It took me about two seconds to make that decision. I decided to work with the international media and the Israeli media.
When I say "work with the international media," what does that mean? We have hundreds of foreign journalists who come to this part of the world – every year, every month, and sometimes every week – to cover the stories here. Now there are two stories here. There's the one that's happening inside Israel, and there's the one that's happening inside the Palestinian areas.
Fortunately for us, Israel is an open country that allows people to write whatever they want, criticize the prime minister, the defense minister, the IDF. You can write all these horrible things against Israel and still walk in downtown Jerusalem. But when it comes to covering the Palestinian territories, the story is completely different. You can't wake up in the morning as a foreign journalist and drive on your own into a Palestinian village. You can't just show up and say "Good morning, I work for the New York Times, can I speak to Hamas please." It doesn't work like that for a number of reasons. You don't know the language and need a translator. You don't know your way around. And most important, it's not safe.
So foreign journalists who want to cover stories in the Palestinian areas rely on fixers. And that's where I fit in. For the past twenty years or so I've been working as a fixer, translator, advisor – call it whatever you want – with most of the foreign media. And of course in this work with the international media I got myself a number of jobs, one of which I'm still doing. I even have colleagues here. For the past twenty years I've been working with NBC News, and I was blogging for Commentary Magazine also. I was writing for U.S. News and World Report, occasionally for the Wall Street Journal, and a number of British tabloids. In the course of this work with the international media I became a writer and analyst of Palestinian affairs and a film producer for the BBC.
About eight years ago, when the Second Intifada started, I started writing for the Jerusalem Post about Palestinian issues. And I still work with the international media. My job is to serve as the eyes and ears of the international media.
Some of you may be wondering what's going on with this guy who started working as a journalist for the PLO and ends up writing for a Jewish newspaper. Some people ask me "when did you become a Zionist? When did you become pro-Israel?" Well, I'm not pro-anything other than the facts and the truth. As a journalist I don't have any problem working for any newspaper that provides me with a platform. I don't care if it's Jewish, Christian, Muslim, or even Buddhist.
And to be honest with you, I find it ironic that as an Arab Muslim living in this part of the world that I have to work for a Jewish newspaper or for the international media in order to be able to practice any kind of real journalism. Why? Because we don't have any free media. In the Palestinian areas we didn't have it when I was working there in the 1970s and 1980s, we didn't get one when we brought Yasser Arafat in to start the Palestinian Authority, and of course we don't have a free media today under Fatah, Hamas, and the rest of the gangs that are running the show out there. And this is very sad.
Sometimes I wish the problem with the media was the only problem that we have over there, but as you all know it's a very messy situation. I'm one of those who has been arguing for the past fifteen years that things have been going in the wrong direction in this part of the world. For a few months after signing Oslo we reached the point where many Jews and many Arabs missed the good old days before the peace process began.
Now, what do I mean by that? Oslo was not bad. Oslo was based on the idea of a two-state solution and ending the military occupation in one way or another. So the idea of Oslo was not bad. Separation between Jews and Palestinians who did not want to live together. And as such I supported it. I thought it was a good idea.
But the way Oslo was implemented brought disaster on both Jews and Arabs. The assumption back then in the U.S., in Israel, and in many places in Europe, was that if you bring the PLO and thousands of PLO fighters and you dump them into the West Bank and Gaza and you give them millions of dollars and guns that they will do the dirty job of policing the West Bank and Gaza. They would replace the occupation and fight Hamas and Islamic Jihad. They would do all these wonderful things. Why? Because they're on our payroll.
So the international community and Israel gathered all these PLO fighters from around the world, released thousands of PLO fighters from Israeli prisons, gave them uniforms and guns, and called them security forces. And the result was the people who had never received any basic training, people who had never finished high school, became colonels and generals in Yasser Arafat's Authority. He established sixteen different security forces with the help of the Americans, the Europeans, and the Israelis. And they started pouring money into this regime that they called the Palestinian Authority. Billions of dollars with the hope that Arafat would deliver.
Now, there's no need to elaborate. As you all know, Arafat turned out to be a crook. Most of the money that was sent to the Palestinian Authority literally went down the drain and supported the shopping sprees of Arafat's wife who was living in Paris. Instead of building us a hospital, Arafat built a casino in Jericho, as if the Palestinian revolution aspired for forty years to get us a casino. And the chutzpah was that he built that casino across the street from a refugee camp. So Palestinians did not see the fruits of peace.
My argument is as follows. The fact that Arafat was crooked didn't surprise us Palestinians. We were only surprised by the fact that the international community kept giving him money and refused to hold him accountable when he stole our money. Why didn't they invest something? They didn't want to believe it.
When I tried to alert my foreign colleagues in 1995, 1996, and 1997, to the fact that there was corruption in the Palestinian Authority, many of them asked me if I was on the payroll of the Jewish Lobby. I wanted to know where was this Jewish Lobby? If there was one maybe they would pay me.
I told them: "This is what I am hearing. The writing is on the wall. Come and listen to what Palestinians are saying." And they told me they weren't interested in that story. They told me they wanted anti-Israel stories because it made their lives so much easier. They told me they didn't want to write anything bad about Palestinians, that Arafat was a man of peace and should be given a chance. I heard this from major American journalists, by the way. Leading American journalists. I don't want to give you their names right now, but I was really frustrated. And angry.
Listen. For all these years we've been attacking the military occupation. So why is it that when I tell you something that Arafat is doing, suddenly you don't want to report it and think it's Jewish propaganda? Most of these journalists did not even want to make any effort.
By depriving these people of money, what did Arafat do? He radicalized the Palestinians who did not see the fruits of peace. So that's reason number one why Palestinian society is radicalized.
But there are other reasons. Reasons number two is that you gave Yasser Arafat guns so that he could kill Hamas and Islamic Jihad, but instead he directed those guns against anyone who said they wanted reform or democracy. Arafat used your guns, your weapons, provided by the United States of America, to suppress the leaders of a new leadership.
Let me give you an example. In 1997, 29 Palestinian professors signed a petition demanding Yasser Arafat end the corruption. They found themselves either shot or killed or thrown into jail or they had to run away from the country. And of course this is not a story you would see on CNN. I don't think even the New York Times reported that.
So Arafat cracked down on the reformists and the democrats and the people who wanted good government. And he sent the rest of the people into the open arms of Hamas. He cracked down on the reformists and he refused to crack down on Hamas and Islamic Jihad.
Reason number three. You gave Yasser Arafat money to open a TV and radio station. And on this TV and radio station Arafat said "Jihad, jihad, kill the crusaders, kill the Jews, kill the infidels, kill everyone but me." Now you may ask yourself why Arafat was inciting against his peace partners in Israel, why was he inciting against the Americans and Europeans who were feeding him? It doesn't make sense.
Well, to us it does make sense. This is how our Arab dictators survive. They constantly blame the miseries of our people on the Jews and the West and the Crusaders and the infidels and the Zionist lobby and the imperialists. They use all these slogans. Arab leaders always need to make sure that their people are busy hating somebody else, preferably the Jews and the Americans. Otherwise their people might rebel, and God forbid they might demand reforms and democracy.
This is exactly what Arafat did, but he did it in Arabic. The international community – and even Israelis – did not want to listen to what Arafat was saying in Arabic. They only cared what he said in English. They said that what he said in English was good.
I said "Excuse me, folks, but in Arabic Arafat is telling people to kill you." But they did not want to listen to the incitement. They underestimated it. They said "you Arabs are all corrupt and don't know anything about democracy so you deserve a dictatorship."
This incitement drove people into the open arms of Hamas. Arafat was telling people how evil the Jews are, and people then said "Hamas is right, Jews are the sons of monkeys and pigs. Why should we make peace with them?"
A fourth reason, which is a lot less important in my view, is that Israelis brought the PLO into the Palestinian areas, armed the PLO, helped create all these security militias and gangsters and mafias, and then said they needed to protect themselves from their peace partners. And how did they protect themselves? By imposing restrictions and curfews, by surrounding Palestinian communities with checkpoints. Why? Because they needed to protect themselves from the militias and mafias that they brought into the West Bank and Gaza. So Palestinians lost faith in the peace process.
All this radicalized Palestinian society to the point that when Hamas decided to run in free and democratic elections under the banner of "change" and "reform" they won. It was all very obvious. The writing was clear on the wall that anyone who challenged Arafat back then....believe me that if even Ehud Olmert had run in the Palestinian elections promising change and reform and democracy he would have won. Because in January of 2006, the parliamentary elections that were held in the Palestinian Authority were largely about internal reforms in the Palestinian areas. Hamas was ready to deliver. What did they do? They came to the Palestinians and said "Listen, folks. You've tried all these PLO people. They're corrupt. They're bad. Arafat was a thief. Abu Mazen is also a total failure. These guys stole your money. These guys are US agents, they are CIA. Why don't you try us now? We will show you that we can establish good government. And, by the way, look at what we've done for you since 1988. We've established a vast network of educational, social, health, and economic services. Arafat built a casino, and we built two universities. Arafat gave his wife 100,000 dollars a month so she can do her shopping while we gave poor people money. Arafat built bars and restaurants in Ramallah while we built orphanages and charities." So the Palestinians said "Let's try Hamas. If they come to power there is nothing left to steal. They can't be more corrupt than the PLO."
That was the basic line. I'm not saying all those who voted for Hamas in 2006 were registering a vote of protest. We have to be very careful. Hamas does have a lot of supporters. What I'm saying is that had it not been also a vote of protest against the PLO , Hamas would not have won. Why? Because I know Christians who voted for Hamas. I know centrist Palestinians who voted for Hamas. I even know PLO people who voted for Hamas because the name of the game back then was "Let's punish the PLO." And how do you do it? By voting for Hamas, their main rivals. And it worked. And Hamas came to power.
What has been happening since then is also very interesting. The U.S. government, with the help of some Europeans and some Israelis, after Hamas won the election, they went to the guys who lost the election and said "folks, here are guns and here is some money. Go bring down this democratically elected government." And what was the result of this U.S. meddling in Palestinian affairs? It backfired. It played into the hands of Hamas and even boosted Hamas' popularity on the street.
What did Palestinians think when they saw Condoleeza Rice and George W. Bush openly campaigning against this democratically elected government? Their sympathies went to this democratically elected government even though it was Hamas. And when Palestinians see PLO people, the Fatah people, openly conspiring with the Americans and the Israelis to bring down a democratically elected government, they're going to hate the PLO even more.
So U.S. and European meddling in Palestinian affairs in the aftermath of the Hamas victory further strengthened Hamas to the point where in June 2007 Hamas says "Everyone is trying to bring me down. No one is giving me a chance. The whole world is against me. You corrupt PLO people are conspiring against me. I won in a free and democratic election. If you don't believe me, ask Jimmy Carter. He supervised the election. What does everyone want from me?"
And they staged a coup. Some people call it a coup. They threw the Fatah people out of Gaza. Fewer than 10,000 Hamas fighters defeated more than 70,000 American-backed Fatah policemen. The question is, how did they do it?
The answer is very simple. As soon as Hamas started shooting, these people did not fight. They ran away. They surrendered to Hamas. They basically went to Hamas and said "No, no, Hamas, please. We will give you all the guns, everything. Just leave us alone." And they ran away.
First they tried to run away toward Egypt. But Mubarak is not stupid. He sealed the border. I was there when it happened.
Israel was the only country in the world that sent troops and helicopters and gunships and ambulances to save Muslims from being slaughtered by Muslims, to save the PLO people from being slaughtered by Hamas. Israel took them and dumped them in the West Bank.
And where are we standing today? I told you before that I'm one of those people who support a two-state solution. I think it's a wonderful solution. But in the end we're getting a different kind of two-state solution. We have two separate entities. One in Gaza, and one in the West Bank.
The one in Gaza is an Islamic state run by Hamas and supported by Ahmadinejad, Syria, Hezbollah, and some people say Al Qaeda and the Muslim Brotherhood. It's a very dangerous situation, and as a moderate Muslim that's the last place I want to live on this earth.
What we have in the West Bank is the secular, corrupt, powerless regime of the PLO. Abu Mazen, Abu Shmazen, all these Abus. The Arafat cronies who failed their people over the past fifteen years. Who lost the election in January 2006 because of the corruption. Who were kicked out of Gaza because they failed. Who have lost control over half the Palestinians who live in this part of the world. And they are sitting in Ramallah. These people are in power only thanks to the presence of the IDF in the West Bank. If the Israeli army were to leave the West Bank tomorrow morning these PLO people would collapse in five minutes and Hamas would take over.
The question we should ask ourselves in the wake of this scenario is whether or not there is really a partner on the Palestinian side for any deal, let alone a peace agreement. Any kind of deal. Is there really a partner on the Palestinian side? And the answer is simple. No.
Hamas is not a partner for any peace agreement because Hamas is not going to change. All these people who believe that Hamas will one day change its ideology, that pragmatic leaders will emerge in Hamas, these people are living under illusions. Hamas is not going to change. To their credit we must say that their message has been very clear. It's the same message in Arabic and in English. They're being very honest about it. They're saying "Folks, we will never recognize Israel. We will never change. We will not abandon the path of the resistance." They're very clear about it.
After they won the election, by the way, the international community went to Hamas and said "Listen. If you want us to deal with you, accept Israel and everything will be okay." And Hamas was very honest. They said "No. We are not going to renounce terrorism. We are not going to recognize previous agreements between Palestinians and Israel. And we are not going to recognize Israel's right to exist." They were very clear about it. And they say the same thing today.
Ten days before the Hamas coup in Gaza I was invited by some U.S. diplomats to tell them about what was happening. I told them "Hamas is about to kick the PLO people out of Gaza because you are openly with the PLO and it has discredited them on the street. You're making them look like CIA agents."
The U.S. diplomats said "You don't know what you're talking about. The PLO has 70,000 people. Who is Hamas? They will crush them. You will see."
My prediction was not 100 percent accurate because I expected it to happen in three weeks. It happened ten days later. The writing was very clear on the wall.
There are so many things that are obvious in this part of the world that international leaders, diplomats, all these people in the West who are dealing with the Palestinian issue turn a blind eye to and don't want to see. Before we go to the Q&A and I take your questions, I want to give you one small example of how people in the West don't want to understand what's going on over here.
Before the January 2006 parliamentary election, the PLO people went to Condoleeza Rice and said "You are making a huge mistake by forcing us to go and have a free and democratic election. Our people don't trust us. We are corrupt and we will lose. Hamas will win. So please let's not hold an election. This is not the right time."
"No, don't worry," she said. "Let Hamas participate in the election. Hamas will not win. Everything will be okay."
They asked her how she knew Hamas was not going to win. She said she warned the Palestinians that if they vote for Hamas, she will punish them.
That warning, by the way, gave Hamas ten more points in the election. Hamas took Rice's statement and made huge banners out of it that said Condoleeza Rice says no to Hamas.
So Rice, knowing that Hamas is a terrorist organization, did not set any preconditions for Hamas' participation in the election. Even in Israel, by the way, Hamas candidates were openly campaigning in Israel, in Jerusalem. In East Jerusalem, okay, but in Israel. They were campaigning openly. They were saying "reforms, democracy, and by the way we want to destroy Israel."
What made Rice, after they won the election, say Hamas is a terrorist organization? Before the election they were not a terrorist organization? She bears responsibility for the fact that Hamas is in power. It was a huge mistake. Instead of learning from their mistakes after Hamas came to power, they continued with the same mistakes. And look at the mess we are in now.
I don't know how to solve this problem. Talking about a Palestinian state today is a joke. Where would that state be established? Israel controls nearly half of the West Bank. These PLO people can't deliver. If Israel gives up the West Bank, you will have to go to Cairo or Amman to take a flight back to America because snipers will be sitting on the hilltops above Ben-Gurion airport.
If you keep up this policy of supporting one party against the other, Gaza will move to the West Bank and we will end up with more anarchy and lawlessness and God knows what else is going to happen. It's a very unpleasant picture. It's very gloomy, I know.
Anthony Cordesman, Center for Strategic and International Studies: Let's see if we can steer this back to the Gaza issue. Given what you've said, what will the impact be on this fighting in Gaza and in the West Bank?
Khaled Abu Toameh: All those talking about how Hamas is finished or on the verge of collapse or that it's only a matter of time before the Palestinians in the Gaza Strip revolt against Hamas, I'm sorry to tell you that I don't share these assessments. Hamas may have suffered a major blow. Many of its institutions have been destroyed. It has been undermined in many ways. But what worries me is that Hamas still enjoys a lot of political support. Hamas continues to be as strong as it was in Gaza.
Why? I've been saying this for a long time: the only way to undermine Hamas and eventually bring about its collapse is to offer the Palestinians a greater alternative to Hamas. Not by bombing their headquarters and destroying their military arsenal. That's good, but it's not enough.
If I were the Americans and the Europeans after Hamas came to power, I would have gone to the PLO people who lost the election and, instead of giving them guns and money, I would have told them "Listen, folks. Hamas is in power because of your corruption, your mismanagement, and because you guys are thieves. Why don't you guys reform yourselves? Get rid of all these corrupt people in the PLO and Fatah. Form a youth party and challenge Hamas in the next election." That's one way.
But I'm afraid that under the current circumstances Hamas is going to be around for a long time. Many Palestinians today will tell you that Mahmoud Abbas is a traitor, that all these people were actually in the IDF headquarters watching the war. Hamas is already saying that Mahmoud Abbas was passing information to the Israeli about the whereabouts of Hamas leaders.
These allegations are very serious, by the way. I don't know if you saw my story today in the Jerusalem Post about how Hamas in the past 48 hours has been waging a massive crackdown on Fatah in Gaza. They've killed or wounded maybe 100 Fatah people. They're dragging them into the streets and shooting them in the legs. They've even gouged the eyes of some of them out. Maybe you're going to have lunch later, so I don't want to go into graphic descriptions of what's happening to Fatah over there. But Fatah is really under attack, and I don't see anyone moving to save them.
I don't see a mass movement rising against Hamas. Not now. I've been talking to many people in Gaza. I haven't heard one person there blaming Hamas for the destruction of his house. I'm hearing a lot of voices against Israel and against the Arab states. And much of the anger is being directed against Mahmoud Abbas. This operation makes the moderate Arabs look like fools. It makes them look as if they were on the wrong side. When you have Al Jazeera, the most popular TV station in the Arab world, daily and nightly inciting against the Arab leaders and giving a platform for people who are saying our Arab leaders are traitors, that our Arab leaders are in collusion with the Israelis, that our Arab leaders were hoping to enter Gaza in Israeli tanks...you know, this is reverberating. Most of the protests on the Arab street in Cairo, in Khartoum, in Yemen, wherever you go, you will hear people chanting slogans against Arab leaders and Mahmoud Abbas before they chant slogans against Israel and America.
And now there's all this talk of bringing Mahmoud Abbas to Gaza. Excuse me, but if Mahmoud Abbas enters Gaza he will be executed in the public square within minutes. You have all these militias roaming the streets. Most of them weren't fighting. They were hiding. They became "civilians" as soon as the Israelis launched their attack. They were all in hiding or they were all dressed as civilians. When they were brought to hospitals they were without their guns. They were counted as civilians.
We don't know exactly what's happening over there, but I don't see any attempt by the local Palestinians or other forces to challenge Hamas openly.
Max Boot, Council on Foreign Relations: What about the Israeli expectation that with these attacks they will have established deterrence against Hamas? Do you think that's true?
Khaled Abu Toameh: Yes. Yes. Look. The West Bank was quiet during the attack in Gaza. Now, I was talking to many people. You know what they were saying? And this is the funny part. "You know what?" they said. "The Jews have gone mad. This is not the time to mess around with them." And, you know, when you hear this from the man on the street, it really does create deterrence. I would rather see deterrence created in another way, but there is this perception on the Arab street today that the Jews have gone crazy, there are no more red lines, nothing, they don't care, and we should be careful. So in that sense, yes, there is some kind of deterrence, for the short term at least.
Before this war, four days before the war, I interviewed a number of Hamas guys. I published it in the Jerusalem Post. And the headline was Hamas Mocks Israel's Nonresponse to Qassam Attacks. What were they saying, the Hamas leaders? Basically that the Jews are cowards.
They think Israel ran away from Lebanon, that Hezbollah defeated them. They thought the Jews were scared and would not come into Gaza. They were really confident that Israel wouldn't fight back. Really. They were. They thought at most that Israel would send a few tanks into open fields just to calm Israeli public opinion. So the response really caught them by surprise, especially the first day.
So yes, there is this perception today in the Arab world that our neighbor has gone mad.
Anthony Cordesman: I was in the West Bank this summer, and it's amazing what they've achieved even though an awful lot of that money is still going to senior officials and not to the Palestinian people.
Khaled Abu Toameh: The other day someone came for the first time ever to this part of the world, and he called me and asked me to take him to Ramallah. So I drove him to downtown Ramallah and we stopped there. The man was shocked. He said "Where are the refugee camps? Where are the mud houses? Where's the poverty?"
I said "Why are you asking me these questions?"
He said "I'm shocked. Look how nice it is."
You know, there are things that are contradictory and don't make sense over there. Some of the restaurants in Ramallah are more expensive than the restaurants in Tel Aviv. There are people with a lot of money.
The corruption hasn't been stopped, but it has been reduced. Some Americans and Europeans continue to pour money on the PLO people without holding them accountable under the pretext that this money will produce a moderating effect.
Max Boot: There does seem to be this sense that the West Bank has been doing better economically.
Khaled Abu Toameh: Yes.
Max Boot: Does that translate into better politics?
Khaled Abu Toameh: No.
Mario Loyola, National Review Magazine: One American strategy in the Bush Administration's foreign policy has been to make conditions in the West Bank so much better than in Gaza that the people in Gaza start to say, "Look, it's better under Fatah."
Khaled Abu Toameh: They are saying that. But at the end of the day they're not going to vote for Fatah. Why? Look. People won't do that for two reasons, or they will vote for Hamas for two reasons.
One, Hamas is not corrupt in power, they didn't steal money. No one gave them a chance, so Palestinians won't hold it against them. Hamas are victims in the eyes of the Palestinians. And as such people's sympathies go to Hamas.
Two, when they look at the PLO guys, all these Abus sitting in Ramallah, they don't see any change. They don't see that the PLO people, the Fatah people, have drawn any conclusions from their own defeat. Fatah has been trying to hold internal elections for the past eighteen years, and they've failed. Mahmoud Abbas promised to hold general elections inside Fatah, two years ago, three years ago, fours years ago. The power struggle between the old guard and the young guard inside Fatah has been ongoing. People look at Fatah and don't see that there is a viable alternative to Hamas.
General Tom McInerney, Fox News Military Analyst: Is there a solution to this problem?
Khaled Abu Toameh: You Americans are always asking us that. Why are Americans always asking me if there is a solution? A solution to what?
Michael J. Totten: The whole thing.
Khaled Abu Toameh: What is the whole thing?
Anthony Cordesman: Is there anything useful that could be done this year?
Khaled Abu Toameh: Listen. Look. We must stop dreaming about the New Middle East and coexistence and harmony and turning this area into Hong Kong and Singapore. If anyone thinks a Palestinian will wake up in the morning and sing the Israeli national anthem, that's not going to happen. If anyone thinks an Israeli Jew will go back to doing his shopping in downtown Ramallah or to see his dentist in Bethlehem or eat fish in Gaza City, that's not going to happen. There has been a total divorce between Jews and Palestinians. We don't want to see each other.
I think that's good. Separation is good. Separation doesn't need harmony and coexistence. Forget about that. That's not going to happen. Let's focus on managing the conflict. Instead of talking about real peace, let's first of all try to stop the violence, reduce the level of bloodshed, and maybe that will pave the way for future peace. The only solution now is total separation between these two communities. Israel should not be involved in the internal affairs of the Palestinians, but at the same time Israel has the right to look after its own security. They should disengage from the Palestinians completely and tell them, "Listen, folks. Don't mess around with us anymore. We're going to strike back if you fire rockets at us. And if you want to have Hamas, Fatah, or whomever, go and do it over there without our help." That's the only way. I don't see a real peace emerging over here. We should stop talking about it.
Max Boot: But earlier you said that if Israel disengages from the West Bank, Hamas will be in power in five minutes.
Khaled Abu Toameh: I mean the Israelis should disengage under the proper circumstances. Under the current circumstances, they should not disengage. Only if they have a partner on the Palestinian side.
Max Boot: The circumstances aren't going to change any time soon.
Khaled Abu Toameh: Yes. Okay. So don't do anything. You know what? Some Israelis ask me what they should do. I say "Nothing. You just sit there. And wait."
If I were an Israeli Jew I would go to the Palestinians and say "Listen, folks. I'm prepared to give you a Palestinian state and the Israeli majority approves of that, not because we love the Palestinians, but because we want to be rid of the Palestinians."
There's a majority of Jews today who want to disband most of the settlements and take only two percent of the West Bank. My Israeli Jewish friends say to me, "You know, Khaled. You Arabs can take whatever you want. Just leave us alone. It's no longer a territorial dispute for us. We'll give you anything you want if you just go and leave us alone." Some of them even go further than that. Some of them say "Just leave us Tel Aviv, the airport, and the beach."
In the wake of these positive changes that have happened inside Israel, all you need is a strong partner on the Palestinian side. There is some hope, but only if there is a strong partner on the Palestinian side.
General Tom McInerney: But not Hamas.
Khaled Abu Toameh: I don't care. If I were Israeli I would talk to any Palestinian who wants to talk to me, and I would shoot any Palestinian who shoots at me. I wouldn't ask if they were Hamas. You know what? Believe me, if you listen to Hamas and Fatah in Arabic there isn't much of a difference, especially these days. Fatah fought alongside Hamas in Gaza. Today they said they lost 36 fighters and fired 900 rockets at Israel. Fatah.
Mario Loyola: Hamas pretends its casualties are lower, and Fatah pretends its casualties are higher.
Khaled Abu Toameh: Look. Look. As I said before, let's stop saying "Fatah" and "Hamas." Talk to anyone who wants to talk. Talking to Hamas does not mean that you recognize Hamas or that they become your buddies. The funny thing is that Israel went to war against a party that it doesn't recognize. And in the end Israel made a cease-fire unilaterally and negotiated with the Americans and the Egyptians for how to end it. And Hamas is still sitting there.
There's nothing wrong with Israel talking to Hamas if they want a ceasefire. Israelis can't ignore the fact that Hamas is in power. And Hamas continues to enjoy tremendous support over there.
Dr. Barry Posen, MIT Security Studies Program: I'm interested in going back a couple of steps and asking for your assessment of Hamas' strategy to let the ceasefire lapse and accelerate the firing of rockets. You already mentioned that they miscalculated the Israeli reaction, but what were they hoping to benefit? And what does that tell us about deterring Hamas in the future?
Khaled Abu Toameh: I think this is something many people in Israel and the West don't hear. I hear it in Arabic, and I hear it directly from them.
Dr. Barry Posen: That's why I'm asking you.
Khaled Abu Toameh: Just before the ceasefire expired, Hamas went to Egypt and said "Listen, folks. We agreed to the previous ceasefire because you, the Egyptians, promised us you would open the Rafah border crossing. And it didn't happen. And we, Hamas, were committed to this. We did our best to honor the ceasefire."
Okay, there were some violations here and there, but Hamas did in a way honor the ceasefire. They arrested people who were firing at Israel.
Mubarak said "To hell with it. I'm not going to open the Rafah border crossing unless you allow Mahmoud Abbas to come back into Gaza. Do whatever you want. I'm under pressure from the Israelis, the Americans, and Mahmoud Abbas not to open the Rafah border crossing."
Mahmoud Abbas went to Mubarak before the ceasefire expired and said "President Mubarak, please don't reopen the Rafah border crossing because that will strengthen Hamas. If you want it to be open, only give it back to me in line with the 2005 US-brokered agreement."
And so, if you think about it, Mahmoud Abbas and Hosni Mubarak bear indirect responsibility for this war. When Hamas saw that they weren't going to open the borders, Hamas said "To hell with the ceasefire" and started firing rockets again. Israel reacted and now we are where we are today.
So now we are back to square one. Hamas is still making the same demand. They said "Okay, we agree to a ceasefire, but reopen the border." They keep saying "reopen the border."
Max Boot: Do you think there is going to be any change in Mubarak's attitude? Is he going to do anything to help out that he wasn't doing before?
Khaled Abu Toameh: No. We're back to square one. Look. For Mubarak it's better if these weapons go into Gaza and kill Jews, because if these weapons don't go into Gaza to kill Jews they might end up on the streets of Cairo. They might end up in the hands of the Muslim Brotherhood.
Smuggling is a business. We're doing Hamas an injustice by saying they're the ones who established the tunnels. These tunnels have been there since 1967. In the 1970s I visited some of the tunnels. In the 1980s I visited the tunnels. When Arafat was there I visited the tunnels. These tunnels are part of the culture. It's a cultural thing over there. If you have your own tunnel it's like you have your own business. Hamas now takes taxes and gives people a license to build their tunnel.
Listen. The Egyptians are hypocrites. They are busy killing African refugees who are trying to get asylum in Israel. They opened fire on an African mother and son who were trying to run away from Sudan and were trying to seek refuge inside Israel. I haven't heard that the Egyptians are destroying tunnels or anything. I haven't heard it.
Dr. Barry Posen: What was Hamas' theory about how the rocket fire would work? Was the rocket fire meant to being hawks to power in the election here? Were they trying to bring back attention? Were they trying to affect Israeli-Egyptian elections? Because in a weird way it seems to me that this war had a funny objective, that both Israelis and Hamas were fighting for Egypt.
Khaled Abu Toameh: Look. I believe this war could have been prevented. Really. Had we gone to Hosni Mubarak and the Americans and said "Okay, let's forget about the 2005 agreement. Let's come up with a new agreement." Hamas would have agreed to have some Palestinian Authority representatives at the border in return. But no one wanted to listen. They all said "Bring down Hamas, bring down Hamas."
To answer your question, Hamas thought that if they fire rockets at Israel that the Israeli public would revolt and start complaining and would go to their leaders and say "Go and find some kind of solution." Israelis don't want war and can't afford to have war on the eve of elections. So they thought the Israeli public would revolt, that the Egyptian government would come back and negotiate a new ceasefire of Hamas' terms. They really thought these rockets would bring about some kind of international response or a response from the Israeli public.
Mario Loyola: Isn't violence for Hamas both a means and an end?
Khaled Abu Toameh: Of course. Of course. But in this specific case they used the rockets to put pressure on Israel and the West and the Egyptians with the hope that they could extract some concessions. Hamas believes they have created a balance of terror with Israel, and they're trying to imitate Hezbollah.
Anthony Cordesman: What are Palestinian attitudes going to be toward Iran and Syria? And what are Palestinians going to think about Europeans?
Khaled Abu Toameh: First of all, Hamas and Fatah are fighting over who is going to receive the international aid. This is very bad, and they are already accusing each other of stealing some of the aid that has come in from the West and from the Arab countries.
Now Iran, Syria, Hezbollah, Al Qaeda, Islamic Jihad, the Muslim Brotherhood, all these people are playing a very negative role in this part of the world. Iran did not want Hamas to sign the ceasefire. Iran wants to fight to the last Palestinian. And they will do it through Hamas, through Hezbollah. They have their own agenda, these Iranians. Hamas could not have taken control of the Gaza Strip in 2007 had it not been for support from Iran and Syria. They had logistical and financial support, which means weapons. Most of the weapons coming into Gaza are being financed by Iran and facilitated by Syria.
So how do the Palestinians relate to them? They are some Palestinians who will tell you that the Iranians are bad, that we don't want them meddling in our affairs, look what they've done, these Iranians and Syrians are responsible for the divisions among Palestinians, they are inciting Hamas. Others will tell you they welcome Iran. There are mixed views. But I don't think the majority would like to see aid from Norway, Switzerland, or Canada instead of from Iran and Hezbollah.
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