June 6, 2011 by Russ Baker
Article summary: THE FAKE ARAB SPRING
It’s true that Arab Spring is a good thing. It’s true Qaddafi is a bad guy. But connect the dots, and you will see that he is being set up. The evidence points to a plan to create an “Arab Spring” for the Good Old Boys—CIA, banks, oil companies. Read and see if you don’t agree.
In an earlier article, we posed the question, “Why are we in Libya?” We offered some thoughts.
Now, more pieces are falling into place. Those pieces have names of your favorite players: oil companies, banks like Goldman Sachs, and they paint a picture of endless corporate intrigue. The sort that never seems to come out in the corporate media.
Let’s go for a ride.
This February, several days after Hosni Mubarak resigned in Egypt, civil protest began in neighboring Libya. Quickly, Muammar Qaddafi’s Justice Minister turned against him and became a rebel leader. And, he made the dramatic claim that his ex-boss was the culprit behind the bombing of Pan Am 103:
Libyan leader Muammar Gaddafi ordered the 1988 bombing of Pan Am flight 103 over Lockerbie, Scotland, a former Libyan cabinet minister was quoted as saying by a Swedish newspaper on Wednesday.
Former Justice Minister Mustafa Mohamed Abud Al Jeleil, reported to have resigned this week over the violence used by the government against protesters, told the tabloid Expressen he had evidence Gaddafi ordered the bombing that killed 270 people.
“I have proof that Gaddafi gave the order for (the) Lockerbie (bombing),” Expressen quoted Al Jeleil as saying in an interview at an undisclosed large town in Libya.
The newspaper did not say what the evidence of Gaddafi’s involvement in the bombing was.
A Libyan, Abdel Basset al-Megrahi, was tried and jailed in Scotland for the bombing, and Gaddafi, in power since 1969, was branded an international pariah for years.
In 2009, the Scottish government freed al-Megrahi on humanitarian grounds after doctors said he had terminal prostate cancer, a decision strongly criticized by the United States. He returned to Libya and is still alive.
“In order to conceal it (his role in ordering the bombing), he did everything in his power to get Megrahi back from Scotland,” al Jeleil was quoted as saying.
“He (Gaddafi) ordered Megrahi to do it.”
This story made it into major news media throughout the world, without anyone stopping to raise questions about the propaganda benefit of the statement, or of the timing. For example, the UK paper, The Telegraph, interviewed Jeleil/Jalil:
In an interview with The Daily Telegraph, Mustafa Abdel Jalil, the head of the provisional rebel government in Benghazi and Libya’s former justice minister, said he had evidence of Gaddafi’s involvement in the 1988 bombing of Pan Am Flight 103 over Lockerbie.
“The orders were given by Gaddafi himself,” he told Rob Crilly.
Mr Abel Jalil claimed he had evidence that convicted bomber Abdelbaset Ali Mohmed al-Megrahi worked for Gaddafi.
“This evidence is in our hands and we have documents that prove what I have said and we are ready to hand them over to the international criminal court,” he added.
Since then, I haven’t seen any sign that Jalil’s evidence has been shown to anyone. So we don’t know that it actually exists, or that he was telling the truth. But the original headlines did the trick—anyone watching television or reading stories then would have been led to believe that Qaddafi was behind this dastardly deed.
A couple of days later, for the first time, President Obama called for Qaddafi to step down. And not long thereafter, the US, UK and their allies were getting ready to pitch military action against Qaddafi, originally characterized as solely humanitarian, “to protect civilians.” (Eventually, the top British military figure would indiscreetly admit that the relentless bombing was intended to remove the Libyan leader.)
We’ll get back to the propaganda machine and its effectiveness later, but let’s now examine the relationship between the Western governments and Qaddafi. Was it, as presented in the media, merely a case of doing the right thing against a brutal tyrant? One also accused of being behind the murder of those airline passengers?
This is not the place to recount the entire back history between Qaddafi and the alliance. Suffice to say that Qaddafi is one of a long string of foreign leaders who insisted on an independent course, including requisite regional bigfooting, and got in trouble. Specifically, we could look at some skirmishes with the US Navy during the Reagan-Bush administration, but there’s a long list of grievances. This, as in the case of Hugo Chavez of Venezuela, is compounded by the fact that he sits on massive oil reserves. Add in his brutality, avarice and bizarre manner, and you’ve got an attractive target, and an easy one for his enemies’ publicity departments.
As animosity grew, Libya started being labeled a terrorist force, possibly with some truth, and then connected to a series of major outrages with which it may or may not have had anything to do.
One was the death of several US soldiers in a Berlin nightclub in 1986, and another the alleged sponsorship of a hijacking that same year. But the thing that turned much of the world against Qaddafi was the alleged role of Libya in blowing Pan Am 103 apart.
Most of us probably remember, vaguely, that Libya’s role in that is an established fact. If so, we’re off base. Let’s start with this 2001 BBC report, following the conviction of Megrahi, a Libyan intelligence officer:
Robert Black, the Scottish law professor who devised the format of the Netherlands-based trial, was quoted on Sunday as saying he was “absolutely astounded” that Al Megrahi had been found guilty.
Mr Black said he believed the prosecution had “a very, very weak circumstantial case” and he was reluctant to believe that Scottish judges would “convict anyone, even a Libyan” on such evidence.
The view, published in British newspapers, echoes that of some of the families of UK victims of the Lockerbie bombing, who are calling for a public inquiry to find “the truth of who was responsible and what the motive was”.
Wednesday’s verdict sparked angry protests in Libya on Saturday, as Washington and London demanded the Libyan Government accept responsibility for the atrocity and pay compensation to the victims’ families.
The protesters condemned what they called a “CIA-dictated” verdict and demanded compensation for the victims of the 1986 US air raids on Tripoli and Benghazi.
For more on doubts about Libya’s role in the bombing, see the excellent summary of powerful evidence that the Libyans may have been framed, evidence not presented at trial, on Wikipedia. (While Wikipedia should not be considered a definitive source, it is often a good roundup of what may be found elsewhere and thus a starting point for further inquiry.) The troubling elements, which constitute a very long list, include an alleged offer from the FBI of $4 million for certain incriminating testimony, the subsequent admission by a key witness that he had lied, details of strange goings-on in the FBI’s crime lab, and indications that the bomb may have been introduced at an airport where the defendant was not present.
Nevertheless, Megrahi’s conviction, and the media’s dutiful reporting of it as justice done, meant that Libya, and Qaddafi, would continue under sanctions that had already isolated the country for a decade from the international community.
Qaddafi had sought to undo the cordon, including handing Megrahi over for trial in 1999. But that had not done the trick, and the January 31, 2001 conviction, coming 11 days after the inauguration of George W. Bush, threatened to make things worse—much worse. Qaddafi particularly had to worry about how it might impact his own survival.
By May 2002, with US troops in Afghanistan having ousted the Taliban and four months after Bush listed Iraq, Iran, North Korea and Syria as part of an “axis of evil” seeking “weapons of mass destruction”, Libya was feeling the heat. That month, it offered staggered payments to the Lockerbie victims’ families, as part of a trade for the cancellation of UN and US trade sanctions, and removal of Libya from the State Department’s list of states sponsoring terrorism. By August, 2003, several months after the invasion of Iraq and removal of Saddam Hussein, Qaddafi cut a deal, as reported in the New York Times:
Libya and lawyers for families of the victims of the 1988 midair bombing of Pan Am Flight 103 over Lockerbie, Scotland, signed an agreement today to create an account for $2.7 billion in expected compensation, a lawyer said.
”Libya and the lawyers representing families of the victims have signed an agreement to create the escrow account at the Bank for International Settlements,” said the lawyer, Saad Djebbar, an Algerian living in London who has followed the case since 1992.
As a result, he said United Nations sanctions might be lifted.
With the agreement, Libya is expected to deposit the money in the account and to send the United Nations Security Council a letter accepting responsibility for the bombing, in which 270 people died.
In Washington, family members said today that the State Department had invited the victims’ families to a briefing on Friday.
It was a package deal, with many tentative aspects. Libya told the UN it “accepted responsibility” in the bombing—though, notably, it did not admit guilt. Indeed, as late as 2008, Qaddafi’s son Saif told a BBC documentary crew that the only reason Libya “admitted responsibility” was to get the sanctions removed. The documentary noted that several victims’ families had declined compensation because they felt Libya had not actually been behind the bombing.
The 2003 deal was enough, however, to begin welcoming Libya back into the family of nations. The Bush administration moved quickly to begin trade with Libya. By December, 2003, Libya had agreed to give up whatever WMD programs it purportedly had in return for the US lifting sanctions.
This heartened not only Libya, but also major Western companies, which had been champing at the bit for years to get a piece of Libya’s assets, including its vast oil reserves and the income they generated.
The inexorable trade machine kept grinding along. Within a few weeks, Bush signed an executive order restoring Libyan immunity from terror lawsuits and ended pending US compensation cases.
In 2007, strongly encouraged by the UK oil company BP, Britain began pushing for a transfer of Megrahi back to prison in Libya, resulting in a series of events that concluded with his 2009 release from incarceration—on purported medical grounds. (New information on BP’s role has come out recently, with Hillary Clinton and key US senators expressing outrage and declaring their intent to investigate–see here. No mention by the Dems of the doubts about his guilt, just indignation that a “murderer” had been freed.)
In 2009, the same year Megrahi was released, Qaddafi, faced with stiff ongoing Lockerbie payments, began pressing oil companies to pay more to help cover his debt.
We learned of the pressure on the oil companies during the recent propaganda effort to build support for military action against Qaddafi. In a New York Times article headlined “Shady Dealings Helped Qaddafi Build Fortune and Regime”—the crux of which was Qaddafi’s shadiness (though not necessarily that of the oil companies)—was this gem of an item. It was easily missed and as easily misconstrued:
In 2009, top aides to Col. Muammar el-Qaddafi called together 15 executives from global energy companies operating in Libya’s oil fields and issued an extraordinary demand: Shell out the money for his country’s $1.5 billion bill for its role in the downing of Pan Am Flight 103 and other terrorist attacks.
If the companies did not comply, the Libyan officials warned, there would be “serious consequences” for their oil leases, according to a State Department summary of the meeting.
Now why would Qaddafi be desperate for cash? The article didn’t say. But if I’m connecting dots correctly, I’d say that you have to read another paper, then link the two.
Here’s the Wall Street Journal with an exclusive from May 31 that is hugely important but has thus far been seen in isolation, unconnected to the oil demand above. I recommend reading the lengthy excerpt that follows:
In early 2008, Libya’s sovereign-wealth fund controlled by Col. Moammar Gadhafi gave $1.3 billion to Goldman Sachs Group to sink into a currency bet and other complicated trades. The investments lost 98% of their value, internal Goldman documents show.
…In 2004, the U.S. government had lifted an earlier set of sanctions…That opened the door for dozens of U.S. and European banks, hedge funds and other investment firms to pile into the North African nation.
The Libyan Investment Authority set up shop on the 22nd floor of what was then Tripoli’s tallest building and launched in June 2007 with about $40 billion in assets. Libya approached 25 financial institutions, offering each of them a chance to manage at least $150 million, recalls a person familiar with the fund’s plans.
Soon it was spreading chunks of the money to firms around the world. In addition to Goldman, those institutions included Société Générale SA, HSBC Holdings PLC, Carlyle Group, J.P. Morgan Chase & Co., Och-Ziff Capital Management Group and Lehman Brothers Holdings Inc., according to internal fund records reviewed by the Journal.
… “The country made a conscious decision to join the major leagues,” says Edwin Truman, a senior fellow at the Peterson Institute for International Economics and former assistant Treasury secretary. Until then, the investment fund’s money was held in Libya’s central bank, earning ho-hum returns on high-quality bonds.
Goldman seized the opportunity. In May 2007, several Goldman partners met with the Libyans at Goldman’s London office. Mustafa Zarti, then the fund’s deputy chairman, and Hatem el-Gheriani, its chief investment officer, invited the Goldman partners to see the fund’s Libyan headquarters for themselves. Mr. Zarti was a close associate of one of Col. Gadhafi’s sons, Saif al-Islam Gadhafi, and reported to a longtime friend of the Libyan ruler.
…Goldman soon carved out a new business with the Libyans, in options—investments that give buyers the right to purchase stocks, currencies or other assets on a future date at stipulated prices. Between January and June 2008, the Libyan fund paid $1.3 billion for options on a basket of currencies and on six stocks: Citigroup Inc., Italian bank UniCredit SpA, Spanish bank Banco Santander, German insurance giant Allianz, French energy company Électricité de France and Italian energy company Eni SpA. The fund stood to reap gains if prices of the underlying stocks or currencies rose above the stipulated levels.
But that fall, the credit crisis hit with a vengeance as Lehman Brothers failed and banks all over the world faced financial crises. The $1.3 billion of option investments were hit especially hard. The underlying securities plunged in value and all of the trades lost money, according to an internal Goldman memo reviewed by the Journal. The memo said the investments were worth just $25.1 million as of February 2010—a decline of 98%.
Officials at the sovereign-wealth fund accused Goldman of misrepresenting the investment deals and making trades without proper authorization, according to people familiar with the situation. In July 2008, Mr. Zarti, the fund’s deputy chairman, summoned Mr. Kabbaj, Goldman’s North Africa chief, to a meeting with the fund’s legal and compliance staff, according to Libyan Investment Authority emails reviewed by the Journal.
One person who attended the meeting says Mr. Zarti was “like a raging bull,” cursing and threatening Mr. Kabbaj and another Goldman employee. Goldman arranged for security to protect the employees until they left Libya the next day, according to people familiar with the matter.
…Following the showdown in Tripoli, the fund demanded restitution and issued vague threats of legal action.
The Journal goes on to describe Goldman’s response—which “audacious” doesn’t begin to describe. Goldman offered to make it all up to Libya by selling it a huge stake…in Goldman itself. That Journal piece is well worth reading, as is this essay from Rolling Stone, but a bit off our topic beyond the notion that Western companies loved rubbing this rube’s nose in it.
The point, at least to me, is that Libya had taken the advice of an American firm and invested, and lost, a huge amount of the funds that are supposed to generate profits used in governing Libya. Including providing the kinds of services that kept Libyans loyal to Qaddafi in the first place.
Is it any surprise that just as this banking disaster unfolded, Qaddafi in 2009 turned desperately to the Western oil companies, which were doing well by Libya, and wanted them to pay more royalties to fund the Lockerbie settlements? Settlements he perhaps should not have had to pay in the first place?
By December 2010, when a Tunisian man set himself on fire, the Arab Spring revolt was under way—in Egypt, Bahrain, and elsewhere. Pretty quickly, it was clear to everyone that the Western powers were in danger of losing crucial oil suppliers—and vital military bases.
It certainly was convenient that, right about that time, Libya showed signs of moving in the opposite direction—into the US camp. Read our piece here about the CIA ties to the Libyan uprising.
Then consider the timing of February’s ramped-up claim by the defecting Libyan official, that Qaddafi himself had ordered the Lockerbie bombing.
If that wasn’t enough in the propaganda department to get the global public worked up, next came the Libya rape story. The average person doesn’t have the time or appetite to follow the kinds of complex corporate maneuverings that fascinate us here, but they do understandably get upset about bombs on civilian aircraft and rape.
We wrote about that rape story back here. Our point, which still stands, is that it is highly unusual for rape victims and their families to come forward publicly. It is almost unheard of in Arab countries, where the consequences can be severe. (Update: the woman and her family are being relocated in the West¸ and she’s said she’d like to come to America.)
We noted the timing of the story, the alacrity with which the Western press grabbed it and spread it, and the simple fact that there’s no evidence tying Qaddafi in any way to any such act. Even the woman herself doesn’t claim that. Yet it infuriated untold millions and postings all over the Web show that it moved a lot of public opinion into the column supporting military action to remove the Libyan leader.
That the corporate media cannot see what is going on here, or refuses to see, tells us how far we have not come since the Gulf of Tonkin Resolution.
Still, we can hear the other shoe dropping if we listen carefully enough. For example, the website Politico ran a little item the other day on a powwow between Hillary Clinton and corporate executives over business opportunities in Iraq.
FIRST LOOK: WALL STREET IN IRAQ? – Secretary of State Hillary Clinton and Deputy Secretary Tom Nides (formerly chief administrative officer at Morgan Stanley) will host a group of corporate executives at State this morning as part of the Iraq Business Roundtable. Corporate executives from approximately 30 major U.S. companies – including financial firms Citigroup, JPMorganChase and Goldman Sachs – will join U.S. and Iraqi officials to discuss economic opportunities in the new Iraq. Full list of corporate participants: http://politi.co/kOpyKA
Give it a couple of years, and they’ll be having the same party celebrating a more sympathetic regime in Libya.