NY Politicians, Corruption & Preet Bharara

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The Global Crisis of Legitimacy</font size></center>

Strategic Forecasting Inc. (STRATFOR)
Geopolitical Intelligence Report
By George Friedman
May 4, 2010


<font size="3">Financial panics are an integral part of capitalism. So are economic recessions. The system generates them and it becomes stronger because of them. Like forest fires, they are painful when they occur, yet without them, the forest could not survive. They impose discipline, punishing the reckless, rewarding the cautious. They do so imperfectly, of course, as at times the reckless are rewarded and the cautious penalized. Political crises — as opposed to normal financial panics — emerge when the reckless appear to be the beneficiaries of the crisis they have caused, while the rest of society bears the burdens of their recklessness. At that point, the crisis ceases to be financial or economic. It becomes political.</font size>

The financial and economic systems are subsystems of the broader political system. More precisely, think of nations as consisting of three basic systems: political, economic and military. Each of these systems has elites that manage it. The three systems are constantly interacting — and in a healthy polity, balancing each other, compensating for failures in one as well as taking advantage of success. Every nation has a different configuration within and between these systems. The relative weight of each system differs, as does the importance of its elites. But each nation contains these systems, and no system exists without the other two.



<font size="4">Limited Liability Investing</font size>

Consider the capitalist economic system. The concept of the corporation provides its modern foundation. The corporation is built around the idea of limited liability for investors, the notion that if you buy part or all of a company, you yourself are not liable for its debts or the harm that it might do; your risk is limited to your investment. In other words, you may own all or part of a company, but you are not responsible for what it does beyond your investment. Whereas supply and demand exist in all times and places, the notion of limited liability investing is unique to modern capitalism and reshapes the dynamic of supply and demand.

It is also a political invention and not an economic one. The decision to create corporations that limit liability flows from political decisions implemented through the legal subsystem of politics. The corporation dominates even in China; though the rules of liability and the definition of control vary, the principle that the state and politics define the structure of corporate risk remains constant.

In a more natural organization of the marketplace, the owners are entirely responsible for the debts and liabilities of the entity they own. That, of course, would create excessive risk, suppressing economic activity. So the political system over time has reallocated risk away from the owners of companies to the companies’ creditors and customers by allowing corporations to become bankrupt without pulling in the owners.

The precise distribution of risk within an economic system is a political matter expressed through the law; it differs from nation to nation and over time. But contrary to the idea that there is a tension between the political and economic systems, the modern economic system is unthinkable except for the eccentric but indispensible political-legal contrivance of the limited liability corporation. In the precise and complex allocation of risk and immunity, we find the origins of the modern market. Among other reasons, this is why classical economists never spoke of “economics” but always of “political economy.”

The state both invents the principle of the corporation and defines the conditions in which the corporation is able to arise. The state defines the structure of risk and liabilities and assures that the laws are enforced. Emerging out of this complexity — and justifying it — is a moral regime. Protection from liability comes with a burden: Poor decisions will be penalized by losses, while wise decisions are rewarded by greater wealth. Because of this, society as a whole will benefit. The entire scheme is designed to increase, in Adam Smith’s words, “The Wealth of Nations” by limiting liability, increasing the willingness to take risk and imposing penalties for poor judgment and rewards for wise judgment. But the measure of the system is not whether individuals benefit, but whether in benefiting they enhance the wealth of the nation.

The greatest systemic risk, therefore, is not an economic concept but a political one. Systemic risk emerges when it appears that the political and legal protections given to economic actors, and particularly to members of the economic elite, have been used to subvert the intent of the system. In other words, the crisis occurs when it appears that the economic elite used the law’s allocation of risk to enrich themselves in ways that undermined the wealth of the nation. Put another way, the crisis occurs when it appears that the financial elite used the politico-legal structure to enrich themselves through systematically imprudent behavior while those engaged in prudent behavior were harmed, with the political elite apparently taking no action to protect the victims.

In the modern public corporation, shareholders — the corporation’s owners — rarely control management. A board of directors technically oversees management on behalf of the shareholders. In the crisis of 2008, we saw behavior that devastated shareholder value while appearing to enrich the management — the corporation’s employees. In this case, the protections given to shareholders of corporations were turned against them when they were forced to pay for the imprudence of their employees — the managers, whose interests did not align with those of the shareholders. The managers in many cases profited personally through their compensation system for actions inimical to shareholder interests. We now have a political, not an economic, crisis for two reasons. First, the crisis qualitatively has moved beyond the boundaries of a cyclical event. Second, the crisis is rooted in the political-legal definitions of the distribution of corporate risk and the legally defined relations between management and shareholder. In leaving the shareholder liable for actions by management, but without giving shareholders controls to limit managerial risk taking, the problem lies not with the market but with the political system that invented and presides over the limited liability corporation.

Financial panics that appear natural and harm the financial elite do not necessarily create political crises. Financial panics that appear to be the result of deliberate manipulation of the allocation of risk under the law, and from which the financial elite as a whole appears to have profited even while shareholders and the public were harmed, inevitably create political crises. In the case of 2008 and the events that followed, we have a paradox. The 2008 crisis was not unprecedented, nor was the federal bailout. We saw similar things in the municipal bond crisis of the 1970s, and the Third World Debt Crisis and Savings and Loan Crisis in the 1980s. Nor was the recession that followed anomalous. It came seven years after the previous one, and compared to the 1970s and early 1980s, when unemployment stood at more than 10 percent and inflation and mortgages were at more than 20 percent, the new one was painful but well within the bounds of expected behavior.

The crisis was rooted in the appearance that it was triggered by the behavior not of small town banks or third world countries, but of the global financial elite, who took advantage of the complexities of law to enrich themselves instead of the shareholders and clients to whom it was thought they had prior fiduciary responsibility.

This is a political crisis then, not an economic one. The political elite is responsible for the corporate elite in a unique fashion: The corporation was a political invention, so by definition, its behavior depends on the political system. But in a deeper sense, the crisis is one of both political and corporate elites, and the perception that by omission or commission they acted together — knowingly engineering the outcome. In a sense, it does not matter whether this is what happened. That it is widely believed that this is what happened alone is the origin of the crisis. This generates a political crisis that in turn is translated into an attack on the economic system.

The public, which is cynical about such things, expects elites to work to benefit themselves. But at the same time, there are limits to the behavior the public will tolerate. That limit might be defined, with Adam Smith in mind, as the point when the wealth of the nation itself is endangered, i.e., when the system is generating outcomes that harm the nation. In extreme form, these crises can delegitimize regimes. In the most extreme form — and we are nowhere near this point — the military elite typically steps in to take control of the system.

This is not something that is confined to the United States by any means, although part of this analysis is designed to explain why the Obama administration must go after Goldman Sachs, Lehman Brothers and others. The symbol of Goldman Sachs profiting from actions that devastate national wealth, or of the management of Lehman wiping out shareholder value while they themselves did well, creates a crisis of confidence in the political and financial systems. With the crisis of legitimacy still not settling down after nearly two years, the reaction of the political system is predictable. It will both anoint symbolic miscreants, and redefine the structure of risk and liability in financial corporations. The goal is not so much to achieve something as to create the impression that it is achieving something, in other words, to demonstrate that the political system is prepared to control the entities it created.



<font size="4">The Crisis in Europe</font size>

We see a similar crisis in Europe. The financial institutions in Europe were fully complicit in the global financial crisis. They bought and sold derivatives whose value they knew to be other than stated, the same as Americans. Though the European financial institutions have asserted they were the hapless victims of unscrupulous American firms, the Europeans were as sophisticated as their American counterparts. Their elites knew what they were doing.

Complicating the European position was the creation of the economic union and the euro by the economic and political elite. There has always been a great deal of ambiguity concerning the powers and authority of the European Union, but its intentions were always clear: to harmonize Europe and to create European-wide solutions to economic problems. This goal always created unease in Europe. There were those who were concerned that a united Europe would exist to benefit the elites, rather than the broader public. There were also those who believed it was designed to benefit the Franco-German core of Europe rather than Europe as a whole. Overall, this reflected minority sentiment, but it was a substantial minority.

The financial crisis came at Europe in three phases. The first was part of the American subprime crisis. The second wave was a uniquely European crisis. European banks had taken massive positions in the Eastern European banking systems. For example, the Czech system was almost entirely foreign (Austrian and Italian) owned. These banks began lending to Eastern European homebuyers, with mortgages denominated in euros, Swiss francs or yen rather than in the currencies of the countries involved (none yet included in the eurozone). Doing this allowed banks to reduce interest rates, as the risk of currency fluctuation was pushed over to the borrower. But when the zlotys and forints began to plunge, these monthly mortgage payments began to soar, as did defaults. The European core, led by Germany, refused a European bailout of the borrowers or lenders even though the lenders who created this crisis were based in eurozone countries. Instead, the International Monetary Fund (IMF) was called in to use funds that included American and Chinese, as well as European, money to solve the problem. This raised the political question in Eastern Europe as to what it meant to be part of the European Union.

The third wave is represented by crisis in sovereign debt in countries that are part of the eurozone but not in the core of Europe — Greece, of course, but also Portugal and possibly Spain. In the Greek case, the Germans in particular hesitated to intervene until it could draw the IMF — and non-European money and guarantees — into the mix. This obviously raised questions in the periphery about what membership in the eurozone meant, just as it created questions in Eastern Europe about what EU membership meant.

But a much deeper crisis of legitimacy arose. In Germany, elite sentiment accepted that some sort of intervention in Greece was inevitable. Public sentiment overwhelmingly opposed intervention, however. The political elite moved into tension with the financial elite under public pressure. In Greece, a similar crisis emerged between an elite that accepted that foreign discipline would have to be introduced and a public that saw this discipline as a betrayal of its interests and national sovereignty.

Europe thus has a double crisis. As in the United States, there is a crisis between the financial and political systems. This crisis is not as intense as in the United States because of a deeper tradition of integration between the two systems in Europe. But the tension between masses and elites is every bit as intense. The second part of the crisis is the crisis of the European Union and growing sense that the European Union is the problem and not the solution. As in the United States, there is a growing movement to distrust not only national arrangements but also multinational arrangements.

The United States and Europe are far from the only areas of the world facing crises of legitimacy. In China, for example, the growing suppression of all dissent derives from serious questions as to whom the financial expansion of the past 30 years benefits, and who will pay for the downturns. It is also interesting to note that Russia is suffering much less from this crisis, having lived through its own crisis before. The global crisis of legitimacy has many aspects worth considering at some point.

But for now, the important thing is to understand that both Europe and the United States are facing fundamental challenges to the legitimacy of, if not the regime, then at least the manner in which the regime has handled itself. The geopolitical significance of this crisis is obvious. If the Americans and Europeans both enter a period in which managing the internal balance becomes more pressing than managing the global balance, then other powers will have enhanced windows of opportunities to redefine their regional balances.

In the United States, we see a predictable process. With the unease over elites intensifying, the political elite is trying to stabilize the situation by attacking the financial elite. It is doing this to both demonstrate that the political elite is distinct from the financial elite and to impose the consequences on the financial elite that the impersonal system was unable to do. There is precedent for this, and it will likely achieve its desired end: greater control over the financial system by the state and an acceptable moral tale for the public.

The European process is much less clear. The lack of clarity comes from the fact that this is a test for the European Union. This is not simply a crisis within national elites, but within the multinational elite that created the European Union. If this leads to the de-legitimization of the EU, then we are really in uncharted territory.

But the most important point is that almost two years since a normal financial panic, the polity has still not managed to absorb the consequences of that event. The politically contrived corporation, and particularly the financial corporations, stands accused of undermining the wealth of nations. As Adam Smith understood, markets are not natural entities but the result of political decisions, as is the political system that creates the allocation of risk that allows markets to function. When that system appears to fail, the consequences go far beyond the particular financials of that event. They have political consequences and, in due course, geopolitical consequences.


This report is republished with permission of STRATFOR

 

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The Divided States of Europe​

STRATFOR
Global Intelligence Report
By Marko Papic
June 28, 2011

Europe continues to be engulfed by economic crisis. The global focus returns to Athens on June 28 as Greek parliamentarians debate austerity measures imposed on them by eurozone partners. If the Greeks vote down these measures, Athens will not receive its second bailout, which could create an even worse crisis in Europe and the world.

It is important to understand that the crisis is not fundamentally about Greece or even about the indebtedness of the entire currency bloc. After all, Greece represents only 2.5 percent of the eurozone’s gross domestic product (GDP), and the bloc’s fiscal numbers are not that bad when looked at in the aggregate. Its overall deficit and debt figures are in a better shape than those of the United States — the U.S. budget deficit stood at 10.6 percent of GDP in 2010, compared to 6.4 percent for the European Union — yet the focus continues to be on Europe.

That is because the real crisis is the more fundamental question of how the European continent is to be ruled in the 21st century. Europe has emerged from its subservience during the Cold War, when it was the geopolitical chessboard for the Soviet Union and the United States. It won its independence by default as the superpowers retreated: Russia withdrawing to its Soviet sphere of influence and the United States switching its focus to the Middle East after 9/11. Since the 1990s, Europe has dabbled with institutional reform but has left the fundamental question of political integration off the table, even as it integrated economically. This is ultimately the source of the current sovereign debt crisis, the lack of political oversight over economic integration gone wrong.

The eurozone’s economic crisis brought this question of Europe’s political fate into focus, but it is a recurring issue. Roughly every 100 years, Europe confronts this dilemma. The Continent suffers from overpopulation — of nations, not people. Europe has the largest concentration of independent nation-states per square foot than any other continent. While Africa is larger and has more countries, no continent has as many rich and relatively powerful countries as Europe does. This is because, geographically, the Continent is riddled with features that prevent the formation of a single political entity. Mountain ranges, peninsulas and islands limit the ability of large powers to dominate or conquer the smaller ones. No single river forms a unifying river valley that can dominate the rest of the Continent. The Danube comes close, but it drains into the practically landlocked Black Sea, the only exit from which is another practically landlocked sea, the Mediterranean. This limits Europe’s ability to produce an independent entity capable of global power projection.

However, Europe does have plenty of rivers, convenient transportation routes and well-sheltered harbors. This allows for capital generation at a number of points on the Continent, such as Vienna, Paris, London, Frankfurt, Rotterdam, Milan, Turin and Hamburg. Thus, while large armies have trouble physically pushing through the Continent and subverting various nations under one rule, ideas, capital, goods and services do not. This makes Europe rich (the Continent has at least the equivalent GDP of the United States, and it could be larger depending how one calculates it).

What makes Europe rich, however, also makes it fragmented. The current political and security architectures of Europe — the European Union and NATO— were encouraged by the United States in order to unify the Continent so that it could present a somewhat united front against the Soviet Union. They did not grow organically out of the Continent. This is a problem because Moscow is no longer a threat for all European countries, Germany and France see Russia as a business partner and European states are facing their first true challenge to Continental governance, with fragmentation and suspicion returning in full force. Closer unification and the creation of some sort of United States of Europe seems like the obvious solution to the problems posed by the eurozone sovereign debt crisis — although the eurozone’s problems are many and not easily solved just by integration, and Europe’s geography and history favor fragmentation.


Confederation of Europe

The European Union is a confederation of states that outsources day-to-day management of many policy spheres to a bureaucratic arm (the European Commission) and monetary policy to the European Central Bank. The important policy issues, such as defense, foreign policy and taxation, remain the sole prerogatives of the states. The states still meet in various formats to deal with these problems. Solutions to the Greek, Irish and Portuguese fiscal problems are agreed upon by all eurozone states on an ad hoc basis, as is participation in the Libyan military campaign within the context of the European Union. Every important decision requires that the states meet and reach a mutually acceptable solution, often producing non-optimal outcomes that are products of compromise.

The best analogy for the contemporary European Union is found not in European history but in American history. This is the period between the successful Revolutionary War in 1783 and the ratification of the U.S. Constitution in 1788. Within that five-year period, the United States was governed by a set of laws drawn up in the Articles of the Confederation. The country had no executive, no government, no real army and no foreign policy. States retained their own armies and many had minor coastal navies. They conducted foreign and trade policy independent of the wishes of the Continental Congress, a supranational body that had less power than even the European Parliament of today (this despite Article VI of the Articles of Confederation, which stipulated that states would not be able to conduct independent foreign policy without the consent of Congress). Congress was supposed to raise funds from the states to fund such things as a Continental Army, pay benefits to the veterans of the Revolutionary War and pay back loans that European powers gave Americans during the war against the British. States, however, refused to give Congress money, and there was nothing anybody could do about it. Congress was forced to print money, causing the Confederation’s currency to become worthless.

With such a loose confederation set-up, the costs of the Revolutionary War were ultimately unbearable for the fledgling nation. The reality of the international system, which pitted the new nation against aggressive European powers looking to subvert America’s independence, soon engulfed the ideals of states’ independence and limited government. Social, economic and security burdens proved too great for individual states to contain and a powerless Congress to address.

Nothing brought this reality home more than a rebellion in Western Massachusetts led by Daniel Shays in 1787. Shays’ Rebellion was, at its heart, an economic crisis. Burdened by European lenders calling for repayment of America’s war debt, the states’ economies collapsed and with them the livelihoods of many rural farmers, many of whom were veterans of the Revolutionary War who had been promised benefits. Austerity measures — often in the form of land confiscation — were imposed on the rural poor to pay off the European creditors. Shays’ Rebellion was put down without the help of the Continental Congress essentially by a local Massachusetts militia acting without any real federal oversight. The rebellion was defeated, but America’s impotence was apparent for all to see, both foreign and domestic.

An economic crisis, domestic insecurity and constant fear of a British counterattack — Britain had not demobilized forts it held on the U.S. side of the Great Lakes — impressed upon the independent-minded states that a “more perfect union” was necessary. Thus the United States of America, as we know it today, was formed. States gave up their rights to conduct foreign policy, to set trade policies independent of each other and to withhold funds from the federal government. The United States set up an executive branch with powers to wage war and conduct foreign policy, as well as a legislature that could no longer be ignored. In 1794, the government’s response to the so-called Whiskey Rebellion in western Pennsylvania showed the strength of the federal arrangement, in stark contrast to the Continental Congress’ handling of Shays’ Rebellion. Washington dispatched an army of more than 10,000 men to suppress a few hundred distillers refusing to pay a new whiskey tax to fund the national debt, thereby sending a clear message of the new government’s overwhelming fiscal, political and military power.

When examining the evolution of the American Confederation into the United States of America, one can find many parallels with the European Union, among others a weak center, independent states, economic crisis and over-indebtedness. The most substantial difference between the United States in the late 18th century and Europe in the 21st century is the level of external threat. In 1787, Shays’ Rebellion impressed upon many Americans — particularly George Washington, who was irked by the crisis — just how weak the country was. If a band of farmers could threaten one of the strongest states in the union, what would the British forces still garrisoned on American soil and in Quebec to the north be able to do? States could independently muddle through the economic crisis, but they could not prevent a British counterattack or protect their merchant fleet against Barbary pirates. America could not survive another such mishap and such a wanton display of military and political impotence.

To America’s advantage, the states all shared similar geography as well as similar culture and language. Although they had different economic policies and interests, all of them ultimately depended upon seaborne Atlantic trade. The threat that such trade would be choked off by a superior naval force — or even by North African pirates — was a clear and present danger. The threat of British counterattack from the north may not have been an existential threat to the southern states, but they realized that if New York, Massachusetts and Pennsylvania were lost, the South might preserve some nominal independence but would quickly revert to de facto colonial status.

In Europe, there is no such clarity of what constitutes a threat. Even though there is a general sense — at least among the governing elites — that Europeans share economic interests, it is very clear that their security interests are not complementary. There is no agreed-upon perception of an external threat. For Central European states that only recently became European Union and NATO members, Russia still poses a threat. They have asked NATO (and even the European Union) to refocus on the European continent and for the alliance to reassure them of its commitment to their security. In return, they have seen France selling advanced helicopter carriers to Russia and Germany building an advanced military training center in Russia.


The Regionalization of Europe

The eurozone crisis — which is engulfing EU member states using the euro but is symbolically important for the entire European Union — is therefore a crisis of trust. Do the current political and security arrangements in Europe — the European Union and NATO — capture the right mix of nation-state interests? Do the member states of those organizations truly feel that they share the same fundamental fate? Are they willing, as the American colonies were at the end of the 18th century, to give up their independence in order to create a common front against political, economic and security concerns? And if the answer to these questions is no, then what are the alternative arrangements that do capture complementary nation-state interests?

On the security front, we already have our answer: the regionalization of European security organizations. NATO has ceased to effectively respond to the national security interests of European states. Germany and France have pursued an accommodationist attitude toward Russia, to the chagrin of the Baltic states and Central Europe. As a response, these Central European states have begun to arrange alternatives. The four Central European states that make up the regional Visegrad Group — Poland, the Czech Republic, Slovakia and Hungary — have used the forum as the mold in which to create a Central European battle group. Baltic states, threatened by Russia’s general resurgence, have looked to expand military and security cooperation with the Nordic countries, with Lithuania set to join the Nordic Battlegroup, of which Estonia is already a member. France and the United Kingdom have decided to enhance cooperation with an expansive military agreement at the end of 2010, and London has also expressed an interest in becoming close to the developing Baltic-Nordic cooperative military ventures.

Regionalization is currently most evident in security matters, but it is only a matter of time before it begins to manifest itself in political and economic matters as well. For example, German Chancellor Angela Merkel has been forthcoming about wanting Poland and the Czech Republic to speed up their efforts to enter the eurozone. Recently, both indicated that they had cooled on the idea of eurozone entry. The decision, of course, has a lot to do with the euro being in a state of crisis, but we cannot underestimate the underlying sense in Warsaw that Berlin is not committed to Poland’s security. Central Europeans may not currently be in the eurozone (save for Estonia, Slovenia and Slovakia), but the future of the eurozone is intertwined in its appeal to the rest of Europe as both an economic and political bloc. All EU member states are contractually obligated to enter the eurozone (save for Denmark and the United Kingdom, which negotiated opt-outs). From Germany’s perspective, membership of the Czech Republic and Poland is more important than that of peripheral Europe. Germany’s trade with Poland and the Czech Republic alone is greater than its trade with Spain, Greece, Ireland and Portugal combined.

The security regionalization of Europe is not a good sign for the future of the eurozone. A monetary union cannot be grafted onto security disunion, especially if the solution to the eurozone crisis becomes more integration. Warsaw is not going to give Berlin veto power over its budget spending if the two are not in agreement over what constitutes a security threat. This argument may seem simple, and it is cogent precisely because it is. Taxation is one of the most basic forms of state sovereignty, and one does not share it with countries that do not share one’s political, economic and security fate.

This goes for any country, not just Poland. If the solution to the eurozone crisis is greater integration, then the interests of the integrating states have to be closely aligned on more than just economic matters. The U.S. example from the late 18th century is particularly instructive, as one could make a cogent argument that American states had more divergent economic interests than European states do today, and yet their security concerns brought them together. In fact, the moment the external threat diminished in the mid-19th century due to Europe’s exhaustion from the Napoleonic Wars, American unity was shaken by the Civil War. America’s economic and cultural bifurcation, which existed even during the Revolutionary War, erupted in conflagration the moment the external threat was removed.

The bottom line is that Europeans have to agree on more than just a 3 percent budget-deficit threshold as the foundation for closer integration. Control over budgets goes to the very heart of sovereignty, and European nations will not give up that control unless they know their security and political interests will be taken seriously by their neighbors.


Europe’s Spheres of Influence

We therefore see Europe evolving into a set of regionalized groupings. These organizations may have different ideas about security and economic matters, one country may even belong to more than one grouping, but for the most part membership will largely be based on location on the Continent. This will not happen overnight. Germany, France and other core economies have a vested interest in preserving the eurozone in its current form for the short term — perhaps as long as another decade — since the economic contagion from Greece is an existential concern for the moment. In the long term, however, regional organizations of like-minded blocs is the path that seems to be evolving in Europe, especially if Germany decides that its relationship with core eurozone countries and Central Europe is more important than its relationship with the periphery.

We can separate the blocs into four main fledgling groupings, which are not mutually exclusive, as a sort of model to depict the evolving relationships among countries in Europe:

1. The German sphere of influence (Germany, Austria, the Netherlands, Belgium, Luxembourg, Czech Republic, Hungary, Croatia, Switzerland, Slovenia, Slovakia and Finland): These core eurozone economies are not disadvantaged by Germany’s competitiveness, or they depend on German trade for economic benefit, and they are not inherently threatened by Germany’s evolving relationship with Russia. Due to its isolation from the rest of Europe and proximity to Russia, Finland is not thrilled about Russia’s resurgence, but occasionally it prefers Germany’s careful accommodative approach to the aggressive approach of neighboring Sweden or Poland. Hungary, the Czech Republic and Slovakia are the most concerned about the Russia-Germany relationship, but not to the extent that Poland and the Baltic states are, and they may decide to remain in the German sphere of influence for economic reasons.
   
   
2. The Nordic regional bloc (Sweden, Norway, Finland, Denmark, Iceland, Estonia, Lithuania and Latvia): These mostly non-eurozone states generally see Russia’s resurgence in a negative light. The Baltic states are seen as part of the Nordic sphere of influence (especially Sweden’s), which leads to problems with Russia. Germany is an important trade partner, but it is also seen as overbearing and as a competitor. Finland straddles this group and the German sphere of influence, depending on the issue.
   
   
3. Visegrad-plus (Poland, Czech Republic, Slovakia, Hungary, Romania and Bulgaria): At the moment, the Visegrad Group members belong to different spheres of influence. The Czech Republic, Slovakia and Hungary do not feel as exposed to Russia’s resurgence as Poland or Romania do. But they also are not completely satisfied with Germany’s attitude toward Russia. Poland is not strong enough to lead this group economically the way Sweden dominates the Nordic bloc. Other than security cooperation, the Visegrad countries have little to offer each other at the moment. Poland intends to change that by lobbying for more funding for new EU member states in the next six months of its EU presidency. That still does not constitute economic leadership.
   
   
4. Mediterranean Europe (Italy, Spain, Portugal, Greece, Cyprus and Malta): These are Europe’s peripheral states. Their security concerns are unique due to their exposure to illegal immigration via routes through Turkey and North Africa. Geographically, these countries are isolated from the main trade routes and lack the capital-generating centers of northern Europe, save for Italy’s Po River Valley (which in many ways does not belong to this group but could be thought of as a separate entity that could be seen as part of the German sphere of influence). These economies therefore face similar problems of over-indebtedness and lack of competitiveness. The question is, who would lead?

And then there are France and the United Kingdom. These countries do not really belong to any bloc. This is London’s traditional posture with regard to continental Europe, although it has recently begun to establish a relationship with the Nordic-Baltic group. France, meanwhile, could be considered part of the German sphere of influence. Paris is attempting to hold onto its leadership role in the eurozone and is revamping its labor-market rules and social benefits to sustain its connection to the German-dominated currency bloc, a painful process. However, France traditionally is also a Mediterranean country and has considered Central European alliances in order to surround Germany. It also recently entered into a new bilateral military relationship with the United Kingdom, in part as a hedge against its close relationship with Germany. If France decides to exit its partnership with Germany, it could quickly gain control of its normal sphere of influence in the Mediterranean, probably with enthusiastic backing from a host of other powers such as the United States and the United Kingdom. In fact, its discussion of a Mediterranean Union was a political hedge, an insurance policy, for exactly such a future.



The Price of Regional Hegemony


The alternative to the regionalization of Europe is clear German leadership that underwrites — economically and politically — greater European integration. If Berlin can overcome the anti-euro populism that is feeding on bailout fatigue in the eurozone core, it could continue to support the periphery and prove its commitment to the eurozone and the European Union. Germany is also trying to show Central Europe that its relationship with Russia is a net positive by using its negotiations with Moscow over Moldova as an example of German political clout.

Central Europeans, however, are already putting Germany’s leadership and commitment to the test. Poland assumes the EU presidency July 1 and has made the union’s commitment to increase funding for new EU member states, as well as EU defense cooperation, its main initiatives. Both policies are a test for Germany and an offer for it to reverse the ongoing security regionalization. If Berlin says no to new money for the newer EU member states — at stake is the union’s cohesion-policy funding, which in the 2007-2013 budget period totaled 177 billion euros — and no to EU-wide security/defense arrangements, then Warsaw, Prague and other Central European capitals have their answer. The question is whether Germany is serious about being a leader of Europe and paying the price to be the hegemon of a united Europe, which would not only mean funding bailouts but also standing up to Russia. If it places its relationship with Russia over its alliance with Central Europe, then it will be difficult for Central Europeans to follow Berlin. This will mean that the regionalization of Europe’s security architecture — via the Visegrad Group and Nordic-Baltic battle groups — makes sense. It will also mean that Central Europeans will have to find new ways to draw the United States into the region for security.

Common security perception is about states understanding that they share the same fate. American states understood this at the end of the 18th century, which is why they gave up their independence, setting the United States on the path toward superpower status. Europeans — at least at present — do not see their situation (or the world) in the same light. Bailouts are enacted not because Greeks share the same fate as Germans but because German bankers share the same fate as German taxpayers. This is a sign that integration has progressed to a point where economic fate is shared, but this is an inadequate baseline on which to build a common political union.

Bailing out Greece is seen as an affront to the German taxpayer, even though that same German taxpayer has benefited disproportionally from the eurozone’s creation. The German government understands the benefits of preserving the eurozone — which is why it continues bailing out the peripheral countries — but there has been no national debate in Germany to explain this logic to the populace. Germany is still waiting to have an open conversation with itself about its role and its future, and especially what price it is willing to pay for regional hegemony and remaining relevant in a world fast becoming dominated by powers capable of harnessing the resources of entire continents.

Without a coherent understanding in Europe that its states all share the same fate, the Greek crisis has little chance of being Europe’s Shays’ Rebellion, triggering deeper unification. Instead of a United States of Europe, its fate will be ongoing regionalization.



<a href="http://www.stratfor.com/weekly/20110627-divided-states-europe">The Divided States of Europe</a> is republished with permission of STRATFOR.

 

[MASTERBAKER]

State Sen. Malcolm Smith, city Councilman Halloran arrested in 'bribery plot' to rig

State Sen. Malcolm Smith, city Councilman Halloran arrested in 'bribery plot' to rig mayor race

* Dem Smith schemed to run as GOPer * Faces rap with Republican Halloran

State Sen. Malcolm Smith and city Councilman Dan Halloran were arrested this morning on charges they were plotting to rig this year’s mayoral election through fraud and bribes.

The pols allegedly formed an alliance built on cash payments and fraud to get Smith — one of the state’s top Democrats — placed on the GOP mayoral ballot, sources said.

FBI agents arrested them both at their Queens homes shortly after 6 a.m.

“I have no idea,” Halloran, in handcuffs, told a Post reporter when asked if he knew why he was being arrested.

et Smith on the GOP mayoral ballot.
Spencer Burnett
Councilman Dan Halloran, a Republican is also part of looming fed rap

“I’m sure the truth will come out once I have an opportunity to find out what’s going on.”

Smith would not say anything as he was hauled off.

During a meeting on Nov 16, Smith allegedly met with the agent and the cooperator — who are not named in the documents — at a Manhattan hotel. The senator allegedly was harping on his need to switch the allegiance of one particular borough GOP chief. After the cooperator said he thought he could influence the party leader, Smith was recorded as saying "If you can change him, call me. Seriously...If you can change him that would be huge."

That same day, the feds recorded Smith pledged to the undercover agent at Grand Central he would be indebted to him if he could win the support of a borough GOP boss: "You pull this off," Smith said, according to documents, "you can have the house ... I'll be the tenant."

The agent asked Smith "is this worth going to the bank for?"

In response, Smith was emphatic: "I want him done. I want him done. I want him to say, 'You know what, Malcolm, we did make a commitment to you early on...We're going back to that.' That's what I want him to do." Smith allegedly closed the discussion, saying "This is a big thing."

Less than two months ago, on Feb . 8 Halloran met up with the informant and the undercover agent at a Manhattan hotel where the councilman told the pair that Savino "wanted $25,000 'in an envelope,' and Tabone wanted $50,000 with half of the money before he signed the (ballot-support) certificate and the other half after."

FBI officials confirmed the arrests to The Post.

“Elected officials are called public servants because they are supposed to serve the people. Public service is not supposed to be a shortcut to self-enrichment," FBI Assistant Director George Venizelos said in a written statement today.

"People in New York, in Spring Valley -- in any city or town in this country -- rightly expect their elected or appointed representatives to hold themselves to a higher standard. At the very least, public officials should obey the law.

"As alleged, these defendants did not obey the law; they broke the law and the public trust. There is a price to pay for that kind of betrayal.”

Prosecutors are planning to lay out the whole sordid scheme during a news conference later today.

“Today’s charges demonstrate, once again, that a show-me-the-money culture seems to pervade every level of New York government. The complaint describes an unappetizing smorgasbord of graft and greed involving six officials who together built a corridor of corruption stretching from Queens and the Bronx to Rockland County and all the way up to Albany itself, " US Attorney Preet Bharara said in a statement.

"As alleged, Senator Malcolm Smith tried to bribe his way to a shot at Gracie Mansion – Smith drew up the game plan and Councilman Halloran essentially quarterbacked that drive by finding party chairmen who were wide open to receiving bribes. After the string of public corruption scandals that we have brought to light, many may rightly resign themselves to the sad truth that perhaps the most powerful special interest in politics is self-interest.

"We will continue pursuing and punishing every corrupt official we find, but the public corruption crisis in New York is more than a prosecutor’s problem.”

As agents took Smith and Halloran into custody, the feds raided the homes of Bronx Republican Chairman Joseph Savino and Queens GOP Vice Chairman Vincent Tabone, who were arrested on charges of wire fraud and bribery. They allegedly agreed to take bribes to get Smith on the ballot.

Also hauled in this morning were Noramie Jasmin, the mayor of Spring Valley in Rockland County, and her deputy mayor, Joseph Desmaret.

The Rockland pair is accused of taking bribes in return for approving the sale of village land to a private concern. In addition to cash bribes, Jasmin is accused by the feds of demanding a secret ownership stake in the company that bought the property from her community.

That scheme dates to August 2011, the feds charge.

All six are going to appear in White Plains federal court today.

At Smith’s home, two FBI agents led the grim-faced senator — in a business suit — from a back door to an unmarked car.

Three FBI agents spent more than 30 minutes inside the home before arresting the powerful pol. A woman inside the home refused to open the door for a reporter.

After the agents took off, a Smith neighbor said, "I'm glad he's arrested."

Ten miles away at Halloran’s home in northern Queens, agents drove up in four unmarked cars and spread out to cover front and back entrances before raiding the councilman’s place. Halloran’s dog could be heard barking throughout the episode.

After less than a half hour, Halloran emerged in custody, wearing blue jeans, a blue sweatshirt and a stunned look on his face.

Smith was trying to buy off Republican leaders because he needed the party’s support in at least three boroughs in order to run as a GOP candidate without even changing his own party affiliation, the sources said.

“It’s incredible,” a source said of the alleged plot.

To get on the GOP ballot, Smith allegedly enlisted Halloran, a Republican, to set up meetings with party leaders and negotiate thousands of dollars in bribes. The money was masked as payments for legal and accounting services, sources said.

Halloran allegedly collected thousands in bribes for himself along the way, the sources said.

He is separately charged with taking bribes from a consultant in return for up to $80,000 in City Council discretionary funding.

The feds were already investigating Halloran when they got wind of the alleged ballot-manipulating plan in November, the sources said. Smith met with his alleged co-conspirators as recently as February.

At the heart of the case against Smith and Halloran is a complex web of corruption schemes that unraveled because of a confidential informant working with the feds and an undercover FBI agent who posed as a real estate developer.

The feds charge that Smith used the informant and the undercover agent to offer payoffs to county leaders to win him the ballot placement he sought. The feds also say Smith was working with the pair on a real estate deal in Rockland County, which is what connected the New York City plot to the mayor and deputy mayor in Spring Valley. Smith allegedly said he would use his Senate office to bring home $500,000 in state funds for road work that would benefit the development project.

Halloran, in addition to facilitating the alleged Smith bribes, allegedly agreed to use his council office to reel in up to $80,000 in city funds for a bogus company controlled by the undercover agent and the federal cooperator. In return, the feds said Halloran took $18,000 in cash bribes and $6,500 in contributions that were from so-called "straw donors" — people who use their own names to cover up illegal donations from others.

Smith and Halloran are facing a prosecution that will rely heavily on wiretaps and recorded conversations, typically the most damning kind of evidence in corruption cases.

Smith and Halloran, if convicted, could be looking at up to 45 years in prison. Tabone and Savino are facing 25 years each. And the Spring Valley duo are staring at a possible prison sentence of 20 years apiece.

Smith’s arrest is a remarkable turn in what was once viewed as an ascendant bid to succeed Mayor Bloomberg.

Smith, 56, spent much of the summer trying to drum up support for a campaign, which was first reported by The Post. To bolster his effort, he met with officials around the state, including New York GOP chief Ed Cox.

At the time, he appeared to have more of a chance than the liberal group of candidates seeking the Democratic nomination.

Both Smith and Halloran are controversial figures.

Smith is facing heat for his ties to a shady Queens nonprofit, the New Direction Local Development Corp., which The Post found misused charitable funds intended for victims of Hurricane Katrina.

Smith, representing much of southeastern Queens, was also involved in an embarrassing Aqueduct casino bid-rigging scandal, which remains under investigation by the FBI.

Never missing a chance to make headlines, Smith last year stunned the state’s political establishment by joining forces with Republicans to form a first-of-its-kind coalition to run the fractured state Senate.

By joining the Independent Democratic Caucus — along with four other Democratic renegades — Smith allowed the state Republican Party to keep control of the Legislature’s upper house.

Smith also once served as the majority leader of the state Senate, after Democrats captured control of the chamber in 2008.

Chaos reigned during Smith’s tenure and, by June 2009, two members of his conference had joined with GOP senators to oust Smith and trigger another crisis at the Capitol.

His brief period of leadership was considered a flop, and his Democratic Party subsequently lost control of the chamber to the Republicans.

Halloran, too, is no stranger to controversy.

During the Christmas blizzard of 2010, the first-term councilman from Bayside claimed he had evidence that Sanitation Department plow drivers were intentionally slowing down the cleanup as part of a wildcat job action.

But he refused to assist in the feds’ probe, citing attorney-client privilege.

The city’s Department of Investigation later released a report that found “no actual evidence about a possible slowdown.”

Halloran, a 42-year-old lawyer and former city cop, ran for Congress last year.

During that campaign, The Post reported the state Board of Elections had referred his campaign to the Albany DA for investigation and possible prosecution because he had not filed state campaign-finance reports for more than two years.

Halloran later filed the appropriate forms, but lost to then-Assemblywoman Grace Meng.

josh.margolin@nypost.com

 

[MCP]

<IFRAME SRC="http://www.bbc.co.uk/news/business-21953380" WIDTH=780 HEIGHT=1500>
<A HREF="http://www.bbc.co.uk/news/business-21953380">link</A>

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[MASTERBAKER]

Eric Stevenson, Bronx Democratic Assemblyman, arrested for taking $20,000 in bribes t

Eric Stevenson, Bronx Democratic Assemblyman, arrested for taking $20,000 in bribes to help adult day care center




Stevenson is accused of taking cash to benefit businessmen interested in developing adult day care center. His arrest follows the takedown of state Sen. Malcolm Smith and Councilman Dan Halloran in an unrelated bust.

Bronx Assemblyman Eric Stevenson was arrested Thursday, accused of pocketing nearly $20,000 in bribes to boost the launch of an adult day care center.

Stevenson, a Democrat, accepted the payoffs to assist four co-defendants in getting the Bronx center up and running, according to the complaint.

RELATED: PLOT INVOLVED BRIBES FOR POLITICAL SUPPORT

One of the co-defendants, during an initial conversation with Stevenson, told the assemblyman he would be “blessed” with the cash for his help, the documents show.

Stevenson — who took a $10,000 cash bribe in September 2012 — agreed to expedite installation of a gas line in the building; steer senior citizens to the facility; and help get a certificate of occupancy, the complaint alleged.

RELATED: BRONX GOP BOSS ADDS TO LIST OF CORRUPTION

A second $5,000 payoff in January was made in return for Stevenson’s help in passing legislation to block any competing adult day care centers from opening in the area, the complaint charged.

Stevenson received another $4,500 in February after showing a draft of the legislation to his co-conspirators, the complaint charged.

RELATED: HALLORAN PLOT UNRAVELED: THE BRIBES & BRAVADO CAUGHT ON TAPE

The assemblyman was plied with more than money: The co-defendants allegedly offered to name their new center in honor of Stevenson’s grandfather.

Stevenson was busted with the aid of another corrupt assemblymember, identified in the 38-page court filing as a cooperating witness who flipped in January 2012.

RELATED: POLS, CONSTITUENTS SHOCKED BY SMITH BRIBERY CHARGES

The unidentified politician faces his own corruption charges in the Bronx — but the charges will be dropped as part of his deal, the complaint says.

The assemblyman will also resign his post as part of the deal.

RELATED: WITNESS WHO WORE WIRE IN MALCOLM SMITH CASE $126M IN DEBT

Stevenson’s arrest follows by two days the takedown of state Sen. Malcolm Smith (D-Queens) and City Councilman Dan Halloran (R-Queens) in a broad-ranging bribery scheme that Manhattan U.S. Attorney Preet Bharara called emblematic of the “show-me-the-money culture” pervading New York politics.

Bharara’s office is also prosecuting Stevenson, who was busted along with four others Thursday morning in a joint investigation with Bronx District Attorney Robert Johnson.

Read more: http://www.nydailynews.com/new-york...ed-corruption-article-1.1307456#ixzz2PVZG5Qgh

<p style=" margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;"> <a title="View Eric Stevenson Complaint on Scribd" href="http://www.scribd.com/doc/134012670" style="text-decoration: underline;" >Eric Stevenson Complaint</a></p><iframe class="scribd_iframe_embed" src="http://www.scribd.com/embeds/134012670/content?start_page=1&view_mode=scroll" data-auto-height="false" data-aspect-ratio="undefined" scrolling="no" id="doc_86280" width="100%" height="600" frameborder="0"></iframe>

 

[MASTERBAKER]

Re: Eric Stevenson, Bronx Democratic Assemblyman, arrested for taking $20,000 in brib

'Willing to sell his soul to be the man again': Former aide says pol in NYC mayoral race bribe scandal couldn't handle fall from grace

A day after Malcolm Smith was charged with trying to bribe his way into the mayoral race, a former aide said the Democratic state senator would have done anything to return to power after being toppled as Senate majority leader.

“It was the collapse of his self-worth. That fall from grace, he wasn’t able to handle it,” the former aide told the Daily News on Wednesday.

“He was clamoring to figure out how to rise back up. He was willing to sell his soul to be the man again and give away his fortune.”

Instead of returning to the top of the political pecking order, Smith’s political career was in free fall Wednesday after the stunning charges that he bribed county Republican bosses to secure a spot in the GOP primary for mayor.

And that fall was not yet complete: In Albany, officials said the Queens pol would soon be stripped of some staff as a result of the federal criminal complaint.

“Changes will be forthcoming,” promised Eric Soufer, a spokesman for the Independent Democratic Conference, a group of breakaway Democrats who have teamed with Republicans to run the state Senate. Smith was a member of the conference.

Smith made history in 2009 by becoming the Senate’s first black majority leader. But he never recovered after losing the powerful post in a coup launched by members upset with his chaotic leadership, the former aide said.

“There was a desperation. ... That’s what it comes down to,” the aide said. To Smith, the idea of going back to being a rank-and-file senator “was just too low a level. It’s weird.”

RELATED: WITNESS WHO WORE WIRE IN MALCOLM SMITH CASE $126M IN DEBT

With Smith facing up to 45 years in prison, many of his current and former colleagues said they have no doubt that he would be willing to snitch to the feds to reduce his sentence.

“Malcolm not only has been around a long time, but he was a power player,” said one lawmaker. “He knows a lot and could try and burn the house down to save himself.”

Sen. Tony Avella (D-Queens) said corruption has run rampant, and he suspects the Smith arrest “could be the tip of the iceberg.”

That could spell trouble for a number of scandal-plagued elected officials with ties to Smith.

Top among them, sources say, is Democrat Gregory Meeks, the Queens congressman who is said to be under FBI investigation.

A charity tied to Smith and Meeks, New Direction, reportedly misused thousands of dollars raised for Hurricane Katrina victims.

The feds have also been looking into a secret $40,000 personal loan Meeks received from Queens businessman Ed Ahmad in 2007 to help pay off his $830,000 home.

Ahmad, who has ties to other Smith colleagues, was convicted last year for his role in a $14 million mortgage fraud scheme.

RELATED: DETAILS IN SEN. MALCOLM SMITH ALLEGED BRIBERY PLOT SHOW DEVIOUS TACTICS

And Smith may have inside information about a bid-rigging scheme for a contract to operate the racino at Aqueduct Racetrack in Queens. Smith, Sen. John Sampson (D-Brooklyn), Sen. Eric Adams (D-Brookyn) and former senator-turned-lobbyist Carl Andrews all played central roles in the bid scandal, according a 2010 report by a state inspector general.

Also caught up in the scandal were former Gov. David Paterson and the Rev. Floyd Flake, a former congressman and Smith’s political mentor.

Smith recently hired Flake’s son, Robert Rasheed Flake, as a $50,000-a-year “community liaison,” though sources say he is more of a driver than anything else. According to the arrest records, cops who busted the young Flake in August for DWI found marijuana in his car.

“He has no loyalty,” said a community activist who has worked with Smith in the past. “Anybody he can turn on to save himself some time, he will.”

The Smith case has also become a black eye for the breakaway group of Democrats who are running the Senate with the Republicans.

Despite previous reports that the 56-year-old Smith was under investigation, he was not only allowed to join the Independent Democratic Conference, but was named conference chairman and given a chairmanship of the Senate Social Services Committee.

Democratic Sens. Jeffrey Klein (Bronx), Diane Savino (S.I.), David Carlucci (Rockland) and David Valesky (Syracuse) had said they formed the unprecedented alliance with the GOP because of the dysfunction and scandal that plagued the Senate Dems.

Klein stripped Smith of his perks after the arrest Tuesday.

With Glenn Blain

klovett@nydailynews.com

Read more: http://www.nydailynews.com/new-york...power-ex-aide-article-1.1307380#ixzz2PVa69siv

 

[MASTERBAKER]

Preet Bharara Will Not Save Us
Preet Bharara Will Not Save Us

Monday, March 13, 2017 at 3:03 p.m.
By Ross Barkan

Chris Buck / AUGUST for The Village Voice
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New York journalists always pine for heroes and villains. A Manichean universe is a convenient one: good guys do good, bad guys do bad, and to the white knight goes the boldest headlines.

Preet Bharara was one of those New York knights. Since 2009, as the U.S. attorney for the Southern District, he carved out the highest profile for the office since Rudy Giuliani was dragging mobsters to justices while shamelessly plotting his first mayoral campaign. Bharara’s exit on Saturday was masterful. President Trump asked for his resignation, purging him and 45 other Barack Obama appointees across America. Bharara refused to quit. Trump fired him.

“WALKING TALL,” roared the front page of the Daily News Sunday. The commentariat agreed. Trump had slayed another saint.

The episode was illustrative of all that was alluring and infuriating about the tenure of every editor’s favorite U.S. attorney — and now every editor’s favorite pick for governor next year. A Time Magazine cover boy, Bharara pursued political corruption at all costs, admirably doing his best, unlike Trump, to drain a swamp. He won convictions of the all-powerful — Assembly Speaker Sheldon Silver, Senate Majority Leader Dean Skelos — and secured an indictment of Joe Percoco, a man so close to Governor Andrew Cuomo that his father, Mario, regarded Joe as another son. There were lesser political figures who ended up under Bharara’s boot heel, like Malcolm Smith, a one-time Senate majority leader, State Senator Carl Kruger and Assemblyman Eric Stevenson.

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Undoubtedly the state legislature and executive branch needed someone like Bharara to scare the living daylights out of it. As one of the most blatantly corrupt state capitols in America, Albany has always been a playpen for the shamelessly moneyed and well-wired to purchase favors. Legislators use campaign cash to buy pool covers and time with Tony Robbins. It’s that kind of place.

Yet Bharara’s tactics were never questioned enough, and his camera savvy, while appreciated by an adoring press, protected him from the scrutiny he deserved. Despite his reputation as some kind of Wall Street sheriff, he failed to hold accountable any of the heinous actors who precipitated the 2008 financial crash. His much-heralded insider trading convictions were overturned on appeal.

When Bharara went on the prowl, he was far from scrupulous. His office repeatedly leaked details of his investigations to the media, building his cases there long before his targets even faced an arrest. In 2013, he leaked news of Smith’s impending arrest to the New York Post, and the tabloid splashed the pol’s face on their cover the same day he was handcuffed. A Post reporter was on hand to grill Smith’s co-conspirator, Councilman Dan Halloran, as he was led away from his home. Had the men gone to a newsstand early enough, they practically could have read about their arrests before they happened.

Weeks before Silver was arrested, we knew the minute details of the case Bharara was constructing against him, thanks to the New York Times. It’s difficult to imagine, given the circumstances, how a jury wasn’t going to convict Silver. The most important newspapers in the city were writing about the bad things this bad man allegedly did before he even showed up in a courtroom.

Imagine you’re innocent but Bharara decides you’re guilty. The moment you’re in his crosshairs, you’re dead. Before the indictment, before the trial, before the conviction — before it all, he can try you in the press. He wields titanic power and his office’s resources are enormous. If our justice system is predicated on innocence until guilt is proven, life in Bharara’s world indicates otherwise.

The federal judge who eventually sentenced Silver, Valerie Caproni, chastised Bharara for the “media blitz” he waged against him in 2015. “The U.S. attorney, while castigating politicians in Albany for playing fast and loose with the ethical rules that govern their conduct, strayed so close to the edge of the rules governing his own conduct that defendant Sheldon Silver has a nonfrivolous argument that he fell over the edge to the defendant’s prejudice,” she said.

Bharara’s pursuit of his other white whale, Mayor Bill de Blasio, reeked of this kind of overreach. Maybe de Blasio is guilty of the various pay-for-play charges Bharara’s office is desperately trying to bring. Maybe he deserves prison time.

But no defendant, powerful executive or no, deserves to be investigated for almost an entire year in the public eye without any charges leveled against him. Grand juries are supposed to be secret, yet somehow the Times knew in December that grand juries were hearing testimony over possible federal and state inquiries into de Blasio’s possible wrongdoing. The inquiries, the newspaper said, could “wrap up in a matter of weeks.” Alas, that was not the case.

It’s important to remember Bharara pushed the boundaries of his office further than most of his peers. He was known for his “speaking complaints,” describing crimes in almost novelistic fashion. Most prosecutors aren’t so verbose. To find yourself a character in a Bhararian plot is to know your career, regardless of ultimate guilt, is finished.

Consider the plight of the teens ensnared in Bharara’s much ballyhooed gang sweeps. These sprawling takedowns entangle innocent bystanders and violent gang leaders alike. Specious evidence, like Facebook and Instagram posts, are used against them and they are pressured into taking plea deals. Black and brown men who are tangentially connected to gang members in their buildings are led away in handcuffs, their lives ruined.

Unlike Bharara, Paul Fishman, the New Jersey U.S. attorney, turned in his resignation to Trump without complaint. The prosecutor who won convictions of two former Chris Christie aides in the Bridgegate scandal, Fishman rarely leaked details of his investigations to the media, shunning the spotlight as he pursued game as big as any Bharara sought. The same held true for Loretta Lynch, who as the tight-lipped U.S. attorney for the Eastern District never made a spectacle of herself.

By investigating Republicans and Democrats, Bharara, reared in the Chuck Schumer academy of media relations, was portrayed as a man above the dirty business of politics, as the Times put in their laudatory summation of his career. In fact, Bharara conducted himself just like the talented politician he was, knowing that to quietly turn in his resignation to Trump was not the way get retweeted 64,000 times (and counting).

Bharara defenders will say Trump went back on his word, since — at least according to Schumer — Trump promised Bharara he could remain in his post indefinitely. Trump never said this publicly, so we’ll have to trust Schumer and his protégé. We’ll also have reason to worry because Bharara was investigating how Fox News settled with the women Roger Ailes sexually harassed and Trump may be thinking about replacing Bharara with Ailes’ personal lawyer.

Now Bharara rides off into the sunset, glowing editorials at his back. He can dream bigger dreams, like a shot at Cuomo when he trudges to re-election next year. Whatever adventure he chooses next, he knows he’ll have an adoring media at his side, ready to pounce on anyone who sullies the white knight’s armor.

 

[COINTELPRO]

He told him that he could stay on to fuck with him. There must be some hate for him. I would have done him the same way.

By firing him this way Trump is leaving a message. He is also protecting himself if information were to become public.

The Obama DOJ was highly corrupt, they needed to go whether covering up their failings in the financial crisis or murder spree by whites that was never looked into.

 

[MASTERBAKER]

Key witness in Preet Bharara’s Russian probe just fell from fourth floor of building
TOPICS:featuredfourth floorMoscowPreet BhararaPutinRussiawitness

Posted By: Tom Cahill March 21, 2017

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A critical witness in a Russian mob-operated money laundering scheme may have just been forcibly thrown from a fourth floor window.

Nikolai Gorokhov, who is the attorney representing the family of anti-Putin lawyer Sergei Magnitsky, is still alive but in intensive care with severe head injuries, according to the Daily Beast. The Beast also reports that Gorokhov was a witness in recently fired U.S. attorney Preet Bharara’s investigation of a Russian money laundering ring operating out of New York City. BBC reporter Daniel Sandford tweeted that Gorokhov was due in court this week to testify before a grand jury on what he knew, citing British financier Bill Browder of Hermitage Capital:


Bizarrely, the Kremlin appears to be floating a narrative that Gorokhov was helping winch up a bathtub with four other workers (who were uninjured) when he fell, rather than being forcibly thrown out of the window. Some of Sandford’s followers were skeptical of the narrative, wondering what a lawyer was doing helping to move a bathtub.

In his own investigation, Magnitsky learned that officials working within Russia’s Interior Ministry and its tax bureau were members of the Klyuev Group. In a 2012 letter to President Obama, Senator John McCain (R-Arizona) described the group as a “dangerous transnational criminal organization” which is allegedly involved in “numerous international crimes.” Sen. McCain equated the Klyuev Group with the Sinaloa drug cartel, which is one of Mexico’s most ruthless organized drug smuggling and trafficking organizations. Magnitsky was later tortured and killed in jail in 2009, presumably due to his knowledge of the group’s members and activities surrounding tax fraud.

Preet Bharara was counting on the testimony of Gorokhov in order to bust the Klyuev Group. However, President Trump suddenly removed him from his post after he refused Attorney General Jeff Sessions’ order to resign. In addition to the alleged attempt on Gorokhov’s life, Axios noted that seven other prominent Russian officials critical of Vladimir Putin’s regime have all mysteriously died since November of 2016.



Tom Cahill is a writer for the Resistance Report based in the Pacific Northwest. He specializes in coverage of political, economic, and environmental news. You can contact him via email at tom.v.cahill@gmail.com, or follow him on Facebook.

 

[MASTERBAKER]

Russian lawyer involved in corruption investigation severely wounded after fall from apartment

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A lawyer for the family of Sergei Magnitsky (pictured) fell from an apartment building on Tuesday.
(Alexander Zemlianichenko/AP)
Christopher Brennan
NEW YORK DAILY NEWS
Updated: Tuesday, March 21, 2017, 9:08 PM

The lawyer for the family of a Russian attorney, who died following a corruption investigation, has been hospitalized after falling from the fifth floor of an apartment building in Moscow.

Nikolai Gorokhov fell from a window on Tuesday, a day before he was supposed to represent the mother of Sergei Magnitsky, whose death has been a focal point in souring U.S.-Russian relations.

Magnitsky said he had uncovered a $230 million fraud scheme by Russian government officials, but was imprisoned and convicted posthumously after being accused of the same fraud.

Gorokhov, 53, was set to appear in court tomorrow in continued court proceedings into the matter, but was “thrown from the top floor of his apartment building” and suffered severe head injuries, according to a website connected to Magnitsky’s boss, financier Bill Browder.

Kremlin casts doubts on U.S. probes into Russia election meddling

It was not immediately clear how Browder knew that the lawyer was “thrown.”

A representative of Browder’s Hermitage Capital later told independent newspaper Novaya Gazeta that Gorokhov and workers had been trying to raise a bathtub to the fifth floor when a winch broke.

Nikolai Gorokhov is also reportedly a witness in a case involving the Magnitsky fraud money going into Manhattan real estate.
(Handout)
“We have a lot of questions relating to what happened that we cannot receive answers to,” the rep said, adding that the winch was strong enough for something heavier than a tub and none of the workers were injured.


Beyond advocating for Magnitsky’s family, Gorokhov is also a key witness in U.S. prosecutors' case against Prevezon Holdings, according to Browder.

House intelligence chair Devin Nunes is hot and cold on Comey

Prevezon is a Cyprus-based company allegedly used to store money from the $230 million Russian fraud scheme in Manhattan real estate.

That lawsuit, in Manhattan federal court, is set to go to trial in May.