Wikileaks cable reveals Syria’s price for US support

Syria is ready to cooperate with America again over Iraq but only at a price and flatly refuses to link an Israeli deal with Iran’s nuclear capability. These are the key messages revealed in one of the top secret cables published by Wikileaks this weekend. The cable “10Damascus8, Codel Gregg’s December 30 meeting with President” discusses “a frank one hour meeting” between Syrian President Bashar Al-Asad and six visiting US Senators Judd Gregg, Evan Bayh, Arlen Specter, Mike Enzi, John Cornyn and Amy Klobuchar on 30 December 2009.
(Photo credit not known, sourced here)

Asad began the talks by saying he wanted a return of Turkish-facilitated indirect talks with Israel but Syria’s relationship with Iran should not be linked to Israeli peace negotiations. Syria’s ties with Hamas and Hezbollah could be “satisfactorily resolved” only after peace was achieved. Asad said he wanted better relationships with the US but his foreign minister Walid al-Muallim said the ball was in the Americans’ court for taking the next positive step.

Asad called Iran the region’s most important country and said the West should acknowledged Iran’s NPT-protected right to enrich uranium under IAEA monitoring. Instead of insisting Iran ship all of its Low Enriched Uranium at once as the West demands, Asad said Iran’s counter-offer to ship several batches of LEU for enrichment abroad was a “reasonable” counter-offer. Asad said Iran was not interested in pursuing a nuclear weapon, but warned an Israeli military strike on its nuclear infrastructure would only increase Iran’s determination.

Asad also refused to link Iran’s nuclear program with Israeli talks, arguing it would complicate both issues. Asad said eight months of indirect peace talks with Israel in May 2008 under Turkish auspices had achieved more than several years of direct negotiations with Israel in the 1990s. Direct talks failed because of the lack of “rules of negotiation.” He said indirect talks was the best way to establish terms of reference similar to those reached by James Baker in 1991. Asad urged the US and EU to support the Turkish initiative. “Israel’s military superiority would not secure it from attack against missiles and other technologies,” he said.

Asad bristled at the suggestion Syria was allowing extremists across its borders into Iraq. Asad blamed the situation on the absence of political cooperation with the US. The Americans possessed a “huge information apparatus” but lacked the ability to analyse this information successfully. “You’re failing in the fight against extremism,” he told the Senators. “While we lack your intelligence capabilities, we succeed in fighting extremists because we have better analysts.”

Asad said Syria had refused to cooperate with President Bush because it did not trust him and his administration had wrongfully accused Syria of supporting foreign fighters. When President Obama assumed office, Syria tried to be positive. Asad said he shared the idea with Special Envoy Mitchell of a border security cooperation initiative with Iraq as a first step (the CIA analyst disputed saying it was an American suggestion to which Syria reluctantly agreed).

Asad also compared the difficulty of patrolling the large Iraqi border with similar issues on US-Mexico border. “In the US you like to shoot (terrorists),” he said. “Suffocating their networks is far more effective.” Asad blamed “US mistakes in Iraq” for trouble in the region. The report said despite a shared interest with the US in ensuring Iraqi stability, Syria would not immediately jump to intelligence cooperation without ensuring its own interests would be respected. “I won’t give it (intelligence cooperation) to you for free,” Asad told the Senators.

The Senators had two other agenda items they wanted Syria to address: the release of three detained Americans in Iran, and re-opening the Damascus Community School. Asad said he was unfamiliar with the detained Americans issue but was “ready” to reopen the school after he shut it down in response to a US military attack in 2008 that killed seven Syrian civilians.

The cable went into more detail of the discussions than revealed by Senator Specter’s account of the CODEL in the February congressional record. While Specter mentioned the Turkish solution and the “decoupling” of Iran he made no mention of the LEU offer or what Asad requested of the US in exchange for intelligence support.

The report is one of over 15,000 Top Secret classified documents released by Wikileaks on the weekend. On Sunday they began the painstaking task of publishing over a quarter of a million leaked US embassy cables. The cables date from 1966 to February 2010 and contain confidential communications between the State Department and 274 embassies in countries throughout the world.

Arms dealer BAE pleads guilty to hiding bribes

A British Magistrates Court heard on Tuesday how Europe’s largest defence company wilfully failed to keep proper accounting records of payments. BAE Systems is the largest arms manufacturer in Europe and the fourth biggest in the world with annual military sales of $15 billion. In a Magistrates Court hearing in London BAE lawyer David Perry said the company would enter a guilty plea at a higher court next month in a plea deal with the Serious Fraud Office.
(Photograph: Paul Ellis/AFP/Getty Images)
BAE is charged with knowingly not keeping proper records that explain payments on two contracts. The statement of offence against BAE reads “between 01 Jan 1999 and 31 Dec 2005 BAE knowingly…failed to keep accounting records which were sufficient to show and explain payments made pursuant to (a) a contract between Red Diamond Trading Limited and Envers Trading Corporation, (b) a further contract between British Aerospace (Operations) Limited and Merlin International Limited.” After the guilty plea, District Judge Caroline Tubbs said sentencing should be approved by a higher court and sent the case to Southwark Crown Court. The next hearing will take place on December 20. At this unprecedented hearing a judge will be asked to confirm the final settlement. Many believe the timing of the Crown Court hearing is deliberately close to Christmas to bury the bad news.The legalese around the trial charge did not state the dodgy accounting was hiding bribes to procure the sale of a military radar system to Tanzania. BAE covertly channelled bribes through the Panama-registered Envers from its company, Red Diamond, to secure a contract in 1999 to supply Tanzania with a military radar system costing $40 million. BAE avoided more serious charges after it struck an agreement with the SFO in February.

The deal splits jurisdiction with the US Department of Justice over the company’s misdeeds. The SFO got Tanzania and the DoJ got the rest. BAE pleaded guilty in the Crown Court to an offence under section 221 of the Companies Act 1985 of failing to keep reasonably accurate accounting records for its activities in Tanzania. The company had to pay $50 million comprising a financial order to be determined by a Crown Court judge with the balance as an ex gratia payment for the benefit of the people of Tanzania.

In return the SFO will drop all investigations into BAE deals in South Africa, the Czech Republic and Romania as well as Tanzania. An NGO called The Corner House have expressed concern the plea bargain means SFO has agreed to fetter its future prosecutorial discretion. “If further evidence came to light that was sufficient to mount a prosecution against individuals that necessitated making allegations concerning BAE’s conduct, the SFO would not be able to bring such a prosecution as it has undertaken not to do so,” said The Corner House.

The Campaign Against Arms Trade have joined The Corner House to bring to the Court’s attention over the plea bargain’s undertaking never to prosecute any individual in future if doing so involves alleging BAE Systems was guilty of corruption. CAAT’s Kaye Stearman said the new hearing date is so close to Christmas that “in the hackneyed phrase, this will be a good day to bury bad news.” “Yet there is still much about this whole sorry saga that the public deserves to know,” she said.

CAAT are responsible for much of what we know about BAE’s arms dealings. They scored a major victory over BAE in 2007 after the High Court ordered the weapons dealer to produce a sworn affidavit divulging how it obtained a confidential and legally privileged document from CAAT. In 2003 the Sunday Times revealed BAE paid a company to carry out an elaborate spying operation on its critics and infiltrate CAAT.

The 2007 affidavit followed the failed police investigation of BAE’s illegal activities in Saudi Arabia. BAE chair Dick Evans had easy access to PM Tony Blair and the government pressurised the SFO to drop the investigation into BAE’s Saudi arms in December 2006. Foreign Secretary Robin Cook said the relationship between BAE and the government was too close. “In my time I came to learn that the Chairman of British Aerospace appeared to have the key to the garden door to Number 10,” he wrote. “Certainly I never once knew Number 10 to come up with any decision that would be incommoding to British Aerospace”.

Ireland faces eviction

There is an image of Ireland doing the rounds which has gone viral. The image is in the format of classified advertisement. The item for sale is Ireland offering “76,000 km2 of floor space” to the buyer. The “vendors” are prepared to sell for 900 billion Euros or roughly $1.23 trillion.

All joking aside, Ireland is no longer worth the money. The pretend asking price is exactly ten times Ireland’s debt which stands at $123 billion and continues to grow. It is now equivalent to one third of Ireland’s GDP. With Ireland still seen as a risky proposition and the bucket of money fast running out, the situation is about to get worse for the Irish taxpayers. They may have to bail out their banks to the tune of $95 billion and will pay the price through a series of austerity budgets and the return of emigration. The bad times are back with a vengeance.Poverty has been the norm for Ireland for much of its existence. Founded out of the barrel of a gun in 1921, the Irish State was the desperately poor relation of northern Europe. Its protracted independence battle from Britain left it penniless, its war neutrality cost it a place in the Marshall Plan and the economic illiteracy and conservative social attitudes of Ireland’s towering statesman Eamon de Valera encouraged mediocrity. In an infamous St Patrick’s Day speech to the nation de Valera’s vision of Irish life was “the romping of sturdy children, the contests of athletic youths and the laughter of happy maidens.”

But as the children, youths and maidens grew into adulthood, they found an Ireland with no place for them. Until the 1960s emigration was the only solution for most if they wanted a financial future. Emigration was also an escape from a stultifying environment. An island off the coast of an island off the coast of Europe, Ireland was isolated culturally and financial from much of the European post-war boom in industry and ideas.

The Irish Catholic Church had enormous power and privilege in de Valera’s young state to the point where he allowed the archbishops to co-write the 1937 constitution. The Church’s conservative hierarchy held its power by ensuring new ideas were suppressed through censorship and criticism from the pulpit. Efforts to change the constitution in the 1980s mostly failed but the battles severely bruised the Church.

Europe would eventually change everything. Entry in the EEC in 1973 had a profound effect on Ireland coming at the same time as the arrival of British television across the country. Informed by overseas events and subsidised by European money the country rocked through waves of social revolution in the 1980s that bitterly divided populations. The constitutional referenda were mostly over sexual matters which had long been the preserve of the Catholic Church.

By the 1990s the Church’s power was crumbling fast. Clerical scandals robbed them of their ability to preach down to the flock while the encroaching cultural influence of Britain and the US throughout the 1980s robbed them of respect in the young. Meanwhile an increasingly monied society was finding it no longer had the time nor need for spiritual aid.

A population of three million used to accepting power from the belt of a crosier suddenly found organised religion surplus to requirements. As in many post-religious societies, mass materialism quickly rushed into fill the void. Moral worth was judged by the car people drove and the house they owned. Like the other PIIGS, which all emerged from strict Catholic or Orthodox societies, the Irish put their noses in the trough for 15 years of good times. As the economy improved through one-off reforms, the nation went on a consumerist spending spree stimulating the economy further. Long a net exporter of people, Ireland suddenly found itself an attractive destination for refugees desperate for a job in this humming hive. The immigrants brought new ways and new ideas and further shook up a tightly homogenous society.

The original Irish boom was based on low taxing hi-tech IT and pharmaceutical companies. By 2000 those industries had plateaued. The boom was running on its own fuel. Construction became Ireland’s biggest industry. Ireland’s lax planning laws led to a building frenzy. The big profits in property encouraged existing homeowners to gamble with their equity in what seemed like easy money. The move to the euro gave access to European markets. The Irish bought property in southern Europe and along with the equally cashed-up Russians and British became primary investors in Montenegro and the Canaries.

A few Cassandras such as Morgan Kelly (Professor of Economics at University College Dublin) predicted what would happen when the boom ended and the house of cards collapsed. It wasn’t just private investors playing for high stakes. The Irish banks had made astronomical profits but got themselves in deep to foreign investors. When the Global Financial Crisis hit, the cheap money dried up. With confidence killed at a stroke, businesses contracted. The toxicity of the loans left the banks deep in debt with no new income to replenish them.

Desperate to avoid its major financial institutions going under, the Irish Government issued a bank guarantee as Governments did in US, Britain, and Australia. Unlike the other three English speaking counties, the Irish guarantee led to national insolvency. Three Irish banks (Anglo Irish, Allied Irish and Bank of Ireland) had hidden the extent of their bad debts from the Government. Now the Government’s open-ended commitment to cover the bank losses far exceeded the fiscal capacity to pay.

The turning point came in September when bank loans worth $75 billion due to the UK, German, and French banks matured. Despite being lied to by the banks, the Irish Government agreed to pay off the loans. It was accomplished with another loan, this time from the European Central Bank. Kelly is saying the next crisis will be mass home mortgage default. Like the “for sale ad”, Kelly goes for gallows humour. “After a sudden worsening in her condition, the Irish Patient has been moved into intensive care and put on artificial ventilation,” he said. “While a hospital spokesman, Jean-Claude Trichet, tried to sound upbeat, there is no prospect that the Patient will recover.”

The “hospital spokesman” Trichet is the French civil servant who heads up the ECB. The ease of access the euro provided was now a noose that threatened to hang the Irish economy. Trichet would normally turn his Gallic nose up at the gauche goings-on of the Irish. But he has too has much to lose: Ireland still owes a lot of money to French banks.

Like fellow terminally-ill patient Greece, Ireland would put the wider European economy at risk if the crisis of confidence spread up the line to the larger economies. Ireland is relying on Trichet’s riches to pay for decades of crony capitalism. But the kindness of strangers will have a price. If mortgagees start to default on a widespread, Ireland could be ruled within five years by what Kelly calls “a hard right, anti-Europe, anti-Traveller party that will leave us nostalgic for the, usually, harmless buffoonery of Biffo, Inda, and their chums.”

Auditor diagnoses Queensland Government’s IT ills

Auditor General Glen Poole has tabled a report in Queensland parliament critical of how the government implements computer systems. Among the many audits in the report “No 13 for 2010” is on Queensland Health’s troubled new payroll system. The auditor said Health’s problems were replicated in other agencies with their new payroll systems and there are some serious issues with the IT outsourcing process.

The report said QBuild’s (Department of Public Works) Ellipse system was implemented to replace their existing operational, financial and payroll systems at a cost of $32m. “Significant issues arose after this system was implemented,” the report said. Project management controls were not consistently applied across the system implementation lifecycle while governance structures were not effective in communicating complete and timely information. Testing was also unsatisfactory given QBuild’s financial reporting and payroll processes “were dependent on the rigour of this testing.”

The QBuild findings were consistent with what the auditor found at Health and they demonstrate “a critical need for improved system implementation skills within the public sector.” The original idea was whole of government implementation which was changed to a project governance arrangement in June 2009.

After many years of design, development and testing, Queensland Health implemented a new payroll system on 14 March this year. Poor requirements gathering and system design meant there were 47 change requests to the original scope, delaying the project by 18 months and making the project three times more expensive than original estimated. Health spent $100 million on their new payroll system and associated whole of government initiatives.

An auditor’s opinion was issued in Report No 7 in June 2010 after significant deficiencies were found in the completeness, accuracy and timely payment of employees when the system first rolled out. The audit found the deficiencies arose as a result of “weakness in internal control” and represented “material non-compliance with the prescribed requirements for the department to maintain an appropriate expense management system.

The system was not ready to implement on 14 March however the Go Live decision was made after project partners IBM and CorpTech signed off the technical readiness while the business signed off the Acceptance Testing report. Because of the project’s complex outsourcing, significant contractual and commercial challenges would occur if the project was further delayed. Yet there were no contingency plans for business cut-over and no testing done in the production environment to determine whether the pays were correct prior to the first live payroll. Nor did anyone consider the impact of the new system’s changed business rules on business practice.

The implementation problems were so bad and so widespread, Health had to establish a Payroll Stabilisation Project with KPMG. The auditor said the Stabilisation Project has ended and the project has transitioned into the Payroll Improvement Program. Health activities have resulted in a declining trend in payroll enquiries and outstanding transactions. Poole cautions “close monitoring of the transaction backlog and further improvement in the efficiency of business processes” was still required. The audit found the deficiencies had no material effect on the completeness and accuracy of the reported employee expenses.

The recommendations for the QBuild project closely mirror what was recommended for Health. The first key point is a lack of a project management methodology including requirements for project reporting, including key risks and issues. Poole recommends government departments engage an experienced project manager with strong enterprise resource planning implementation experience. He said strong governance frameworks should be established to ensure separation between senior supplier and the project manager while suppliers should only be paid on deliverables satisfying acceptance criteria.

Some recommendations may be unrealistic (eg “user acceptance testing should be completed prior to commencing user training”) however most is basic project management methodology. Given that experience of such methodology is plentiful at QH, CorpTech and IBM, it may be that too many cooks spoiled this particular broth. Serious questions need to be asked about the efficacy of outsourcing large government IT projects.

Disclosure: this writer is a former employee of IBM and worked very briefly – and unenjoyably – on the QHIT project before tendering his resignation in April 2009.

Harry Redford, the White Bull and Roma

In the 1860s the new colony of Queensland issued licences for a sheep and cattle station called Bowen Downs north of Longreach. Bowen Downs extended along the Thomson River and its tributaries to Muttaburra. In 1870 more than a thousand cattle disappeared from the station. This event would have grave consequences some years later to the town of Roma, 700kms to the south.

(picture: “Harry Redford leaving NSW for the new frontier Qld, 1869″ by John Morrison)

The controversy started when a number of cleanskin cattle were taken from Bowen Downs without permission of the owners. A New South Welshman called Harry Redford (in some accounts called Readford) was one of four men in charge of drays and horses belonging to William Forrester who owned a station near Bowen Downs.

The four men rode 40kms up the Thomson River and build cattle yards where they mustered unbranded Bowen Downs cattle. They included a valuable imported pure white bull to accompany the cattle to keep them quiet. On 1 March 1870, the cattle were moved to Forrester’s camp where they were branded with the names of several owners. Redford and four other men drove the mob in a dangerous journey to sell them in the southern colonies.

By June, Redford and his crew were spotted at the general store in Strezletski Creek, South Australia. Redford (posing as “Henry Collins”) bought clothes and provisions and offered the storekeeper two cows in payment. Redford told him he and his brother kept the cattle in an adjoining colony. The storekeeper demanded the white bull as well and the deal was done with Redford issuing a receipt in the name of Collins.

In September stockmen at Bowen Downs noticed tracks of cattle leaving the station. They followed the tracks to a neighbouring property belonging to a man named McKenzie where they found Bowen Downs cattle. McKenzie made no claim to the cattle but another man would later testify McKenzie was told “the coast was clear” when it came to dealing with the Bowen Downs cattle.

McKenzie and two other men (McGrath and Cornish) were arrested and charged with stealing “20 oxen, 20 cows, 20 steers, 20 heifers and calves”. McKenzie and McGrath were brought before the District Court in Roma in 1871. The Government, alarmed at growing reports of cattle thefts, supplemented the Crown Prosecutor with a private barrister. Despite a large number of witnesses testifying against the men, a jury found the pair not guilty.

The discovery of the stolen cattle led to further investigations which uncovered an even larger amount of missing cattle. The famous white bull was found at Strezletski and the remainder of the cattle were traced to Adelaide. McKenzie and McGrath were brought back to Roma to face further charges with Forrester and two other men (though not Redford) for stealing 200 cattle. McKenzie turned Queen’s evidence and testified he in was in the pay of McGrath when they took the cattle and branded them in Forrester’s yard. Again the jury found McGrath not guilty. The prosecution decided not to proceed with the other cases.

In February 1872 Redford was arrested in NSW for the Bowen Downs crime. He was transported to Roma in November and remanded for trial in February 1873 charged with stealing “100 bullocks, 100 cows, 100 heifers, 100 steers and 1 bull.” There was great difficulty empanelling a jury with only seven out of 48 jurors accepted. The judge determined only those set aside by the prosecution would return until 12 were selected. A Bowen Downs overseer told the court he had bought the valuable white bull and Redford’s signature was matched with the fictional Collins. A former accomplice gave evidence against Redford. The defence undermined his testimony saying he had escaped from a lunatic asylum in Brisbane and was promised a pardon if he gave evidence.

The defence called no witnesses but said Redford had suffered great hardships in the 12 months since arrest. After a 12 hour court case, the jury needed one hour to return another verdict of not guilty, greeted with gasps of surprise from the crowded Roma courthouse. The judge asked the foreman to repeat the verdict, after which he exclaimed “Thank God, gentlemen, that verdict is yours, not mine.”

The Brisbane Courier, Sydney Morning Herald and Victorian press attacked the verdict while wealthier citizens of Roma petitioned the government deploring the miscarriage of justice. “As a Magistrate of the District,” one citizen wrote, “I beg to add my private testimony to the fact that the feeling in Roma is evidently much very against convictions for cattle stealing and the present jury list contains many names of men quite unfitted to return an honest verdict.”

The local judge wrote a letter to the Attorney-General. He said although Redford was charged with stealing a thousand cattle, only the theft of the white bull could be proven. “I fail to see the possibility of obtaining a conviction for cattle stealing in any case before a Roma jury,” the judge said. He blamed the defective Jury Act which allowed “respectable people” to be barred from jury duty.

In March 1873, the parliament in Brisbane withdrew the District Court from Roma for two years. Defenders of Roma juries wrote letters to the Brisbane press in order to “redeem ourselves from the imputation cast upon us”. They put the blame on the Crown for failing to secure the prosecutions. In the end the ban lasted less than 12 months.

The trial received notoriety across Australia. It was one of several episodes which Ralph Boldrewood’s Robbery Under Arms is based on with Redford’s fictional counterpart Captain Starlight tried in “Nomah”. The real Redford continued to misbehave and was arrested in St George in 1875 for horse stealing. Once again a Roma court refused to convict. A second horse stealing charge was dismissed due to lack of evidence but he was eventually sentenced to 18 months for a third horse stealing offence. Significantly, this trial took place at Toowoomba, not Roma.

When released, he joined a party exploring a route for a rail link from Brisbane to Darwin. His lasting fame came for opening up stock routes between Queensland and the Northern Territory. He died in 1901 when attempting to cross the flooded Corella Creek.

Squirming all the way to the bank

The last two of the major four Australian banks to act on the Reserve Bank rate rise have passed on substantial rises to beleaguered customers. While the RBA announced a quarter of a percent interest rate rise on Melbourne Cup Day last week, today the National Australia Bank lifted its standard variable rate 43 points to 7.67 percent while Westpac added 35 points taking their standard variable loan to 7.86 percent. ANZ announced a similar hike yesterday.

 All three were slow to act after Commonwealth’s early response of 20 points above the RBA addition unleashed a week and a half of frenzied attacks against the banks. The media and politicians had their reasons for lashing the banks and with the CBA and its CEO Ralph Norris taking most of the heat Westpac, ANZ and NAB scurried off to the bunkers to contemplate how to sell their response.

It was never in doubt they too would pass on inflated rises. Like the Commonwealth, all three acted in the best interests of their board not their customers. While all four expect adverse consumer reaction, they could rely on the vast majority of their customers to grudgingly accept the rises rather than go through the hassle of changing over to cheaper options provided by loan operators, credit unions and building societies. Between them the Big Four control over 86 per cent of the Australian mortgage lending market.

The media release NAB sent out today to announce the rise is a masterpiece in sleight of hand. In the same first breath as it announced the size of the raise, it maintained it was still “highly competitive” against two of the three other banks. They remain the cheapest of the big four by 13 points. But they are not highly competitive when measured against Wizard/Aussie or RAMS. Building societies ABS and Heritage are also between 10 and 20 points cheaper than NAB. Credit unions have cheaper loans still with Credit Union Australia offering a (pre rate rise) standard variable of 6.87 percent, almost a full 100 points cheaper than Westpac.

The trigger for the bank’s money grab was the initial decision by the RBA as everyone in Australia was tucking into chicken and champagne on Melbourne Cup. day. RBA Governor Glenn Stevens began with apparent good news. The economy is in good shape. Confidence is returning, he said, employment is firming and business is being stimulated by global growth and high commodity prices. Trouble was these conditions brought inflation with them. “Inflation is likely to rise over the next few years,” said Stevens. “This outlook, which is largely unchanged from the Bank’s earlier forecasts, assumes some tightening in monetary policy.”

They “tightened” monetary policy by 0.25 percent. Before the Cup had ended, the Commonwealth was first out of the blocks. The additional 25 points was not tight enough for them. The Commonwealth raised their home loan variable interest rate from 7.36 per cent to 7.81 per cent a year, a jump of 45 points. Group Executive, Retail Banking Services Ross McEwan blamed the additional 20 point rise on the “sustained increase in the Retail Bank’s wholesale funding and retail deposit costs”. McEwan said money was more expensive since the GFC and as older and cheaper funding arrangements expire they had to be replaced with more expensive funding. Commonwealth said consumer deposits which formed 60 percent of their home loan funding were now more expensive because of “increased competition”.

After nine days of silence, ANZ came out with their plan yesterday. They bumped their rates up 39 points to 7.80 percent and blamed “the sustained rise in the cost of funds in recent months”. CEO Australia Philip Chronican dressed the decision up as taking “the lead in doing more to give customers’ choice and to help them manage their finances in this uncertain interest rate environment.”

NAB and Westpac waited until today to tell us their news. Westpac added 35 points taking their standard variable loan to 7.86 percent, the highest of the majors. Group Executive, Westpac Retail & Business Banking Rob Coombe delivered the bad news. “This was a very difficult decision brought upon us by average funding costs that continue to rise, and was only made after the most careful consideration.”

NAB didn’t bother disguising it as “careful consideration”. Instead they asked consumers to look at positives. As well as their fabled competitiveness, they were reducing their greenhouse gas emissions while asking for sympathy as they absorb “a significant portion” of its increased average funding costs. The problem with these arguments are the banks’ recent profit statements. In 2010 NAB cash earnings increased almost a fifth to $4.6 billion. Commonwealth did better still with similar percentage increase to $5.7 billion. Westpac were on a similar path with cash earnings of $3 billion for the first half of the year, as were ANZ with $2.3 billion.

Part of the reason for these high profits are Australia’s high rates compared to other developed other countries. The US, Canada, UK, Japan, the Euro Zone and Switzerland have official rates of 1 percent or under. Only the steamrolling economies of China, India and Brazil have higher rates than Australia. But there is a second reason making bank customers angry. Their huge profits are a reflection of the privileged position enjoyed by the banks resulting from the Commonwealth Government’s bank deposit guarantee.

The guarantee was withdrawn at the end of March but kept Australia stable in the post Lehman collapse era. The State acted as guarantor to $32 billion worth of bank borrowing from international credit markets. On behalf of those unhappy taxpayers (and with his own job on the line) Treasurer Wayne Swan is leading the charge against the banks. “What we’ve seen in terms of the profitability of our banks which have been restored to pre global financial crisis levels,” he said, “means that any increase over and above the Reserve Bank increase is simply not justified.” Swan has a political agenda but the management double-speak used by the banks to justify the inflated rises would appear to bear him out.

Burma buys time with sham election

To nobody’s great surprise, Burmese military rulers had a sweeping victory in last week’s election. With the last democratically elected leader of the country under house arrest for eight years and her party forcibly disbanded, few outside the remote capital Naypyidaw had any faith in the election’s validity. The country has been ruled undemocratically since 1962 by military rule under several different names. It annulled the unfavourable result of the one free election it had in the last 48 years. It was little surprise to hear they picked up 80 percent of the seats this time round.
(picture: SOE THAN WIN/AFP/Getty Images)
It took a while for even this news to seep out. Silent for three days after the election, State Television finally announced on Wednesday top members of the ruling junta, including army joint chief-of-staff Thura Shwe Mann and Prime Minister Thein Sein, won seats in Parliament.

We only have State Media’s word for what happened as foreign reporters are not allowed in the country. The tightly controlled local media takes the Government’s side when it is forced to take a side at all. Word of mouth ensures everyone knows what is really happening. A brave few like Muang San strapped on a hidden camera as he went to vote. “I’m a journalist,” he said. “It’s my duty to show the world what is happening in Burma.”

The main opposition party National League for Democracy led by the imprisoned Aung San Suu Kyi boycotted the election thought a breakaway offshoot called the National Democratic Front contested it. With no press, no charismatic leader, no scrutiny of the polls and ten times fewer candidates, they were trounced. “The Burmese junta hosted this election in order to whitewash itself internationally,” said a banana seller at a market near Rangoon.

The election gives the regime useful bargaining chips in its key relations with other ASEAN countries and China. Due to the repeated criticism of the US and the EU, Burma has become ASEAN’s albatross. The association of south east Asian nations has survived by turning the other cheek to members’ excesses but are under enormous pressure to get Burma to conform to international norms. ASEAN countries have offered guarded support for the elections. The real benefit is to give Asean an excuse to ignore further criticisms of the Naypyidaw regime.

The regime can also afford to ignore the criticisms. Burma spends at least 40 percent of its national budget on the military compared to 0.4 percent on healthcare and 0.5 percent on education. Its standing army of 500,000 soldiers is the largest in south east Asia.

Foreign powers are queuing up to take their money. In 2009, Burma signed a contract with Russia to buy 20 MiG-29 jet fighters for US $570 million and many of Burma’s future nuclear military purchases may come from fellow rogue state North Korea. China is also a huge contributor as Burma’s third-largest trading partner and provides extensive military, economic and diplomatic support.

While Asian leaders get cosy with the tatmadaw, the biggest thorn in their side remains the frail but immensely courageous activist Suu Kyi. The 65-year-old Nobel Peace Prize laureate, democracy activist and daughter of the country’s founder is scheduled to be released Saturday from house arrest. Most observers remain sceptical this will happen as she has been in detention for 15 of the last 21 years despite repeated calls from the international community to release her. A bad sign is today’s decision to reject her appeal against house arrest by the politically motivated Burma’s Supreme Court.

Not all the regime’s enemies are in prison. In the hills, army forces still fight with ethnic groups that don’t want to be a part of Myanmar. Karen separatists are causing havoc on the border with Thailand. Thailand does not want a new Karen state, but unrest at the Mae Sot-Myawaddy crossing is causing economic losses estimated at 10 million baht (almost $400,000) this year. The Karen National Union has said it will now join up with five other ethnic rebel groups: the Kachin Independence Army, the Karenni National Progressive Party, the Mon New State Party and the Shan State Army-North.

Burma, for all its half a million strong army, is unable to crush these six ethnic revolts. Neither can the compliant media stop the grumbling on the streets of Rangoon. Like any Government that rules by fear, the Burmese junta philosophy is driven by fear it will be overthrown. The paranoid tragedy that is Burma’s politics still has a few acts to go before the curtain falls.