Nov 25, 2012

LUKOIL opens new terminal at Barcelona port

LUKOIL opens new terminal at Barcelona port // Companies // News | Neftegaz.RU
02 May 2012 , 10:31Neftegaz.RU672
Vagit Alekperov, President of OAO LUKOIL, and Jose Luis Porté, President of Meroil, participated in the festive ceremony today dedicated to the commissioning of a new petroleum terminal at the port of Barcelona (Spain).

The project was implemented by a joint venture (50/50) established in July, 2010 between LITASCO, an international oil trader (a wholly-owned subsidiary of LUKOIL), and the Spanish company Meroil.
The new terminal was constructed as part of a project to expand Meroil’s existing terminal capacities.

Thirteen new tanks with an aggregate storage capacity of 360,000 cubic meters, and ranging in volume from 6,500 to 40,000 cubic meters, were constructed within an area of 40,000 square meters. The new terminal, connected to the pipeline system of Hydrocarbonates Logistics Company, includes 8 petroleum-product loading gantries with at hroughput capacity of 400 tank trucks per day.

Sep 10, 2012

From the European ‘Party of Discontents’ to the Authoritarian ‘Axis of Resistance' to the West?

By Irina Severin | 20.08.12

Will Merkel's Visit to Moldova Make a Difference?

Why Angela Merkel, the most influential European politician, in the midst of the EU financial crisis decided to visit Moldova - Europe's poorest and otherwise insignificant country? Why bother?

A glance at the map shows that Moldova including its breakaway region Transnistria (self-proclaimed in 1990-s with the Russian Army support) is sandwiched between two countries, problematic for the EU:  Ukraine with the "Tymoshenko case" and Romania with the 'Basescu case'. Both countries Romania as a member of the EU and Ukraine,   proclaiming the European aspirations demonstrate clear potential for sliding into authoritarianism. 

In both cases, there are indications of Russian involvement in domestic political processes. In the Romanian case, Russia was traced as encouraging the Ponta-Antonescu 'coup' against Basescu. In Ukraine, Russia's growing meddling limits Ukrainian potential for democratization.

The economic pressure is another instrument of influence. In both cases,  gas prices being political are used for control of the political and economic situation in the countries.

Transnistria, existing mostly for justification of the Russian military presence in the region, is a direct threat to security in the Europe, not a "stabilizing factor" as Russia pretends.  Russia involvement wouldn't be a threat if Moscow were moving to rapprochement with the EU modernizing its political and economic system. Germany is interested in cooperation with Russia, but both the EU and Germany need to see that Russia is open for the European values as a precondition for closer interaction and for being guaranty for stability.
In 2009 Angela Merkel offered closer cooperation to Medvedev in exchange to Russia constructive role in the Transnistrian frozen conflict settlement. Russia didn't advance in this direction preferring to impose its will maintaining its military presence on the border with the EU. Russia is quite pessimistic about the EU future considering it a temporary experiment and recalling that about 50 years ago European countries were each other’s worst enemy.
Moscow thinks that the EU dissolution would rise Russia to a great power status. Though, Russia's plans are much more ambitious. Russia considers its  Eurasian Union an alternative to the EU and doesn't limit it with the former USSR borders as some used to think. 

As Fyodor Lukyanov mentions in his article Uncertain World: Does Europe Have Any Alternative? Moscow doesn't exclude that it can relapse in what it names 'big Balkan game’ and even ‘big Orthodox game’ (including Greece and Serbia, for instance)."
From the European 'Party of Discontents'…
Meantime Russia tries to get control over the EU's decision-making without abiding by the European principles, but converting the EU countries to its own political 'matrix'. Technically this is achievable by encouraging the EU countries' politicians to break the EU political standards and oppose to the EU requirements. 

Now this is happening in Romania with Ponta government.  He came to power by organizing protests against President Basescu accusing him in complying with the tight the EU and IMF requirements.  Ponta's actions are tempered for now by coming parliamentary elections. Romanians are staunchly pro-European, and any anti-European rhetoric would obstruct their chances to win elections. 

Earlier Greek Syriza incited long-term protests against the EU and IMF, what put on the brink of collapse not only Greece but the EU and Eurozone as well. 

Opposing to the EU and the IMF from left or right by default puts any country into the Russian sphere of influence and at Russia's mercy.  Lukyanov names this opposition to the EU "the growing "party of discontents": "Both ideological extremes are brought together by the new rhetoric calling on the government to defend the public against the social ills of globalization". Further, he explains:
The difference between the ‘party of recovery’(consisting of Conservatives, Christian Democrats, Liberals and Social Democrats) versus the 'party of discontents' lies in their ability to run the state. The former has a clear idea of what should be done and how, but finds it increasingly difficult to garner public support, while its opponent can channel public sentiment but lacks a strategy of its own. The discontents are chanting slogans without assuming any responsibility. 
Ideological developments are more complicated. One EU country, Hungary, is already essentially turning its back on European valuesIt is increasingly leaning towards a more conservative and nationalist policy. 
On another side of Moldova - in Ukraine Russia recently managed to considerably advance its interests in exchange for a promise of lower gas prices. The "Language law" offers status of the regional language to the Russian language making the Ukrainian language redundant in more than half of Ukraine. 

Now Russian propagandists promote as the next step the idea of partition of Ukraine on the Ukrainian-speaking West and predominantly Russian-speaking rest of the country, where the Ukrainian language will be excluded, and the Ukrainian speakers will become the unprotected minority. 

The "Language law" has radicalized and polarized political situation in Ukraine,  making the country unstable before the elections. Not to mention here the incarceration of the opposition leaders, what is the anathema for the EU, but an apparent gain for Russia.
On this background,  Moldova despite all odds following democratic principles and adopting European values is looking like a rare case of success, which can become a showcase for others. The country doesn't require massive investments and is genuinely European. 
At the same time, lack of 'clear European prospective' for Moldova makes it a subject of the Russian pressure. One of the instruments is artificially created fringe movements: pro-Russian, invoking reunification with Russia and 'anti-Russian', promoting reunification with Romania. 

Both extremes exploit and boost nationalistic moods and raise the grade of polarization of the society. Recent March, organized by a fringe group supporting Unification with Romania, led to staged clashes with the "Patriots of Moldova", another fringe group, promoting the idea of unification with Russia. Naturally, such performances don't encourage the Transnistrian conflict resolution. Quite the opposite - they offer a justification for the existence of Russia's  military outpost on the Dniester. 
…To the Authoritarian 'Axis of Resistance' to the West
Merkel's encouragement of Moldova's European aspirations can strengthen Moldova as a stability factor in the region as well as a positive example for the neighboring countries. Otherwise, Moldova as small as it is can trigger a massive destabilization,  which can reach as far as the Balkans and Greece. Moldova’s territorial integrity and sovereignty is a key for the European security and stability.
If not supported now Moldova together with the EU's "party of discontents" one day can become a part of the authoritarian 'Axis of resistance' to the West, which Putin is working hard to create after his return to the presidency. 

The Authoritarian Axis became apparent due to the Syria case. Apparently, it includes Russia, Syria, China, Iran, North Korea, Venezuela. The situation starts to resemble the "Cold War" bi-polar world order when two sides were fighting for promoting their political models to expand their influence. 

Putin managed to replace the communism with the ideology of the Resistance to the West but has nothing to offer as an alternative political or economic model. Exactly as the European  "party of discontent", ‘ "detected"  by Lukyanov,  Moscow knows how to "channel public sentiment" and "to sow the seeds of discontent’ around the world, but doesn't know what to do next. Being underdeveloped and ineffective Russia could only lead the world to the chaos. 
For many years the reply of the West to Russia's growing assertion abroad was 'we don't fight with Russia'. But the problem is that Russia is fighting the West. And the West should at least acknowledge this. And if not fighting back at least to secure democratic values and principles in the world with some meaningful steps. Supporting Moldova today Merkel invests in stability and security in the Europe, what can be not achievable tomorrow.
The next day after Angela Merkel's announcement about her coming to Moldova Prime Minister Vlad Filat has got an invitation from  Moscow to meet Vladimir Putin after Merkel's visit. Will Moldova become the next target of promises of lower gas prices in exchange for the anti-Western  'discontent moves'?

Jun 15, 2012

Is Ron Paul A Useful Idiot?

Is Ron Paul A Useful Idiot?
Is Ron Paul A Useful Idiot?
Big Peace ^

Posted on Sunday, August 28, 2011 07:38:01 AM by mnehring
You saw it here first, folks!
Over at the American Spectator, the great Jeffrey Lord writes that “almost to a person … prominent pre-Ron Paul non-interventionist “Paulist” politicians of the 20th century were overwhelmingly not conservatives at all. They were men of the left. The far left.”
From three-time Democratic presidential nominee and Woodrow Wilson Secretary of State William Jennings Bryan to powerful Montana Democratic Senator Burton K. Wheeler to FDR’s ex-vice presidential nominee Henry Wallace to the 1968 anti-war presidential candidacy of Minnesota Democratic Senator Eugene McCarthy to 1972 Democratic presidential nominee (and Henry Wallace delegate in 1948) George McGovern, non-interventionists have held prominent positions in the American Left that was and is the Democratic Party.(emphasis added)

What was unique about Wallace’s 1948 Progressive Party campaign was how it was completely controlled by the secret Communist Party agents that surrounded Wallace, despite the fact that he was not a Communist. Lillian Hellman, who despite her denials was indeed a secret member of the Communist Party, admitted as much in her 1976 book Scoundrel Time:
During the early autumn of 1948, four or five of us [leaders of the Progressive Party campaign] were eating lunch together on the day of a large evening rally. When lunch was finished Wallace suggested that he and I take a walk. … When we had walked for a while, he asked me if it was true that many of the people, the important people, in the Progressive Party were Communists. It was such a surprising question that I laughed and said most certainly it was true.
He said, “Then it is true, what they’re saying?”
“Yes,” I said. “I thought you must have known that. The hard, dirty work in the office is done by them and a good deal of the bad advice you’re getting is given by the higher-ups. I don’t think they mean any harm; they’re stubborn men.”
“I see,” he said, and that was that.
What is clear is that the Communists – who, of course, did mean harm – were able to drive the campaign of a non-Communist due to their influence. And Wallace knew it, despite his public denials. As Arthur Herman pointed out in National Review “when Hubert Humphrey complained about the prominent role Communists were playing in the election, Wallace blithely told him to go talk to the Russian embassy — it had more influence over his campaign officials than he did.”

So if it can happen to Henry Wallace, why can’t it happen to his Republican mirror, Ron Paul? On Thursday, Mark Levin had Jeffrey Lord on his show to talk about his article (listen to it here, here and here), where they discussed all the crackpots and “neo-confederates” that surround Ron Paul in his inner circle. What would a group like think of, say, Israel?

Well, on his own website, we find that: “On January 9, [2009] Ron Paul addressed Congress to voice his opposition to a House resolution expressing strong support for Israel in its invasion of Gaza, and branding Hamas as a terrorist organization.” It goes on to proudly highlight that he went on Press TV (the Iranian state propaganda channel) and Russia Today (KGB-TV basically, with it’s paid agents promoting and even doing fund-raising for Ron Paul).
Anyone who has spent time around his supporters know what they think of Israel, and likely had to hear the anti-Semitic conspiracy theories that are so widespread in his little cult. What is their influence? Why doesn’t he denounce them? Also, such a denunciation would have a devastating impact both the national and international crackpot communities that sustain anti-Americanism, as the great Cold War era defector and former KGB General turned American Patriot Ion Mihai Pacepa explained. Wouldn’t that be in our national interest, Dr. Paul?

Jun 8, 2012

Russia eXaminer: Russia and China - Partnership of "Rabbit and Boa"

Russia eXaminer

Russia-China Anti-Western Friendship Leads to Global Chaos and Russia Takeover

By Irina Severin | 07.06.2012
Putin's three-day visit to China after his demonstrative refusal to participate in the Summit of the developed countries in the United States says that he does have something to discuss with the Chinese leadership. Moreover this is an opportunity to demonstrate to the West that Putin has an alternative. There is no doubt that he feels more comfortable there where nobody recalls of human rights and democracy, what Putin calls unnecessary "ideologization" in relations with the West.

May 26, 2012

Fight for Ukraine is not over

By Irina Severin | 05.25.2012
Merkel seeks Tymoshenko's  treatment In Germany. Tymoshenko's safety in Ukraine can not be guaranteed despite the extra security measures employed

Moderate expectations

A shift in the EU relation to Ukraine from threatening with boycott  to cooperation hopefully will give its fruits. Azarov's invitation for the EU lawyers to take part in Tymoshenko trial gives possibility to resolve the problem with Tymoshenko imprisonment without creating an impression that Yanukovych gave up to the pressure, but he does this in the context of approximation of the Ukrainian judiciary system  to the EU standards. 
The problem for the EU is that Yanukovych never gives up to the pressure - be it from Moscow or from Brussels. An opposite - if the pressure is applied he will act against his own interests and the interests of the country protecting first of all his self-esteem. Even if black and white approach is understandable at the parliamentary level, as politicians care more about the impression they create and reelection and not always are able to get to the the essence of the problem, at the executive and diplomatic level should be employed more sophisticated approach.
It seems that a search for the mutual acceptable solution was exactly the reason of the Ukrainian  prime-minister invitation for the European lawyers to take part in the Tymoshenko trial as well as the proposition that they can study all related to the case documents in order to evaluate them from the European point of view.  

May 19, 2012

Radical left and neo-Nazis score well in Greek elections / Political Affairs / Radical left and neo-Nazis score well in Greek elections

Radical left and neo-Nazis score well in Greek elections

06.05.12 @ 21:46
By Valentina Pop
BRUSSELS - Greek voters on Sunday (6 May) punished the two ruling parties responsible for the last EU bail-out and its austerity measures by giving the radical left the second highest number of votes and allowing a neo-Nazi party into the legislature for the first time.
Early official results after 10 percent of the votes were count show that the centre-right New Democracy party has gained the most votes (19.2%) but it is not enough to re-make the current ruling coalition with the Social Democrats (Pasok).

Apr 13, 2012

Signs of Gasoline Price Drop May Thwart Case Against Obama

Bloomberg News By Jim Snyder on April 10, 2012 Companies Mentioned

  • OIL
    iPath Goldman Sachs Crude Oil Total Return Index ETN
    • $25.82 USD
    • -0.21
    • -0.81%
Signs that gasoline prices may have peaked signal relief to both American drivers and President Barack Obama, who Republicans have tried to tie to a climb in the costs.
Average prices at the pump have hovered at $3.92 a gallon this month, after an almost uninterrupted rise since mid- January. Some analysts now believe they’ll start to recede, as oil fell to an eight-week trading low on forecasts U.S. supplies would rise to their highest level for this time of year.
That may be good news for Obama, because gasoline costs had risen to among the top concerns for Americans and voters tend to blame incumbents for their economic anxieties, says Bruce Oppenheimer, a Vanderbilt University professor who has studied energy and politics.

Mar 29, 2012

Guess Romney won't be getting the Pravda endorsement

Posted By Joshua Keating     Share
The once proud Communist Party propaganda arm-turned-supermarket tabloid/LOL-aggregator unloads on the GOP frontrunner:
Electing Mitt Romney as the next President of the United States of America would be like appointing a serial paedophile as a kindergarten teacher, a rapist as a janitor at a girls' dormitory or a psychopath with a fixation on knives as a kitchen hand. His comments on Russia are a puerile attempt at making the grand stage and boy, did he blow it...
Romney's "number one geopolitical foe" remark seems to be bringing out the best in Russian official bombast:
...Public Chamber Foreign Affairs working group head Alexander Sokolov [compared] him to one of the “Marlboro men, those so-called cool guys, for whom only America’s interests exist and all other countries are potential enemies – or at best, rivals.”
Even the normally staid Dmitry Medvedev said Romney's remark "smacks of Hollywood" and advised him to "check his watch": “It’s 2012, not the middle of the 1970s,”  
Romney reiterated his attacks on the president's open-mic incident in a piece for FP yesterday, in which he said, "It is not an accident that Mr. Medvedev is now busy attacking me. The Russians clearly prefer to do business with the current incumbent of the White House."
Obama's foreign-policy advisors responded here.  

Mar 21, 2012

Uncertain World: Russia - U.S. - Back to Business? | Columnists | RIA Novosti

Uncertain World: Russia - U.S. - Back to Business? | Columnists | RIA Novosti


Uncertain World: Russia - U.S. - Back to Business?

19:44 15/03/2012
Weekly column by Fyodor Lukyanov
Tags: New START Treaty, presidential elections 2012, World Trade Organization (WTO), John McCain, Hillary Clinton, Vladimir Putin, Barack Obama, United States, Russia
The latest intrigue in Russian-U.S. relations was U.S. President Barack Obama’s delayed official greetings to president-elect Vladimir Putin on his win. The U.S. Department of State made a low-key announcement about the presidential election in Russia, which did not even refer to the winner by name. Secretary of State Hillary Clinton urged the Russian government to heed criticisms voiced by the OSCE. Republican presidential hopeful Mitt Romney reproached Obama for his failure to criticize the “flagrant manipulation.” Finally, long-time Russia critic Sen. John McCain again predicted the liberation of the Russian people from tyranny in the manner of the Arab Spring. An official spokesman for the White House said that there was nothing personal in Obama’s delay – the head of state was simply very busy.

© RIA Novosti.
Finally, on March 9, Obama called Putin and a detailed conversation followed. Moscow had stated earlier that the positive trends in bilateral relations of the last few years will be continued. There was no scandal and Putin’s victory was accepted, albeit without much enthusiasm. The sides have differences but will try not to highlight them for the time being. Moreover, there was an indirect signal this week that they will even try to minimize the fallout from the negative tone of the election campaigns in both countries.
The newspaper Kommersant quotes sources as saying that the relocation of the G8 summit in May from Chicago to Camp David is linked with Obama’s reluctance to create a negative atmosphere in relations with Russia. The G8 forum will be followed by a NATO summit in Chicago and Putin promised to attend it only in the event that progress is made on missile defense. Progress is not on the horizon, and Putin’s demonstrative departure from Chicago would only create unnecessary chatter about the collapse of the reset. This is not to say that his presence at the NATO summit would improve the atmosphere. The president-elect would likely only perpetuate the cycle of mutual accusations that has become routine since 2000. The Americans are not confirming anything on the record. Off the record, they describe Putin as one of the reasons, but not the main one. However, both Moscow and Washington clearly understand the fragility of the moment and the need for tact.
Putin’s guarded and mistrustful attitude to the United States is common knowledge, and he makes no attempt to conceal it. The reasons for it lie not in his record during the Cold War, as many often claim, but in his experience in dealing with the George W. Bush administration during its first and, particularly, second term.
Whether fair or not, Putin has come to the conclusion that a gentlemen’s agreement is not possible with the United States. He thinks Bush responded with base ingratitude to Moscow’s positive gestures more than once – from its support during 9/11 and the subsequent war on terror, to its voluntary closing of military facilities in Vietnam and Cuba. Putin  believes that these gestures were met with aggressive efforts of the United States to bolster its presence in the post-Soviet space, expand NATO, and deploy missile defense systems on Polish and Czech territory, to name a few. As a result, Putin has come to the conclusion that agreements with the United States are possible but only following tough and uncompromising bargaining, as was the case with the New START treaty and Russia’s accession to the WTO.
However, the bigger problem is that the new governments (and meaningful talks are not possible earlier than next spring when the presidential election is over in the United States as well) do not have a clear-cut positive agenda. They have carried through the reset. Now they are facing the same old issues: Afghanistan and Iran. The former is simpler: the organized withdrawal of U.S. troops and maintaining relative stability there is in the interests of all parties. This should not create any special problems. The situation around Iran strongly depends on numerous external factors. Moscow and Washington will discuss both issues, but they can hardly form the basis of a new bilateral agenda.
The first obstacle the new leaders will face will be the same old story of missile defense. Putin dealt with this issue during his previous presidency, when he made proposals to Bush. He does not intend to give up now. A compromise is hardly possible because missile defense is a matter of principle for both sides. Russia insists that the United States plan is a threat to its security whereas the United States is confident of its right to move forward regardless of any country’s response. The potential for conflict is obviously strong. Moscow acknowledges that as long as the principle of strategic stability – Mutual Assured Destruction (MAD) – remains, missile defense talks will be stuck in an impasse. But there does not appear to be any other principle that would suit both sides.
There is nothing else to discuss. There will be no opportunity to maintain dialogue by negotiating nuclear arms cuts again. First, Russia believes further reductions would diminish its defensive capabilities. After all, Moscow has to consider other factors as well, such as China, which is gradually building up its military strength. Second, even if Russia and the United States decide to resume talks on this issue, this is not a full-scale agenda of the 21st century. For the time being the sides are surviving on table scraps from the 20th century, but they are almost all gone.
Is Russia unpredictable? Perhaps, but one shouldn’t exaggerate – its randomness often follows a consistent pattern. But is the world at large predictable? The past two decades have seen all forecasts refuted more than once and have taught us only one thing – to be ready for any change. This column is on what the nations and governments are facing in the era of global uncertainty.
Fyodor Lukyanov is Editor-in-Chief of the Russia in Global Affairs journal – the most authoritative source of expertise on Russian foreign policy and global developments. He is also a frequent commentator on international affairs and contributes to various media in the United States, Europe and China, including academic journals Social Research, Europe-Asia Studies, Columbia Journal of International Affairs. Mr. Lukyanov is a senior member of the Council on Foreign and Defense Policy and a member of the Presidential Council on Human Rights and Civic Society Institutions. He holds a degree from Moscow State University.
Uncertain World: Why I Sympathize With Vladimir Putin
Uncertain World: Vladimir Putin in a World of Risks and Danger
Uncertain World: Why Does Russia’s Stance on Syria Baffle Everyone?
Uncertain World: Medvedev’s Foreign Policy: Period of Stabilization
Uncertain World: Anti-Americanism in Russia
Uncertain World: Will Russia Lose Georgia for Good?
Uncertain World: What Russia thinks of Syria
Uncertain World: The war of nerves around Iran
Uncertain World: The Arab Spring in global context

Feb 15, 2012

Latvia’s Russian Party Triggers Constitutional Referendum On State Language

By Vladimir Socor | February 15, 2012—Volume 9, Issue 32|
Latvia is holding on February 18 a constitutional referendum on an anti-constitutional proposition. Initiated by local Russian fringe-nationalists and pushed by the local Russian party, Harmony Center, it would confer the status of a parallel state language on the Russian language in Latvia. The referendum will fail arithmetically (see below), but it helps re-energize Harmony Center after its recent failure to work its way into Latvia’s government. Moscow had coached Harmony to re-brand itself as moderate and enter the government; but since that failed (in October 2011) it undoubtedly reconsiders those tactics.

Feb 5, 2012

Welfare for the Rich | The Freeman | Ideas On Liberty

Welfare for the Rich | The Freeman | Ideas On Liberty
Robert P. Murphy

Welfare for the Rich

The Wealthy Receive Billions of Dollars in Government Subsidies Each Year

Advocates of the free market—including those considered “right-wing” and “conservative”—believe it is wrong to violate property rights. Consequently, they oppose egalitarian measures to steal from the rich and give to the poor. Such “income redistribution” represents naked theft and epitomizes the Founding Fathers’ fears of unfettered democracy. At the same time, champions of laissez faire devote much of their time to criticizing the thousands of distortionary and punitive regulations imposed on businesses. Indeed, Ayn Rand went so far as to write an essay in which she described big business as “America’s persecuted minority.”

In light of these tendencies, it is easy to overlook the fact that a large portion of the welfare state is devoted to the rich. Although couched in altruistic language and billed as serving the public interest, much of the government’s redistribution of wealth is from the hapless taxpayer to the pockets of large corporations. This may seem paradoxical to naïve observers whose political views are shaped largely by political campaigns between Democrats (the ostensible friends of the poor) versus Republicans (the ostensible opponents of welfare). But anyone familiar with political economy can quickly recognize that it makes far more sense for politicians to funnel tax dollars into the hands of powerful (not to mention rich) special interests. Big business learned long ago that the easiest way to handle taxes and regulations is to divert “public” money into its own hands and to influence the regulators to enforce measures that disproportionately burden upstart competitors.

I hope to redress the rhetorical imbalance by outlining the numerous ways rich individuals and big businesses manage to siphon off taxpayer money into their own pockets. To keep the article manageable, I’ll focus mainly on actual subsidies, that is, cases where wealthy rent-seekers literally receive cash flows (directly or indirectly) from the government. Beyond these fairly obvious examples there are dozens of clever ways in which rich and unscrupulous special interests use their political influence to enrich themselves at the expense of the public without actually receiving tax dollars. (These would include licensing restrictions and import quotas.) Because of space constraints, an extensive analysis of these subtler shenanigans will have to wait for a future article.

One of the most blatant examples of corporate welfare is the bloated system of agricultural price supports, which started in the 1920s and was institutionalized during the New Deal. The rationale behind the program is straightforward: Under pure laissez faire, agricultural markets would (allegedly) prove extremely volatile. In good times with high prices farmers would borrow money to expand their operations and plant more crops. But this would soon lead to a glut on the markets, forcing farmers to slash prices and go into foreclosure. This tremendous uncertainty, as well as the wild swings in crop supply, could (allegedly) be rectified if the federal government stepped in to purchase surplus crops when the market’s demand proved insufficient. Such policies would presumably stabilize crop prices and the food supply, providing more rational and orderly markets in agriculture.

As with other forms of government intervention, a pure policy of surplus acquisition would lead to disaster. If farmers were assured that whatever quantities of a crop they grew the government would buy it from them at remunerative prices, they would plant the most cost-effective crops with reckless abandon. (Indeed, at the close of 2000 the Commodity Credit Corporation [CCC], a branch of the U.S. Department of Agriculture, held stockpiles of 97 million bushels of wheat, eight million bushels of corn, and five million bushels of soybeans, according to the Food and Agricultural Policy Research Institute. The CCC spent $133.5 million to purchase over a million metric tons of wheat on a single day in 1999.) To avoid the accumulation of stockpiles and yet maintain price supports for certain crops, the government hit on the absurd notion of paying farmers not to grow the crops in question. It is possible to qualify for such subsidies even if an owner of arable land had never intended to grow the crops in the first place.

From 1995 to 2004 the federal government provided agricultural subsidies of over $143 billion, according to the Environmental Working Group. The recipients of these subsidies are not exactly Dust Bowl migrants from a Steinbeck novel, either. Over $104 billion (72 percent) of the loot during this period went to the top 10 percent of the recipients, which were large farming organizations or cooperatives that each received an average of $33,000 in subsidies every year. To further illustrate the phenomenon, in October 2005 the House Agricultural Committee rejected a proposal by President Bush to place a cap on annual farm subsidies of $250,000 per person.

Another classic example of how the well-to-do fleece the taxpayers is the multiplicity of “joint ventures” between the government and big business. Projects such as sports stadiums, railroads, or even amusement parks are deemed “too big for the private sector.” Besides being silly—after all, any money that the government spends on such projects was taken from the private sector—these pork-barrel expenditures represent a transfer from the poor (and middle class) to the rich.

For example, the fiscal 2006 Transportation/Treasury/Housing and Urban Development (TTHUD) Act contained $350,000 for the Yucaipa Valley Regional Sports Complex (in California) and $100,000 for renovations to the National Orange Show Stadium in San Bernardino. The Act also contained $50,000 for the Capitol Hill Baseball and Softball League. Beyond its support for sports fans, the government also subsidized art lovers and conference attendees (not typically drawn from the downtrodden of society). Citizens Against Government Waste points out that this same Act contained $325,000 each for renovations to the Seattle Aquarium and the Fox Theater, $200,000 for renovations to the Fredonia Hotel and Convention Center in Texas, and $100,000 for D.C.’s Friends of Carter Barron Foundation for the Performing Arts.

These anecdotes, though outrageous, are whimsical when compared with other types of corporate welfare. For example, the federal government provides enormous funding for energy research, which attempts to develop alternative supplies and technologies as well as discover better methods of using existing sources. The Cato Institute estimates that in fiscal year 2003, the Energy Department spent $670 million on such projects. Inasmuch as struggling single mothers are not designing ethanol engines, this largess represents yet more welfare for the rich.

In a similar vein, the government spends billions funding scientific research. In FY2005 the National Institutes for Health alone spent over $24 billion on all awards, and over $20 billion of this consisted in research grants. Large pharmaceutical companies certainly benefit from this convenient assistance.

We close this section with the epitome of a failed government/business partnership, the classic case of Amtrak. In 2005 alone Amtrak lost $1.2 billion, according to the Heritage Foundation, a shortfall made up by the hapless taxpayer. What makes this waste even more despicable is that Amtrak doesn’t even fulfill its ostensible purpose, namely, to provide affordable passenger rail service across the nation. In particular, Amtrak doesn’t offer service to Phoenix, Las Vegas, Columbus, Nashville, Louisville, Dayton, Tulsa, or Colorado Springs, even though each of these cities has over 500,000 residents. And as anyone who has ridden Amtrak knows, it is far from cheap. For example, its cheapest roundtrip fare from New York City to Washington, D.C., is currently $135 before taxes, compared to $69 for a similar ticket on an admittedly slower bus.

Government Contractors

Even government projects that might be deemed legitimate—such as expenditures on military vehicles or renovations to the Statue of Liberty—represent hidden subsidies to the extent that the contracts are awarded corruptly. The economic principles behind the cost overruns are straightforward enough. Unlike the shareholders of a private firm, if government departments are careful to award contracts to the lowest bidder (who can still get the job done), the politicians and bureaucrats don’t pocket the savings, for that would be sheer theft of public funds. On the other hand, by awarding generous contracts, officials stay in the excellent graces of the beneficiaries. This comes in handy when officials retire from government work and look for consulting jobs.

Another source of systematic welfare is the “cost-plus” method of payment. Here, the government doesn’t settle on an actual price for goods or services delivered, but rather agrees to meet the contractor’s expenses plus some markup. Naturally, this type of arrangement puts no incentive on the contractor to watch costs, and hence represents a hidden subsidy.

We should also consider the effect of timing and the different outcomes in private versus government settings. Congress can agree to spend, say, $20 billion on a space station that will take ten years to complete. Five years into the contract the suppliers can complain that they will require an additional $10 billion to finish the project because of “unexpected” expenses. By this point the voters don’t remember the previous expenditures, and it would seem a terrible waste not to finish such a grand project. Thus the government often ends up funding boondoggles that would never have been approved had the actual price tag been known all along.

When it comes to welfare for contractors, no other agency can match the Pentagon, with its classified programs and aura of necessity. Besides the notorious $600 toilet seats uncovered in a 1983 audit, probably all the major purchases of hardware occur at inflated prices. (The difference is, nobody knows how much a B-2 Stealth bomber “should” cost, so its 2001 price tag of $530 million isn’t as shocking.) No outsider can really be sure of the exact amount of the hidden subsidy, or what the corporate beneficiary does to win it, but we can be fairly sure that the recipients do not reside in the inner city.

On this topic we must mention the case of Halliburton, for this is one issue on which the leftist conspiracy theorists make a decent case. Regardless of the motivations for the invasion of Iraq, it cannot be denied that Halliburton benefited greatly from it. According to a report by the Center for Public Integrity (which required six months and 70 Freedom of Information Act requests to assemble the data), Halliburton received over $2.3 billion in reconstruction contracts in Iraq and Afghanistan. In second place was the engineering and construction firm Bechtel Group, Inc., with just over $1 billion. International American Products, Inc., finished third with a nonetheless-respectable $526 million in contracts. (For those interested in conspiracies, Halliburton and Bechtel contributed roughly $2.38 million and $3.3 million to President Bush, respectively, while International American Products only contributed $2,500.)

The “War on Terror” has been a bonanza for defense and related contractors. According to Robert Higgs, Department of Defense outlays excluding payments to military personnel rose from $217 billion in FY2001 to $366 billion in FY2006. In this same period the number of companies with federal homeland-security contracts grew from nine to a whopping 33,890, a jump so large that it renders typical percentage figures—in this case, a growth of 376,456 percent—rather meaningless.

Small Business Administration

The Small Business Administration (SBA) is another agency with an apparently noble mission that nonetheless acts in reverse-Robin Hood fashion. In 2005 the SBA announced that $79.6 billion in federal contracts were awarded to “small businesses.” However, according to the New York Times, some of this money went to mom-and-pop organizations such as Northrop Grumman, Boeing, Bechtel, and General Dynamics. Indeed, the Christian Science Monitor reports that almost $5 billion of the contracts classified as “small business” were for the 13 largest government contractors.

Beyond winning contracts theoretically intended for small businesses, there is another way big business benefits from the SBA. In a scheme that Doug French (himself a Las Vegas banker) calls “welfare for bankers,” the SBA guarantees loans for qualifying businesses. Banks are then able to pool such loans and sell them in secondary markets. Now in a simple model of perfect competition, the SBA guarantees would benefit only the loan recipients, because they would acquire funding at lower interest rates. But in the real world, savvy banks acquire “PLP status,” meaning they are preferred lenders. This allows them to issue SBA-guaranteed loans without as much paperwork and other hassles as other banks would need to suffer, and so allows these privileged banks to earn a net income from the entire process. To the extent that PLP status represents a hurdle that has nothing to do with merit or business performance, the process is a form of subsidy to certain (rich) bankers.

The Government National Mortgage Association (GNMA or “Ginnie Mae”) is a public corporation in the Department of Housing and Urban Development. Ginnie Mae boosts the secondary mortgage market by guaranteeing principal and interest payments on mortgage-backed securities. In a typical case, a bank or other institution will acquire dozens of individual mortgages from homebuyers and place them into a single pool, then issue securities to other investors based on the cash flows from the mortgage payments. In the event of unexpected defaults by the homebuyers, Ginnie Mae would step in to guarantee the payments to the secondary investors.

This pledge obviously makes the guaranteed securities more attractive, lowering their promised rate of return. This in turn lowers the mortgage rates faced by the original homebuyers, but also provides liquidity in the secondary mortgage market and no doubt higher commissions for politically savvy middlemen. (As Ginnie Mae’s Wikipedia entry puts it in an unintentionally humorous line, “This arrangement seemingly benefits everyone involved.”) Naturally the loser is, as always, the U.S. taxpayer, who must assume the losses from mortgage loans made at rates that do not reflect the true risks involved. Although in recent years Ginnie Mae has itself earned more in service fees than it paid out on defaults (and thus did not use any public funds), this is only possible because the taxpayers are ultimately liable for the outstanding collection of guaranteed mortgage-backed securities; total potential exposure in 2004 was $453.2 billion.

Other Guarantees and Bailouts

The same analysis applies to other government loan guarantees. For example, suppose the federal government guarantees that it will make good on bonds issued by the Mexican government in the event of a default. Such a pledge undoubtedly showers benefits on both the Mexican government and the (typically wealthy) investors in its bonds, while the source of these benefits is undoubtedly the American taxpayer. This is true even if the Mexican government does not default on its bond payments. After all, if the taxpayers pledged to pay all costs associated with a fire at any of General Motors’ factories, this would certainly be a subsidy to GM, even if no such fire ever occurred. (This is obvious; with the federal guarantee, GM would save the money it otherwise would have spent on fire-insurance premiums.) In a similar fashion, even if the Mexican government doesn’t default, it still benefits from borrowing money at lower interest rates than would otherwise be the case.

Of course, if and when the U.S. government has to make good on these types of pledges, the transactions involve funneling taxpayer dollars to wealthy investors both at home and abroad. Sometimes these subsidies are particularly subtle. For example, during the Mexican “peso crisis” of 1994, the Clinton administration contributed some $20 billion to the international bailout effort by providing loan guarantees and currency swaps. This latter move, executed by the Treasury’s Exchange Stabilization Fund, swapped cash flows denominated in dollars with those denominated in pesos. Inasmuch as the dollar flows originated (at least partly) with the government Fund, and also because the whole purpose of the intervention was to engage in currency swaps that the private market considered unprofitable, President Clinton’s decision used U.S. tax dollars to shield the Mexican government from its irresponsible monetary policies. In short, yet another example of welfare for the rich and powerful.

The celebrated fate of Long Term Capital Management (LTCM), a huge hedge fund that had Nobel laureates Myron Scholes and Robert Merton on its board, presents yet another case of corporate welfare. Because its trading strategy took advantage of slight (but theoretically “irrational”) overvaluations of newly issued bonds (versus older “off-the-run” bonds), LTCM was highly leveraged, sometimes with a leverage ratio of over 30. When the Russian government defaulted on its bonds in 1998, this set in motion a chain of events that proved catastrophic to LTCM’s positions. In the course of a few months the amazing success story had lost over $4.6 billion. Citing the potential disruptions to the entire financial community if LTCM itself defaulted, the New York Federal Reserve Bank intervened. Though it technically did not use public money in the bailout, the Fed nonetheless used “moral suasion” (backed perhaps by implicit pressure?) to get LTCM’s major creditors to allow for an orderly liquidation. Supporters of the move claimed that it prevented a financial meltdown, while critics pointed out that the “too big to fail” mentality would only encourage large institutions to take risky positions in the future, and that the ultimate fallback to the government-sponsored rescue allowed LTCM to reject a private-sector bailout effort led by Warren Buffett. (Under Buffett’s plan, the managers of LTCM would have been fired and the shareholders would have fared much worse than they did under the “necessary” Fed-brokered arrangement.)

We cannot leave this section without mentioning the post-9/11 federal bailout of the airlines. The Air Transportation Safety and System Stabilization Act (signed on September 23, 2001) gave $10 billion in loan guarantees, as well as $5 billion in direct “relief,” to the airlines. Now even libertarians may differ on the justification for this bailout. After all, the federal government hampered the ability of the airlines to prevent 9/11 (through gun bans and other interventions) and also forced them to lose business by the mandatory flight ban immediately after the catastrophe. Nonetheless, the entrepreneurs involved in the airline industry certainly did not live up to their task of anticipating the future better than others. In a truly free market the consequences of poor preparation are losses. When the critics ask, “If the free market is so good, why did the government need to take over airline security?” the defender of laissez faire can reply, first, that government was involved in security before 9/11 and, second, that airline executives did not actually face the full pressures of the profit-and-loss test. When their inadequate security measures allowed disaster, they didn’t bear the full brunt of these shortsighted decisions.

Government Deficits and the Federal Reserve?

Though not as clear cut as some of the other examples in this essay, the annual issuance of hundreds of billions of dollars in new government bonds may qualify as welfare for the rich. If one agrees that the federal guarantee of Mexican bonds represents goodies to the wealthy at the expense of the taxpayer, then by consistency one must also condemn massive federal deficits for the same reason. This is because all Treasury bonds are “guaranteed” by the full faith and credit of the U.S. government as a matter of course. This practice allows the Treasury to obtain loans at low rates of interest and undoubtedly showers income on politically connected banks and other financial brokers. As always, the losers are the taxpayers (who must ultimately pay off the Treasury’s debts) and the smaller banks that do not enjoy the privileges of Fed membership.

When it comes to the “moral hazard” of federal relief, the standard illustrations are the Federal Deposit Insurance Corporation and federal checks to property owners after natural disasters, such as hurricanes and earthquakes. By insuring checking deposits (up to $100,000), the FDIC provides an incentive for banks to invest in riskier projects because on the margin the (expected) costs of doing so are reduced. In a similar manner, when the government provides massive relief to owners of beachfront condos and hotels after a hurricane, this encourages more development in disaster-prone regions than would otherwise occur (if the owners had to pay full market insurance premiums). To the extent that owners of banks and beachfront property tend to be above-average income earners, these programs represent yet more examples of subsidies to the rich.

The final example we shall discuss is one of the most blatant and economically unjustified: the Export-Import Bank. It is worth quoting the Bank’s own mission statement in its entirety:

The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States. Ex-Im Bank’s mission is to assist in financing the export of U.S. goods and services to international markets.

Ex-Im Bank enables U.S. companies—large and small—to turn export opportunities into real sales that help to maintain and create U.S. jobs and contribute to a stronger national economy.

Ex-Im Bank does not compete with private sector lenders but provides export financing products that fill gaps in trade financing. We assume credit and country risks that the private sector is unable or unwilling to accept. We also help to level the playing field for U.S. exporters by matching the financing that other governments provide to their exporters.

Ex-Im Bank provides working capital guarantees (pre-export financing); export credit insurance; and loan guarantees and direct loans (buyer financing). No transaction is too large or too small. On average, 85% of our transactions directly benefit U.S. small businesses.

With more than 70 years of experience, Ex-Im Bank has supported more than $400 billion of U.S. exports, primarily to developing markets worldwide.

As with most descriptions provided by the agencies themselves, the Ex-Im Bank’s statement seems innocuous enough. Yet Henry Hazlitt, in his wonderful Economics in One Lesson, long ago exploded the myth that subsidizing exports is good for the economy. For example, when the Ex-Im Bank “levels the playing field” by “matching the financing that other governments provide to their exporters,” what does this really mean? It means that the federal government gives money to foreign governments or companies which they then use to purchase products from American exporters. To clearly see what is going on, it would be simpler if the U.S. government first bought the products from domestic producers (using tax dollars, of course) and then handed them over for free to the foreign organizations. Yes, this practice benefits the workers and shareholders of the privileged exporting firms, but these gains are more than offset by the losses to the taxpayers. After all, as Hazlitt pointed out, the country as a whole doesn’t get rich by giving goods away.

Similar to the Ex-Im Bank is foreign aid in general, to the extent that the recipient governments spend the money on U.S. exports. For example, according to the Cato Institute, in FY2003 $3.7 billion in federal money was used to finance weapons purchases for foreign governments.

Free-market enthusiasts often rail against welfare for the poor, and rightly so. However, as both experience and political economy suggest, the welfare state also redistributes wealth into the hands of the rich and politically powerful. To offer a consistent message—as well as attract support among more-egalitarian observers—advocates of laissez faire should condemn the billions of dollars in annual subsidies for the rich.