Monthly Archives: February 2011

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Countrywide Control Fraud, but Inch Deep Prosecutions

By William K. Black

(cross-posted with

I write to contrast four recent stories about Countrywide.  Here are their headlines and brief synopses provided in the initial paragraphs of the stories.

U.S. drops criminal probe of former Countrywide chief Angelo Mozilo

Mozilo’s actions in the mortgage meltdown — which led to $67.5-million settlement against him — did not amount to criminal wrongdoing, federal prosecutors have determined.

By E. Scott Reckard, Los Angeles Times
4:11 PM PST, February 18, 2011

Federal prosecutors have shelved a criminal investigation of Angelo R. Mozilo after determining that his actions in the mortgage meltdown — which led to $67.5-million settlement against him — did not amount to criminal wrongdoing.

Judge OKs Countrywide settlement but big investors opt out

Institutional investors including CalPERS say the Countrywide settlement amount is too little.

By E. Scott Reckard, Los Angeles Times
February 26, 2011

Major investors opting out of a $624-million class-action settlement with Countrywide Financial Corp. said they would have recouped less than 5% of their losses on the mortgage lender’s stock had they accepted the agreement.

“A settlement on behalf of my clients would have to be a material multiple of that amount,” said Blair Nicholas of San Diego, a lawyer for the California Public Employees’ Retirement System and 15 other institutional investors. Altogether, 33 institutional investors have opted out.

The agreement was approved Friday by U.S. District Judge Mariana Pfaelzer in Los Angeles, who described the settlement as reasonable and substantial given the complexities of the case and the uncertainties of what a jury might decide.

It requires Countrywide and its parent company, Bank of America Corp., to provide $600 million for former Countrywide shareholders remaining in the case. The lender’s outside accounting firm, KPMG, added $24 million.

Countrywide and Bank of America, which bought the Calabasas mortgage lender as it skirted bankruptcy in 2008, contended the near-collapse and the investors’ losses were the unforeseeable result of the broader financial crisis. BofA acquired Countrywide, whose stock was once valued at $25 billion, for $2.5 billion in BofA stock.

The lawsuits contended that Countrywide, once America’s biggest home lender, fraudulently concealed its mounting risks as it loosened lending standards to build its market share during the housing boom.

How a Whistle-Blower Conquered Countrywide


Michael G. Winston, a former executive at the Countrywide Financial Corporation. Mr. Winston spent three years in a legal battle against Countrywide, the once-mighty mortgage giant, and its current owner, Bank of America, contending that he was punished and pushed out for not toeing the company line. On Feb. 4, he won: a jury in California awarded him $3.8 million in damages.

Mr. Winston’s story provides a glimpse into how business was done at Countrywide at the height of the subprime craziness — and how assiduously Angelo R. Mozilo, the company’s fallen leader, worked to quash dissent in the ranks. Mr. Winston had the audacity to question Countrywide practices. Mr. Mozilo was not pleased and, before long, Mr. Winston was marginalized and later dismissed.

Lending Magnate Settles Fraud Case

October 15, 2010

Angelo R. Mozilo, the former chief executive of Countrywide Financial, once the nation’s largest mortgage lender, agreed to pay $67.5 million on Friday to settle a civil fraud case brought by the Securities and Exchange Commission last year.

Countrywide itself is paying $20 million of Mr. Mozilo’s $67.5 million payment as part of an indemnification agreement he has with the company.

Here are the key analytical points that emerge from these articles:
  1. The SEC and a host of institutional investors and States have sued Countrywide’s senior officials, Countrywide, and its successor (Bank of America) alleging civil fraud.  The burden of persuasion is greater in a criminal fraud case (“beyond a reasonable doubt” instead of a “preponderance of the evidence”), but the factual elements that the civil litigants and the prosecutor must prove are the same (e.g., deceit).  Indeed, civil fraud must be pleaded with particularity and supporting evidence to survive a motion to dismiss.
  2. It is inconceivable that Countrywide engaged in widespread accounting and securities fraud without Angelo Mozilo’s knowledge and acquiescence – which would make him criminally liable for the fraud.
  3. Therefore, if the news reports are correct that the Justice Department concluded that Mozilo’s conduct was not fraudulent, then the Justice Department has purportedly found after investigation that Countrywide did not engage in accounting or securities fraud and the SEC suit and related civil suits are baseless.
  4. The SEC, States, and institutional investors have conducted their own investigations and believe that they have documented widespread accounting and securities fraud by Countrywide’s senior managers.
  5. The successful action by the whistleblower, Michael G. Winston, is consistent with the existence of control fraud at Countrywide.
  6. The Department of Justice should either explain to the SEC and the other civil plaintiffs why their civil suits against Mozilo, Countrywide, and Bank of America are baseless because of some unique facts known only to the Department of Justice that establish that the senior managers did not act fraudulently or, if there are no such unique facts known to the Department of Justice but not to the plaintiffs, the Department should prosecute the frauds of Countrywide’s senior managers based on the widespread fraud documented by multiple investigations by the plaintiffs.

Really Bad Reporting in Wisconsin: Who ‘Contributes’ to Public Workers’ Pensions?

By David Cay Johnston

When it comes to improving public understanding of tax policy, nothing has been more troubling than the deeply flawed coverage of the Wisconsin state employees’ fight over collective bargaining.
Economic nonsense is being reported as fact in most of the news reports on the Wisconsin dispute, the product of a breakdown of skepticism among journalists multiplied by their lack of understanding of basic economic principles.
Gov. Scott Walker says he wants state workers covered by collective bargaining agreements to “contribute more” to their pension and health insurance plans.
Accepting Gov. Walker’ s assertions as fact, and failing to check, created the impression that somehow the workers are getting something extra, a gift from taxpayers. They are not.
Out of every dollar that funds Wisconsin’ s pension and health insurance plans for state workers, 100 cents comes from the state workers.

How can that be? Because…        

more at


William Black Interviewed on InfoKrieger News

William Black was interviewed recently on InfoKrieger News.  For article and video see here.

Financial Crisis Inquiry Commission’s Interview of William Black

Audio (mp3) of the FCIC’s interview of William Black are avialable in two parts on the FCIC’s website.  Links to the mp3’s follow.

Part 1
Part 2

Don’t Conflate Columnists and Countries

By William K. Black

Well the inevitable remains inevitable. Talk about Israel and Egypt and some folks will become enraged and cast dark aspersions – there must be some evil reason why he discusses the topic. One reader responded to Mr. Rosner’s JPost column about me by remarking that I must be a professor of “traitors.” The readers who post comments on JPost columns tend to have strident views. Sadly, I have distressed at least one reader of our UMKC blog. “Anonymous” writes:
I think terror ranks right up there with fraud and corruption, but let’s grant your point for the moment. Were you turning a blind eye to PLO corruption? Can you point to posts or articles you wrote in the PLO era? If not, I think these posts are more anti-Israel than anti-corruption.
The context is that Anonymous is responding to my reply to his inquiry about why I was “obsessed” with JPost columnists. I explained that I was so interested because the JPost columnists were implicitly criticizing President Obama for not successfully bribing the Egyptian army to launch a wave of terror against the Egyptian people for the purposes of keeping Mubarak in power and keeping the Camp David Peace Accords in force. I explained why Israel refused to follow this strategy for moral and pragmatic reasons – and expressed the view that it was obscene to denounce the U.S. for refusing to adopt a strategy that Israel rightly refused to follow.

So let me go through Anonymous’ complaint. First, he thinks terror is as important as fraud and corruption. I said nothing about their relative “ranks.” Indeed, I pointed out that the suggested corruption was designed to produce a wave of terror by the Egyptian army against its citizens.

Second, he asks “were you turning a blind eye to PLO corruption?” PLO corruption is irrelevant to the strategy that the JPost columnists were implicitly advocating of the U.S. bribing Egyptian generals in order to induce them to murder and maim Egyptian civilians. No one was implying that Israelis were uniquely corrupt. The corruption at issue was Egyptian corruption.

Third, Anonymous thinks my posts are “anti-Israel” unless I can produce multiple posts attacking PLO corruption. Putting aside the fact that the “PLO era” (if I understand how Anon. is using that phrase) ended before I began making posts a bit over two years ago, the writer misses a more fundamental point. None of my columns are about Israel — they are about particular JPost columnists. My columns are distinctly pro-Israel (without being anti-Muslim). I stress that Israel has, despite its military dominance, refused for moral and pragmatic reasons to employ “Hama Rules.” I stress that Israel has refused to attempt to bribe Egyptian generals to induce them to launch a wave of terror against their citizens for the purpose of keeping Mubarak in power. Anonymous makes the error of conflating specific JPost columnists with Israel. Again, I stress that Israel refused to follow their strategy suggestions – Israel returned the Sinai to the nation from which it was taken by force of arms – Egypt. Israel refused to employ the bribery/terror strategy. I believe that the policies the columnists have recommended would have been anti-Israel, anti-Egypt, and anti-U.S. I think President Carter’s successful shepherding of the Peace Accords was pro-Israel, pro-Egypt, and pro-U.S. I think that if President Obama had employed the bribery/terror strategy that the JPost columnists advocate it would have been anti-Israel, anti-Egypt, and anti-U.S.

While I did not blog until fairly recently, I did write a letter to the editor of Al-Ahram, Egypt’s leading English-language paper, nearly a decade ago. I’ve set out the full text below.

Words in Bin Laden’s mouth
Sir- Several of your opinion writers this week share the same flaw — the desire to claim that Bin Laden revels in the mass murder of innocents because of the cause that is dear to the writer’s (but not Bin Laden’s) heart. Thus, we are told that thousands were massacred on 11 September because of global income disparities, or because the US is arrogant, or because the US does not put enough pressure on Israel to make peace.
In fact, none of those things motivated Bin Laden. Even his most recent video, which for the first time tries to highlight the Palestinians, makes that clear. Bin Laden has made it abundantly clear that what lit his fuse was the presence of “infidels” “defiling” “holy Arabia” (i.e., American troops risking their lives to defend his native country from imminent invasion by Saddam).
Now, as I recall the position of Arab and Islamic states at Durban, any state that discriminated against others on the basis of their religion was “racist” and engaged in “apartheid.” I trust you will show some minimal consistency and agree that Saudi Arabia already does discriminate against other faiths (e.g., displaying a crucifix can be a crime) and that Bin Laden wants the total exclusion of “infidels.” The US should not accede to such bigotry, our soldiers do not “defile” a country by defending it, and it is a Wahabi/House of Saud “creation myth” to call all of Saudi Arabia “holy.” Moreover, in a desire to respect local sensibilities (even bigoted ones), US troops are kept hundreds of miles from Mecca and Medina. Further, the US did a very good thing in defeating Iraq, defending Saudi Arabia and liberating Kuwait. The world would be much worse off but for these US actions. Therefore, whatever policies we followed with regard to Israel, Bin Laden would still have wished to engage in the mass murder of Jewish and Christian civilians (“Crusaders” in his argot).
The claim that Bin Laden massacred American civilians out of global poverty is absurd. He’s rich and his principal lieutenants, like Atta, were well-to-do. The US could increase foreign aid a hundred times over and he would still seek our blood.
Nor can the US possibly, morally, accede to Bin Laden’s demands about Israel. He wants the restoration of the universal caliphate, the recovery of all lands ever ruled by Muslims, and the mass murder of those who stand in the way of this restoration — including women and children. We will not accede to the destruction of Israel or further terrorist attacks. No reputable American will. So, Bin Laden will still seek to murder us even if our efforts to aid the peace process succeed. You know full well that Bin Laden hates the peace process and wishes it to fail. You know full well that he planned these attacks at the very time that US carrots and sticks led to an Israeli offer for return of land that came very close to producing a final peace agreement.
One of your opinion writers says the critical question Americans should ask is why 19 Arabs were willing to sacrifice their lives to massacre thousands of innocents. I’ll address that question, but I’ll start with a question of my own. What caused five or six unarmed Americans to be willing to give up their lives attacking four armed terrorists in order to save the lives of people they didn’t even know? I am talking, of course, about the hijacked plane that crashed in Philadelphia. It was love. What caused the terrorists to act as they did? It was hate.
That hate was very carefully taught. The death of thousands has become a mere statistic to your opinion writers, so try this one instead: the terrorists took female flight attendants, bound their hands behind their backs, and slit their throats. As I write, thousands (not a handful) of Palestinians are rioting to show their support of these heroic murderers of defenceless American women. Arafat is repeating the strategy he used when many Palestinians celebrated the 11 September massacres, by seeking to suppress television reporting of the pro-Bin Laden riots in Gaza.
If you are truly concerned about global poverty, consider the effects of Bin Laden’s massacres on the world economy and who will be the worst losers from the coming global recession — the poor. Consider also what oil shocks do to the poorest of the poor. Sub-Saharan Africa has never recovered from OPEC’s successful foray as a cartel. Saddam came very close to controlling Iraq, Iran’s primary oil-producing region, Kuwait and Saudi Arabia. Want to hazard a guess as to the oil shock he would have engineered and the impact on the (net oil importing) Third World?
William K. Black
Assistant professor
University of Texas at Austin
LBJ School of Public Affairs
But I add a caution. What if I didn’t have this letter to the editor? Would it be appropriate to write that I was a “traitor” or imply that I was “obsessed” about Israel for bigoted reasons? Why not respond to the substance of our arguments rather than our imagined motives?

Fannie and Freddie’s Confused Futures

By William K. Black

(cross-posted with

A few days after the Obama administration released its vague concepts for the future of Fannie and Freddie it issued budget estimates for Fannie and Freddie’s losses premised on the continued existence, indeed, expansion of Fannie and Freddie. The administration assumed that the cost of resolving Fannie and Freddie would drop by roughly one-half – by 2021. The predicted reduction in losses appears to come not from improvement in Fannie and Freddie’s bad assets, but rather from profits on Fannie and Freddie’s overall operations. These profits stem from Fannie and Freddie, which are now publicly-owned, being able to borrow funds at or near the governmental rate. That price advantage makes it impossible for any private entity to compete with them in the secondary market. This purported reduction in the cost to the public of resolving Fannie and Freddie’s failures is not really an economic savings – unless one ignores the implicit cost of issuing government debt to fund Fannie and Freddie. The nominal accounting savings, however, will be exceptionally attractive to politicians. Administration officials will have an overpowering desire to claim that their brilliance cut Fannie and Freddie’s costs in half. Collectively, this will provide powerful incentives to continue Fannie and Freddie as a huge governmental enterprise.
We need to understand why Fannie and Freddie became massively insolvent. It wasn’t because they were governmental, but because they were private. It is simple to run Fannie and Freddie in a safe and sound fashion. Fannie created the concept of prime loans and prime loans have exceptionally low credit risk. Fannie and Freddie can easily spot any degradation in credit quality by reviewing samples of the loans insisting on full underwriting. Fannie and Freddie can minimize interest rate risk by creating and selling MBS and hedging the pipeline risk. When Fannie and Freddie were governmental 25 years ago they did not deliberately take excessive risks. They did not understand how to hedge in a fully effective fashion, but we have learned a great deal in 25 years about how to hedge pipeline risk.

The risks to Fannie and Freddie are governmental, not financial. The government could decide to do extremely destructive things to Fannie and Freddie.

The risks to a privatized Fannie and Freddie (by whatever name) are even greater. If the existing systemically dangerous institutions (SDIs) became private label securitizers they would have all the perverse risks that come from modern executive compensation. They would pose a systemic risk if they were to fail – which is why regardless of how much the government promised not to bail them out no one would believe it. That is why they would be GSEs regardless of their official designation. The more they are perceived as GSEs the greater the political risk that Congress will demand dangerous actions from the private label securitizers.

It is not clear why the administration believes that securitization of mortgages is necessary or even desirable. Portfolio home lenders will face prepayment and interest rate risk, but those risks are simply transferred, not removed, by securitization. Given what we have learned from the crisis, the assumption that securitization leads to an efficient distribution appears baseless. Some banks will doubtless fail if interest rates increase sharply and remain high for many months, but hedging and macroeconomic policy can greatly reduce the failure rate among banks.

The first step, however, should be to make the existing disaster that is Fannie and Freddie fully transparent. We need to investigate fully what went wrong. If Fannie and Freddie put all their information on the web we could bring the wisdom of the masses to bear and determine the truth. There is no reason why Fannie and Freddie should have broad proprietary secrets.

Why the Jews, Bibi or Obama?

By William K. Black

Shmuel Rosner, in his Jerusalem Post column, criticizes Professor Telhami’s prediction in the New York Time’s “Room for Debate” feature that: “Benjamin Netanyahu will likely be seen by future Israelis as the prime minister who lost Egypt.” Rosner’s response: “you say ‘prediction’ – I say ‘wishful thinking.” Rosner explains:
Why? Does he think Netanyahu could have prevented Egyptian unrest? Did he provoke Egyptians in any way? Why would Israelis blame Netanyahu for something on which he had no control? I read Telhami’s column once and twice and couldn’t quite get it.
Rosner’s comment brings to mind the famous joke. It is 1936. A German Jew stops just at the entrance to a meeting hall where a Nazi speaker is whipping up the crowd.
Who stabbed Germany in the back? Who sabotaged the German army when it was on the verge of victory? Who betrayed the Fatherland by giving the British our secrets so that their Navy could blockade our ports and starve our people? Who destroyed our economy and our currency? It was always the same group and you know who they were. Answer me now – who did all these things?

The Jew yells an answer before the rest of the crowd can react: “the bicyclists!” The Nazi speaker and the crowd are stunned. The bewildered Nazi finally asks, “why the bicyclists?” The Jew responds: “why the Jews?”

I understand and agree with Rosner’s criticism of Telhami’s prediction. It makes no sense to blame Bibi (Netanyahu’s popular nickname) for something “on which he had no control.” But the JPost is chock full of columns, including one by Rosner, that blame President Obama for Mubarak’s fall. Unlike Telhami’s column, which is respectful, the tone of the JPost columns attacking Obama is exceptionally strident. Why doesn’t Rosner recognize that it is absurd to blame either the bicyclists (Obama) or the Jews (Netanyahu) for Mubarak’s loss of power? Why not blame Mubarak and his cronies and family – who the Egyptians came to despise?

The efforts by JPost columnists to blame Obama for Mubarak’s fall are less coherent than Telhami’s critique of Netanyahu. Ms. Honig claims “Obama ushered in chaos even if he chose Cairo as his venue for the 2009 speech in which he sucked up to Islam [sic].” Obama gave a speech on June 4, 2009 that supposedly caused street revolts in Cairo 18 months later. In reality, the revolt in Tunisia sparked the protests in Cairo and the revolt in Tunisia was caused by the usual combination of corrupt, failed, and autocratic leadership plus a random event. As even Honig concedes, Mubarak could not remain in power in any event because “Mubarak is old and ill.” He also had no successor with legitimacy that Israel would find desirable. Honig projects magic powers onto Obama – a speech, in English, by an American produced a national movement in Egypt.

But Rosner asks the right question, though he fails to ask it of his JPost colleagues: how was Netanyahu or Obama supposed to “control” either the Egyptian military or the protestors? Rosner finds the answer to that question about Netanyahu so obvious that it is clear that he considers the question foolish. Netanyahu could not “control” either the Egyptian military or the protestors. Netanyahu had no magic button he could push that would give him such control. Rosner sees all this with clarity. But he and his colleagues cannot see that Obama had no magic button. No one seriously believes that Obama can give a speech and cause the residents of Cairo to start or to end a revolt. The only conceivable magic button is bribery of senior Egyptian generals.

There are three crippling problems with the hypothesized Obama magic bribery button. First, what is supposed to happen if the bribe succeeds? “Successful” bribery would require the Egyptian army to kill, torture, and imprison enough Egyptians to terrorize the protestors to the point that the protests ended and did not resume. Even if the bribe and the repression succeeded, how long would Mubarak live and what destabilizing forces would the campaign of terror against Egyptians unleash? Second, the bribe would likely fail and blow up in the face of the nation offering the bribe. Imagine Al Jazeera interviewing an Egyptian general explaining that a foreign government offered him a $200 million bribe in return for a promise to order the Egyptian army to attack the protestors. Third, if Obama has a magical bribery button that can create a “successful” Egyptian army war of terror against the Egyptian people – then Netanyahu does as well. Mossad can run a “false flag” bribery operation of an Egyptian general by representatives of a pseudo-Saudi prince. Indeed, since JPost columnists have long employed their most derisive and insulting prose to demonstrate that the American government is hopelessly incompetent in understanding and influencing Arab and Iranian officials, Mossad should be dramatically superior to our CIA in arranging such bribes and directing the resulting campaign of terror against the Egyptian people. If Obama “lost” Egypt by failing to bribe the Egyptian generals, then Netanyahu “lost” Egypt. (Indeed, every major nation with a intelligence service “lost” Egypt under this “logic.”)

The U.S. should never Act as Israel’s “Shabbos Goy”
The three crippling problems with the magic bribery button theory also prompt a question: why do the JPost columnists think that Obama has a duty to act as Netanyahu’s “Shabbos Goy”? Is there some secret codicil to the Israeli-Egyptian Peace Accords under which America agreed to bribe the Egyptian military to terrorize and murder Egyptian civilians should they ever revolt? How many Egyptians did we agree to kill? If Israel felt it was essential to its national security to use bribery to spark a wave of terror against the Egyptian protestors then it was Israel’s responsibility to undertake that murderous strategy and to take the moral and strategic consequences of unleashing the terror. It is obscene for Israelis to criticize the U.S. for refusing to act despicably when Israelis (correctly!) refuse to engage in those same despicable acts. We should never act as Israel’s or any other nation’s Shabbos Goy.

Why didn’t Bibi order Mossad to bribe the Egyptian generals to order the army to attack Egyptian civilians? Because doing so would have been morally depraved, unsuccessful, and harmful to Israel. I am a white-collar criminologist. I study fraud and bribery by elites and have helped conduct investigations to detect it and systems to reduce it. Corruption is a severe problem in Egypt (and Israel), and corrupt senior leaders pose a risk to national security. But bribery has great limitations even in corrupt nations. A general who grows rich through kickbacks from defense contractors will typically refuse even huge bribes that would require him to murder fellow citizens who are peacefully demonstrating for change. It is easier to bribe the military to engage in terror when the nation is fighting a vicious civil war along ethnic divisions in which terror is the norm. That is not the situation in Egypt – and no Western nation understood that fact better than Israel. I predict that the Mossad did not present using bribery to instigate a wave of terror against the Egyptian protestors as an option to Netanyahu. I predict that the same is true of the CIA and Obama.

The CIA, contrary to JPost columnists’ typical derision, combined bribery, small units of special forces, and smart air strikes brilliantly in the initial campaign in Afghanistan in response to the 9/11 attacks. But the CIA also learned early in that campaign the limits of relying on bribery (and financial incentives such as rewards) to capture or kill the most senior Taliban and al-Qaeda leaders. Afghanistan also demonstrates the typical weakness of trying to create a reliable national government – seen by the population as legitimate – through bribery and the provision of ample opportunities for corrupt gain.

Mubarak lost Egypt – to the Egyptian people – who no longer feared or respected him or his children. None of us know what will come next. Mubarak’s successors could be far worse. Neither the U.S. nor Israel has a magic button to push that will determine his successors. There are great limits to U.S. and Israeli power and life is uncertain. That is the nature of the real world.

The Israelis Promoting Eternal War

The Jerusalem Post’s columnists’ consuming hatred of President Obama has prompted several of them to make clear their vision of Israel’s future.  That vision is so grim, so self-destructive for Israel, and so dangerous for America that it behooves Americans to find out the direction in which some of the most influential Israeli columnists have been successfully, and dramatically moving Israel’s policies.  Mubarak’s fall from power has caused several JPost columnists to excoriate Obama, claiming that he acted like President Carter (who these columnists claim “lost” Iran).  The fear of these columnists is that Mubarak’s successor might abrogate the 1978 Camp David Peace Accords, which produced the “cold peace” between Egypt and Israel that has endured for over 30 years and which the IDF considers to have been an enormous strategic benefit to Israel’s national security.  The embarrassing problem for these JPost columnists is that it was President Carter who worked so successfully to broker the Peace Accords.  It is inconvenient that one of the JPosts’ favorite demons is in fact the man who produced the Peace Accords.  The JPost columnists that support the Peace Accords typically deal with the inconvenience by ignoring Carter’s role.    also has columnists, however, who attack Carter – for bringing peace between Israel and Egypt!  These columnists favor eternal war against Muslims.  Indeed, they explicitly favor conquest through war.  Israel should seize other nations’ oil (and beaches!).  Ms. Honig complains:
Carter was the one who twisted Menachem Begin’s arms to cede the Sinai and contract the frigid peace with Egypt. Its durability was anyhow limited because Mubarak is old and ill. We struck a risky bargain with a here-today-gone-sometimes-tomorrow regime. All Egyptian undertakings might disintegrate into the desert sands, leaving us on the precipice of a strategic calamity.

Honig believes that Israel should have never given Egyptian land that Israel had conquered in the 1967 “Six Days” war back to Egypt.  That, of course, would have prevented any peace treaty with Israel and Egypt and Israel would have had recurrent wars as Egypt sought to liberate the Sinai.  Similarly, Mr. Eisenman explains why Israel should have declared that the Sinai was Israeli.

Then, of course, there were the oil and gas fields already being exploited by the Egyptians. These anyhow would have led to energy independence for a country as small as Israel. Then there were the incredible and so-necessary ‘breathing space’ and all recreational opportunities represented by the Red Sea and its coastal towns already under development like Nueiba, Sharm el-Sheikh, and Ophira – and all the present and future tourist sites and incomparable skin-diving locales associated with these. This, not to mention its total and absolute strategic benefit or the presence there of the fabled Mt. Sinai and their own Moses’ holy domain?

“Breathing space?”  Israel should conquer and seize territory from its neighbors to provide greater room for Israelis to live?  This, in a column that says Muslims are analogous to Hitler?  The mind boggles.  What a boon for anti-Israeli critics.  If your country doesn’t have enough oil; take your neighbor’s oil fields.  The idea that one should conquer and seize another nation’s land for “incomparable skin-diving” is novel.  (Recall that Moshe (Moses) could not enter Israel – Mount Sinai was not in Israel.) 
Eisenman claims there are two reasons why Israel, in violation of international law, can seize its neighbors’ lands that lie outside “biblical” Israel.  First, the Sinai was “broad, virtually uninhabited … with all its resources and limitless potential.”  Low population density, valuable resources, and proximity combine to produce the JPost columnists’ implicit slogan – “Su Casa es Mi Casa.”  And your oil wells are my oil wells.  Mostly though, your skin-diving sites are my skin-diving sites.  Eisenman thinks skin-diving is worth mentioning in framing what he asserts is a compelling case for Israel embracing theft, breach of international law, and endless war as its strategy. 

Second, Eisenman claims that Israel would have prospered and been internationally popular if it had it refused to make peace with Egypt and made the Sinai part of Israel.

[T]o coin another aphorism … ‘all the world loves a winner.’ No one likes or actually, in the end, cares about ‘a loser.’  

By making peace, and giving up the Sinai, “Israel has in the last 35 years … sacrificed the awe, wonder, and admiration of much of the world.”   Winners defeat opposing armies and keep what they conquer.  No one will care about Israel’s neighbors as long as they lose their wars with Israel.  Israel would be held in awe today if had refused to make peace and seized any land it conquered.

Eisenman, chastises young IDF troops for celebrating the end of hostilities against Egypt during the Yom Kippur war.  He describes the IDF troops as “well meaning”, but “flower children.”  In fact, they had seen the lethality of modern war (the Yom Kippur war was the first major use of advanced anti-tank missiles and saw a major increase in the effectiveness of anti-aircraft platforms).  The IDF was beaten in several major battles and nearly lost the Golan.  They IDF troops had superb reasons for celebrating the end of hostilities.  I doubt that many of them were willing to die, or kill, so that Eisenman could pursue his passion for skin-diving.  Eisenman concludes that only “fools” would celebrate the Peace Accords. 
Eisenman and Honig also emphasize that it is impossible for Israel to make peace with its neighbors because they are Muslim nations.  Eisenman warns that “treaties with non-Muslims are not binding and can be canceled at any moment….”
Honig warns that democracy in impossible in Muslim nations because the Islamic sphere is utterly devoid of democratic traditions and infrastructure.

Eisenman’s claim that the world would love Israel as a “winner” and despise its Arab neighbors as “losers” if only Israel had seized the Sinai, declared it Israeli, and refused to enter into the Peace Accords exemplifies the self-delusion that has come to characterize one of Israel’s most influential newspapers.  The columnists’ strategy of endless war and theft poses a grave danger to Israel, its neighbors, and the United States.   

Rosner’s Portrayal of the U.S. Neo-Cons as Useful Idiots – Part 2

By William K. Black

The Jerusalem Post’s columnist Shmuel Rosner has replied to, but rarely engaged, my comments on his earlier column concerning Egypt.   The thrust of his prior column was that President Obama had naively “desert[ed Egypt] a valued strategic ally” because Americans are ignorant of Mideast culture.    
My response was substantive, quoting directly from Rosner’s column over 15 times and discussing why I believed he had phrased many of his remarks in a manner that was intentionally misleading.  Rosner’s reply is non-responsive on these points. 

Rosner’s reply focuses on one point.  He claims I misquoted him.  “Black quotes me as saying things that A. I’ve never said, and B. Are not true.”  Rosner then proceeds to cite portions of my column where I did not quote him and says that those portions where I did not quote him are not quotations from him.  That, of course, is why quotation marks and indented block quotations exist.  So, he self-refutes his point “A” – he does not argue that any of my quotations from his Slate column are inaccurate.

I wrote many things in my column commenting on what I believed were areas where Rosner’s column deliberately slanted his language to convey inaccurate facts, internally inconsistent arguments, and omissions of key facts that would have refuted the impression he tried to create in the reader.  Rosner, of course, is welcome to respond substantively to the many arguments I made where I recurrently cited his exact language.  He has a regular column in a major newspaper and has essentially unlimited space to explain why I am substantively wrong in my criticisms of his work. 

Instead, he starts with the usual jibe at the fact that I am a professor.  He doesn’t, of course, use these ad hominem attacks against professors who write to compliment his work.  In any event, after he tries to get his readers primed he begins with the clear error of claiming that I misquoted him.  After the reflexive ad hominem introduction and the clear factual error about my quotations, he moves to Part B – he asserts that I’m incorrect to write that he “paints U.S. neo-cons as Likud’s useful idiots.”  Here’s the context: Rosner’s column in Slate referred at one point to an old attack on Israel by some Americans.  The claim is that U.S. and Israeli neo-cons (the putative Israeli neo-cons composed Likud under this claim) sought to get the U.S. to invade Iraq for the primary purpose of destroying one of the largest Arab military forces threatening Israel with WMD and conventional forces.  Under some variants of this claim the invasion was also supposed to intimidate Syria (and perhaps Iran) to keep them from attacking Israel.  Under other variants the U.S. invasion of Iraq was supposed to unleash democratic forces that would bring down Israel’s most dangerous opponents (Syria and Iran). 

Rosner original column noted that, from the Israeli perspective, the U.S. neo-cons’ devotion to democracy for Arabs and Persians was naïve and dangerous.  Democracy would bring to power the most anti-Israeli elements and pose a grave strategic risk to Israel. 
The point I was making was that Rosner paints Israelis as viewing the U.S. neo-cons as fools (so naïve that their pro-democracy fantasies posed a grave risk to Israel).  The neo-cons were, however, useful to Israelis (or so many Israelis originally believed) because the neo-cons were the leading U.S. proponents of invading Iraq.  Most Israelis, particularly the rejectionist members of Likud, believed that destroying Iraq’s military and its putative weapons of mass destruction would directly benefit Israel and could indirectly aid Israel by deterring Syria. 

I did not say that Israelis or Likudniks believed in bringing democracy to Iraq.  I explained why Rosner’s logic means that Israelis (originally) viewed the U.S. neo-cons as useful idiots who could help prompt a U.S. invasion of Iraq, but who should be ignored when they blathered about democracy in the Mideast.  I also pointed out that the U.S. invasion of Iraq, which a majority of Israelis originally viewed as good for Israel and an act of U.S. pragmatism had the unexpected consequences of bringing Iran to primacy and dangerously straining the U.S. military.  The combination may be harmful to Israeli interests.  My point was that following allegedly pragmatic policies can often prove foolish.  Again, I don’t believe that Rosner disagrees with this point, but he is welcome to point out areas in which he disagrees.

Rosner’s primary point seems to be that Prime Minister Sharon was Likud’s leader and Sharon’s defenders say that he secretly urged Bush not to invade Iraq.  Maybe, but this is the kind of self-serving remembrance that requires skepticism.  Historians may reach a consensus about Sharon’s true position in 30 years – after going through premature, contradictory conventional wisdoms.   What we know for sure is that Netanyahu was writing in the Wall Street Journal (September 20, 2002): “The Case for Toppling Saddam” to urge the U.S. to launch a preemptive invasion.  
If Rosner believes that my goal was to put the onus on Likud he misses my point.  My title referred to Likud because Rosner emphasized Likud in his article.  I stated my agreement with Rosner’s point that Israeli’s overwhelmingly rejected the U.S. neo-cons’ dreams of launching a wave of democracy through the Mideast by invading Iraq as a dangerous fantasy.  Most Israelis, however, strongly supported the U.S. invasion of Iraq.  Only U.S. and Israeli citizens voiced majority support for the invasion.  Likud’s rejectionists, the folks that rule Israel today, were simply among the strongest proponents of the U.S. invasion of Iraq and they continue to dominate the ruling coalition through their leader, Prime Minister Netanyahu.  

Likudniks were not unique among Israelis in finding the U.S. neo-cons to be useful idiots.  Peres and Barak supported the invasion.  Israeli intelligence supported the invasion and believed Iraq had WMD. 
My argument is not that Israelis were irrational or evil because they broadly supported the invasion of Iraq.  They thought the invasion was in their national interest and could remove (or at least postpone) an existential threat to Israel.  They knew the U.S. neo-cons were useful because they were the leading U.S. proponents of the invasion and had access to key policy and opinion makers.  I agree with Rosner that Israelis believed that the neo-cons’ claims that the invasion of Iraq would set off a wave of democracy for Arabs and Persians were foolish.  The neo-cons’ belief in democracy was doubly naïve from the Israeli perspective – Israelis did not believe invading Iraq would produce a wave of democratic change in the region and they feared rather than favored Arab and Iranian democracy.  That’s why, under Rosner’s analysis of Israeli politics, Israeli’s found U.S. neo-cons to be useful idiots.  I never suggested that Rosner used that phrase.  I said that the picture he painted of Israeli politics indicates that this is how Israelis, particularly rejectionist Likudniks, viewed the U.S. neo-cons – naïve fools, but useful fools if they could help convince the U.S. to invade Iraq.            
Rosner ends his reply this way:

But I’d give him one additional advice (if one can tolerate the layman advice to a distinguished Professor): When I describe Israeli positions and actions, it doesn’t always mean I agree with these positions. A writer, a reporter, might feel the need to just lay the facts before the readers. Accurately.

No one tried to pull academic credentials on Rosner.  The ad hominem jibes Rosner chose to start and end his reply refute his claim that as a reporter all he does is “lay the facts before the readers.  Accurately.”  My column showed that what Rosner did all too often was slant things and selectively omit essential facts (like Carter’s decisive role in producing the Camp David Peace Accords that produced the peace with Egypt). 

The reason I quoted Rosner so extensively was to allow the reader to differentiate the circumstances in which he was “describ[ing] Israeli positions and actions” from those in which I was criticizing him for personally stating a position in a manner that I believed slanted the facts.  I explained why I believed his writing was inaccurate in those circumstances.  Readers can review my comment and confirm that I never criticized Rosner for describing an Israeli position.