Saturday, July 28, 2012

(WHATS LEFT) Richard Seymour: Hallucinating revolutions, pacifying resistance

Richard Seymour: Hallucinating revolutions, pacifying resistance
by gowans on July 27, 2012

While it may stir hopes that a popular rebellion is sweeping away oppression, the Syrian revolt, whatever its origins and proclamations, is hardly that. Its likely destination is a new US client regime in Damascus; its probable outcome the dismantling of what’s left of Syrian socialism, anti-imperialism and anti-Zionism. Would that it were all that romantic leftists fervently wish it to be, but a sober look at the rebellion, and recent history, strongly points in another direction.

Following blogger and author Richard Seymour, the views of many leftist who side with the rebels can be summarized as follows:

• All genuine popular liberation movements should be supported.
• The Syrian revolt is a genuine popular liberation movement.
• Western countries are intervening to tilt the balance in favour of an outcome they want.
• There is no sign they can achieve this.

Since few would disagree with the first point, we can move quickly to the second. Is the Syrian revolt “genuine” and is it “popular”?

If by genuine we mean the revolt is intended to advance popular interests, and that it doesn’t represent the pursuit of narrow interests under the guise of achieving popular goals, then the answer must surely be that the rebel movement’s genuineness depends on what section of it we’re talking about.

It’s clear that the aim of exiles in key leadership positions within the Syrian National Council is to turn Syria into a US client regime. The Muslim Brotherhood’s interests are undoubtedly sectarian, as are those of al Qaeda, a recent addition to the rebellion. Unless we pretend these groups are not part of the rebel movement, it cannot be said to be genuine in all its parts. To be sure, some parts of it are, but other parts—and very important ones—aren’t.

Is the rebel movement “popular”?

We don’t know exactly how much support the rebels have, or how much the government has. But we do know that each side appears to be able to count on the backing of significant parts of the Syrian population—the rebels on Sunnis (though less so the Sunni merchant class); the government on religious minorities. If the rebels represent a popular movement, then, inasmuch as the definition of “popular” depends on having the support of a significant part of the population, the forces arrayed against the rebellion are popular as well.

But should a rebel movement be supported simply because it’s popular? By definition, fascist regimes are based on mass support (without it, they’re merely authoritarian.) Most Democratic Party voters—as well as Republican Party ones—are part of the 99 percent. Both parties are popularly supported. Does that mean leftists ought to support them too? The Nazis too had a vaguely progressive section—that part on which the “socialist” in National Socialist German Workers’ Party turned. But its presence didn’t make the Nazis a popular movement for socialism or any less of a tool of capitalist-imperialist interests.

The counter argument here is that none of these popularly supported parties of the right are “genuinely” popular. (While popularly supported, they don’t advance popular goals.) But that gets us back to the question of whether the Syrian rebel movement is homogenous, united in aiming to oust the Assad government for a common purpose. Clearly, it is not.

On the other hand, we might say that the Syrian state isn’t popular, in the sense of its being said to represent narrow class interests, while the rebel movement seeks to overthrow those interests, and therefore is popular by definition. But there’s no evidence that any significant part of the Syrian rebellion is inspired by class interests, except perhaps key parts of the SNC, whose class interests align with those of the banks, corporations and wealthy investors who dominate the US state, media and economy. At best, parts of the rebel movement seek a liberal democracy, which would rapidly dismantle the remaining socialist elements of the Syrian economy. To be sure, Syria has never been socialist in the manner Trotsky’s followers favour—and a number of leftists on the side of the rebels, including Seymour, who Wikipedia notes is a member of the Socialist Workers Party— are devotees of the Russian revolutionary. But a liberal democracy would be even further from their ideal.

Seymour’s third point is that Western countries are intervening to tilt the balance in favour of an outcome they want. Since there’s no secret about this, we can move to point 4.

The fourth point is that there is no sign the West can hijack the rebel movement. There is an obvious objection to this: Were there a good chance Western governments couldn’t tip the outcome in their favour, they would be energetically opposing the rebellion, not ardently supporting it. Seymour’s point may be based, apart from wishful thinking, on the reality that there are large parts of the rebel movement that Washington does not trust, and therefore is reluctant to assist. The CIA’s role—at least that which is admitted to—has been to funnel Saudi- and Qatari-provided arms to the groups Washington wants to come out on top, and away from those it wants to keep from power. But therein lies the reason the United States will assuredly hijack the rebel movement. It will channel military, diplomatic, political, and ideological support to those parts of it that can be trusted to cater to US interests, and this overwhelming support will allow pro-imperialist elements, in time, to dominate the rebellion, if they don’t already. To think otherwise, is to ignore what happens time and again.

A brief example. In the summer of 1982 the Marxian economist Paul Sweezy hailed the rise of Poland’s Solidarity trade union movement as “heartening proof of the ability of the working class….to lead humanity into a socialist future.” [1] Maybe when you’ve lived on a starvation diet for years a discarded four-day old hamburger plucked from a McDonald’s dumpster starts to look like a steak dinner. Solidarity too was termed a genuine popular liberation movement, but it, like so many others so characterized, led, not forward, but backward. We know now that Solidarity’s high-profile supporters—The Wall Street Journal, Margaret Thatcher and Ronald Reagan—had a better idea of what Solidarity was all about than Sweezy did—to say nothing of much of the anti-Communist left. Those who didn’t have their heads stuck in a utopian cloud saw clearly enough that Solidarity would not lead to “genuine” socialism, but to the breakdown of the Polish state, chaos in the Warsaw Pact, and a step along the road to rolling back Communism; which is what happened, and the decades since have been marked by the deepest reaction. Henry Kissinger recently concluded correctly that the Syrian rebellion “will have to be judged by its destination, not its origin; its outcome, not its proclamations.” Judging Solidarity by its destination and outcomes, we can hardly be optimistic about the Syrian rebellion, nor parts of the left grasping its probable destination.

The reply to this might be, “Well, at least we should support the genuinely popular elements of the rebel movement.” Seymour wants us to do this by seeing to it that arms flow freely to the rebels, as Gilbert Achcar (another follower of Trotsky’s thought), wanted to do with the Libyan rebels. This naively ignores who’s providing the arms, who they’re provided to, and what’s likely to be expected of the recipients in return. The main weapons suppliers, the Saudi and Qatari tyrannies—and who could ask for more convincing supporters of a genuine popular liberation movement?—are not channelling arms to genuine popular liberation groups. Instead, it seems very likely that military support is being heaped upon those sections of the rebellion that are amenable to a post-conflict working arrangement with US-allies Turkey, Israel and the Gulf Cooperation Council and to settling in comfortably to a subordinate role to Washington. The idea behind arms flowing freely to “genuinely popular” liberation forces is that Washington backs leftists while the Saudi and Qatari tyrannies arm democrats. The naivety is breathtaking—on par with Sweezy’s embracing Solidarity as heartening proof of an imminent socialist future.

There’s more than a soupcon of absurdity in any discussion among Western leftists of “supporting” the Syrian rebels, since support amounts to nothing more than a rhetorical endorsement without any practical, real-word, consequences. It’s not as if an International Brigade is being assembled (backed by what? Saudi and Qatari money) that fervent anti-Assad leftists of the West can join to show real, meaningful support. Except weren’t the last International Brigades fighting against rebels? And come to think of it, aren’t the Saudis and Qataris backing an international volunteer brigade…of jihadis? If supporting Syria’s rebels meant anything at all, Western leftists would be making their way to Turkish border towns to offer their services to the Free Syrian Army, or the local CIA outfit attached to it. Perhaps a collection can be taken up to raise airfare for Seymour to travel to the nearest FSA recruiting center to put real meat behind his support for Syria’s “genuine popular liberation” movement.

Despite its surface appearance of empty clap-trap, Seymour’s position does have a practical, real-world aim—to neutralize opposition in the West to Western intervention on the side of the rebels by the people who are most likely to mount it—the Western left. Once you accept the argument that the rebels are a genuinely popular liberation movement and that massive outside intervention by imperialist powers won’t tilt the outcome of the rebellion in their favour, then all that’s left to do—as a way of showing solidarity with the rebels—is to raise not a single objection to their receiving aid from your own government. Which means that Seymour, who fancies himself a champion of popular causes against powerful conservative forces, may, on the contrary, be a pacifier of dissent against the most reactionary force around—US-led imperialism.

1. Paul M. Sweezy, “Response to The Line of March Symposium,” Line of March, #12, September/October 1982, 119-122.



(NEWZIMBABWE) Addressing the economy's liquidity challenges: Gono

Addressing the economy's liquidity challenges: Gono
27/07/2012 00:00:00
by Gideon Gono

Following is Reserve Bank of Zimbabwe, Gideon Gono’s address to the annual congress of the Confederation of Zimbabwe Industries (CZI) in Nyanga on how to address the liquidity challenges which have continued to undermine economic recovery since dollarisation in 2009.

IT is an undisputable fact that the banking sector plays a pivotal and indispensable role in economic growth through efficient allocation of resources via financial intermediation. The intermediary role of banks can, however, be effectively played in an environment epitomized by liquidity adequacy. Additionally, improved market confidence and the smooth operation of the payment systems, largely depend on adequate liquidity in the economy.

As such, lack of liquidity in the banking system seriously undermines the stability of the financial system and results in loss of market confidence.

It is against this background that liquidity is regarded as the life blood of the economy, and in its absence financial markets cease to function efficiently. Persistent liquidity constraints in the Zimbabwean economy have resulted in reduced public confidence in the banking sector as well as increased financial disintermediation.

The adoption of the multiple currency system in January 2009 has been accompanied by persistent liquidity shortages. In this regard, attendant challenges in the banking sector are to a large extent inextricably bound to attendant liquidity conditions.

This adverse development has had debilitating effects on Government’s initiatives to firmly steer the Zimbabwean economy onto a recovery path. This reflects the negative effects repeated disruptions to the traditional mechanisms of liquidity creation and transmission, both at the aggregate and individual levels.

The negative impact of the prevailing liquidity challenges have also been felt on the inter-bank market, a key component of the money market and the starting point of the monetary transmission mechanism.

Regrettably, the potency of policy initiatives geared at enhancing access to finance has been severely undermined by liquidity constraints that have remained an albatross around economic recovery efforts. Lack of balance of payments and budgetary support as well as limited access to offshore lines of credit have also compounded the liquidity conditions.

The remedial measures to suspend disbursements to Zimbabwe on account of external payment arrears have conspired with subdued export performance and a rising import bill to amplify liquidity shortages in the economy.


To the extent that liquidity is a multi-faceted concept, the following viewpoints shape its definition:

1. The liquidity of financial instruments – the ease with which financial instruments can be exchanged for money without losing value;
2. Market liquidity – the ability to trade volumes without significantly affecting prices, (or the ease with which value can be realized from liquidation of non-cash assets without disturbing underlying prices);
3. Monetary liquidity – the quantity of fully liquid assets circulating in the economy as measured by the narrow or broad monetary aggregates or its ratio to Gross Domestic Product (GDP);
4. Funding Liquidity – the ease with which economic agents can obtain external finance. Alternatively the ability meet cash obligations when they fall due;
5. Balance Sheet Liquidity – the amount of liquid assets on balance sheets of non-financial institutions; and
6. Bank Liquidity – the ability of a bank to meet its immediate obligations as they fall due.In a nutshell, liquidity is the general level of liquid assets funding a certain level of economic activity.

If an economy has potential to grow at a targeted level, but there is insufficient liquidity to support the required production and other socio-economic activities, then economic growth is curtailed. Liquidity is therefore, critical in supporting the attainment of sustained economic growth and development.
Sources of Liquidity

It is important to note that, within the auspices of a multiple currency regime, where the Reserve Bank does not issue currency, liquidity sources are limited. In this respect, the country’s liquidity situation is contingent upon developments on the external sector front.

Other than domestic deposit mobilization, which, to a large extent, is currently limited, the major source of liquidity is export earnings, the others being:

1. Diaspora Remittances;
2. Offshore credit lines;
3. Foreign direct investment inflows; and
4. Portfolio investment inflows.

Efforts to improve the country’s liquidity conditions should, thus place great prominence on increasing confidence in the banking sector and the economy at large.Improved confidence is usually accompanied by increased investment inflows which in turn support key productive and export sectors.

This will in turn, improve liquidity conditions particularly under the multiple currency system. Zimbabwe requires adequate liquidity for both short term and long term funding for infrastructure and the productive sectors of the economy, and in particular our industries

Over the past decade, Zimbabwe’s products significantly lost competitiveness in the domestic, regional and international markets. This negative development is largely attributed to relatively high production costs as a result of various factors. In addition to high utility tariffs, production processes in Zimbabwe are hamstrung by erratic supplies of water and electricity.

This ultimately translates into high production costs, resulting in delivery delays for both domestic and export orders and the competitiveness of the products in general.Some producers are forced to utilize generators to power their plants and other operations.

As a consequence, production costs incurred ends up more than trebling when compared to costs otherwise incurred when power supplies are reliable. Zimbabwe’s competitors notably, South Africa also produce Genetically Modified (GMO) products which are cheap to produce compared to Zimbabwean products.

Some of these products find their way into the Zimbabwean market, thereby, out-competing domestically produced goods.In addition, there are regulatory and policy inconsistencies, by Government regarding the competitiveness of Zimbabwean products. For instance Government allows for the importation of products, notably GMO products such as onions, tomatoes, milk, yoghurt and other milk products.

The increased importation of these products has drained the Zimbabwean economy of the much needed liquidity. South Africa, for example, produces GMO products and has reliable power supply, resulting in the products being cheaper than rival products produced domestically. Mr. Chairman, a lot has to be done to eliminate these policy contradictions which are hampering the recovery of industry.

Under the General Import and Export License, all finished products can be imported including tomatoes, onions, apples, oranges, and milk products (the list is endless). As a result, in 2011 Zimbabwe imported finished products to the tune of US$5,419.2 million compared to US$1,308.7 million. in 1999.

This has resulted in the crowding-out of Zimbabwean products with dampening effects on efforts to rejuvenate the country’s industrial production.

It is against this background that significant de-industrialization has been experienced with the manufacturing sector’s contribution to GDP contracting significantly from 25% in the 1990s to current levels of 15%. At the moment, our retail shops are filled with finished goods imported from South Africa and beyond. These are goods which we used to produce in yesteryears and export to the region and other parts of the world.

Today our goods are not competitive in the regional and in international markets. Additionally, the need for reliable power supply remains key in efforts aimed at improving the competiveness of Zimbabwean products. Against this background, Authorities have to seriously and urgently consider the development of new power generation capacity.

For years, discussions on Hwange 7 and 8 extensions, the Batoka gorge, the Kariba South extension, the Gokwe North (Sengwa) power generation plants have become theme songs.

Up to this day there has not been any tangible progress in the development of these pipe dreams. For industry to develop and increase export capacity, the economic enablers have to be functional, these include, power generation, the rail and road networks and other utilities.

The efficient delivery of these enablers will allow industry to increase production cheaply, increase exports and in turn increase liquidity in the economy.The banking sector lies at the centre of all these activities through its intermediary role of mobilizing surplus investible funds for re-deployment to deficit individuals and entities.
Banking confidence

In view of the recurrence of deep-seated liquidity challenges in our economy, the need for bold policy measures cannot be over-emphasized.At the national level, the Reserve Bank has put forward a number of short-term actions to rebuild confidence in the creditworthiness and robustness of financial institutions.

This is geared at facilitating the smooth operation of the market in terms of liquidity flow and provision of credit. The ability of banks to effectively promote economic growth hinges largely on bank soundness, efficiency and the stability of the financial sector.

As such, the Reserve Bank continues to play a proactive role to safeguard the banking sector. The bank mainly focuses on increased risk management procedures, enforcement of minimum capital adequacy, enhancement of corporate governance structures and the promotion of investment and growth.

The legal provisions governing the regulation and supervision of these institutions are set out in section 6 of the RBZ Act [Chapter 22:10], Banking Act [Chapter 24: 20], and National Payments Systems Act [Chapter 24:23].In addition, the Exchange Control Act [Chapter 22:05], empowers the Reserve Bank to regulate foreign exchange transactions in order to prevent financial instabilities arising from adverse mobility of foreign capital.

Bank capital plays a critical role of enhancing the competitiveness of banking institutions and reducing or mitigating incidences of bank failure and financial sector instability. To this end, the Reserve Bank continues to review the minimum capital requirements to ensure that banks are adequately capitalised.
Bank capitalisation

A well capitalised and sound banking institution is able to attract significant deposits and offshore financing at a reasonable cost, which translate into lower cost of funds to the productive sector. As part of its efforts to ensure that banks are adequately capitalised, the Reserve Bank has opened up the financial sector to foreign players in a bid to create strong and competitive banking institutions, thereby improving the efficiency of financial intermediation.

Consistent with this, some banks have made concerted efforts to partner with foreign banks to enhance their competiveness. To date, Premier bank has partnered with Ecobank and Kingdom Financial Holdings Limited (KFHL) concluded an agreement with Afrasia Bank Limited (ABL) domiciled in Mauritius. The Central Bank continues to encourage the mergers of financial institutions in order to build strong banks that can effectively play their intermediary role in the economy.

This ensures that bank balance sheets will be strong enough to maintain the required liquidity ratios thus enhancing confidence in the industry.Experiences in Zimbabwe demonstrate the need for effective corporate governance within the financial institutions as most bank failures are due to weaknesses in corporate governance.

Proposed amendments to the Banking Act seek to improve the legal and regulatory environment in the country, as well as tackle specific issues currently being faced by banks such as abusing depositors’ funds through insider lending.
Financial Inclusion

A substantial amount of cash is changing hands outside the banking system and this has exacerbated the liquidity challenges being experienced in the formal banking sector. The cash based transactions are mainly due to the growing informalisation of the economy. If such transactions are done through the banking system, financial intermediation would rise, thereby enhancing the ability of banks to extend credit to deficit units

.Efforts are being made by the banking sector to ensure financial inclusion of a large proportion of an unbanked population in the country through mobile banking.As at 31 January 2012, fifteen (15) banking institutions had introduced mobile banking products in partnership with mobile network operators. Financial inclusion is critical for economic growth and development, poverty alleviation and the attainment of the Millennium Development Goals (MGDs).

At the beginning of the year, the Central Bank directed banks to bring onshore Nostro account balances as part of measures to improve the liquidity situation in the economy and restore confidence in the banking sector. This measure contributed significantly in improving liquidity in the market. The challenge, however, is to ensure that the productive sectors of the economy have access to funds held locally.
Statutory Reserves

On 1 March 2012, outstanding statutory reserve balances of banks amounting to US$83.4 million were converted into Government Stock of interest rates ranging between 2.5% and 3.5%; and tenure of 2, 3 and 4 years. The effective date for the stocks was 1 January 2012 and they pay half-yearly coupon.

The first coupon payment of US$1.268 million was effected on 2 July 2012. In that respect, we are grateful to the Government for ensuring performance as this promotes market confidence. This development will ensure support for any future issues of Government instruments.

In addition, banks may be prepared to start using these instruments as collateral or start trading them thus re-activating the interbank market. Money MarketThe absence of money market instruments, in the form of Government paper, has affected the smooth functioning of the inter-bank market, as banks and market participants cannot trade without suitable and acceptable collateral instruments, to cover counterparty risks.

Mr. Chairman, we commend the Honourable Minister of Finance for his Mid – Term Fiscal Review Statement in which he announced that Government shall issue instruments to the market. The re-introduction of these instruments will resuscitate the country’s money market and unlock as well as broaden liquidity, away from its current narrow definition of cash.

This coupled with the re-activation of the interbank market is envisaged to go a long way in ameliorating the current liquidity challenges thereby fostering banking sector stability and economic growth.

The issuance of these securities will also smoothen Government cashflows through the issuance of paper when Government revenues are low and the maturity of the paper coincides with the times when revenues are higher.

The multicurrency regime has undermined the ability of the Reserve Bank to perform its traditional Lender-of-Last Resort (LOLR) function, a development which has compounded the short term liquidity constraints. Once the LOLR facility has been increased substantially from the current $7 million, the availability of collateral will result in the operation of the LOLR – thereby increasing confidence in the banking sector.
Stress Testing

Effective 31 March 2012, all banking institutions are now required to submit to the Reserve Bank, liquidity stress tests on a quarterly basis in line with Basel II requirements.

Stress tests results show the resilience of the banking sector to movements in market interest rates.Interest RatesLending rates quoted by banks have remained relatively high, largely sustained by persistent liquidity shortages, high credit demand, high associated risks, limited lines of credit and the absence of an active money market.

The absence of a functioning money market has resulted in the widening of interest rate range quoted by banks. Nominal lending rates quoted by banks range from 8% to 30% with a weighted average lending rate of between 14% and 20% during the last 4 months. Deposit rates, however, ranged from 0.15% to 6%, with time deposits offering higher rates of about 12%.

This negative development continues to militate against efforts geared at promoting a savings culture among the banking public. In turn, this compounds the country’s liquidity situation, which also hamstrings the economic recovery process.

Once an active money market is restored, it is envisaged that the rates will be aligned to an appropriate yield curve that promotes investment. In this regard, Monetary Authorities are currently engaged in discussion with the banking sector so that the industry addresses the issue of punitive bank charges and the high spread between lending and deposit rates.

The streamlining of charges has the potential to encourage the flow of savings into the formal banking system. To the banks, we encourage them to lower bank charges so as to enhance bank deposits. The banks can benefit from increased volumes of business.

Micro Finance

The Central Bank has observed the unethical and unscrupulous behavior by money lending and micro finance institutions. In response to this, the Reserve Bank of Zimbabwe issued out a circular on 4 June 2012, warning the institutions to comply with regulations governing the conduct of their business.

The Central Bank noted that some of these institutions were illegally taking deposits from the public and this constituted a leakage from the formal banking system. The public is also being warned against investing their funds with these institutions as they risk losing their savings.

The Reserve bank has so far closed two institutions for operating outside the law and is monitoring the activities of microfinance and money lending institutions. These corrective measures, coupled with the lowering of bank charges and levies have the potential to attract deposits into the formal banking system.

Continued efforts by the Monetary Authorities to restore sanity in the banking sector are envisaged to further boost confidence in the industry.External DebtZimbabwe remains in debt distress, with a total public debt of over US$10 billion.

The continued indebtedness of the country is undermining the country’s ability to attract long term finance from traditional offshore creditors.In this regard, the resolution of the country’s debt will unlock credit lines and significantly improve the country’s creditworthiness, thus complementing current efforts to attract capital flows into the key export and productive sectors.

Within this context, the adoption by the Government of Zimbabwe Accelerated Arrears Clearance, Debt and Development Strategy (ZAADDS) in March 2012, is a bold stride in the amicable resolution of the country’s overhang. Authorities are currently engaged in discussions with the International Monetary Fund (IMF) staff monitored program and the issue will be presented to the IMF Executive Board in November 2012 for consideration.

The adoption of an SMP will pave way for possible arrears and debt clearance as well as provide a signal to other lenders to engage Zimbabwe and unlock funding for the country. This will undoubtedly, result in increased capital inflows and improve liquidity conditions in the economy.
Deposit Protection

There is increasing global acknowledgement of the critical role that deposit insurance systems play in the promotion and maintenance of financial stability, which is a critical component for economic growth, financial stability and economic inclusion.An informed public that understands the benefits and limitations of deposit insurance schemes behaves rationally in the event of a bank failure.

There will be no run on banks as depositors are aware that they will be reimbursed their deposits hence contributing to the stability of the financial system. In view of this, the Deposit Protection Board (DPB) was established in July 2003 with a mandate to reimburse depositors in the event of a bank failure. The institution, however, commenced its operations in the midst of an economic crisis and has, therefore, not been able to fully play its role.

There are, however, plans to recapitalize the DPB to enable it to give some protection to depositors and be able to reimburse depositors quickly, preferably within a short period as this builds confidence in the system.
Business Models

The increase in non-performing loans has made it necessary for banks to be more prudent in their lending practices. This ensures that the sector remains stable even though lending is curtailed.

The repayment of loans by business is critical in giving the banking sector confidence and trust to enable the industry to continue providing support.In this regard, management of companies have to re-look at their business models and come up with strategies that build capacity to repay borrowed funds.

Consideration should also be given to other options such as diluting shareholding so as to bring in capital as a way of managing the liquidity challenges. Some businesses are collapsing just because owners still want to maintain full ownership and yet they are failing to mobilize funds from the banking sector.
Confidence Liquidity

Confidence is central in the growth and development matrix of an economy. Once confidence is assured, there is an incentive for people to work harder and become innovative even in an environment that is typified by negative exogenous factors.

Without confidence in an economy, financial capital will always fly out to safety, thereby undermining liquidity conditions. Mr. Chairman, we need confidence liquidity in this country in order to oil the wheels of the economy and support sustained growth.
Sense of Urgency

Certain laws and regulations need to be reviewed so as not to derail the growth momentum that the country has attained. In this regard, there is need to ensure that the country is served with pro-actively designed laws and regulations which enable productive sectors to operate in a conducive environment.

Currently, both the Authorities and the private sector have to act with a sense of urgency in order to accelerate the economic recovery process which is key in improving liquidity conditions. For instance, Authorities need to urgently review the prohibition of the transportation of certain products, notably fuel by road after 6pm.

Surely, there is no harm in allowing tankers to move fuel at night. IndigenisationThe implementation of Indigenization and Economic Empowerment regulations in the banking sector should be done in a manner that preserves confidence since any adverse developments in the banking sector could grind economic activity to a screeching halt.In this regard, we commend Government’s initiatives to re-engage in view of the Indigenization and Economic Empowerment regulations as espoused in the July 2012 Mid- Term Fiscal Policy Review.

As such, we are gratified to note that some aspects of the Indigenization and Economic Empowerment Regulations are receiving attention with a view to harmonize and fine- tune pertinent issues.

Within this context, the need to reconcile the Indigenization regulations and other Acts of Parliament cannot be over-emphasized. Accordingly, the implementation of the Indigenization and Economic Empowerment provisions cannot be done in isolation of the Banking Act and Regulations, the Reserve Bank of Zimbabwe Act, the Exchange Control Act and Regulations, the Companies Act and all other already existing legal instruments.

Maintenance of banking safety and soundness is essential, given the key role played by banks in facilitating economic growth. Accordingly, the current reforms in the banking sector, which place more emphasis on the need for banks to be adequately capitalised, through mergers and acquisitions will be sustained and strengthened.

A sound banking sector is critical in mobilizing funds for the growth and development of the productive sectors of the economy, creating employment and the overall benefit of the generality of the population.

Under the multi-currency system, the major source of liquidity are exports receipts. As a result, there is need for medium to long term capital to replace antiquated equipment and machinery in industry so as to produce competitive products for both export and domestic consumption.

This should see the level of import growth dissipating and exports rising. The improvement of confidence in the economy is critical in order to raise the required capital both locally and offshore.

This will support the recovery of productive sectors, create employment, improve export earnings and liquidity available for on-lending to the rest the economy for the benefit of the whole economy.

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(NYASATIMES) Malawi increase minimum wage rate over 100 percent

Malawi increase minimum wage rate over 100 percent
By Malawi News Agency
July 27, 2012

Domestic workers should now smile as government has stipulated that their daily rate of payment should no longer be K178.25 but K317. The District Labour Officer for Blantyre, Frank Adini disclosed that the law on the new daily pay has already been gazetted. “With effect from July 1, 2012, the minimum wage is K317 per day,” said Adini.

He said the decision was made by a forum comprising representatives from trade unions, employer organizations, Economics Association of Malawi (ECAMA) and Ministry of Labour.

Adini: Minimum wage up

“You need to manage an employee. Those who cannot afford to pay their domestic worker the rate of K317 per day should not dare to engage one, because it is now considered as a crime not to do so.

“Paying a domestic worker less than what government has set up is a violation of their rights and you could be sued, “said Adini.

A renowned private recruitment and training organization of domestic workers in Blantyre, Seka Agency said in a separate interview that this would not affect business as most of its clients were already paying their graduates a minimum of K7,000 per month.

“Eight thousand two hundred forty two Kwacha is not far from K8, 242. Our clients will understand the economic situation,” said Rose Sekanawo Tambala who is the owner of Seka Agency.

The Employment Act empowers the Minister of Labour to revise the minimum wage for domestic workers after consultations with stake holders.



(NYASATIMES) Malawi govt after Mutharika’s money stashed in foreign banks

Malawi govt after Mutharika’s money stashed in foreign banks
By Gerald Namwaza, Nyasa Times
July 26, 2012

Malawi government has dispatched secret agents specialised in money laundering to Europe to trace the wealth of former president Bingu wa Mutharika, sources close to the operation have exclusively told the Nyasa Times.

Mutharika is believed to have stashed millions of money in foreign banks mainly in Europe which government analysts believe is funding the recent apparent resurgence of the outsmarted Democratic Progressive Party (DPP).

DPP, under the tutelage of its heir apparent, Peter Mutharika, have had well patronised rallies in his home district Thyolo and another one in central.

However it is believed that people were ferried to the venues to make it look as if many people attended the meetings because they still love the party.

Peter Mutharika: Inherited Bingu wa Mutharika's estate, party


Political commentators have said numbers of people attending a political rally does not necessarily signify that a party is popular and that people will vote for it during elections.

“There so many factors why people go to attend political meetings, most of the people go there to while their time away while others just attend the political party meetings as a form of entertainment and then there are others who simply go there to watch and observe things. Yet others go there for handouts or see what they can get out of the politicians,” said a political commentator.

But DPP party gurus have said that the PP government is scared stiff with the masses turn-out to its meetings and that they are spending sleepless nights over it.

“We know government will come hard on us because we have grassroots support and they will intimidate us but we will not stop fighting for the good things that our party stands for,” said DPP spokesman Nicholous Dausi, who is also implicated in the infamous ‘Midnight Six’.

The Midnight Six are implicated in a case allegedly attempting to subvert the Malawi Constitution and prevent the current president Joyce Banda taking over after the sudden demise of Bingu wa Mutharika. The matter is in courts.

Dausi said the party does not pay people to come to its meetings.

“People are attracted with the ideologies, the beliefs and the tenets of democracy that are enshrined in our party,” Dausi said.

He added that the party was well funded by well wishers who have seen that the current government is not delivering.

He said the current devaluation of the kwacha has made the lives of many Malawians miserable as the cost of living has jumped, a fact collaborated by faith based Centre for Social Concern (CFSC).


In their June report CFSC says the cost of living sequence has revealed how an increasing numbers of people could be struggling to cope as, against a backdrop of growing unemployment and shrinking wages, the prices of staple food (maize) has risen by an average of 19 percent in one month in four cities, with Blantyre topping the list at 73percent.

A source at the Anti Corruption Bureau (ACB) confirmed there was a dual docket for both the former president and Peter Mutharika on how they acquired sudden wealth.

“I don’t think there is any political witch hunt, all that government machinery is doing is to find out how the former president and his brother Peter, as well as other party officials acquired their wealth,” said the source.

DPP government put former president Bakili Muluzi on corruption charges.

Bingu wa Mutharika, close to bankruptcy before his ascendancy to presidency and joining Bakili Muluzi’s United Democratic Front (UDF) build a multibillion mansion in his home, refurbished his Bineth farm in Zimbabwe beyond recognition and amassed wealth that is the current source of conflict between his wife Callista and brother Peter.



(NYASATIMES) Malawi cancels K40bn fertiliser procurement tender: See list of previous suppliers

Malawi cancels K40bn fertiliser procurement tender: See list of previous suppliers
By Nyasa Times
July 21, 2012

Malawi’s Ministry of Agriculture and Food Security, has announced cancellation of the Tender of the Procurement of Subsidised Fertilizer for 2112 – 2013 Growing season – IBF Number: 019/FERT/IPC/12/001. The ministry said the tender will be re-advertised “after reviewing measures for enhancing the implementation of the programme.”

According to Finance Minister Dr. Ken Lipenga, the major allocation within the Ministry of Agriculture budget in the 2012/13 National Budget he presented recently is for the Farm Inputs Subsidy Program (FISP) which has been allocated a total of K40.6 billion.

“These funds are for the purchase of 150,000 metric tonnes of fertilizers comprising 75,000 metric tonnes of Urea and 75,000 metric tonnes of NPK fertilizers which will be distributed to 1.5 million farm families at a price of K500 per bag,” said Lipenga when he presented the financial plan.

Before is the list of previous suppliers:

Fertiliser subsidy program


Subject of Procurement: Supply and Delivery of Fertilizers
Procurement Reference Number: 019/Fert./IPC/09/010
Procurement Method: International Competitive Bidding (ICB)
Date: 18Th October, 2010
Country: Malawi

The Government of the Republic of Malawi through the Ministry of Agriculture and Food Security wishes to inform the general public and the international Community that contracts for the supply and delivery of subsidized fertilizers for the 2010/2011 Farm Input Subsidy Programme (FISP) have been awarded to the below listed successful bidders.





1 Export Trading
P.O. Box 51722, Limbe

2 Farmers World
P.O. Box 1631, Lilongwe

3 Nyiombo Investments
P.O. Box 40654, Lilongwe

4 Sealand
P.O. Box 520, Lilongwe

P.O. Box 2505, Blantyre

6 Mulli Brothers
P/Bag 5145, Limbe

7 Simama General Dealers
P.O. Box 258, Karonga

8 Malawi Fertilizer Company
P.O. Box 1631, Lilongwe

9 Optichem (2000) Ltd
P.O. Box 40039, Lilongwe

10 Farm -Chem
P.O. Box 51776, Blantyre

11 Xelite Strips Ltd
P.O. Box 1911, Lilongwe

12 Krish Trading Company
P.O. Box 353, Lilongwe

13 Astro Chemicals
P.O. Box 1251, Blantyre

14 Transglobe Produce
P.O. Box 5025, Blantyre

15 Mapeto Wholesalers
P.O. Box 5243, Limbe

16 Shire Ltd
P.O. Box 5491, Limbe

17 B & N Investments
T/A Mitundu, Lilongwe

18 Masina Investments
P/Bag 72, Lilongwe

19 Gassom Traders
P.O. Box 395, Lilongwe

TOTAL: 17,471,336,556.00


Subject of Procurement: Transportation Services
Procurement Reference Number: 019/Trans/Fert/IPC/09/012
Procurement Method: National Bidding (NCB)
Date: 18Th October, 2010
Country: Malawi

The Government of the Republic of Malawi through the Ministry of Agriculture and Food Security wishes to inform the general public that contracts for provision of transportation services for the 2010/2011Farm Input Subsidy Programme (FISP) have been awarded to the below listed successful transporters. This contract does not have total contract price as it is based on the availability of the contractedtransporter and the unit rate per kilometer per metric tone. Many thanks to all those who participated in the bidding process.


Unit Rate/Kilometer/Metric Tonne (MK)

Long Haul
Short Haul
Bad Road

1 Chizamsoka
P.O. Box 11, Chitipa

2 Zingakake Transport
P.O. Box 303

3 Salpha Enterprises
P.O. Box 1122

4 Mzati Investments
P.O. Box 31140,Lilongwe

5 Yafuka Produce
P.O. Box 197,Thyolo

6 Mulli Brothers
P/Bag 5145,Limbe

7 Masina Investments
P.O. Box 72,Lilongwe

8 Simama General
P.O. Box X42,Lilongwe

9 The Road Transport
P.O. Box 30740

10 K C Freight
P.O. Box 90218,Blantyre

11 Swank Haulage
P.O. Box 489

12 Farwest Investments
P.O. Box 143,Mulanje

13 Mwenera Transport
P.O. Box 410

14 Peter’s Freight
P.O. Box 305,Lilongwe

15 Mico Transport
P.O. Box 1`279,Lilongwe

16 Anala Investments
P.O. Box 205,Mponela

17 P. W. C. Investments
P.O. Box 51274,Limbe

18 World Wide
P.O. Box 250,Lilongwe

19 B & G Transport
P.O. Box 3,Mzuzu

20 Mag Logistics
P.O. Box 31863

21 Amajuba general
P.O. Box 20509,Lilongwe

22 Agricultural Produce
P.O. Box 40165,

23 MEAR Trucking
P.O. Box 40160,Lilongwe

24 I Investments
P.O. Box 20439,Lilongwe

25 Northern Region
P.O. Box 598,Mzuzu

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(NYASATIMES) Goodall implicated in $6.8m fertiliser deal, involved company with al-Qaeda ties

Goodall implicated in $6.8m fertiliser deal, involved company with al-Qaeda ties
By Nyasa Times Reporter
July 28, 2012

Former Minister of Finance Goodall Gondwe has been implicated in the subsidy fertiliser scam by insisting that government buys the fertiliser from a Saudi Arabia company which had no capacity to deliver the required tonnage.

An Anti Corruption Bureau (ACB) Investigation Report Ref. ACB/CR/BT/155/06 which Nyasa Times has a copy reveals that Gondwe blasted official from Smallholder Farmers Fertiliser Revolving Fund (SFFRFM) who were recommending that government sources the 2005 subsidy fertiliser from South Africa.

Gondwe is said to have blasted SFFRFM officials which included general manager Bester Ndisale and operations manager Biziwick Chinguwo who had been on a fertiliser surveillance trip to Saudi Arabia, the United Kingdom, Ukraine and Russia together with government officials.

The delegation was led by Nerbert Nyirenda, the then Director of Public Enterprises Reform and Monitoring Unit (PERMU) and comprised of Ndisale, Chinguwo and Alex Namaona from the Ministry of Agriculture and Food Security.

Gondwe: Cost Malawi US$6.8 million dollars in fertiliser deal

“Dr Milton Kutengule (the then Secretary to the Treasury) then advised the delegation to leave for their mission immediately and further stated that the Principal Secretary for Agriculture would follow later’. The mission left Malawi without knowing which fertilizer suppliers had been earmarked to be visited. However, Mr. Nebert Nyirenda informed his delegation that he would search on the internet the company they would be visiting,” reads the report in part.

“When the Delegation reached Saudi Arabia, the leader of the delegation Mr. Nebert Nyirenda, informed his members that they would meet and hold discussions with Pioneer Chemicals. Mr. Nebert Nyirenda indentified this supplier in Saudi Arabia.

“The delegation visited the facilities of Pioneer Chemicals. Their findings were that Pioneer Chemicals had a small factory and did not have capacity to meet the requirements of the subsidy fertilizer programme. The delegation then, while in Saudi Arabia, decided to inform the Secretary to Treasury, Dr Milton Kutengule, of these findings,” reads the report in part.

The findings of the team which were reported to Kutengule were that among other things the capacity of the indentified company Pioneer Chemicals was too small to meet the requirements of the desired quantities and that the offered prices of fertilizers in Saudi Arabia were generally not different from those offered in South Africa.

“The delegation, with the exception of Mr. Nebert Nyirenda, then decided to pass through South Africa on their way to Malawi, with the intention of meeting fertilizer companies there and assess their capabilities as well. While making arrangement to meet companies in South Africa, Dr Milton Kutengule phoned Mr. Ndisale and asked him what he was doing in South Africa. Dr Kutengule ordered the delegation to immediately stop whatever they were doing and return to Malawi.”

“A week later after the delegation’s arrival in Malawi; Mr. Nebert Nyirenda summoned both Mr. Ndisale and Mr. Chinguwo for a meeting at Ministry of Finance in Lilongwe with Dr. Goodall Gondwe. At the Ministry SFFRM management first met Dr. Milton Kutengule who stated that “NO MATTER WHAT, GOVERNMENT WOULD BUY FERTILIZER FROM SAUDI ARABIA”

“Dr Kutengule then took SFFRFM management to the Minister of Finance, Dr Goodall Gondwe, who challenged the SFFRFM management on why they recommended that the fertilizer be bought from South Africa and not Saudi Arabia. Dr Gondwe dressed down SFFRFM management and categorically asked them that “IN KAMUZU GOVERNMENT WOULD YOUBUY FERTILIZER LIKE THAT?” reads part of the report.

The report then reveals that from this moment on, Gondwe ordered the SFFRFM management not to do anything in relation to the decision making process with regard to where the subsidy fertilizer would be bought.

This decision, the report noted, defeated the technical advisory role of SFFRFM management had in the subsidy fertilizer procurement process.

“Government, through the three officials from Ministry of Finance, i.e. Dr Goodall Gondwe, Dr Milton Kutengule and Mr. Nebert Nyirenda then decided that the subsidy fertilizer Would be bought from Saud Arabia specifically from Pioneer Chemicals,” reads the report in part.

“From this time onwards, government never consulted SFFRF management on anything to do with the procurement of the subsidy fertilizer and resorted to giving SFFRFM management instructions and directives,” adds the report.

The report discloses that Pioneer Chemical failed to deliver the 70, 000 tones they were requested but delivered only 35, 000 tonnes of fertilizer and this forced government to source the commodity locally.

“The Malawi Government incurred a loss of US$6,898,150 (about MK1, 034,722,500) for procuring locally the 35,000 metric tons of Urea that Pioneer Chemicals failed to supply,” reads the report.

“We find that the Minister of Finance, Honourable Goodall Gondwe conducted himself in a manner conducive to corruption in that he coerced the Fertilizer Surveillance Team, comprising of Messrs Nerbert Nyirenda, Bester Ndisale, Bizwick Chinguwo and Alex Namaona to identify and select Pioneer Chemicals to supply 35,000 metric tons of Urea fertilizer and 35,000 metric tons of 23:21:0+4S in the 2005 —2006 subsidy fertilizer growing season,” reads findings of the investigation.

The ACB investigation also found Kutengule and Nyirenda to have ‘conducted themselves in a manner conducive to corruption’ on their various roles they played in the procurement of the subsidy fertilizer.

Meanwhile, Nyasa Times understand that the Saudi Arabia company t is thought to have links to terrorist group al-Qaeda.

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(MnG) Boeremag kingpin's brother convicted in treason trial

Boeremag kingpin's brother convicted in treason trial
27 Jul 2012 14:13 - Sapa

Andre du Toit has been found guilty of treason after Judge Eben Jordaan said there was no doubt he had been part of the inner circle of the Boeremag.

Judge Eben Jordaan said in the North Gauteng High Court in Pretoria there was no doubt that Andre du Toit, a former policeman, had been part of the inner circle of the Boeremag organisation which had planned a violent rightwing coup to overthrow the ANC-led government. Mike was convicted of treason on Thursday.

Andre had attended numerous meetings with Mike in various parts of the country where the coup was planned and discussed in 2001 and early in 2002.

He was also present at a meeting in January 2002 when he swore allegiance to the Boeremag and its cause and was handed a bullet as symbol that "traitors" would be shot.

The plans entailed creating chaos in the country through a trigger event, whereafter military bases would be taken over, the government replaced with white military rule and all blacks and Indians chased out of the country.

Coup plan

Blowing up the Vaal dam, shooting down a Boeing and blowing up power stations were among the plans discussed.

Specific tasks were assigned to people at some of the meetings.

The judge accepted evidence that Andre du Toit had been placed in charge of communication in continuation of the coup plan while he and his brother were already on the run from police late in 2001.

He was also one of the accused who had handed a military radio to a police agent during a meeting at a strip club in Pretoria.

The agent had infiltrated the organisation and later testified against him.

According to the evidence, Andre had discussed his fears that the man might be a police spy with another state witness but his older brother Mike did not share this view.

No turning back
One of the most important pieces of evidence against Andre was a conversation with the same agent that was taped and later played in court during the trial.

In the conversation, he made it clear that there was no turning back and remarked how wonderful it was that there were people supporting their plan.

He also talked about taking over the military bases as Lohatlha and Kimberley.

Andre was present when explosives were tested at a place near Bela Bela with the aim of blowing up power lines and substations.

The court rejected his claims that the meetings he attended had been innocent and aimed at self-protection against farm attacks.

Judgment will continue on Monday. – Sapa



Friday, July 27, 2012

(LAND DESTROYER) US Treasury: Al Qaeda Runs Syrian "Rebellion"

US Treasury: Al Qaeda Runs Syrian "Rebellion"
US fails to sell militants in Syria as "freedom fighters," tells truth for pretext to liquidate monsters of their own creation.
by Tony Cartalucci
Friday, July 27, 2012

July 27, 2012 - The Wall Street Journal (WSJ) in its article, "Al Qaeda's War for Syria," cited officials from the US Treasury Department stating, "Al Qaeda in Syria (often operating as the "Al Nusra Front for the People of the Levant") is using traffickers—some ideologically aligned, some motivated by money—to secure routes through Turkey and Iraq for foreign fighters, most of whom are from the Middle East and North Africa. A growing number of donors from the Persian Gulf and Levant appear to be sending financial support."

Photo: The "Free Syrian Army," whose composition consists of not only Syrian sectarian extremists, but Libyan terrorists from the US State Department listed "Libyan Islamic Fighting Group" led by Abdul Hakim Belhaj, is the manifestation of years of US, Saudi, and Israeli aid since at least 2007.

This undercuts the West's year and a half-long narrative that Syria's violence was the result of a so-called "uprising" by the people of Syria. While the WJS attempts to downplay this admission by claiming, "al Qaeda makes up a small part of the resistance movement," it concedes that, "its strength appears to be rising." In reality, it was Al Qaeda militants from the very beginning, and the only aspect of the conflict "rising" is public awareness of this fact.

Since 2007, US Aided and Abetted Al Qaeda Affiliates Against Syria

As early as 2007, veteran journalist Seymour Hersh wrote in his New Yorker article "The Redirection," that:

"To undermine Iran, which is predominantly Shiite, the Bush Administration has decided, in effect, to reconfigure its priorities in the Middle East. In Lebanon, the Administration has coöperated with Saudi Arabia’s government, which is Sunni, in clandestine operations that are intended to weaken Hezbollah, the Shiite organization that is backed by Iran. The U.S. has also taken part in clandestine operations aimed at Iran and its ally Syria. A by-product of these activities has been the bolstering of Sunni extremist groups that espouse a militant vision of Islam and are hostile to America and sympathetic to Al Qaeda." -The Redirection, Seymour Hersh (2007)

Hersh's report would also include:

"the Saudi government, with Washington’s approval, would provide funds and logistical aid to weaken the government of President Bashir Assad, of Syria. The Israelis believe that putting such pressure on the Assad government will make it more conciliatory and open to negotiations." -The Redirection, Seymour Hersh (2007)

The 2007 article also warned about the inevitable consequences of arming radical sectarian extremists, with CIA operators in Lebanon warning of mass murder, sectarian violence, and specifically the targeting of Christian minorities across the Levant (the region along the Mediterranean Sea including Jordan, Israel, Lebanon, and Syria):

"Robert Baer, a former longtime C.I.A. agent in Lebanon, has been a severe critic of Hezbollah and has warned of its links to Iranian-sponsored terrorism. But now, he told me, “we’ve got Sunni Arabs preparing for cataclysmic conflict, and we will need somebody to protect the Christians in Lebanon. It used to be the French and the United States who would do it, and now it’s going to be Nasrallah and the Shiites" -The Redirection, Seymour Hersh (2007)

Now, demonstratively, we see exactly this feared onslaught manifesting itself in Syria, in particular against Christians as indicated in LA Times' "Church fears 'ethnic cleansing' of Christians in Homs, Syria," and more recently in USA Today's distorted, but still telling, "Christians in Syria live in uneasy alliance with Assad, Alawites." Even the massacre in Houla, seems to echo of this 2007 warning, bearing all the hallmarks of sectarian extremists like Al Qaeda.

Not only did the United States government, with Saudi Arabia, Qatar, and Israel's aid, knowingly assemble a sectarian extremist front affiliated with Al Qaeda, not from within Syria, but from beyond its borders, it knew well in advance the destructive consequences such a foreign policy would yield.

The US government has since willfully lied to the both the American people and the world regarding the true nature of the violence unfolding in Syria, and with the help of the corporate-media, is attempting to spin the forewarned consequences of their long-planned conspiracy as merely an unfortunate by-product of a spontaneous conflict.

A Foreign Invasion, not a Rebellion

The WSJ's article begins with the sentence, "the United States and its allies should consider opening a second front in the Syrian war. In addition to helping end Bashar Assad's rule, there is a growing need to conduct a covert campaign against al Qaeda and other extremist groups gaining a presence in the country."

In essence, we are being told that the militant extremists the US assembled against Syria have failed to overthrow the government, so the US should intervene on the pretext of liquidating the very terrorists they conspired to send, funded and armed, and have been supporting since the very beginning.

The very logistical "routes" through Turkey the WSJ claims Al Qaeda is using to flood into Syria with militants and weapons, are admittedly organized by the US through its CIA intelligence apparatus. The New York Times article, "C.I.A. Said to Aid in Steering Arms to Syrian Opposition," states clearly that:

A small number of C.I.A. officers are operating secretly in southern Turkey, helping allies decide which Syrian opposition fighters across the border will receive arms to fight the Syrian government, according to American officials and Arab intelligence officers.

The NYT continues:

The weapons, including automatic rifles, rocket-propelled grenades, ammunition and some antitank weapons, are being funneled mostly across the Turkish border by way of a shadowy network of intermediaries including Syria’s Muslim Brotherhood and paid for by Turkey, Saudi Arabia and Qatar, the officials said.

Likewise, in the Washington Post's article, "Syrian rebels get influx of arms with gulf neighbors’ money, U.S. coordination," it is reported:

Syrian rebels battling the regime of President Bashar al-Assad have begun receiving significantly more and better weapons in recent weeks, an effort paid for by Persian Gulf nations and coordinated in part by the United States, according to opposition activists and U.S. and foreign officials.

We are now expected to forget these admissions, or believe that Al Qaeda is slipping past CIA officers "operating secretly in southern Turkey," and that only by coincidence they are armed with the very weapons and resources the US, Saudis, and Qataris have pledged to supply the so-called "Free Syrian Army" with. Turkey, it should be remembered, is a NATO member - that Al Qaeda is swarming within and along its borders belies 10 years of "War on Terror" mythology.

The "Free Syrian Army" does include sectarian extremists from within Syria, mostly drawn from the banned, sectarian Muslim Brotherhood movement which has sought to destroy secular society across the Arab World for decades. But the vast majority of the fighters flowing into Aleppo in the north, and who had recently attempted to overrun Damascus in the south, are foreign fighters, armed by foreign sponsors, invading and conducting armed attacks on populated Syrian cities.

Image: "A lot of them were bald and many had beards. Many wore white sports shoes and army pants," said an alleged "defected officer" of the perpetrators of the "Houla Massacre." An apt description of the NATO-armed sectarian terrorists that ravaged Libya before traveling to Syria (here, here, and here) to continue their campaign of extremist-driven genocide. (click image to enlarge)

Reports months ago indicated that Libyan militants had been making their way to Syria by the hundreds, flush with cash and weapons recently received from NATO during their own operation to overrun and destroy Libya. As many as 600 Libyan terrorists were reported to have reached Syria by late 2011.

Now as Western media houses embed their representatives within terrorist bands crossing the Turkish-Syrian border, and as these terrorists find their way into Aleppo and amongst a population capable of revealing their identity to the world, slowly the admissions are trickling out that indeed entire "platoons" of North African fighters are involved in the misleadingly titled, "rebellion."

CNN, whose Ivan Watson accompanied these terrorists over the Turkish-Syrian border and into Aleppo, revealed that indeed foreign fighters were amongst the militants. It was admitted that:

Meanwhile, residents of the village where the Syrian Falcons were headquartered said there were fighters of several North African nationalities also serving with the brigade's ranks.

A volunteer Libyan fighter has also told CNN he intends to travel from Turkey to Syria within days to add a "platoon" of Libyan fighters to armed movement.

CNN also added:

On Wednesday, CNN’s crew met a Libyan fighter who had crossed into Syria from Turkey with four other Libyans. The fighter wore full camouflage and was carrying a Kalashnikov rifle. He said more Libyan fighters were on the way.

The foreign fighters, some of them are clearly drawn because they see this as … a jihad. So this is a magnet for jihadists who see this as a fight for Sunni Muslims.

CNN's reports provide bookends to earlier admissions that large numbers of Libyan terrorists flush with NATO cash and weapons had headed to Syria, with notorious terrorist commanders making the arrangements.

West Used Al Qaeda in Afghanistan and Libya, Is Using Al Qaeda Now in Syria

By all accounts, including admissions by former Secretary of Defense Robert Gates and former National Security Adviser Zbigniew Brzezinski, Osama Bin Laden's organization that would become Al Qaeda was created by the West during the Soviet-Afghan war in in the late 70's and throughout the 80's. The US and Saudi funding of these militants did not begin after the Soviet invasion, but actually several years before the invasion. US intervention in Afghanistan by training and arming Afghanistan's Mujaheddin, along with Osama Bin Laden's Arab fighters, is one of the leading factors that led to the murderous and protracted decade-long war, according to the Nation in an article titled, "Blowback, the Prequel."

Photo: Former US National Security Adviser Zbigniew Brzezinski meeting with Osama Bin Laden, then leading the CIA's Arab legionaries in Afghanistan. Bin Laden's Al Qaeda would later spin off into regional terrorist organizations, covertly armed, trained, and protected by the CIA to this day, including LIFG in Libya, MEK in Iraq and Iran, and Baluchi terrorists in Pakistan.

Since then, Al Qaeda has conveniently provided both a well-armed, capable proxy force, as well as a sufficiently terrifying boogeyman, giving Wall Street and London access to nations it could otherwise never justify intervening in.

The very militant leader of the "Tripoli Brigade" who secured Libya's capital just in time for US dignitaries to visit, was Abdul Hakim Belhaj, commander of the Libyan Islamic Fighting Group (LIFG), listed on the US State Department's roster of "Foreign Terrorist Organizations" (#28). In fact, several reports out of West Point's Combating Terrorism Center (CTC) illustrated how not only LIFG was actively leading NATO-backed regime change in Libya, but was involved in fighting Western troops and locals in both Afghanistan and Iraq - disrupting legitimate resistance, and providing a continuous pretext to maintain Western occupation.

That Belhaj almost immediately after overthrowing Libya's government, began organizing operations to bring in fighters, weapons, and cash to Syria, indicates that, just as Al Qaeda was used from its very inception by the US and Saudis to fight Soviets in Afghanistan, it is still a valuable tool in executing Western foreign policy.

Essentially, the so-called "War on Terror" is a fraud, the belligerents on both sides fueled by the West as a means of establishing military, economic, and political hegemony in otherwise unapproachable targeted nations. When Al Qaeda cannot sufficiently overrun a targeted nation as a proxy "foreign legion" of Western interests (Libya), its presence, facilitated by the West in the first place, is then cited as a "casus belli" for military intervention (Afghanistan).

Now, it appears that the West's Arab "foreign legion," Al Qaeda, is about to suffer an unprecedented defeat - not at the hands of Western anti-terrorism forces, but at the hands of Syrian troops in the city of Aleppo. In a desperate effort to prevent this, the West is employing a series of desperate strategies ranging from portraying the trapped foreign-fighters committing atrocities inside Aleppo as "pending a certain massacre," to using the very presence of these foreign-fighters as evidence "Al Qaeada" is operating in Syria and must be "stopped" by Western intervention.

It is essential to understand that, as empires have always done, the monolithic corporate-financier interests of the West seek regional hegemony as a step toward global domination, and will say and do anything in order to achieve it. As resistance increases, the West's lies become more difficult to sell, the consistency of their propaganda overtly crumbling. The West, in nearly a single breath, has now claimed FSA fighters are both "Al Qaeda" that need to be eliminated, while also impeding a "massacre" by Syrian forces if something isn't done to save them.

When US President Obama referred to the "depths of depravity" regarding Syrian security operations in Aleppo, he and his script writers do so with the belief that Americans, and the world, are ignorant and disinterested in the truth, and will gladly allow Western foreign policy to once again prey on their emotions and good intentions to sell yet another destructive, self-serving military intervention.

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(ZAMBIA REPORTS) Amsterdam Demands Retraction of False Rupiah Banda Article by The Post

COMMENT - The MMD and UPND's lawyer is trying to paint an international picture of a 'breakdown in the rule of law and democracy', so they can gin up international condemnation of the government if they start taxing the mines or get serious about developing the country. His law firm Amsterdam & Peroff is a Chatham House corporate member, and he has pulled these kinds of stunts before, including in Thailand. Read more here.

Amsterdam Demands Retraction of False Rupiah Banda Article by The Post
Posted by: Peter Adamu Posted date: July 26, 2012

Zambian former president Rupiah Banda’s international lawyer has accused The Post Newspapers of publishing false articles to attack the PF government’s political opponents.

Robert Amsterdam in a statement to QFM news says the Post Newspapers Limited is acting like a propaganda tool for the PF government.

On June 12 and 13, 2012, The Post Newspapers published two articles alleging that the former President Banda suffered a home robbery in which large amounts of cash went missing.

The Post Newspaper of Zambia has published a number of verifiably false news articles to attack political opponents of the government, says Robert Amsterdam, acting on behalf of the former President Rupiah Banda.

Amsterdam says he has a letter from the Zambian Inspector General of Police to The Post Newspaper indicating that the story published by the post was false.

He adds that a copy of the letter from the Zambian Inspector-General of the Police has been published on his website.

Former President Banda has denied the allegations as pure fiction, says Amsterdam.
Mr. Amsterdam has since demanded that The Post retracts the article.

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Thursday, July 26, 2012

(NEWZIMBABWE) MDC-T has failed the test of government

MDC-T has failed the test of government
By Psychology MaziwisaPolitics Last updated on: July 26, 2012
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THE Movement for Democratic Change of Prime Minister Morgan Tsvangirai, previously seen by many as a vibrant opposition and a refreshing alternative to Zanu PF, is undergoing a gradual and catastrophic decline.

There are only two reasons for this political disaster. The first concerns the MDC-T’s election promises which have gone largely unfulfilled. The second, which is a bit ironic, is that the sanctions imposed on Zimbabwe have made it absolutely impossible for the MDC-T to prove its worth as a force for economic good.

Let’s look at each of these in turn. In 2008, Morgan Tsvangirai and his associates made a host of promises in their election manifesto including the promise to restore the agricultural sector to its full capacity. They committed themselves to ensuring decent standards of life through, amongst other means, job creation, reasonable salaries and the participation of women and young people in the economic activities of Zimbabwe.

They promised, too, to adhere to principles of good governance, transparency and accountability and to stamp out violence as a means of winning elections.

Yet, if the evidence of the last couple of years is anything to go by, the verdict must be that the Prime Minister’s party has not lived up to its word. In other words, Tsvangirai and his people lied to the nation.

There are a few reasons connected to this woeful failure to deliver. Firstly, the MDC-T joined the coalition government with virtually no expertise in governance. They were blind to the realities and challenges of real leadership, the difference between what is desirable and what is actually possible.

Furthermore, instead of sticking to the core business of being in government, which is to serve the best interests of Zimbabwe and the Zimbabwean people, MDC-T officials saw the inclusive government as a once-in-a-lifetime opportunity to feather their own nests. With their hands in the till, issues of transparency and accountability were sidelined.

Of course this shameful conduct was not easy to discern while the party was still in opposition but thanks to the inclusive government, voters have finally learnt the shocking truth about the duplicity, thievery and moral bankruptcy of the MDC-T.

Moreover, Tsvangirai’s claim, so eloquently expressed during the 2008 elections, that his party represents peace, tolerance and harmony, has been exposed as untrue and baseless. It has slowly been replaced by the growing perception that the MDC-T in fact thrives on violent behaviour and intolerance.

Several examples exist to corroborate this. Not so long ago, a police officer died in cold blood, allegedly at the hands of MDC-T supporters. The party’s own gatherings, including a major conference in Bulawayo last year, have been marred by violent clashes.

Recently, Tendai Biti declared that his party would fight back if provoked. This attempt to disguise the MDC-T as the victim rather than the perpetrator of violence is laughable. Biti can put lip stick on Morgan Tsvangirai and call him Mandela, but he is still Morgan Tsvangirai.

The MDC-T also promised to scrap unneeded and unnecessary journeys abroad in order to guard against abuse of state funds. This sounded good at the time. Yet on entering government, this election commitment, like many others, was ditched.

Tendai Biti, one of the worst offenders in this regard, has indeed acknowledged that most of the journeys embarked on by MDC-T officials have yielded nothing of benefit to the country. This dreadful failure to deliver on election promises has not just disappointed MDC-T supporters, it has caused their trust and confidence to evaporate.

Now let’s consider the issue of sanctions. Tsvangirai’s party has repeatedly stated the lie that the only reason it wants the sanctions removed is because President Mugabe and Zanu PF have used the punitive measures to hide behind their lack of managerial skills. This is preposterous.

The unvarnished truth is that the MDC-T wants the sanctions removed because, contrary to public opinion, the sanctions are real and they have been a huge impediment to the fulfilment of their election commitments.

Sources close to what transpired in Brussels last Monday, where the European Union was meeting to consider the lifting of sanctions on Zimbabwe, tell me that this reality helped guide the European Union in its decision to lift only those sanctions that affect direct aid to the government of Zimbabwe. It was an attempt; I’m reliably informed, to strike a balance between improving MDC-T’s electoral prospects and keeping Zanu PF on the run. But this self-serving stance might not be of much use to the MDC-T. The damage has already been done.

Indeed, most Zimbabweans now believe that, unless there is overwhelming proof to the contrary, it is safe to assume that whenever Tsvangirai’s lips are moving, he is lying.

Accordingly, it is perhaps not going too far to say that the MDC-T had better enjoy whatever remains of its time in the inclusive government for, by the end of next year, it will be reviled and hated and might even be nicknamed the Movement for Deceptive Change.



(NEWZIMBABWE) Rhodes an angel compared to Anjin: Biti

COMMENT - Let's see if Tendai Biti is going to go after Anglo-American too, though I doubt it.

Rhodes an angel compared to Anjin: Biti
26/07/2012 00:00:00
by Staff Reporter

FINANCE Minister Tendai Biti has again laid into the China-controlled diamond mining firm, Anjin Investments, claiming the company was ripping the country off adding its murky operations were reminiscent of settler-colonial exploitation.

Biti told legislators that although diamond production had increased from 2,5 million carats to 4,5 million carats this year, revenues had been stagnant at US$41 million and singled out Anjin for particular criticism.

He claimed that the Chinese firm, the largest of the five companies operating in the reputedly rich diamond fields at Marange, was taking most of the revenues out of the country.

“It can’t be a one way traffic of extraction (without benefits to Zimbabwe) that would make Cecil John Rhodes look like an angel…we are going to continue speaking about diamonds,” he said.

Biti said while Mbada Diamonds – a much smaller company - had contributed US$2 million in Pay As You Earn, Anjin brought in just US$200,000.

“Where we got US$41 million we should have got US$285 million. To accept US$41 million it means we are stupid, we are fools; we are idiots,” he said.

“The Chinese are saying to themselves that we found our fools in Zimbabwe. In other countries they are building freeways, dams, real development and not these hotels they are building here.”

Biti was reacting to concern from MPs over the state of the country’s economy after he was forced to cut his growth forecast for the year and concede that the US$600 million expected from diamond sales would no longer be realised.

But Anjin has previously dismissed Biti’s criticism, accusing the Minister of over-estimating potential revenues from diamonds when he presented his 2012 budget.

“It is either he is untruthful, incompetent or illiterate. He made the blunder and miscalculated. He must be man enough and admit that he made a mistake,” Anjin board member Munyaradzi Machacha said last month during a visit to Marange by EU envoys.

“He (Biti) is scapegoating companies like Anjin for his miscalculations. He is persecuting a cash cow because he made a blunder.”

Still, MPs urged the government to find ways of ensuring diamond revenues were not diverted away from Treasury.

Said Bulawayo East MP Tabitha Khumalo: “The money from Chiadzwa must go to Treasury, Chiadzwa must be owned by the State, We have money but we have misplaced priorities.

“If the Cabinet does not want to deal with the question of Chiadzwa then I am going to urge the people of Zimbabwe to go and invade Chiadzwa.”

Anjin Investments is one of the five companies presently operating at the Marange diamond fields.

Deputy Mines Minister Gift Chimanikire recently revealed that the Zimbabwe Defence Industries (ZDI) has a 40 percent interest in the company while the state-run mining firm, ZMDC, owns 10 percent. The balance is controlled by the Chinese Defence Industries.

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(SALON) The roots of Bain Capital in El Salvador’s civil war

The roots of Bain Capital in El Salvador’s civil war
Romney tapped El Salvador's wealthy families, including one linked to right-wing death squads
By Justin Elliott
Friday, Jan 20, 2012 8:00 PM UTC

A significant portion of the seed money that created Mitt Romney’s private equity firm, Bain Capital, was provided by wealthy oligarchs from El Salvador, including members of a family with a relative who allegedly financed rightist groups that used death squads during the country’s bloody civil war in the 1980s

Bain, the source of Romney’s fabulous personal wealth, has been the subject of recent attacks in the Republican primary over allegations that Romney and the firm behaved like, in Rick Perry’s words, “vulture capitalists.”One TV spot denounced Romney for relying on “foreign seed money from Latin America” but did not say where the money came from. In fact, Romney recruited as investors wealthy Central Americans who were seeking a safe haven for their capital during a tumultuous and violent period in the region.

Like so much about Bain, which is known for secrecy and has been dubbed a “black box,” all the names of the investors who put up the money for the initial fund in 1984 are not known. Much of what we do know was first reported by the Boston Globe in 1994 when Romney ran for U.S. Senate against Ted Kennedy.

In 1984, Romney had been tapped by his boss at Bain & Co, a consulting firm, to create a spin-off venture capital fund, Bain Capital.

A Costa Rica-born Bain official named Harry Strachan invited friends and former clients in Central America to a presentation about the fund with Romney in Miami. The group was impressed and “signed up for 20% of the fund,” according to Strachan’s memoir. That was about $6.5 million, according to the Globe. Bain partners themselves were putting up half the money, according to Strachan. Thus the Central American investors had contributed 40 percent of the outside capital.

Back in 1984, wealthy Salvadoran families were looking for safe investments as violence and upheaval engulfed the country. The war, which pitted leftist guerrillas against a right-wing government backed by the Reagan administration, ultimately left over 70,000 people dead in the tiny nation before a peace deal was brokered by the United Nations in 1992. The vast majority of violence, a UN truth commission later found, was committed by rightist death squads and the military, which received U.S. training and $6 billion in military and economic aid. The Reagan administration feared that El Salvador could become a foothold for Communists in Central America.

The notorious death squads were financed by members of the Salvadoran oligarchy and had close links to the country’s military. The death squads kidnapped, tortured, and killed suspected leftists in urban areas fueling an insurgency that retreated to rural areas and waged war on the government from the countryside. The war, which lasted 12 years, triggered an exodus that brought more than 1 million Salvadorans to the United States.

There is no evidence that any of Bain Capital’s original investors were involved in these sorts of activities. But the identities of some of the investors remain secret, and there are family names that raise questions.

Four members of the de Sola family were among the original Bain investors, or “limited partners” in the company, the Globe reported. Their relative and “one-time business partner,” Orlando de Sola, was an important figure in El Salvador. A well-known right-wing coffee grower with an (in his words) “authoritarian” vision for the country, de Sola spent time living in Miami but was also a founding member of the right-wing Arena party, lead by a U.S.-trained former intelligence officer named Roberto D’Aubuisson.

Craig Pyes, an investigative reporter then with the Albuquerque Journal, wrote a series on the rightist death squads based on extensive on-the-ground reporting in El Salvador in the early 1980s with Laurie Becklund of the Los Angeles Times, while the death squads were still active.

Pyes, who has since won two Pulitzer Prizes and is now a private investigator in California, says that no one has produced any proof that de Sola directly funded death squads.

“However,” Pyes says, “he was in the inner circle of the group around D’Aubuisson at the time that D’Aubuisson was well known to be involved in the death squads. De Sola’s name appears in a December 1983 FBI cable as one of 29 people suspected by State Department officials of furnishing funds and weapons to Salvadoran death squads.”

De Sola’s name also turned up in a notebook, seized from an aide to D’Aubuisson named Saravia, that detailed the finances of D’Aubuisson’s terrorist network, according to Pyes.

The Saravia notebook, reviewed by U.S. officials, listed weapons purchases, payments, and what appear to be descriptions of violent plots by rightists, including the assassination of El Salvador’s Archbishop Oscar Arnulfo Romero in 1980. Asked about the notebook by the New York Times in the late 1980s, de Sola denied that he had ever helped finance political violence. De Sola could not be reached for comment for this story.

Romney, for his part, who was much more accessible to the press in 1994, told the Globe that year that “we investigated the individuals’ integrity and looked for any obvious signs of illegal activity and problems in their background, and found none. We did not investigate in-laws and relatives.” He also said that Bain had checked the names of the Bain investors with the U.S. government. Given the policy of the Reagan administration at the time, though, it’s not clear going to the government would have been the most effective vetting mechanism.

It’s impossible to fully explore the backgrounds of the original Bain investors because we don’t know all their identities, including the names of the four members of the de Sola family mentioned by the Globe. Neither the Romney camp, Bain Capital, nor Strachan — the Bain executive who recruited the Central Americans — responded to requests for comment.

During his first presidential bid in 2007, Romney more than once touted the Central American investors in Bain while trying to woo Hispanic voters. In a speech in March of that year to the Miami-Dade Lincoln Day Dinner, Romney actually specified five of the original “partners” in Bain Capital — but the de Sola family was not among those he named.

And that August he told the Miami Herald, “The investments for the company that I started, Bain Capital, came largely from Latin America. My largest single investors came from El Salvador, Ecuador, Colombia and Guatemala. And so I feel a deep kinship to people in Latin America.”

Justin Elliott is a reporter for ProPublica. You can follow him on Twitter @ElliottJustin More Justin Elliott.



(CNN) Exxon reports record profit of nearly $16 billion

Exxon reports record profit of nearly $16 billion
By Steve Hargreaves @CNNMoney July 26, 2012: 10:50 AM ET

Exxon Mobil reports record profit of nearly $16 billion, but nearly half comes from one-time gains.

NEW YORK (CNNMoney) -- Exxon Mobil reported a quarterly profit of nearly $16 billion Thursday -- the highest ever for a U.S. corporation. The number beat out the previous quarterly record of $14.83 billion set in the third quarter of 2008, also by Exxon.

But this quarter's massive number includes $7.5 billion from "divestments and tax-related items," partly from the sale of refining and chemical operations in Japan.

Excluding that special credit, the company made $8.4 billion, down 21% from the $10.7 billion Exxon made in the same period last year as falling oil and natural gas prices cut into earnings.

Exxon said its combined production of oil and gas decreased 5.6% from year-earlier levels -- also a worrying trend for investors.

Exxon's quarterly profit of $15.9 billion came on revenues of $127.4 billion, giving it a profit margin of just over 12%.

The company said it paid $26.6 billion in taxes and royalties during the quarter -- $8.5 billion in the form of income taxes.

Exxon's big bet on shale gas

The lackluster economy caused oil and natural gas prices to sharply decline in the second quarter of this year.

Oil prices were about 9% lower than they were a year ago, while natural gas prices were off about 25%. Exxon produces twice as much natural gas as it does oil.

The falling prices have hit other major oil companies as well.

Earlier Thursday Royal Dutch Shell (RDSA), the world's largest publicly-traded company, reported a 14% drop in earnings. Exxon is the largest U.S.-based company, taking the top spot in this year's Fortune 500 list. It's the world's second largest company based on revenues behind Shell.

Exxon said it spent $9.3 billion searching and developing new oil and gas supplies in the second quarter.

The company touted recent agreements it signed with Russia's Rosneft to develop shale oil deposits in Western Siberia, as well as major expansions at petrochemical plants in Saudi Arabia and along the U.S. Gulf Coast.

Oil spill worries ahead of Arctic drilling

But analysts have been critical of Exxon's declining production rates for the last several quarters. Exxon blamed the decline on pre-arranged agreements, OPEC production decisions and the sale of assets.

Some analysts also say the company spends too much money on share buybacks and not enough on dividend payments. Share buybacks reduce the number of outstanding shares, and are intended to boost the company's stock price.

Exxon said it spent $5 billion buying back shares in the second quarter, and noted the dividend increased 21% from the same time last year.

On Wednesday Exxon's board voted to keep the dividend the same going into the third quarter this year, at 57 cents per share.

Shares of Exxon Mobil (XOM, Fortune 500) rose slightly in early trading.



(CNN) Spain on the brink

Europe's Debt Crisis
Spain on the brink
By Ben Rooney @CNNMoneyInvest July 25, 2012: 3:26 PM ET

NEW YORK (CNNMoney) -- Spain has come under heavy pressure in the bond market this week as investors grow increasingly convinced that the government will need a bailout.

At current levels, the price Spain must pay to borrow money for 10 years now looks to be comfortably above 7%, a cost that experts say the government cannot afford to pay for long.

The yield on Spain's 10- year bond rose to a high of 7.75% on Wednesday, before falling back to 7.37% later in the day.

"The pressures are clearly building for a major policy response, as Spain finds the cost of funding reaching intolerable levels," said Andrew Milligan, head of global strategy at Standard Life Investments in Edinburgh.

The surge in yields, which rise when prices fall, reflects a growing conviction among investors that Spain will become the latest, and largest, euro area nation to seek a bailout from the European Union and International Monetary Fund.

Spain has been in the line of fire since it requested up to €100 billion in loans from the eurozone rescue fund to recapitalize the nation's banks. Eurozone finance ministers approved the terms of the loan agreement last week, but the move failed to allay concerns about Spain needing a full-blown bailout similar to those given to Greece, Portugal and Ireland.

Related: Europe threatens U.S. economy, says Geithner

Spanish Prime Minister Mariano Rajoy has resisted taking such a dramatic step, which would entail a significant loss of national sovereignty and a lasting stigma.

Even if Madrid capitulated, analysts say the eurozone may not have enough money to fund a bailout for Spain.

The bulk of Europe's crisis resources will be in the European Stability Mechanism, which is on hold until Sept. 15, when the German Constitutional Court is expected to issue an initial opinion on its legality.

What's more, analysts say the ESM will not be able to inject funds directly into Spanish banks until a eurozone-wide banking regulator is established, which could take months, if not years. That means the loans could end up adding to the debts of the Spanish government, which is already struggling to shrink its deficits.

In the meantime, eurozone finance ministers have agreed to set aside €30 billion in emergency funds for Spain from the European Financial Stability Facility.

By contrast, Spain could need up to €300 billion to cover its financing needs through 2015, according to London-based research firm Capital Economics.

Fears grow Spain may need bigger bailout

The EFSF could theoretically fund a bailout for Spain until the ESM is up and running, said Capital Economics analyst Jonathan Loynes in a research note. But that would deplete the resources of both funds and "leave little in the pot" for other troubled eurozone nations, he added.

Indeed, investors have been worried that Italy could be left out in the cold if Spain is forced to take a bailout.

The yield on Italy's 10-year bond shot to a high of 6.7% on Wednesday before falling back.

The trend in short-term yields is even more worrying, according to Nicholas Spiro, director of London-based consultancy Spiro Sovereign Strategy.

In a note, Spiro said yields on Spain's 2-year notes have risen some 85 basis points since last Friday, while Italy's 2-year yields have jumped nearly 100 basis points in the same time frame. A basis point is equal to one one-hundredth of one percentage point.

"The failure to shore up Spain is wreaking havoc with Italy's bond market," said Spiro. "Fears that Spain's request for a bailout would make Italy more vulnerable are being borne out."

Related: Why Madrid's shell game backfired
The moves in European bond markets this week have raised speculation that the European Central Bank will intervene on Spain's behalf.

The ECB has purchased billions of euros worth of bonds issued by Spain and other euro area governments under the controversial Securities Market Program. The central bank also pumped over €1 trillion worth of liquidity into the European banking system in two separate operations, which temporarily eased sovereign borrowing costs earlier this year.

But some ECB officials have expressed concern that subsidizing government debt would reduce the incentive officials have to enact the reforms deemed necessary to restore fiscal discipline.

In addition, analysts say another intervention by the ECB would only buy time, rather than address the underlying problems in the eurozone.

To do that, euro area leaders need to make a significant move towards a so-called fiscal and political union, analysts say. While they have taken steps in that direction, the shift could take years to complete given the slow pace of progress so far.

Related: Greece is back in the spotlight

Much will depend on Germany, the largest economy in the eurozone, which has expressed deep reservations about assuming the liabilities of other euro area governments.

"It's very difficult to see what, in the short-term at least, could shore up confidence in Spain and Italy for anything longer than a few weeks or so," said Spiro. "Only a game-changing move on the part of Germany could make a difference. For the time being, this is highly unlikely."

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