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With AIG “Bailout,” Did the US become a Planned Economy to Fight Off Takeover by One?

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In two posts concluding, ” the government might find a victory [in AIG’s lawsuit] to be more costly than it anticipated,” Yves Smith digs out key details from AIG’s claims that in September 2008, the US illegally took it over.

I think Smith is intrigued by the additional evidence provided by the AIG complaint that the government took several actions that ensured it could use AIG as a bailout vehicle, including (in her second post), by not asking whether the counterparties would be willing to take a haircut.

Another stunning new allegation in the “Corrected Proposed Findings of Fact” document is that, in stark contrast with previous claims by the Fed, that only UBS was willing to take a haircut, it turns out the New York Fed only bothered talking to eight of the 16 counterparties (and then as we already know from the SIGTARP report on this issue, using a script that was delivered by junior staffers, as opposed to having Geithner or Paulson call and force them to take a haircut). Moreover, BlackRock, which was advising the Fed, believed that Bank of America and Goldman would be receptive to discounts.

But I’m particularly interested in what Treasury forestalled with its bailout: bailouts from sovereign wealth funds from Singapore, China, and some unnamed Middle Eastern funders. From the first post:

[The AIG complaint] argues that AIG was forced to take a bailout it didn’t need, that all that was required was a bridge loan until it could obtain private financing. That may sound like a howler. AIG was teetering on the verge of failure and needed to get a $14 billion bridge loan on September 16 (a Tuesday, the day after the Lehman bankruptcy) that in a few days rose to $37 billion simply to carry it through the weekend when the terms of the credit facility were finalized.

[snip]

7.6 Defendant directly discouraged sovereign wealth funds from providing liquidity to AIG.

(a) Sovereign wealth funds, including the Government of Singapore Investment Corporation (GIC) and the Chinese Investment Corporation (CIC) expressed interest in investing in AIG (Studzinski Dep. 39:4-40:18, 133:11-19).

(b) Defendant discouraged the CIC and representatives of the Chinese Government from assisting AIG. At 12:25 p.m. on September 16, 2008, Taiya Smith, Paulson’s deputy chief of staff and executive secretary, informed Paulson’s chief of staff and Treasury Under Secretary for International Affairs David McCormick that the CIC was “prepared to make a big investment in AIG, but would need Hank to call [Chinese Vice Premier] Wang Qishan” (PTX 89 at 1; see also PTX 423 at 15-18). The Chinese “were actually willing to put up a little bit more than the total amount of money required for AIG” (PTX 423 at 16).

(c) On September 16, 2008, McCormick spoke to Paulson about the Chinese interest in investing AIG (PTX 423 at 16-17). McCormick then told Smith that Treasury “did not want the Chinese coming in at this point in time on AIG” (PTX 423 at 17).

(d) Later that day, Smith met with Chinese Government officials in California during Joint Commission on Commerce and Trade in Yorba Linda, California (PTX 423 at 16). During that meeting, “all [the Chinese officials] wanted to talk about was AIG” (PTX 423 at 17). Smith spent one or two hours explaining what was happening with AIG (PTX 423 at 18). She conveyed the message that Treasury did not want the Chinese to invest in AIG (PTX 423 at 17).

(e) On September 17, 2008, United States Senator Hillary Clinton called Paulson “on behalf of Mickey Kantor, who had served as Commerce secretary in the Clinton administration and now represented a group of Middle Eastern investors. These investors, Hillary said, wanted to buy AIG. ‘Maybe the government doesn’t have to do anything,’ she said” (PTX 706 at 279). Paulson told Senator Clinton, “this was impossible unless the investors had a big balance sheet and the wherewithal to guarantee all of AIG’s liabilities” (PTX 706 at 279). (numbered text page 17, PDF page 21)

The fact that the Singapore and Chinese sovereign wealth funds both were willing to invest in AIG, and that a separate group of Middle Eastern investors was also pressing to buy in, strongly undercuts the official story that the only way out for AIG was into the Fed’s arms. Yes, we don’t know exactly how much they were willing to put in and whether that would have been enough to make up the $85 billion size of the initial credit line.

But the Chinese statement was a clear general indication that “we’re willing and able to go big”.

In this telling, the US government bailed out AIG to prevent China (and Singapore and some of our “allies” in the Middle East) from bailing it out.

As Smith points out, there may well be good national security

Now one can argue there were reasons to turn down these offers. Having the Chinese, or consortium dominated by foreigners, could prove to be ugly. The US, after all, had just put Fannie and Freddie in conservatorship in large measure to reassure the Chinese and Japanese, who were large investors in Freddie and Fannie guaranteed paper, that they would not suffer losses. What if the Chinese government rescued AIG and the black hole turned out to be bigger than anyone though it was?

[snip]

There is also the not-trivial issue that AIG is widely believed to provide legitimate-looking jobs to CIA assets all over the world. Would letting foreigners obtain control put that sort of information at risk?

While Smith believes these issues could have been addressed by having a consortium of foreigners take over AIG, I suspect Treasury would still regard it as having China take over our critical infrastructure. While I don’t get the finance bit like Smith does, it seems like having the monopoly insurer of excessive “capitalist” gambling in Chinese hands would have been the equivalent of letting them hold one of Wall Streets’ nuts for safe keeping.

Plus, I’ve long argued that the government had to bail out GM (though not Chrysler) for similar reasons. Had GM gone bankrupt, China would have bought up key parts of it, obtaining the key part of American’s manufacturing driver that China hasn’t already stolen by spying on DOD.

In both bailouts, I’d argue, the US had to intervene to prevent our biggest rival from basically taking large bites out of the critical heart to our economy, all operating under sound capitalist principles.

To stave that off, it appears — particularly if AIG’s claims have any basis in fact, which they appear to — the US embraced a command economy.

None of that’s a surprise. We’ve always forsworn capitalism when national interests dictated.

But given the ideology involved — given that this involved holding off a purported command economy threatening to gut our country using the tools of capitalism — it does seem worth noting.

This is one of the reasons I’m so intrigued by the apparent TREASUREMAPPING of JP Morgan Chase. Someone — it may be the Russians, but this kind of thing is easy to project — is treating JPMC as the ripe critical underbelly that it obviously is. The AIG bailout shows just how vulnerable we really are to such acts.

TurboTax Timmeh Teaches DC about Autobiographical Fiction

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TurboTax Timmeh Geithner’s book has been out about a week or ten days. And it seems to have had a remarkable effect: teaching DC that the memoirs from figures of power are often as not autobiographical fiction as real historical fact.

Sure, I expected debunkings by David Dayen and William Black and Josh Rosner and Yves Smith. They didn’t disappoint.

But I’m particularly happy to see this plaintive discovery from Felix Salmon, after comparing TurboTax Timmeh’s account of a speech with the actual transcript.

As I read the rest of Geithner’s book, then, I’m basically forced to treat the author as an unreliable narrator. Geithner might seem to be straight-up and guileless, but his report of this speech shows that he can remember things — even things which are easily found on the internet — in an extremely self-serving manner. Maybe that’s only to be expected, from a political memoir. But it’s disappointing, all the same.

And I’m grateful that Marketwatch has deployed the slide show click bait genre into a list of all the things TurboTax Timmeh chooses to remain silent about.

I guess I just find the acceleration of attention on TurboTax Timmeh’s self-serving fictions welcome given that I’ve never seen similar focus on the lies that get spun for National Security figures: not for John Rizzo, not for Jose Rodriguez, not for Dick Cheney, in spite of abundant public documentation that those were fictional narratives.

Perhaps TurboTax Timmeh is just a more egregious example than these others, though I doubt it. They all did great damage, and boasted while they did so.

I hope, then, that the clear debunking of TTT’s autobiographical fiction will serve as a model response the next time someone in power attempts to get rich by telling lies.

Barney Frank: “As Well as To Financial Regulators”

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When I first read about this letter from retiring Financial Services Committee Ranking Member Barney Frank to Eric Holder, I thought it akin to what retiring Homeland Security Chair Joe Lieberman did on the Sunday shows when he aggressively called for gun control: a PR stunt by an outgoing top Committee member, addressing a problem in all-but retirement that he didn’t address while he had the authority to do so in Congress.

Dear Mr. Attorney General:

I note several instances recently in which Administration officials have proceeded civilly against blatant violations of our important financial laws, in part because of the difficulty of proving cases beyond a reasonable doubt, especially where the law may have been somewhat uncertain, but also because of a concern that the criminal conviction—and even indictment—of a major financial institution could have a destabilizing effect. This latter consideration does not apply, similarly, to individuals. It is, of course, the case that no corporation can have engaged in wrongdoing without the active decision of individual officers of that entity. I believe it is also the case that prosecuting individuals has more of a deterrent effect than prosecuting corporations.

I am writing to you as well as to financial regulators, understanding that the decision to pursue criminal proceedings rests with the Justice Department, so I ask that there be a series of consultations involving law enforcement officials and regulators with the goal of increasing prosecution of culpable individuals as an important step in seeing that the laws that protect the stability and integrity of our financial system are better observed.

BARNEY FRANK

And that may well be what this is: an effort to pile on all the calls for prosecuting the banksters.

But I am fascinated by that second paragraph, the mention of the financial regulators. Consider this NYT account of HSBC’s wrist-slap that Bill Black highlighted.

Despite the Justice Department’s proposed compromise, Treasury Department officials and bank regulators at the Federal Reserve and the Office of the Comptroller of the Currency pointed to potential issues with the aggressive stance, according to the officials briefed on the matter. When approached by the Justice Department for their thoughts, the regulators cautioned about the effect on the broader economy.

“The Justice Department asked Treasury for our view about the potential implications of prosecuting a large financial institution,” David S. Cohen, the Treasury’s under secretary for terrorism and financial intelligence, said in a statement. “We did not believe we were in a position to offer any meaningful assessment. The decision of how the Justice Department exercises its prosecutorial discretion is solely theirs and Treasury had no role.”

Still, some prosecutors proposed that Attorney General Eric H. Holder Jr. meet with Treasury Secretary Timothy F. Geithner, people briefed on the matter said. The meeting never took place. [my emphasis]

DOJ went to Treasury and the Fed and OCC and asked for permission to get HSBC to plead guilty to Bank Secrecy Act violations. According to Cohen, Treasury said they had no meaningful assessment. According to NYT, the regulators–the Fed and OCC–raised concerns about the broader economy.

And Barney Frank says he is writing financial regulators (in addition to Holder himself) about bank immunity, but this appears not to be the letter to financial regulators, because they are not CC’ed on the letter. Yet he has not released a separate letter to regulators to the press (though if my attempts to get this letter this morning are any indication, Frank’s staffers have already moved onto look for new jobs).

This suggests there’s another letter to the people who told DOJ to let HSBC skate.

It’s worth noting that one of these regulators–OCC–was broadly implicated by the Permanent Subcommittee Investigation of HSBC.

In any case, there seems to be more to what Frank is doing. It may be he’s just trying to push Holder to meet with TurboTax Timmeh and the financial regulators, as Holder’s prosecutors attempted to make happen. Or he may be doing something else here, potentially even coaxing regulators to embrace individual indictments to stave off the larger anger about the HSBC wrist-slap.

It may well be this is a show. But it appears that we’re only seeing half the show.

Treasury’s Quaint Notion of “Voluntarily”

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As DDay noted earlier, Treasury will ignore that Standard Chartered signed a settlement confirming that it had hidden $250 billion worth of transfers by gaming its documentation so that it can sign a softball unified settlement with everyone else.

It’s more important that SCB get its softball settlement, I guess, than Treasury maintain even a shred of credibility.

But in addition to simply ignoring that earlier settlement, Treasury is also giving this excuse for its softball settlement.

Prosecutors and Treasury officials will also assess a smaller penalty because the bank came forward voluntarily with information about its transactions and compliance with United States sanctions, according to the law enforcement officials.

Remember this, from Benjamin Lawsky’s original settlement?

At a meeting in May 2010, SCB assured the Department that it would take immediate corrective action. Notwithstanding that promise, the Department‟s last regulatory examination of the New York branch in 2011 identified continuing and significant BSA/AML

failures, including:

  • An OFAC compliance system that lacked the ability to identify misspellings and variations of names on the OFAC sanctioned list.
  • No documented evidence of investigation before release of funds for transactions with parties whose names matched the OFAC-sanctioned list.
  • Outsourcing of the entire OFAC compliance process for the New York branch to Chennai, India, with no evidence of any oversight or communication between the Chennai and the New York offices. [my emphasis]

As of last year, SCB wasn’t even doing what they claimed they were doing to fix this problem. More troubling, they had replicated what they and other banks had done before, simply send the office engaging in this fraud so far away from the US so as to offer the US branch plausible deniability.

That’s what counts as “voluntary” cooperation in TurboTax Timmeh Geithner’s Treasury Department: ongoing efforts to continue engaging in the same kind of games.

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The Superintendent of Financial Services Draws the Curtain Back on the Get Out of Jail Free Industry

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As Yves and I suspected, NY Superintendent of Financial Services Benjamin Lawsky was breaking the unwritten rules that regulators should help banks avoid any consequences for violating sanctions and other violations when he released details of Standard Chartered Bank’s dealings with Iran.

The Treasury Department and Federal Reserve were blindsided and angered by New York’s banking regulator’s decision to launch an explosive attack on Standard Chartered Plc over $250 billion in alleged money laundering transactions tied to Iran, sources familiar with the situation said.

[snip]

Lawsky’s move also undercut the Treasury’s Office of Foreign Assets Control (OFAC), which has made a priority of enforcing economic sanctions against Iran. The surprise left the office’s leader, David Cohen, the undersecretary for terrorism and financial intelligence, scrambling to come up with a response, sources said.

Reuters lays out the steps that SCB took that normally should be enough to minimize any consequences for violating Iran sanctions. First, you hire Sullivan and Cromwell and act contrite. Then, you pay a consultant to conduct a review and claim the violations involved just $14 billion million in transactions as opposed to $250 billion shown in your bank records.

As part of a review the bank sought to give to regulators, Standard Chartered hired Promontory Financial Group, a Washington D.C. consulting firm run by Eugene Ludwig, who served as U.S. Comptroller of the Currency from 1993-98. Promontory was hired to review Standard Chartered’s transactions tied to Iran. The bank’s review ultimately settled on the figure of less than $14 million for improper transactions.

Then you bury all the embarrassing details showing willful flouting of the rules, so the proles don’t learn how craven banks really are.

I suspect, for the reasons laid out here, that OFAC will still find a way to give SCB a nice cushy settlement. But Lawsky has revealed what really goes on behind these settlements: the coziness, the misrepresentations, the complicity in hiding the true face of banking.

Update: Thanks to Jim–who is supposed to be on vacation–for noting I got the amount the consultant decided was tied to Iran wrong by an order of magnitude: million, not billion. Which means the consultant’s job was to minimize the exposure to a fraction of a percent of the true exposure.

Update: Barry Ritholtz’s take on this.

Obama Brings Bankster and Oil Curses to Burma

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After I read Obama’s Executive Order opening up trade with Burma, I joked,

Wait. We’re exporting FINANCIAL SERVICES to Myanmar? This is considered a favor to them?

Seriously. Sending our financial services to another country is, these days, the equivalent of bombing them.

Just as–probably more–troubling though are the concerns Josh Rogin lays out about Obama green-lighting investment in the Myanmar Oil and Gas Enterprise, off of which the military profits.

[Aung San] Suu Kyi, who was elected to Burma’s parliament in April after more than two decades of house arrest, last month specifically asked foreign governments not to allow their companies to partner with MOGE at this time.

“The Myanmar Oil and Gas Enterprise (MOGE) … with which all foreign participation in the energy sector takes place through joint venture arrangements, lacks both transparency and accountability at present,” she said June 14 in a speech in Geneva. “The [Myanmar] government needs to apply internationally recognized standards such as the IMF code of good practices on fiscal transparency. Other countries could help by not allowing their own companies to partner [with] MOGE unless it was signed up to such codes.”

The Obama administration has repeatedly said that it would follow Suu Kyi’s lead while cautiously opening up to closer ties with the Burmese regime. The new U.S. ambassador to Burma Derek Mitchell arrived there today.

[snip]

Following a Deputies Committee meeting last week, the side that advocated for a broader repeal of the investment ban won out. That side included the State Department’s East Asian and Pacific affairs bureau (EAP), led by Assistant Secretary Kurt Campbell, the economics office at State led by Undersecretary Robert Hormats, and the Treasury and Commerce departments.

While the Treasury version of today’s news imposes human rights (but not profit) controls on investments over $500,000 and threatens sanctions on anyone threatening the peace in Burma (this is akin to the sanctions passed on Yemen),

The order provides new authority to impose blocking sanctions on persons determined by the Secretary of the Treasury, in consultation with or at the recommendation of the Secretary of State:  to have engaged in acts that directly or indirectly threaten the peace, security, or stability of Burma, such as actions that have the purpose or effect of undermining or obstructing the political reform process or the peace process with ethnic minorities in Burma;

Ultimately, it’s Treasury–one of the entities that overrode the human rights advocates in this debate and has proven unable to regulate our own banksters–that gets to decide what constitutes peace.

There’s a very long, almost universal history of bad outcomes associated with big investments in oil. And yet the only safeguard Obama has put in place to prevent the oil curse from spoiling this really superb development–the opening of Burma–is the diligence of the Treasury Department that refuses to even reign in our own cursed industries.

Did Treasury Fire Jim Freis for Showing that Banksters Are a Bigger Problem than Terrorists?

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As I noted earlier, a few weeks ago Treasury fired the head of FinCEN, Jim Freis. (FinCEN makes sure that financial institutions report whatever evidence of potential crimes they’re seeing.)

American Banker reported that Treasury wanted “additional focus on international areas such as terrorist financing,” and less focus on “other financial crimes such as mortgage fraud.”

Three days before he was fired, FinCEN released this report, showing in aggregate what all of last year’s Suspicious Activity Reports revealed. It shows that among the SARs from depository institutions (which make up over half of all SARs), reports of terrorist financing and hacking (computer intrusion) are going down, while reports of behavior targeting consumers–mortgage and consumer loan fraud–are going up (though it notes the mortgage loan fraud reports are inflated because some date from years ago).

  • Reports of Terrorist Financing declined 14%, from 711 instances in 2010 to 609 for the same period in 2011.
  • The number of depository institution SARs identifying Mortgage Loan Fraud as a Characterization of Suspicious Activity continued to rise (up 30.6% in calendar year 2011). Quite markedly, Mortgage Loan Fraud is the only summary characterization that has experienced an increase every year since 1996, with the past two years (2010 and 2011) accounting for nearly 37% of all noted instances of this specific activity for the last decade. Note that depository institutions may submit Mortgage Loan Fraud SARs well past the actual date of the activity. This upward spike in mortgage fraud counts is in predominant part attributable to mortgage repurchase demands and special filings generated by several institutions.4
  • Of the eleven reportable suspicious activities that experienced decreases, none saw greater than Computer Intrusion, falling 21% in 2011 as compared to those filed in 2010. For the second year in a row, this drop is amongst the largest of any of the defined summary characterizations.
  • Though having experienced decreases in 2009 and 2010, the number of reports indicating Consumer Loan Fraud (in whole or part) significantly rose in 2011, up 127% from the prior year.

Such trends are similar to what the report shows in the securities and futures industries, with an even bigger drop in terrorist financing and big gains in futures fraud, embezzlement, and insider trading.

  • Embezzlement/Theft saw the second largest gain of any of the suspicious activities reported in SAR-SF filings, rising 38% in CY2011. However, of the 21 Types of Suspicious Activity listed, Futures Fraud saw the biggest rise (up 85%) for the same year, increasing from 20 instances in 2010 to 37 instances in 2011.
  • Likewise, Insider Trading (+34%) and Forgery (+19%) also experienced double-digit growth, making them the only two distinct activities that have continued to rise every year since 2003.
  • Of those activity types showing a decrease, Bribery/Gratuity (down 74%) and Terrorist Financing (down 59%) both saw a sizeable drop between 2010 and 2011, with the former down from 69 reported instances last year to just 18 in 2011 and the latter falling from 46 instances in 2010 to a low of 19 twelve months later.

Remember, SARs are not a reflection of what Freis demands (nevermind the fact he’s been on the job when things like terrorist financing were higher). Rather, this is what banks and securities firms self report, as mandated by law, about what they’re seeing in their own records.

Jim Freis showed that terrorism is getting better and bankster crimes are getting worse. And then Treasury fired him.

And the report from American Banker suggests that by replacing Freis, Treasury may intend to have FinCEN dictate what financial institutions prioritize. Which will mean terrorism–and not the crimes of banksters–will once again be the focus.

Fincen is likely to take a higher profile when it receives new leadership. In the immediate aftermath of the Sept. 11 attacks, Fincen was very active in dealing with bank regulatory matters, including helping to shape policy on anti-money laundering requirements. But the financial crisis largely pushed Fincen to the side and the agency focused on many of its other responsibilities. Treasury appears to want Fincen to take a larger role in terrorist financing activities and possibly reassert itself in the bank regulatory sphere. In past few years, banks have not had to focus on what Fincen’s agenda was. A more assertive Fincen changes the equation.

FinCEN offers one objective read of the relative prevalence of various forms of financial crime. And last year, it showed that banksters were a growing problem and terrorists a shrinking one.

And that message was so dangerous to the powers that be, it appears, Treasury decided to kill the messenger.

US Let China Buy Treasuries Directly During Debt Ceiling Crisis

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Reuters has a story on how the Treasury Department allowed China to start buying US Treasuries directly last June.

The documents viewed by Reuters show the U.S. Treasury Department has given the People’s Bank of China a direct computer link to its auction system, which the Chinese first used to buy two-year notes in late June 2011.

China can now participate in auctions without placing bids through primary dealers. If it wants to sell, however, it still has to go through the market.

The change was not announced publicly or in any message to primary dealers.

Now, Reuters offers a number of potential reasons why China might want to do this: it would get a better price by by-passing Wall Street, it reflected growing confidence its money managers could buy debt more efficiently than through primary dealers.

But I can’t help notice the timing.

Last summer, just as it was becoming increasingly clear that Republicans were willing to crash the economy to win the debt ceiling debate, China started buying US debt directly.

I have no idea whether that would enable Treasury to exceed the debt limit without notice–assuming everything else worked the same, it presumably wouldn’t. But as Reuters reported last year (almost at the same time this latest change was taking place), when China wanted to keep buying 30% or more of our treasuries at auctions in 2009, we fudged the rules to allow them to do that. Then by letting China buy directly last year, as The Big Picture shows, Treasury gave the appearance that China was net selling debt, rather than (presumably) continuing to buy a great deal of it.

At the very least, then, the Obama Administration has twice enacted ways to hide the degree to which China has us by the balls, keeping interest rates low while gaining more and more of a threat over us. Given the timing, though, I can’t help but wonder whether it also serves to hide something else about our debt.

And–as Reuters implicitly notes–this change also means we willingly gave the greatest hacking entity in the world direct access to our Treasury auctions.

To safeguard against hackers, Treasury officials upgraded the system that allows China to access the bidding process.

[snip]

The United States has, however, displayed increasing anxiety about China as a cybersecurity threat. The change Treasury officials made to their direct bidding system before allowing access to China was to limit access to the system to a specially designed private network connection controlled by the Treasury.

Oh, okay then. Because the specially designed private networks DOD runs on have proven so resistant to China’s attacks.

Obama’s Yemen EO Still Lets Our Spooks Pay the Targets of the EO

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As I noted earlier, Obama just signed an Executive Order ostensibly targeting the US assets of those who undermine Yemen’s stability, potentially including US citizens who do so. I’ve been comparing this EO to one of the analogous ones pointed out in Karen DeYoung’s article on the EO: one issued against Somalia in 2010 (h/t to Daveed Gartenstein-Ross for the link).

The EOs are very similar, including the language potentially targeting US citizens. But there are some interesting differences.

As DeYoung pointed out, the Yemeni EO, unlike the Somlia one, does not include an annex with named targets, even though the EO itself speaks of “certain members of the Government of Yemen.” As such, this EO seems to be a threat with consequences, not an immediate sanction.

The Yemen EO also uses slightly different language in the clause targeting those who materially support those destabilizing the country. Whereas the Somalia EO includes those who provide “logistical” or “technical” support, the Yemen EO includes those who provide “technological” support. So make sure you don’t serve as webmaster for someone Hillary Clinton thinks is destabilizing Yemen.

The most interesting difference, IMO, is this clause, which appears in the Yemen EO but does not in the Somalia one.

Sec. 5. Nothing in section 1 of this order shall prohibit transactions for the conduct of the official business of the United States Government by employees, grantees, or contractors thereof.

In other words, while Obama doesn’t want you, or Ali Abdullah Saleh’s leave-behinds, or the AP to destabilize Yemen, he reserves the right for US government employees, grantees, or contractors to do so. Which presumably means, as happened in Afghanistan, we are and plan to continue paying some of the people who are in violation of this EO.

I wonder. Among all the adjectives we might use to describe the Saudis, do we use “grantee” among them?

Vladimir Putin Too Busy Rearranging His Sock Drawer to Attend the G8

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I have to admit, the old KGB hand Vladimir Putin sure plays hardball in matters of diplomacy. Normally when you blow off a major summit (Putin will be sending Dmitri Mevedev in his place), you give more than a ten day’s notice.

Vladimir Putin will miss a planned visit to the US this month for a key global summit and a much-anticipated meeting with President Barack Obama, the Kremlin has confirmed, as the Russian president faced pressure from protests and opposition criticism at home.

The White House announced on Wednesday that Putin was unable to join the other leaders of the Group of Eight industrial nations meeting outside Washington on 18-19 May. The Kremlin said Putin needed to finish work setting up his government.

I guess Vlad didn’t know what a mess his sock drawer was in when the US used him as an excuse to move the G8 away from protestors in Chicago to Camp David.

Russian opposition to U.S. and NATO plans for a missile defense shield in Europe was the subtext of a surprise announcement earlier this spring of a change in venue for the G-8 meeting. The summit was long planned to take place adjacent to a larger summit of NATO leaders in Chicago.

Putin let it be known that he did not want to attend the NATO summit, as Russian leaders sometimes do by invitation, or engage NATO leaders on the missile issue, U.S. and other diplomats said. They spoke on condition of anonymity to discuss sensitive diplomacy. The missile defense plan is on the NATO agenda for Chicago, although most of the summit discussions are likely to center on Afghanistan.

The switch to Camp David was partly an attempt by the U.S. to appear welcoming to Putin, so that he could meet quietly with European and other large powers at the dawn of his presidency without the awkward juxtaposition with NATO and the missile shield issue, the diplomats said.

Though a desire to appease Putin was, just like Putin’s excuse about naming a cabinet, just a convenient excuse.

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