The Afghan Triangle: Kashmir, India, Pakistan

Graham Usher

(Graham Usher is a writer and journalist based in Pakistan and a contributing editor of Middle East Report.)

The Association of Parents of Disappeared Persons protesting in Srinagar, Indian-administered Kashmir. (Faheem Qadri)

The Pakistani army’s operation in the Swat Valley in northwest Pakistan is the most sustained in five years of selective counterinsurgency against the local Taliban. The toll already is immense: 1.9 million internally displaced, including tens of thousands housed in tents on parched plains; 15,000 soldiers battling 5,000 guerrillas; and more than a thousand dead, mainly militants according to available counts but also soldiers and of course civilians.

The war has not been confined to Swat. In revenge for losses there, the Pakistan Taliban has unleashed a torrent of attacks in Peshawar, Lahore, Islamabad and other cities, killing scores. “You know it’s serious this time: the scale of the army’s campaign confirms it. You fear the war is at your door,” said Sajjad Ali from Mardan, a city adjacent to Swat.

The war is the fruit of a failed peace process, denounced by the United States as an “abdication” that had allowed the Taliban to within 60 miles of Islamabad. In February, the provincial government had proffered a localized form of Islamic law in Swat in return for the Taliban disarming and recognizing “the writ of the state.” The insurgents observed their commitments only in the breach, which included the slaughter of their opponents. In May the army “reinvaded” Swat.

Pakistanis historically have been hostile to campaigns against the Taliban, casting them as “America’s war.” But not this time: The army, the civilian government and most Pakistanis, including the largest opposition party, support the Swat offensive. “The atrocities of the Swat Taliban galvanized public opinion,” says Maleeha Lodhi, a former ambassador to the US. “It produced a coincidence of military resolve, political consensus and strong public support. And because the US was not seen as calling the shots in any pronounced way, this helped the government pursue a very aggressive policy.”

The public support manifests as a spontaneous, generous solidarity. In cities like Mardan, Peshawar and Swabi, people have literally opened their homes to the refugees. In vast tent cities near the banks of the Indus, volunteers deliver food, clothes, utensils and shelter. The relief work, involving all parts of Pakistani civil society, is led by the Islamic charities.

One such charity is Jamaat-ud-Dawa (JuD). Last December the Pakistani government banned JuD and arrested its amir, Hafiz Saeed, following the JuD’s designation as a terrorist group by the United Nations. Saeed founded Lashkar-e-Tayaba (LeT), the Pakistani jihadi group that India alleges was behind the attack in Mumbai in November 2008. In Pakistan, it is widely assumed that JuD and LeT are one and the same organization. On June 2, the Lahore High Court ordered Saeed’s release on the grounds that the state had supplied “insufficient” evidence to warrant his detention. India responded by saying that the decision raised “serious doubts over Pakistan’s sincerity in acting with determination against terrorist groups and individuals operating from its territory.” India has since conditioned any return to peace negotiations with Pakistan on the latter taking action against LeT and other jihadi groups.

For the Obama administration—which has cast Taliban and al-Qaeda “sanctuaries” in Pakistani tribal areas bordering Afghanistan as the “single greatest threat” to America—the enigma is whether Pakistan’s military establishment is friend or foe in America’s war against Islamic militancy. “I’ve rarely seen in my years in Washington an issue so hotly disputed internally by experts and intelligence officials,” ceded Richard Holbrooke, President Obama’s point man for “Af-Pak,” when asked that question in February.

The dispute in Washington about how to perceive the Pakistani army runs along two colliding tracks. Track one says the army is a friend. Even before Swat, the Pakistani army had lost 1,000 men to Taliban and al-Qaeda guerillas in the tribal areas. Pakistan’s premier military intelligence agency, the Inter-Services Intelligence (ISI), had “rendered” more than 600 al-Qaeda suspects into CIA hands, including Khalid Sheikh Mohammed, alleged mastermind behind the September 11, 2001 attacks. Currently the Pakistani army is fighting the Taliban not only in Swat but also the tribal areas of Bajaur, Orakzai, Mohmand, Khyber and South Waziristan.

Kashmiri children watching cricket near an excavation site in Budgam, near Srinagar, Indian-administered Kashmir. (Faheem Qadri)

Track two says the army-ISI combination is a foe. It allows Afghan Taliban leader Mullah Omar and his Shura council free run in Pakistan’s Balochistan province from where they direct the insurgency in Afghanistan. It shelters Afghan Taliban commanders like Jalaluddin and Sirjuddin Haqqani in North Waziristan. And it supplies money, arms and training to jihadi groups fighting the Indian army in Indian-occupied Kashmir, including the “banned” LeT.

The two tracks collide because both, in part, are true. The army is combating the Pakistan Taliban and its jihadi allies in Swat and elsewhere, seeing their spread as a danger to Pakistan’s integrity as a state. One hundred and twenty thousand soldiers have been mobilized to fight them. But 250,000 remain rooted on the eastern border facing the Indian army, and primed by organizational formation, weaponry, ideology and ethos to a vision that defines India, not the Taliban or al-Qaeda, as the “strategic enemy.” That vision must change if Pakistan is to defeat the enemy at home.

Jockeying for Kashmir

For the last 61 years the fight has been fought, mostly, in and for Indian-occupied Kashmir (IoK): the territory Delhi and Islamabad have contested since the 1947 partition cleaved them into two states—and Kashmir into “Pakistani” and “Indian” parts. Sometimes (1947, 1965, 1971, 1999) the war has been hot. More often it has been waged via Pakistani proxies against a standing Indian military. Since 1989, it has been channeled through a low-intensity, Pakistan-backed separatist-Islamist insurgency that has killed 50,000 people and incurred an Indian military occupation three times the size of America’s in Iraq and three times as lethal.

Of all the jihadi groups the ISI nurtured in IoK, the LeT was the deadliest, but there were others. Their collective purpose was to “bleed India” until Delhi surrendered IoK to Islamabad. Pre-9/11, the collaboration was overt. LeT and other jihadi groups recruited fighters throughout Pakistan, but particularly from southern Punjab. They launched hundreds of guerilla attacks on Indian soldiers and civilians and fought alongside the Pakistani army in the 1999 invasion of Kargil, the last time the two armies went head to head inside Indian Kashmir.

In December 2001, India charged LeT with attacking its parliament in Delhi, bringing the two countries to the brink of nuclear war. Under American pressure, General Pervez Musharraf, Pakistan’s then-military dictator, banned the LeT and other jihadi groups. Moves against the militants in 2002 seemed like bluffs at the time. In fact, they were the beginning of a slow change. Steered by Washington, Islamabad and Delhi went from nuclear brinkmanship to a truce across the armistice line in Kashmir. In 2004, Musharraf began a peace process or “composite dialogue” with India predicated on the oath “not to permit any territory under Pakistan’s control to be used to support terrorism in any manner.” What had commenced as a feint by Pakistan’s military establishment was hardening into policy.

The ISI demobilized thousands of jihadi fighters in Pakistani-occupied Kashmir (PoK). Some of their camps were moved inland, including, ironically, to the Swat Valley. Six army divisions (about 80,000 to 100,000 men) were repositioned from the eastern border with India to the western border with Afghanistan, where the army was becoming embroiled in its first clashes with the Pakistan Taliban. Under the command of General Ashfaq Kayani (now army chief of staff), the ISI was reformed, with the more Indo-phobic and jihadi officers purged. Guerilla infiltration into IoK slowed to a trickle.

Some of the army’s senior officers believed that because both Pakistan and India had become nuclear powers, hot war was no longer an option. More importantly, many generals were convinced that the army would not be able to preserve its preeminent position in the Pakistani state or defend its enormous corporate interests in the economy without sustained growth which would require peace with India. Musharraf was the leading proponent of this new thinking. In 2004, he authorized Khurshid Kasuri, the civilian foreign minister at the time, to open “back-channel” negotiations with India on a possible settlement for Kashmir, one that would in essence give Islamabad an honorable exit from what had become an unwinnable war.

Over the next three years a deal took shape: Demilitarization would neutralize the two Kashmirs, open borders would unite them, and a form of self-government or autonomy would partly satisfy the Kashmiri aspiration to self-determination. The army agreed to the nucleus of this draft agreement with the proviso that the Kashmiris vote on it. “This was to allow the army to give up historic positions without appearing to,” said Hasan Rizvi Ashkari, a military historian.

The back channel ran aground in the storm that wrecked Musharraf after his illegal sacking of Chief Justice Iftikhar Chaudhry in March 2007. Many fear that the attacks in Mumbai may have sunk prospects for a Kashmir agreement forever. But the progress of the discussions had suggested that the military was open to a resolution and had taken steps in that direction. “When the Kashmir camps were initially dispersed, the boys [fighters] were told that it was just a temporary measure because of 9/11,” a senior jihadi leader told the BBC in 2008. “Then the arrests and disappearances started. The boys realized fundamental changes were underway and quietly slipped away beyond the control of the Pakistani authorities.” This is what happened in the Swat Valley where jihadi cells joined forces and lent enormous firepower to local Islamist groups demanding shari‘a law. The pattern was repeated in the southern Punjab and Islamabad.

Police paramilitaries in downtown Srinagar during a city shutdown called by separatists. (Liz Harris)

Deprived of support from their old (state) godfathers, the “youngest and most radicalized members” were drawn to new groups, says historian Ahmed Rashid. They “joined up with al-Qaeda and the Pakistan and Afghan Taliban in the tribal areas on the border with Afghanistan. They embraced the global jihad to fight US troops in Afghanistan and Iraq, and later attacked the Pakistan government.” Rashid believes this al-Qaeda, Taliban and jihadi nexus is the motor driving much of the violence that has rocked Pakistan, Afghanistan and India in recent years, including Mumbai, the assassination of former Prime Minister Benazir Bhutto in December 2007, and the recent wave of attacks in Pakistani cities.

In other words, after 2004 many LeT and other jihadi cadres ceased focusing their militancy exclusively on India or Kashmir. They fragmented and morphed into multiple cells with ties to al-Qaeda and other Pakistani Sunni sectarian groups, sometimes acting in alliance, sometimes autonomously, but together having an outreach that included Afghanistan, Pakistan, Bangladesh, India, Kashmir, Iraq, Europe and beyond. The ISI was loath to cut ties with groups over which it did maintain some sway, like the old LeT-JuD nexus. Nor was the ISI inclined to abandon entirely the proxy war strategy in IoK before a settlement had been reached. “If we did that, Kashmir would go cold and India would bury it forever,” said a senior army general in 2005.

IoK has warmed. In 2008 there were 41 militant infractions across the armistice line, double the 2007 total. The upward curve has continued in 2009, with several skirmishes between the two armies. For the first time since 2004, LeT cadres have publicly surfaced in the southern Punjab, proselytizing for jihad. Seminaries and schools are acting as recruiting centers, with the traffic in students moving in both directions between the Punjab and the tribal areas. Funerals in both provinces eulogize “martyrs” in Kashmir and Afghanistan.

None of this could happen without the knowledge of the ISI. Militant activity increased in the twilight between the end of Musharraf’s military rule and Pakistan’s new civilian government. Yet the new militancy seems to have little to do with the mass demonstrations for independence that shook IoK in the summer of 2008, or with insurgent violence there, which remains low. It has more to do with Afghanistan or, more precisely, with India in Afghanistan.

India’s Regional Dominance

Pakistan has been worried by India’s widening footprint in Afghanistan since the Bonn conference in November 2001, where Afghan factions came together to determine their country’s post-Taliban future. The Afghan Taliban was purged from any interim government headed by Hamid Karzai, and replaced by forces loyal to the Northern Alliance (NA). The NA had opposed the Taliban regime before 9/11 and fought with US troops to topple it. India, Iran and Russia were its main sponsors; Pakistan and Saudi Arabia supported the Taliban. Neither the Taliban nor Islamabad was invited to Bonn. “This was our original sin,” said Lakdar Brahimi, the UN’s envoy in Afghanistan, who chaired the conference.

India remains one of Karzai’s few champions. And Afghanistan is seen to be very much within Delhi’s sphere of regional influence. India has four consulates and has given the Afghan government $1.2 billion in aid: a huge investment for a country that is 99 percent Muslim and with which India shares no border. Delhi has built the new national parliament in Kabul, runs the Afghan electricity and satellite systems and has helped train its army and intelligence forces, the latter staffed by many ex-NA commanders.

India’s most ambitious Afghan project is a new highway, routed across the western border to the Iranian port of Chabahar, that circumvents landlocked Afghanistan’s need to use Pakistani ports to the Gulf; Islamabad deems these trade and energy corridors vital to its economic future. For the Pakistan army, the highway’s importance is clear: India seeks to consolidate an alliance with Iran in western Afghanistan to counter Pakistan’s influence in eastern Afghanistan. This is a continuation of the pre-9/11 war in a post-9/11 infrastructure, with India, Iran and the Karzai government on the one side, and Pakistan and the Afghan Taliban on the other. “The army feels under siege,” says Ayesha Siddiqa, a military analyst.

In 2004, the Bush administration tilted US South Asia policy toward Delhi, lured by the size of India’s markets and its potential role as a strategic “counterweight” to China, Pakistan’s closest regional ally. In 2008, the US signed an agreement that allows India to buy civilian atomic technology, including nuclear fuel, from American firms, even though Delhi is not a signatory to the non-proliferation treaty. Pakistan was granted no such privilege; on the contrary, it is denounced as a rogue for developing the bomb by stealth and for the proliferation activities of its former top nuclear scientist, A. Q. Khan. Some in Congress want aid to Pakistan tied to US access to Khan for questioning.

For all the fabled “chemistry” between Bush and Musharraf, since 9/11 Washington has treated Islamabad as a gun for hire, providing certain weaponry and around $2 billion a year in exchange for securing supply lines for US and NATO forces in Afghanistan and for fighting the Taliban and al-Qaeda in the tribal areas. By cooperating in these ways, the army may have hoped that its interests would be taken into account in the post-invasion reconstruction. Yet unlike Iran or India—and despite the services or sacrifices rendered—Islamabad was given no say in the formation of the Afghan government or in its nascent military forces. This strengthened Pakistani perceptions that Musharraf and his army were mercenaries fighting “America’s war.” The Taliban, by contrast, were deemed Afghan or at least Pashtun nationalists resisting a foreign, colonial and anti-Muslim occupation.

These realities help explain the army’s selective counterinsurgency in the tribal areas. In Bajaur, Mahmond and to a lesser extent South Waziristan, the army has often been ruthless in campaigns against the Pakistan Taliban. This is partly revenge for the killing of Pakistani soldiers. But there is also the perception (and, the army insists, evidence) that “Pakistan’s enemies” are fomenting the militancy. A commander in Bajaur says many of those captured or killed by the army are Afghans, including Tajiks or Uzbeks, while the tribal areas are almost exclusively Pashtun. The inference is obvious. Some “insurgents” are “agents” working for Afghan intelligence and/or India.

In North Waziristan, on the other hand, the preferred policy is to negotiate ceasefires with tribal militants who openly provide fighters and arms to Afghan Taliban commanders like the Haqqanis. Unlike the Pakistan Taliban, these tribal militants do not attack the Pakistani army other than to avenge US drone attacks. “They’re our people; they’re not our enemies,” says an ISI officer.

A Pakistani analyst—who declined attribution—says these dual policies explain the enigma of the Pakistan army. It will act against those who threaten the state, such as the Taliban in Swat and al-Qaeda-linked militants elsewhere. But it will not act against those who, like the Afghan Taliban, seek only a haven from which to fight American and NATO troops in Afghanistan. In fact, “The ISI has retained its links to the Afghan Taliban because it wants to use them as a bargaining chip in Afghanistan,” says the analyst. “The Pakistan army wants to have a bigger say in whatever new regional dispensation America is planning. The view within the army and ISI is if the Afghan Taliban is abandoned, this would strengthen the Afghan government, as well as India in Afghanistan, at Pakistan’s expense.”

A Fork in the Road

Prior to his election, Barack Obama was clear on the link between peace in Kashmir and war in Afghanistan. “If Pakistan can look towards to the east with confidence, it will be less likely to believe its interests are best advanced through cooperation with the Taliban,” he wrote in Foreign Affairs in 2007. Ensconced in the Oval Office, the president now dismisses Islamabad’s focus on Delhi as paranoia. “The obsession with India as a mortal threat to Pakistan is misguided [because] their biggest threat right now comes internally,” he said in April 2009.

The shift seals a “new” American policy toward Pakistan that marks more continuity than change with Bush’s second term. Under Obama, US drone attacks into the tribal areas—inaugurated by Bush—have continued and may be extended to other areas of Pakistan. Whatever good will Obama hoped to generate through increases in civilian aid has been wiped out by the increase in Pakistani deaths by American rockets.

The Pakistan aid bill before Congress, although promising a “deeper, broader, long-term engagement with the [Pakistani] people,” could be as conditional as anything tendered by Bush. Military aid is not to be tied only to fighting the Taliban and al-Qaeda but may require Pakistan’s pledge not to support “any person or group that conducts violence, sabotage or other activities meant to instill fear or terror in India.” Some members of Congress want aid to Pakistan linked to moving troops from the eastern border with India to the western border with Afghanistan.

American policy towards Kashmir also reveals India’s widening influence in Washington. In an intensive lobbying effort, Delhi made clear to Obama that his envoy would be shunned if any link were made between Kashmir and Af-Pak. It worked. In a trip to Islamabad in April, Holbrooke refused to even say “Kashmir.” And while in Delhi, he was effusive about India’s “critical role” in the region without which “we cannot settle Afghanistan and many other world problems.” The implication was that Kashmir, clearly, is not among them.

This Indian-American axis presents Islamabad with a fork in the road. One way goes back. The ISI again could try to bleed India via surrogates in Afghanistan and Kashmir in the hope that its regional concerns will be addressed, above all a final status for Kashmir and recognition of its western border with Afghanistan. But such a strategy would likely fail; pursuing foreign policy objectives through guerilla violence rarely worked in the past. It simply creates conditions of friction that al-Qaeda, the Taliban and jihadi groups can exploit to keep 80 percent of Pakistan’s military manpower and hardware pinned down on India rather than on them or the tribal areas. Mumbai and the Taliban’s conquest of Swat are two examples of just how useful a diversion this can be.

The alternative is to go forward and insist that Kashmir, Afghanistan and Islamic militancy are regional problems requiring regional solutions. India is right to insist that Pakistan go after those nationals and groups implicated in Mumbai and other attacks in India with the same vigor as it is currently going after the Pakistan Taliban in Swat. But equally Delhi must recommence serious negotiations to resolve Kashmir and other outstanding water and land disputes with Islamabad.

On such bases Pakistan and India could come together to agree to terms for coexistence in a neutral and neutralized Afghanistan. For economic, energy and geopolitical reasons, both nations have an interest in their roads crossing in Kabul. But the road must start in Kashmir.

Independent’s Day

Daniel Klaidman

NEWSWEEK

From the magazine issue dated Jul 20, 2009

It's the morning after Independence Day, and Eric Holder Jr. is feeling the weight of history. The night before, he'd stood on the roof of the White House alongside the president of the United States, leaning over a railing to watch fireworks burst over the Mall, the monuments to Lincoln and Washington aglow at either end. "I was so struck by the fact that for the first time in history an African-American was presiding over this celebration of what our nation is all about," he says. Now, sitting at his kitchen table in jeans and a gray polo shirt, as his 11-year-old son, Buddy, dashes in and out of the room, Holder is reflecting on his own role. He doesn't dwell on the fact that he's the country's first black attorney general. He is focused instead on the tension that the best of his predecessors have confronted: how does one faithfully serve both the law and the president?

Alone among cabinet officers, attorneys general are partisan appointees expected to rise above partisanship. All struggle to find a happy medium between loyalty and independence. Few succeed. At one extreme looms Alberto Gonzales, who allowed the Justice Department to be run like Tammany Hall. At the other is Janet Reno, whose righteousness and folksy eccentricities marginalized her within the Clinton administration. Lean too far one way and you corrupt the office, too far the other way and you render yourself impotent. Mindful of history, Holder is trying to get the balance right. "You have the responsibility of enforcing the nation's laws, and you have to be seen as neutral, detached, and nonpartisan in that effort," Holder says. "But the reality of being A.G. is that I'm also part of the president's team. I want the president to succeed; I campaigned for him. I share his world view and values."

These are not just the philosophical musings of a new attorney general. Holder, 58, may be on the verge of asserting his independence in a profound way. Four knowledgeable sources tell NEWSWEEK that he is now leaning toward appointing a prosecutor to investigate the Bush administration's brutal interrogation practices, something the president has been reluctant to do. While no final decision has been made, an announcement could come in a matter of weeks, say these sources, who decline to be identified discussing a sensitive law-enforcement matter. Such a decision would roil the country, would likely plunge Washington into a new round of partisan warfare, and could even imperil Obama's domestic priorities, including health care and energy reform. Holder knows all this, and he has been wrestling with the question for months. "I hope that whatever decision I make would not have a negative impact on the president's agenda," he says. "But that can't be a part of my decision."

Holder is not a natural renegade. His first instinct is to shy away from confrontation, to search for common ground. If he disagrees with you, he's likely to compliment you first before staking out an opposing position. "Now, you see, that's interesting," he'll begin, gently. As a trial judge in Washington, D.C., in the late 1980s and early '90s, he was known as a tough sentencer ("Hold-'em Holder"). But he even managed to win over convicts he was putting behind bars. "As a judge, he had a natural grace," recalls Reid Weingarten, a former Justice Department colleague and a close friend. "He was so sensitive when he sent someone off to prison, the guy would thank him." Holder acknowledges that he struggles against a tendency to please, that he's had to learn to be more assertive over the years. "The thing I have to watch out for is the desire to be a team player," he says, well aware that he's on the verge of becoming something else entirely.

When Holder and his wife, Sharon Malone, glide into a dinner party they change the atmosphere. In a town famous for its drabness, they're an attractive, poised, and uncommonly elegant pair—not unlike the new first couple. But they're also a study in contrasts. Holder is disarmingly grounded, with none of the false humility that usually signals vanity in a Washington player. He plunges into conversation with a smile, utterly comfortable in his skin. His wife, at first, is more guarded. She grew up in the Deep South under Jim Crow—her sister, Vivian Malone Jones, integrated the University of Alabama—and has a fierce sense of right and wrong. At a recent dinner in a leafy corner of Bethesda, Malone drew a direct line from the sins of America's racial past to the abuses of the Guantánamo Bay detention center. Both are examples of "what we have not done in the face of injustice," she said at one point, her Southern accent becoming more discernible as her voice rose with indignation. At the same party, Holder praised the Bush administration for setting up an "effective antiterror infrastructure."

Malone traces many of their differences to their divergent upbringings. "His parents are from the West Indies..he experienced a kinder, gentler version of the black experience," she says. Holder grew up in East Elmhurst, Queens, a lower-middle-class neighborhood in the shadow of New York's La Guardia Airport. The neighborhood has long been a steppingstone for immigrants, but also attracted blacks moving north during the Great Migration. When Holder was growing up in the 1950s, there were fewer houses—mostly semi-detached clapboard and brick homes, like the one his family owned on the corner of 101st Street and 24th Avenue—and more trees. Today the neighborhood is dominated by Mexican, Dominican and South Asian families, with a diminishing number of West Indians and African-Americans.

As we walk up 24th on a recent Saturday, Holder describes for me a happy and largely drama-free childhood. The family was comfortable enough. His father, Eric Sr., was in real estate and owned a few small buildings in Harlem. His mother, Miriam, stayed at home and doted on her two sons. Little Ricky, as he was known, was bright, athletic, and good-natured. As we walk past the baseball diamond where Holder played center field, he recalls how he used to occasionally catch glimpses of Willie Mays leaving or entering his mansion on nearby Ditmas Boulevard. Arriving at the basketball courts of PS 127, Holder bumps into a couple of old schoolyard buddies, greets them with a soul handshake and falls into an easy banter, reminiscing about "back in the day" when they dominated the hardcourt. "Ancient history," says Jeff Aubry, now a state assemblyman. "When gods walked the earth," responds Holder, who dunked for the first time on these courts at age 16.

Holder doesn't dispute the idea that his happy upbringing has led to a generally sunny view of the world. "I grew up in a stable neighborhood in a stable, two-parent family, and I never really saw the reality of racism or felt the insecurity that comes with it," he says. "That edge that Sharon's got—I don't have it. She's more suspicious of people. I am more trusting." There's a pause, and then, with a weary chuckle, one signaling gravity rather than levity, Holder says, "Lesson learned." And then adds, under his breath: "Marc Rich."

The name of the fugitive financier pardoned—with Holder's blessing—at the tail end of the Clinton administration still gnaws at him. It isn't hard to see why. As a Justice Department lawyer, Holder made a name for himself prosecuting corrupt politicians and judges. He began his career in 1976, straight out of Columbia Law School, in the Justice Department's Public Integrity Section, where prosecutors are imbued with a sense of rectitude and learn to fend off political interference. And though Holder has bluntly acknowledged that he "blew it," the Rich decision haunts him. Given his professional roots, he says, "the notion that you would take actions based on political considerations runs counter to everything in my DNA." Aides say that his recent confirmation hearings, which aired the details of the Rich pardon, were in a way liberating; he aspires to no higher office and is now free to be his own man. But his wife says that part of what drives him today is a continuing hunger for redemption.

When I ask Malone the inevitable questions about Rich, she looks pained. "It was awful; it was a terrible time," she says. But she also casts the episode as a lesson about character, arguing that her husband's trusting nature was exploited by Rich's conniving lawyers. "Eric sees himself as the nice guy. In a lot of ways that's a good thing. He's always saying, 'You get more out of people with kindness than meanness.' But when he leaves the 'nice guy' behind, that's when he's strongest."

Any White House tests an attorney general's strength. But one run by Rahm Emanuel requires a particular brand of fortitude. A legendary enforcer of presidential will, Emanuel relentlessly tries to anticipate political threats that could harm his boss. He hates surprises. That makes the Justice Department, with its independent mandate, an inherently nervous-making place for Emanuel. During the first Clinton administration, he was famous for blitzing Justice officials with phone calls, obsessively trying to gather intelligence, plant policy ideas, and generally keep tabs on the department.

One of his main interlocutors back then was Holder. With Reno marginalized by the Clintonites, Holder, then serving as deputy attorney general, became the White House's main channel to Justice. A mutual respect developed between the two men, and an affection endures to this day. (Malone, a well-regarded ob-gyn, delivered one of Emanuel's kids.) "Rahm's style is often misunderstood," says Holder. "He brings a rigor and a discipline that is a net plus to this administration." For his part, Emanuel calls Holder a "strong, independent attorney general." But Emanuel's agitated presence hangs over the building—"the wrath of Rahm," one Justice lawyer calls it—and he is clearly on the minds of Holder and his aides as they weigh whether to launch a probe into the Bush administration's interrogation policies.

Holder began to review those policies in April. As he pored over reports and listened to briefings, he became increasingly troubled. There were startling indications that some interrogators had gone far beyond what had been authorized in the legal opinions issued by the Justice Department, which were themselves controversial. He told one intimate that what he saw "turned my stomach."

It was soon clear to Holder that he might have to launch an investigation to determine whether crimes were committed under the Bush administration and prosecutions warranted. The obstacles were obvious. For a new administration to reach back and investigate its predecessor is rare, if not unprecedented. After having been deeply involved in the decision to authorize Ken Starr to investigate Bill Clinton's affair with Monica Lewinsky, Holder well knew how politicized things could get. He worried about the impact on the CIA, whose operatives would be at the center of any probe. And he could clearly read the signals coming out of the White House. President Obama had already deflected the left wing of his party and human-rights organizations by saying, "We should be looking forward and not backwards" when it came to Bush-era abuses.

Still, Holder couldn't shake what he had learned in reports about the treatment of prisoners at the CIA's "black sites." If the public knew the details, he and his aides figured, there would be a groundswell of support for an independent probe. He raised with his staff the possibility of appointing a prosecutor. According to three sources familiar with the process, they discussed several potential choices and the criteria for such a sensitive investigation. Holder was looking for someone with "gravitas and grit," according to one of these sources, all of whom declined to be named. At one point, an aide joked that Holder might need to clone Patrick Fitzgerald, the hard-charging, independent-minded U.S. attorney who had prosecuted Scooter Libby in the Plamegate affair. In the end, Holder asked for a list of 10 candidates, five from within the Justice Department and five from outside.

On April 15 the attorney general traveled to West Point, where he had been invited to give a speech dedicating the military academy's new Center for the Rule of Law. As he mingled with cadets before his speech, Holder's aides furiously worked their BlackBerrys, trying to find out what was happening back in Washington. For weeks Holder had participated in a contentious internal debate over whether the Obama administration should release the Bush-era legal opinions that had authorized waterboarding and other harsh interrogation methods. He had argued to administration officials that "if you don't release the memos, you'll own the policy." CIA Director Leon Panetta, a shrewd political operator, countered that full disclosure would damage the government's ability to recruit spies and harm national security; he pushed to release only heavily redacted versions.

Holder and his aides thought they'd been losing the internal battle. What they didn't know was that, at that very moment, Obama was staging a mock debate in Emanuel's office in order to come to a final decision. In his address to the cadets, Holder cited George Washington's admonition at the Battle of Trenton, Christmas 1776, that "captive British soldiers were to be treated with humanity, regardless of how Colonial soldiers captured in battle might be treated." As Holder flew back to Washington on the FBI's Cessna Citation, Obama reached his decision. The memos would be released in full.

Holder and his team celebrated quietly, and waited for national outrage to build. But they'd miscalculated. The memos had already received such public notoriety that the new details in them did not shock many people. (Even the revelation, a few days later, that 9/11 mastermind Khalid Sheikh Mohammed and another detainee had been waterboarded hundreds of times did not drastically alter the contours of the story.) And the White House certainly did its part to head off further controversy. On the Sunday after the memos were revealed, Emanuel appeared on This Week With George Stephanopoulos and declared that there would be no prosecutions of CIA operatives who had acted in good faith with the guidance they were given. In his statement announcing the release of the memos, Obama said, "This is a time for reflection, not retribution." (Throughout, however, he has been careful to say that the final decision is the attorney general's to make.)

Emanuel and other administration officials could see that the politics of national security was turning against them. When I interviewed a senior White House official in early April, he remarked that Republicans had figured out that they could attack Obama on these issues essentially free of cost. "The genius of the Obama presidency so far has been an ability to keep social issues off the docket," he said. "But now the Republicans have found their dream…issue and they have nothing to lose."

Emanuel's response to the torture memos should not have surprised Holder. In the months since the inauguration, the relationship between the Justice Department and the White House had been marred by surprising tension and acrimony. A certain amount of friction is inherent in the relationship, even healthy. But in the Obama administration the bad blood between the camps has at times been striking. The first detonation occurred in only the third week of the administration, soon after a Justice lawyer walked into a courtroom in California and argued that a lawsuit, brought by a British detainee who was alleging torture, should have been thrown out on national-security grounds. By invoking the "state secrets" privilege, the lawyer was reaffirming a position staked out by the Bush administration. The move provoked an uproar among liberals and human-rights groups. It also infuriated Obama, who learned about it from the front page of The New York Times. "This is not the way I like to make decisions," he icily told aides, according to two administration officials, who declined to be identified discussing the president's private reactions. White House officials were livid and accused the Justice Department of sandbagging the president. Justice officials countered that they'd notified the White House counsel's office about the position they had planned to take.

Other missteps were made directly by Holder. Early on, he gave a speech on race relations in honor of Black History Month. He used the infelicitous phrase "nation of cowards" to describe the hair trigger that Americans are on when it comes to race. The quote churned through the cable conversation for a couple of news cycles and caused significant heartburn at the White House; Holder had not vetted the language with his staff. A few weeks later, he told reporters he planned to push for reinstating the ban on assault weapons, which had expired in 2004. He was simply repeating a position that Obama had taken on numerous occasions during the campaign, but at a time when the White House was desperate to win over pro-gun moderate Democrats in Congress. "It's not what we wanted to talk about," said one annoyed White House official, who declined to be identified criticizing the attorney general.

The miscues began to reinforce a narrative that Justice has had a hard time shaking. White House officials have complained that Holder and his staff are not sufficiently attuned to their political needs. Holder is well liked inside the department. His relaxed, unpretentious style—on a flight to Rome in May for a meeting of justice ministers, he popped out of his cabin with his iPod on, mimicking Bobby Darin performing "Beyond the Sea"—has bred tremendous loyalty among his personal staff. But that staff is largely made up of veteran prosecutors and lawyers whom Holder has known and worked with for years. They do not see the president's political fortunes as their primary concern. Among some White House officials there is a not-too-subtle undertone suggesting that Holder has "overlearned the lessons of Marc Rich," as one administration official said to me.

The tensions came to a head in June. By then, Congress was in full revolt over the prospect of Gitmo detainees being transferred to the United States, and the Senate had already voted to block funding to shut down Guantánamo. On the afternoon of June 3, a White House official called Holder's office to let him know that a compromise had been reached with Senate Democrats. The deal had been cut without input from Justice, according to three department officials who did not want to be identified discussing internal matters, and it imposed onerous restrictions that would make it harder to move detainees from Cuba to the United States.

Especially galling was the fact that the White House then asked Holder to go up to the Hill that evening to meet with Senate Democrats and bless the deal. Holder declined—a snub in the delicate dance of Washington politics—and in-stead dispatched the deputy attorney general in his place. Ultimately the measure passed, despite Justice's objections. Obama aides deny that they left Holder out of the loop. "There was no decision to cut them out, and they were not cut out," says one White House official. "That's a misunderstanding."

Holder is clearly not looking to have a contentious relationship with the White House. It's not his nature, and he knows it's not smart politics. His desire to get along has proved useful in his career before, and may now. Emanuel attributes any early problems to the fact that "everyone was getting their sea legs," and insists things have been patched up. "It's not like we're all sitting around singing 'Kumbaya,' " he says, but he insists that Obama got in Holder exactly what he wanted: "a strong, independent leader."

There's an obvious affinity between Holder and the man who appointed him to be the first black attorney general of the United States. They are both black men raised outside the conventional African-American tradition who worked their way to the top of the meritocracy. They are lawyers committed to translating the law into justice. Having spent most of their adult lives in the public arena, both know intimately the tug of war between principle and pragmatism. Obama, Holder says confidently, "understands the nature of what we do at the Justice Department in a way no recent president has. He's a damn good lawyer, and he understands the value of having an independent attorney general."

The next few weeks, though, could test Holder's confidence. After the prospect of torture investigations seemed to lose momentum in April, the attorney general and his aides turned to other pressing issues. They were preoccupied with Gitmo, developing a hugely complex new set of detention and prosecution policies, and putting out the daily fires that go along with running a 110,000-person department. The regular meetings Holder's team had been having on the torture question died down. Some aides began to wonder whether the idea of appointing a prosecutor was off the table.

But in late June Holder asked an aide for a copy of the CIA inspector general's thick classified report on interrogation abuses. He cleared his schedule and, over two days, holed up alone in his Justice Depart ment office, immersed himself in what Dick Cheney once referred to as "the dark side." He read the report twice, the first time as a lawyer, looking for evidence and instances of transgressions that might call for prosecution. The second time, he started to absorb what he was reading at a more emotional level. He was "shocked and saddened," he told a friend, by what government servants were alleged to have done in America's name. When he was done he stood at his window for a long time, staring at Constitution Avenue.

URL: http://www.newsweek.com/id/206300

U.S. Agrees to Resettle Palestinians Displaced by Iraq War

By MIRIAM JORDAN

The U.S. agreed to resettle 1,350 Palestinians displaced by fighting in Iraq, marking the largest resettlement ever of Palestinian refugees in the nation.

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Associated Press

A woman walks in a compound for Palestinian refugees in Baghdad, where many Palestinians fled after the U.S. invasion of Iraq

The decision appears to signal a shift in Washington's previous position against resettling Palestinians out of concern about the potential impact on U.S. relations with Israel and the Arab world. The resettlement, which is slated to begin this fall, is likely to illicit strong reactions from people on both sides of the Israeli-Palestinian conflict.

A State Department spokesman said the U.S. is responding to an appeal from the United Nations' refugee agency, UNHCR, which has been providing assistance to some 3,000 Palestinians stuck in three makeshift camps in the desert in the Syrian-Iraqi border region.

Middle Eastern scholars and refugee experts believe Washington felt pressured to help solve the humanitarian crisis created by the U.S.-led invasion. Some of the Palestinians have lived in the camps for more than three years.

"These particular Palestinians are a fallout from the Iraq War," said George Bisharat, a professor at the University of California Hastings College of Law, who specializes in Middle Eastern law. "The Obama administration had to take some responsibility for the consequences of the invasion."

However, resettling such a large number of Palestinians in the U.S. is a potentially volatile issue.

Many Arab countries interpreted President Barack Obama's speech in Cairo last month as an attempt to put U.S. relations with Islamic nations on a new course and dissipate the strain that characterized ties during the Bush administration. They see the offer of accepting Palestinian refugees as an early sign of a new openness.

Meanwhile, some supporters of Israel are concerned that the resettlement might alter the U.S.'s approach toward Israel.

Ziad Asali, president of the American Task Force on Palestine, a Washington advocacy group, applauded the U.S. decision, calling it "a significant step ... consistent with the new U.S. message of accommodation and finding solutions with the Muslim world."

However, Mr. Asali cautioned that it is bound to irk Palestinian and Arab leaders who interpret U.S. willingness to resettle Palestinians -- which comes with full rights such as citizenship down the road -- as "a conspiracy to liquidate the Palestinian refugee issue." With the exception of Jordan, no country in the Middle East has granted citizenship to Palestinian refugees. Many Arab countries believe that fully integrating large numbers of Palestinian refugees would undercut their demand for an independent state.

At least one pro-Israel group in the U.S. deems it a mistake to absorb the Palestinian Iraqis, who were welcomed by Saddam Hussein and regarded as loyal supporters of his regime. "We don't think that Washington should be bringing in a group of people who we know were publicly and consistently hostile to the United States and its closest ally, Israel," said Morton Klein, president of the Zionist Organization of America.

An Israeli government spokesman said that "Israel has no official position on this internal American issue."

Like other refugees, the Palestinians will be resettled across the U.S., based on where resettlement agencies partnering with the U.S. government decide housing and job opportunities are available. Refugees who have relatives in the U.S. are likely to be settled near their families.

Palestinians moved to Iraq after Arab-Israeli conflicts in 1948 and 1967, and following the Gulf War in 1991. The community grew to nearly 35,000. "Saddam Hussein made a point of using Palestinian refugees to show solidarity with the Palestinian cause," said Bill Frelick, refugee-policy director at Human Rights Watch in Washington.

The preferential treatment bred resentment among many Iraqis. After Baghdad fell to U.S.-led forces in 2003, Palestinians became a target for harassment and violence, including bombings and murder. A particular point of contention had been the government's provision of subsidized housing for Palestinians, often at the expense of mostly Shiite landlords who received little rent from the government in return.

After Mr. Hussein was deposed, many landlords evicted their Palestinian tenants, who are mainly Sunni Muslims. Driven out of Baghdad and other cities, the Palestinians tried to flee to neighboring Syria and Jordan, which already host hundreds of thousands of Palestinian refugees. When those countries blocked their entry, the displaced Palestinians sought refuge in camps that lack basic infrastructure and jeopardize their health and safety, said Mr. Frelick.

In October, the UNHCR issued an appeal to countries traditionally open to resettlement for urgent action after fruitless calls for help from humanitarian organizations. "It is priority that all these camps close by the end of the year because conditions are not sustainable," said Tim Irwin, a UNHCR spokesman in Washington.

The U.S. committed to absorb the largest number of Iraqi Palestinians. Sweden, the Netherlands and the U.K. also joined the effort, he said. So far, 24 Palestinian refugees have been resettled in the U.S. The remainder are expected to arrive by early 2010.

Write to Miriam Jordan at miriam.jordan@wsj.com

Signs of Hope Emerge in the West Bank

By ETHAN BRONNER

NABLUS, West Bank — The first movie theater to operate in this Palestinian city in two decades opened its doors in late June. Palestinian policemen standing beneath new traffic lights are checking cars for seat belt violations. One-month-old parking meters are filling with the coins of shoppers. Music stores are blasting love songs into the street, and no nationalist or Islamist scold is forcing them to stop.

“You don’t appreciate the value of law and order until you lose it,” Rashid al-Sakhel, the owner of a carpet store, said as he stood in his doorway surveying the small wonder of bustling streets on a sunny morning. “For the past eight years, a 10-year-old boy could order a strike and we would all close. Now nobody can threaten us.”

For the first time since the second Palestinian uprising broke out in late 2000, leading to terrorist bombings and fierce Israeli countermeasures, a sense of personal security and economic potential is spreading across the West Bank as the Palestinian Authority’s security forces enter their second year of consolidating order.

The International Monetary Fund is about to issue its first upbeat report in years for the West Bank, forecasting a 7 percent growth rate for 2009. Car sales in 2008 were double those of 2007. Construction on the first new Palestinian town in decades, for 40,000, will begin early next year north of Ramallah. In Jenin, a seven-story store called Herbawi Home Furnishings has opened, containing the latest espresso machines. Two weeks ago, the Israeli military shut its obtrusive nine-year-old checkpoint at the entrance to this city, part of a series of reductions in security measures.

Whether all this can last and lead to the consolidation of political power for the Fatah-dominated Palestinian Authority based in Ramallah, as the Obama administration hopes, remains unclear. But a recent opinion poll in the West Bank and Gaza by the Jerusalem Media and Communications Center, a Palestinian news agency, found that Fatah was seen as far more trustworthy than Hamas — 35 percent versus 19 percent — a significant shift from the organization’s poll in January, when Hamas appeared to be at least as trustworthy.

“Two years ago I couldn’t have even gone to Nablus,” said Tony Blair, the former British prime minister who serves as international envoy to the Palestinians, after a smooth visit this week. “Security is greatly improved, and the economy is doing much better. Now we need to move to the next stage: politics.”

The aim of American and European policy is to stitch Palestinian politics back together by strengthening the Palestinian Authority under the presidency of Mahmoud Abbas, which favors a two-state solution with Israel, while weakening the Islamists of Hamas, who rule in Gaza. Fatah says it will hold its first general congress in 20 years in early August to build on its successes, but it remains unclear if the meeting will take place.

The Israeli government of Prime Minister Benjamin Netanyahu says it shares the goal of helping Mr. Abbas, which is why it is seeking to improve West Bank economic conditions as a platform for moving to a political discussion. The Palestinians worry that the political discussion will never arrive and say the Israelis are doing far too little to ease the occupation. Still, they point with pride to the many changes in the West Bank.

Meanwhile, the Israeli-led economic siege of Gaza continues, letting in only humanitarian goods. That sets the desired contrast between the territories into sharp relief but causes enormous suffering and anger.

Asked to explain why the West Bank’s fortunes were shifting, a top Israeli general began his narrative with a chart showing 410 Israelis killed by Palestinians in 2002, and 4 in 2008.

“We destroyed the terrorist groups through three things — intelligence, the barrier and freedom of action by our men,” he said, speaking on condition of anonymity in keeping with military rules. “We sent our troops into every marketplace and every house, staying tightly focused on getting the bad guys.”

But he added that the 2006 legislative electoral victory by Hamas, followed by its violent takeover of Gaza in 2007, led Mr. Abbas to fight Hamas. Palestinian troops have been training in Jordan under American sponsorship.

There are now several thousand men trained in that way, and their skills, along with those of the European-trained police force here, have made a huge difference.

An important element in making the Palestinian force effective, American and Israeli officials say, was taking young Palestinian men out of the ancestral grips of their villages and tribal clans and training them abroad, turning them into soldiers loyal to units and commanders.

The Israeli general said that in the past year and a half, Israeli and Palestinian forces had shot at each other only twice, and in each case there was a meeting to restore trust.

Speaking of the seriousness of the Palestinians, he added, “Twice in recent months we have been amazed.” The first time was during Israel’s military invasion of Gaza when Palestinian police officers kept the West Bank calm during protests. The second was in June when the security forces clashed twice with Hamas men in the city of Qalqilya, fighting to the death.

The Israelis have pulled their forces to the outskirts of four cities, greatly reduced the number of permanent checkpoints and promised to help industry develop. They say the Palestinians now need courts, prisons and trained judges.

Mr. Blair agreed but said there was much more Israel should do, like ending the growth of settlements and taking away dirt mounds and other barriers. In addition, he said, Israel should allow greater Palestinian development in the 60 percent of the West Bank it fully controls.

Palestinian business leaders are incensed at the Israeli limitations. Paltel, which operates the only Palestinian cellphone company, says Israel will not permit it to place its towers on the land it controls. That forces Palestinian customers to pay roaming charges for many calls, and allows Israeli cellphone companies to offer lower rates.

For more than a year, Israel has promised to free a second frequency so that a competitor to Paltel can provide cellphone service, but it has not yet done so. This leaves the Palestinians skeptical.

“I fail to see any indications that Israel wants to help the Palestinian economy,” Abdel-Malik al-Jaber, vice chairman of Paltel, said.

Still, his company has invested millions in the past year in call centers and customer service because of the increased security and disposable income.

As Nader Elawy, manager of Cinema City, the new movie theater here, put it: “We now have law and order. You can really feel the change.”

JPMorgan’s Profit Soars Despite Downturn

By GRAHAM BOWLEY

A new order is emerging on Wall Street after the worst crisis since the Great Depression — one in which just a couple of victors are starting to tower over the handful of financial titans that used to dominate the industry.

On Thursday, JPMorgan Chase became the latest big bank to announce stellar second-quarter earnings. Its $2.7 billion profit, after record gains for Goldman Sachs, underscores how the government’s effort to halt a collapse has also set the stage for a narrowing concentration of financial power.

“One theme here is that Goldman Sachs and JPMorgan really have emerged as the winners, as the last of the survivors,” said Robert Reich, a professor at the University of California, Berkeley, who was secretary of labor in the Clinton administration.

Both banks now stand astride post-bailout Wall Street, having benefited from billions of dollars in taxpayer support and cheap government financing to climb over banks that continue to struggle. They are capitalizing on the turmoil in financial markets and their rivals’ weakness to pull in billions in trading profits.

For the most part, the worst of the financial crisis seems to be over. Yet other large banks, including Citigroup and Bank of America, are still struggling to return to health. Both are expected to report a more profitable quarter on Friday, but a spate of management changes and looming losses from credit cards and commercial real estate have thwarted a stronger recovery.

And then there are the legions of regional and small banks that are falling in greater numbers across the country. While many have racked up large losses, they stand to bleed more red ink if the recession wears on. Fifty-three have failed this year, and the Federal Deposit Insurance Corporation is girding for scores to follow.

Uncertainties over the economy mean that Goldman and JPMorgan may be enjoying a fragile dominance, industry experts said. JPMorgan reported big declines in its consumer business on Thursday, and it has set aside more than $30 billion to cover future losses from surging credit card charge-offs and mortgage and home equity losses.

“Nobody is through this until unemployment turns around,” said Moshe Orenbuch, a Credit Suisse banking analyst.

And if regulation being considered in Washington is passed, banks would face new limits on the amount of their own capital they may trade. That could limit the profits that banks like Goldman and JPMorgan make from their trading businesses, and level the playing field, experts say.

Other former Wall Street stars like Morgan Stanley, which was hurt more by the crisis and has avoided taking big risks in the new era, may also rebound and begin to take on old rivals.

But for now, Goldman Sachs and JPMorgan are surging. “The stronger players are positioned to take advantage of the crisis and they will dominate clearly in the near term,” said James Reichbach, the head of Deloitte’s United States financial practice.

JPMorgan’s renewed strength, like Goldman’s, comes as it vaults ahead of longtime rivals, especially in investment banking, including bond and equity trading, and underwriting debt to help companies issue shares and bonds. Traders took advantage of big market swings and less competition to post big gains in fixed-income and equities.

Michael J. Cavanagh, the chief financial officer at JPMorgan, said its profit and fees from this business were “a record for us in a quarter and a record for anybody at any firm in any quarter.” The bank, he added, was “so very proud of those results.”

It has also profited from the demise of weaker banks to enlarge its market share in mortgages and retail banking. On Tuesday, as the CIT Group, a lender to many small businesses, negotiated with the government to avoid collapse, JPMorgan signaled that it was watching.

“It would be an opportunity for us in these states if CIT was unable to continue lending to borrowers,” Tom Kelly, a spokesman at Chase, was quoted by Dow Jones Newswires as saying.

And revenue from the retail bank Washington Mutual, which JPMorgan acquired last fall, is starting to help earnings. Morgan is also profiting from its government-assisted purchase of Bear Stearns last year. JPMorgan is now No. 1 globally in equity and debt capital markets, according to Dealogic.

Amid the surge, Jamie Dimon, JPMorgan’s chief executive, has cemented his status as one of America’s most powerful and outspoken bankers. He has vocally distanced himself from the government’s financial support, calling the $25 billion in taxpayer money the bank received in December a “scarlet letter” and pushing with Goldman Sachs, Morgan Stanley and others to repay the money swiftly. Those three banks repaid the money last month.

Yet JPMorgan’s transformation into one of the industry’s strongest players is underpinned by the shelter it received from the government: The bank used the money as a cushion until it was able to raise new capital. “There is no doubt all of us benefited from the government help — all of us,” said a senior executive at another Wall Street bank.

A spokesman for JPMorgan said the bank accepted aid at the request of the government but would not comment beyond that.

Few banks have undergone such a turnaround. Only a few years ago, JPMorgan was struggling after years of poor management and a failure to digest a series of big acquisitions. But under Mr. Dimon, it cut costs and strengthened its balance sheet.

The payoff began last year. With the industry teetering on the verge of collapse, JPMorgan snapped up Bear Stearns in March 2008 and Washington Mutual last fall in two government-assisted transactions. Clients say that its growing dominance has given it more leverage to charge for lending and other services.

After aggressively lobbying to repay its taxpayer money, Mr. Dimon has also been driving a hard bargain over the repurchase of warrants the government received from the bank last autumn in exchange for taxpayer support. JPMorgan is now planning to let the Treasury Department auction off the warrants to private investors after the two sides failed to agree on a price.

Mr. Dimon is also gearing up for a series of battles in Washington. One is over tighter regulations for derivatives, a business where the bank generates lucrative fees as one of the industry’s largest players.

Another is the creation of a new consumer protection agency, which could threaten the profitability of the bank’s mortgage and credit card businesses if it introduces tougher regulations.

JPMorgan’s stock has risen 20 percent since early March. It closed Thursday at $35.76.

Eric Dash and David Jolly contributed reporting.

Britain Replacing U.S. as Iran's Favorite Target

By Tara Bahrampour
Washington Post Staff Writer
Friday, July 17, 2009

For the past three decades, the United States has been Iran's "Great Satan." Schoolchildren learned to chant "Down With U.S.A." Conservative clerics sermonized against America. Anti-American murals depicting images such as a skull-faced Statue of Liberty dotted Tehran.

But since Iran's disputed presidential election last month, another Satan has gained ground: Great Britain.

Since Iranians took to the streets to protest the official vote results, the government has expelled two British diplomats, kicked out the longtime British Broadcasting Corp. bureau chief, and arrested British Embassy staff members, accusing them of fomenting the unrest. Last week, an adviser to the supreme leader, Ayatollah Ali Khamenei, called Britain "worse than America" for its alleged interference in Iran's post-election affairs.

Although complaints about British meddling are enjoying a resurgence, they are hardly new. For many Iranians, especially those whose memories go back several decades, the British reach is long and deep.

"To the older generation of Iranians, it's as if the sun has never gone down on the British Empire," said Mehrzad Boroujerdi, director of Middle Eastern studies at Syracuse University. "They are considered the masters of political intrigue, and players such as the U.S. are considered to be novices, new kids on the block."

Suspicion of Britain heightened under Iran's current administration, said Ali Ansari, a professor of Iranian history at the University of St. Andrews in Scotland. "Ahmadinejad's government has always been very Anglophobic in its approach," he said, noting a 2007 incident in which Iran took 15 British marines and sailors into custody, saying they had violated Iranian waters. "They're really obsessed with Britain in a way that even previous Iranian governments, even in the Islamic republic, haven't been."

Ahmadinejad and those in his government have little political experience outside Iran, analysts said, and are often unsophisticated in their dealings with other nations, relying on local folklore that goes back a century -- to when Britain had great influence in the region.

Iranians found both good and bad in that history. Britain supported Iranians who pushed for a constitution in 1905, but it left them feeling betrayed when it joined with Russia to divide Iran into "spheres of influence" and attempted to create what effectively would have been a British protectorate.

When oil was discovered in Iran in 1908, the British built refineries there, turning the country into an oil producer for the first time. But resentment grew as Iran received only a fraction of the profits and Iranian workers lived in miserable conditions.

British influence was seen to be behind Reza Shah Pahlavi's 1921 ascendance and, 20 years later, his fall from power. Scholars debate London's influence on these events, but Britain, along with the United States, has admitted to helping oust Iran's democratically elected prime minister in 1953.

The United States gained more influence after World War II, but Britain's behind-the-scenes role remained ingrained in the popular Iranian imagination. Some, including the deposed Mohammad Reza Pahlavi, believed the British orchestrated the 1979 Islamic revolution. "In fairness to the Iranians, the British have been manipulative," Boroujerdi said. "But, in my view, they have been given way too much credit in terms of their actions in Iran."

Even U.S. foreign policy was sometimes interpreted as directed from London. "There were a couple of members of Parliament that got up and said [President George W. Bush's 2002] 'axis of evil' speech was written by the British as a speech to read out," Ansari said. "They said the Americans weren't capable of this, they weren't intelligent enough to think of this."

In every Iranian crisis, the BBC has come in for blame, perhaps in part because of its history in Iran. "BBC Persian service has a very specific position in Iran -- it was created in 1941 to help with the overthrow of Reza Shah," Ansari said. By the late 1970s, however, "it played a role that was at odds with the British government. . . . It gave Khomeini a lot more airtime than they thought was useful or helpful," he said, referring to the late ayatollah and leader of the revolution.

Still, many in Iran find it hard to separate the BBC from the British government. The station's popularity there has stoked suspicion, as has its recent introduction of Farsi-language satellite television service.

"Because the BBC is seen as having been so important during the revolution, with the fact that the BBC is opening a new channel of communication, there's a feeling that perhaps the BBC is gearing up for a new revolution," said Dick Davis, a professor of Persian at Ohio State University.

Ervand Abrahamian, a history professor at the City University of New York's Baruch College, agreed, adding that by blacking out local media now as in 1978, today's rulers "are doing the same thing the shah was doing."

In this case, however, the focus on the BBC and the British government could also be part of a broader political strategy by Iranian leaders, some analysts said. After years of antagonism, the United States would be a key player in any future negotiations over Iran's nuclear program, and blaming America for the current crisis could hurt those prospects.

"The U.S., after all, is the big prize that the Iranians are after," Boroujerdi said, "and they basically neglect the Europeans because they feel that the U.S. is the big kid that they have to talk to."

President Obama's international popularity could also be a factor. "I think they have real problems with Obama," Abrahamian said. "He has offered major concessions, and they haven't really replied to that."

But even if the U.S. role as the Great Satan is being played down, that does not mean it has lost the title, Boroujerdi said.

"Great Britain seems to be the flavor of the month right now. . . . But I don't think that anyone can take comfort that the flavor of the month has changed; it can change again at a moment's notice."

A Shiite Schism On Clerical Rule

By Anthony Shadid
Washington Post Foreign Service
Friday, July 17, 2009

NAJAF, Iraq -- As Iran simmers over its disputed presidential election, Shiite clerics in Iraq are looking across the border with a sense of satisfaction that they have figured out a more durable answer to a question that has beset Shiite Islam for centuries: What role should religion play in politics?

No one in this city, which stands as the world's most venerable seat of Shiite scholarship, is boasting. Nor is there any swagger among the most senior clerics and their retinue of turbaned students and advisers. Befitting the ways of the tradition-bound Shiite seminary, points are made in whispers and hints, through allegories and metaphor.

But three decades after the Iranian revolution brought to power one notion of clerical rule -- and six years after the fall of Saddam Hussein helped enshrine another version of religious authority here -- the relationship between religion and the state in Iraq, clerics here say, seems more enduring than the alternative in neighboring Iran.

"It's true," said Ghaith Shubar, a cleric who runs a foundation in Najaf aligned with Grand Ayatollah Ali Sistani, Iraq's most powerful cleric. "The spiritual guidance of the people in Iraq has become stronger than the guidance offered under the system in Iran. The marjaiya" -- the term used to describe the authority of the most senior ayatollahs -- "has more influence in Iraq, spiritual and otherwise, than it does in Iran."

More than a debate over semantics or the sometimes arcane details of a cleric's role, the precise relationship between the clergy and the state goes to the heart of politics in Iraq and Iran, both with Shiite majorities but with different ethnicities and languages. Though unelected, clerics in each country enjoy a standing unparalleled elsewhere in the Middle East. Sistani played perhaps the most decisive role in politics of any Iraqi leader in the years after the U.S.-led invasion overthrew Hussein in 2003. In theory at least, Ayatollah Ali Khamenei, the supreme leader of Iran, wields power that is sanctioned by God, though discontent over the official results of last month's election has challenged his authority.

In reality, however, the two systems are radically different, manifesting in many ways a division that has shaped Shiite Islam for centuries. The division has been especially pronounced since 1970, when Ayatollah Ruhollah Khomeini, the eventual leader of the Iranian revolution, first elaborated the idea of clerical rule in a series of lectures during his tenure in Najaf.

Known as wilayat al-faqih, the theory holds that God's authority, passed down through a line of imams that started with Ali, the son-in-law and cousin of the prophet Muhammad, and ended with the 12th imam, who disappeared in the 9th century, is held by a cleric chosen as the supreme leader. Enshrined in the Iranian constitution, this authority has served as the basis of governance for the country since the revolution.

The authority of clerics in Iraq, on the other hand, lacks any legal basis. It is derived instead from prestige, the notion that millions look to Sistani as their spiritual authority. The most devout of his followers consider his edicts to carry the force of law. The tall, ascetic, Iranian-born Sistani is thought to adhere to what is sometimes called the quietist school of Shiite Islam, in which the clergy disavow an overt role in politics. Often, politicians are left guessing what Sistani's position -- if he has one -- might be.

His authority is distinct from political parties in Iraq that are avowedly Islamist and often count junior clerics among their senior leadership. The more senior ayatollahs deem those clerics politicians first and foremost, not clergy.

As one cleric put it, the difference between the two visions in Iraq and Iran is akin to different roles at a construction site. Under the wilayat al-faqih in Iran, the cleric might serve as the foreman, responsible for each aspect of the design and execution. In the quietist model in Iraq, Sistani would be considered the owner, but perhaps an absentee one.

A Lively Debate

Both visions represent an ideal that rarely translates into reality. In Iran, the discontent among senior clerics over the presidential election and the government's response has challenged Khamenei's ostensibly absolute authority. In Iraq, Sistani has often exerted decisive influence in the country's politics -- from undoing U.S. plans in 2003 for the country's political transition to self-rule to guaranteeing the turnout in landmark elections in 2005.

"Don't ever forget Sistani's influence," a senior Iraqi official said.

But the differences between the two still make for one of the liveliest debates among clerics, shaping the reputations of both the holy city of Najaf and its Iranian counterpart, Qom.

"The struggle [between the two] continues," said Mohammed Hussein al-Hakim, whose father serves with Sistani as one of the four most powerful ayatollahs in Najaf.

Most clerics in Iraq are reluctant to say anything about the crisis in Iran that began last month. The mantra heard in Najaf, filled with Iranian pilgrims and populated by clerical families with lineage in Iran, is that it is not their concern.

In part, their silence reflects courtesy among clerics, and a view that debates are better aired in the cramped seminaries and squat, brick residences that orbit the gold-domed shrine of Imam Ali. Others may want to keep their distance from Iran; a long-standing Sunni argument here is that religious Shiites are more loyal to their faith than to the Iraqi state.

"Truthfully, we don't want to interfere in the affairs of others," said Ali al-Najafi, the oldest son of another of the four most senior ayatollahs here, Bashir al-Najafi.

When clerics do speak, they are often dismissive, at least publicly, of the import of the crisis. "A tempest in a teacup," said one cleric, who asked not to be named, using an Arabic equivalent of the English phrase. "It still doesn't have the spark for a revolution."

"Britain and America, that's who's involved in Iran at this point," added Ali al-Waadh, a cleric and representative of Sistani's near the Kadhimiyah shrine in Baghdad.

But there is a sense among those same individuals that the political power wielded by clerics in Iran has threatened their religious authority. One cleric cited a proverb: "If you want to earn the love of the people, then leave their worldly affairs to them."

"When the marja" -- the title reserved for the most senior ayatollahs -- "removes himself from the political scene," Shubar said, "then his spiritual influence only grows."

Views of Sistani

The irony of a clerical state endangering clerics' religious standing has not gone unnoticed.

"It's true that the government in Iran is Islamic, but a great percentage of the population -- not the majority perhaps -- is secular," Shubar said, sitting in his office. "The government in Iraq is not religious, but the greater percentage of the people here are." In the Middle East, he added, "people tend to move in the opposite direction of their government."

The character of Sistani is rarely questioned. A deeply conservative man, steeped in the seminary since he was 10 years old, he has cultivated an image of asceticism so severe that he still sits on cheap carpets and bought a refrigerator only a decade or so ago.

When he is criticized, it is usually over his origins; his Arabic is still heavily accented by the Farsi of his native Iran, which he left nearly 60 years ago. Some view his intervention as excessive, blaming him for the deeply sectarian cast of politics here. Others deem it the opposite. Followers of Moqtada al-Sadr, a junior cleric who espouses a more assertive role for the clergy, often complain that Sistani is too reticent. In their stronghold of Sadr City, a vast, impoverished neighborhood in Baghdad, they call a street of stores selling mattresses and blankets "Sistani Street." The idea: that he is sleeping.

Hakim described the role of Sistani and his colleagues now as tawjiih, or guidance.

The confidence of the clerics in Najaf speaks to the sense that their city has returned to its preeminence in Shiite scholarship. For decades, its once-unquestioned influence was becoming eclipsed by that of Qom, and its clout reached a nadir under Hussein's nearly 25 years of rule. Today, Najaf seems on the ascent, building on the relatively monolithic authority of Sistani and his colleagues. An economic revival, meanwhile, has begun transforming the skyline, adding high-rise hotels and sprawling religious complexes to a city that was until recently dominated by low-slung, ocher buildings.

"We're not following Iran," Waadh said. "Iran should follow Najaf."

Recession Lesson: Share and Swap Replaces Buy and Grab

By Nancy Trejos
Washington Post Staff Writer
Friday, July 17, 2009

The recession is reminding Americans of a lesson they first learned in childhood: Share and share alike. They are sharing or swapping tools and books, cars and handbags, time and talent.

The renewed desire to share shows up in a variety of statistics: A car-sharing service has had a 70 percent membership increase since the recession set in. Governments are putting bikes on the street for public use. How-to-swap Web sites are proliferating.

"I think what happens in a recession or any sort of economic contraction is that you have not only a loss of financial resources, but also you have a loss of emotional resources," said Shawn Achor, a Harvard University researcher and a consultant on positive psychology.

"You don't have as much of the money or security or confidence or pride that goes with financial success," he said. "Our brains try to seek out those resources that are lost. The financial resources are beyond our control, but the emotional resources are not. And we seek out each other. We rely on each other."

The economy reflects the way Americans have cut back, especially on discretionary items: Department store sales dropped 1.3 percent in June. People are not buying cars, and auto sales dropped 27.7 percent last month. They are not paying others to do what they can do themselves -- Home Depot reports increased attendance at in-store do-it-yourself clinics. And although paint sales are down in general, according to Sherwin-Williams, individual consumers are still buying.

When Tom Burdett needed to cut some tile at his home outside Annapolis, he refused to buy expensive tools. So he asked his neighbors and friends for help. Sure enough, someone had just what he needed. And when that friend needed help installing a satellite dish, Burdett volunteered.

"I'm not going to go out and buy a $500 tile saw just to do one project," said Burdett, a television producer who lives in Edgewater. "Just ask for help and help people out. I think the economy has kind of woken people back up to the old way of doing things instead of the crazy '90s of 'Oh just go out and buy it.' "

The sharing mind-set is not new to the American culture, but many Americans abandoned it when the nation shifted from an agricultural society to an industrial one, said Rosemary Hornak, a psychology professor at Meredith College in Raleigh, N.C. They moved farther from their families and did not have time to connect with new neighbors because they worked so much, she said.

Now that people are experiencing financial distress, they don't want to be alone.

"You can't change the economy. You can't change the recession. Maybe you can get a better job, but that won't be instantaneous. What do you do?" she said. "Sharing is one of the things that first of all makes you feel better about yourself. . . . We're moving into 'How can we establish these kinds of personal connections, this helping others, sharing, being a bit more neighborly?' "

Neighborhood conversations tell more of the story as the movement grows organically in communities across the Washington region and the nation. On one street in Arlington, for instance, neighbors are chipping in for mulch and dividing it among themselves.

Liz McLellan, a Web designer in Oregon, started a free yard-sharing community at Hyperlocavore (http://hyperlocavore.ning.com) in January. Friends, relatives or neighbors create a group, pool their resources and start a garden, then distribute the produce equally. The recession gardens, as she calls them, can save families with two children up to $2,500 a year.

"We have people who are foodies and have become accustomed to outstanding taste and freshness," she said. "We have people who simply are trying to make ends meet."

In February, Robert Morse of New York started DaveZillion.com -- named for a friend known for helping his neighbors before he died at age 43 -- to connect groups of people who want to help one another out on home projects or share tools.

"We hear stories about guys who have no money to go golfing anymore and are going to each other's houses and helping each other paint the house or fix the patio," he said.

Women have flocked to the Web site BagBorroworSteal.com to borrow or rent luxury bags and other accessories. Users of a book-swapping Web site, Bookmooch, have increased 30 percent to about 124,000 since the beginning of the year. The membership of the trading site SwapTree has grown tenfold in the past year.

"We're kind of coming out of an opulent time," said Mark Hexamer, co-founder of SwapTree. "People have seen the bad side of mass consumerism. Now everyone is kind of looking for ways to cut down on the family budget."

Since the recession started, car-sharing company Zipcar has had a 70 percent increase in membership to almost 300,000. Sixty percent of the new members said they had sold their cars or abandoned plans to buy them and decided instead to use Zipcar, which charges a small annual fee.

"The downturn in the economy has people thinking of buying less and sharing more," said Scott Griffith, chief executive of Zipcar.

Local governments and faith organizations are joining in. Arlington County runs Commuterpage.com to help residents carpool. For a $40 annual fee, the District offers access to 120 bikes at self-service racks around the city.

Chris Ganson, 35, a city planner, has embraced the sharing mentality in several ways. He has joined the city's Smart Bike program as well as Zipcar. "It's convenient and it saves money," he said.

Ganson also shares a house in Adams Morgan with five other people. He pays $955 a month for a room with a private bathroom, about $600 less than for most one-bedroom apartments in the neighborhood. "It's a great thing for times like these," he said.

Emily Richards, 27, a Falls Church marketing consultant, shares books with her mother-in-law, sister-in-law and friends. Whenever she visits her four sisters in Alabama, she uses their clothing so she does not have to pack a big bag and pay extra baggage fees. She also recently let a friend borrow the vases that were part of the centerpieces at her wedding. That friend is going to use them at her wedding.

"I think I'm very frugal by nature, but it's nice to know that other people have embraced that mind-set," she said.

When the economy started getting worse, a friend persuaded Burdett to join DaveZillion.com with him. Burdett and his neighbors used to hire a handyman for small home projects. That is now a luxury. "With the recession, no one has extra cash," he said.

Burdett's network grew to about 13 friends and friends of friends. In addition to the tile saw, he now has access to other tools such as air compressors. He also does his share of helping. He recently erected a fence around a friend's father's house.

"Almost everyone I know has lost a lot, I would say half of what they had as an investment," he said. "People are helping each other and getting back together. You're not the lone ranger anymore."

Kurdish Leaders Warn Of Strains With Maliki

By Anthony Shadid
Washington Post Foreign Service
Friday, July 17, 2009

IRBIL, Iraq, July 16 -- Iraq's autonomous Kurdish region and the Iraqi government are closer to war than at any time since the U.S.-led invasion in 2003, the Kurdish prime minister said Thursday, in a bleak measure of the tension that has risen along what U.S. officials consider the country's most combustible fault line.

In separate interviews, Prime Minister Nechirvan Barzani and the region's president, Massoud Barzani, described a stalemate in attempts to resolve long-standing disputes with Iraqi Prime Minister Nouri al-Maliki's emboldened government. Had it not been for the presence of the U.S. military in northern Iraq, Nechirvan Barzani said, fighting might have started in the most volatile regions.

The conflict is one of many that still beset Iraq, even as violence subsides and the U.S. military begins a year-long withdrawal of most combat troops from the country. There remains an active sectarian conflict, exacerbated by insurgent groups that seem bent on reigniting Sunni-Shiite carnage. There is also a contest underway in Baghdad to determine the political coalition that will rule the country after next year's elections. But for months, U.S. officials have warned that the ethnic conflict pitting Kurds against Arabs, or more precisely the Kurdish regional government against Maliki's federal government in Baghdad, poses the greatest threat to Iraq's stability and could persist for years.

In an incident June 28 that underscored the trouble, Kurdish residents and militiamen loyal to the Kurdish regional government faced off with an Arab-led Iraqi army unit approaching Makhmur, a predominantly Kurdish town between the troubled northern cities of Kirkuk and Mosul. Kurds believed the unit was trying to enter the town, and for 24 hours, Kurdish leaders, Iraqi officials in Baghdad and the U.S. military negotiated until the Arab-led Iraqi unit was diverted, the Kurdish prime minister said.

The Kurdish militiamen, who are nominally under the authority of the Iraqi army but give their loyalty to the Kurdish regional government, retained control.

"They sent huge forces to be stationed there to control a disputed area, and our message was clear: We will not allow you to do so," the Kurdish prime minister said.

"Our instructions are clear," Massoud Barzani said in a separate interview. Neither the Iraqi army nor the Kurdish militia has "the unilateral right to move into these areas."

U.S. military officials confirmed the incident but offered differing accounts. Asked if the incident was essentially the Kurdish Iraqi army facing down the Arab Iraqi army, Maj. James Rawlinson, a military spokesman in Kirkuk, replied, "Basically."

A spokesman in the Iraqi Defense Ministry blamed the incident on a misunderstanding. He said the army movement was nothing more than a troop rotation. When residents and others saw the Iraqi army unit's arrival, he said, they feared that the government in Baghdad was sending reinforcements. "They turned it into a big issue when it was a simple operation," he said.

The conflict between the government and the Kurdish region is so explosive because it intersects with the most critical disputes that still endanger the country's stability. They include debate over a hydrocarbon law to share revenue and manage Iraq's enormous oil reserves, some of which are located in areas claimed by the Kurdish government; talks to delineate the border between the Kurdish and Arab regions; and efforts to resolve the fate of Kirkuk, an oil-rich city shared by Kurds, Arabs and Turkmens.

Complicating the landscape is the bad blood between two of the key players -- Massoud Barzani, the Kurdish president, and Maliki, whose stature has grown dramatically amid the restoration of a semblance of calm and his Dawa party's success in provincial elections in January. Although two delegations from Maliki's party have visited Irbil, the Kurdish capital, since the spring, the two men have not spoken in a year, Barzani said.

"Everything is frozen," said Prime Minister Barzani, a nephew of the president. "Nothing is moving." He warned that the deadlock was untenable. "If the problems are not solved and we're not sitting down together, then the risk of military confrontation will emerge," he said.

Both have blamed the other side for provocations, often with justification. Kurdish officials see in Maliki's actions a recurrence of what they believe is arrogance from Baghdad stretching back generations. Maliki's allies accuse Kurdish leaders of overreaching in their territorial ambitions and stubbornness in talks.

"If things remain the way they are between the two parties, without solutions and without abiding by the constitution, then unfortunately everything is possible," said Ezzedine Dawla, a Sunni Arab lawmaker from Mosul, Iraq's most restive city.

Last month's standoff was at least the third that involved the Kurdish militia, known as the pesh merga, reaching into land that had been administered by Baghdad until the U.S.-led invasion. With U.S. approval after the fall of Saddam Hussein's government, Kurdish leaders dispatched pesh merga past the frontier. In predominantly Kurdish regions, they sent administrative staff and their personnel, as well. Since last year, Maliki has pushed back, sending the Iraqi army to confront pesh merga in the border town of Khanaqin, which has a Kurdish majority, and deploying thousands more troops in Kirkuk. Fearing tension, the U.S. military has bolstered its presence in Kirkuk.

The Kurdish prime minister said the two sides narrowly avoided bloodshed in Makhmur.

He said the Iraqi army headed toward Makhmur, set in a wind-swept region of rolling wheat fields, with the intention of staying in the town. The troops were stopped by about 2,000 pesh merga in a standoff that lasted through the night. A flurry of phone calls continued into the next morning. The Kurdish prime minister said he stayed awake until 4 a.m. as the talks unfolded. "What does that tell you about the seriousness of the situation?" he asked.

American officials offered two accounts of what happened. Rawlinson, the spokesman in Kirkuk, said a battalion from Iraq's 7th Division was headed to station itself in Makhmur. At the nearby town of Debaga, it was stopped by soldiers of the 2nd Division, which is composed of pesh merga units. The U.S. military was alerted at 2:30 a.m., he said. "It was the middle of the night, and people got tense," Rawlinson said.

Maj. Derrick Cheng, a spokesman in Tikrit, said Iraq's 7th Division was headed to Nineveh province for an upcoming operation. "The movement fed fears and rumors," he said, and at least 30 vehicles and 100 people blocked the road. Calls were made, and the Iraqi army troops stopped on the road, then took another route, "bypassing Makhmur completely to avoid any potential conflict that might have resulted," he said. Rawlinson later said he would defer to Cheng's version.

Prime Minister Barzani saw the incident as more provocation than misunderstanding. He insisted that Iraqi army commanders were still imbued with a "military-style mentality of being the Big Brother to impose their will." He warned that the Iraqi army was biding its time until it became stronger, perhaps with tanks from the United States.

"Then what do you expect from us?" he asked. "We just sit down and wait to see it?" Asked whether the pesh merga had tanks, too, he replied, "Oh, yes. Yes, we do."

Correspondent Nada Bakri in Baghdad contributed to this report.

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Voters in Mauritania Prepare for Saturday Election

By Scott Stearns Nouakchott 17 July 2009

Supporters of Mauritania's former military leader Mohamed Ould Abedl Aziz attend a political rally in the southern city of Rosso, 17 Jul 2009

Voters in Mauritania go to the polls Saturday to choose a new president. It is an election to restore constitutional order following last year's military coup.

Friday is a day of reflection in Mauritania for voters to consider what they have heard from candidates over the past two weeks.

So what are people thinking?

This university student in the southern city of Rosso says former military leader Mohamed Ould Abdel Aziz is the right man to lead Mauritania because he is determined to fight corrupt politicians.

"I support him because President Aziz is a man of actions and thought," he said. "Most Mauritanian people support him because he came and tried to make dramatic change in this country, and we as people, we as poor people, we must go with him side-to-side and shoulder-to-shoulder."

Aziz led the coup last August that toppled Mauritania's first democratically-elected leader.

He refused African Union demands to restore civilian authority and changed the constitution to allow retired soldiers to run for office before resigning his commission to run for president.

Opposition candidate Ahmed Ould Daddah's campaign posters ask, "Do you want to be finished with coups d'etat?" Daddah is a former Central Bank Governor who says Mauritanians can end the cycle of coups and transitional governments in favor of a real democracy where decisions are made by voters not soldiers.

This Daddah supporter in the capital says Aziz is going to fall and break because of the electoral alliance between Daddah and opposition lawmaker Messaoud Ould Boulkheir.

Dadah and Boulkheir have both vowed publicly to support the other in a potential runoff against Aziz. Boulkheir is a former president of the National Assembly who says this is a vote about defeating those who take power through military force.

This woman leaving Boulkheir's closing campaign rally says he is the one who will become president, God willing. She says he represents and supports all Mauritanians and is the one who can do things for the whole country.

More than 250 electoral observers from the Arab League and African Union are here to monitor Saturday's vote. Results are expected within 48 hours. If no one wins more than 50 percent, the top two vote-getters will face-off in a second-round of balloting August 1.

Pakistan Court Tosses Out Sharif Conviction

By VOA News 17 July 2009

Nawaz Sharif (file photo)

Pakistan's Supreme Court has overturned a hijacking conviction against former Prime Minister Nawaz Sharif, clearing the way for the popular politician to run for public office again.

Sharif was found guilty of "hijacking" then army chief Pervez Musharraf's plane, by not allowing it to land in October of 1999. The plane eventually landed and Mr. Musharraf seized control of Pakistan in a coup, later becoming president. Mr. Sharif went into exile.

The high court on Friday acquitted Mr. Sharif, saying the charges of hijacking and terrorism do not stand. A spokesman for former prime minister Sadiqul Farooq hailed the ruling.

In May, the Supreme Court overturned a ban on Mr. Sharif seeking office. The former prime minister's party (Pakistan Muslim League - N) came in second during last year's parliamentary elections. The party was once part of a ruling coalition, but later moved to the opposition.

Mr. Sharif met with Pakistani President Asif Ali Zardari in Lahore Friday.

Mr. Sharif was barred from holding office following the 1999 conviction. A high court decision in February to uphold the ban and nullify the election of his brother Shahbaz as chief minister of Punjab province sparked massive protests.

Some information for this report was provided by AFP, AP and Reuters