Aug 28, 2009

What to Do About the Torturers? - The New York Review of Books

Donald Rumsfeld with Dick Cheney.Image via Wikipedia

By David Cole

Torture Team: Rumsfeld's Memo and the Betrayal of American Values
by Philippe Sands

Palgrave Macmillan, 254 pp., $26.95

The Trial of Donald Rumsfeld: A Prosecution by Book
by Michael Ratner and the Center for Constitutional Rights

New Press, 242 pp., $23.95

Administration of Torture: A Documentary Record from Washington to Abu Ghraib and Beyond
by Jameel Jaffer and Amrit Singh

Columbia University Press, 374 pp., $29.95; $22.50 (paper)

The story of America's descent into torture in the wake of the terrorist attacks of September 11, 2001, has been told now by many writers. Mark Danner, Jane Mayer, and Ron Suskind have written brilliant expositions of the facts, showing how the drive to prevent the next attack led the administration's highest officials to seek ways around the legal restrictions on coercive interrogation of suspects.[1] After the abuses at Abu Ghraib came to light, the military itself commissioned three detailed investigative reports, including highly critical ones by Major General Antonio Taguba and by a panel led by former defense secretary James Schlesinger. Among other factors, they blamed ambiguity in the standards governing interrogation—an ambiguity ultimately attributable to the attempts at evasion directed from the top. Congressional committees have held numerous public hearings into the use of coercive interrogation tactics at both Abu Ghraib and Guantánamo. The Center for Constitutional Rights, the ACLU, and the NYU Center on Law and Security have each published collections of official documents, which effectively indict the government using its own words.[2]

But undoubtedly the most unusual and deeply revealing take on the subject is the work of the British lawyer and law professor Philippe Sands. As Alexis de Tocqueville showed long ago, sometimes it takes the eyes of an outsider to show us ourselves. Sands, a leading international lawyer and a professor at University College London, took it upon himself to conduct his own personal investigation of one aspect of the torture policy—the Army's adoption of coercive tactics to interrogate suspects at Guantánamo. This policy was not the worst of the post–September 11 abuses. As far as we know, no one has been waterboarded at Guantánamo, as some were at the CIA's secret "black sites," nor have any suspects been killed in interrogation, as happened on several occasions elsewhere. No one we know of has been rendered from Guantánamo to another country to be tortured, although some prisoners who were earlier subject to rendition and torture have since been transferred to Guantánamo.



But precisely because the Army's interrogation policy was not the worst of the worst—to borrow a phrase—its story may actually be more instructive. The CIA has always operated to a significant degree outside the law. The military, by contrast, is at its core an institution committed to discipline and order, strictly governed by the laws of war. So the fact that illegal abusive tactics were officially authorized at the Pentagon's highest levels is in some sense more shocking than the CIA's crimes. We should expect more of the military.

America's experiment with torture presents the Obama administration with one of its most difficult challenges: how should the nation account for the abuses that have occurred in the past, what are the appropriate remedies, and how can we ensure that such abuses not happen again? Torture Team offers new insight into what will surely be one of the leading human rights issues of the next several years.

1.

Sands began his investigation, as any good lawyer would, with the documents—from a memo drafted by Lieutenant Colonel Diane Beaver, a staff lawyer for the Army stationed at Guantánamo; to a log detailing the interrogation of "Detainee 063," Mohammed al-Qahtani; to a one-page memo drafted by William Haynes, Department of Defense general counsel, and signed by Defense Secretary Donald Rumsfeld himself, authorizing a series of coercive interrogation tactics beyond anything the military had previously permitted. In signing that memo, which approved sixteen coercive tactics, including forcing suspects to stand for up to four hours straight, Rumsfeld scribbled in the margin, "I stand for 8–10 hours a day. Why is standing limited to 4 hours?" As that comment itself suggests, these documents chillingly underscore the mundane banality with which cruelty and torture became official policy of the United States Department of Defense.

The smoking gun is the Army's log of the interrogation of Mohammed al-Qahtani. Al-Qahtani was thought to be the twentieth hijacker; he was denied entry to the United States in August 2001 at Orlando Airport, where Mohamed Atta, the leader of the September 11 attacks, was waiting to meet him. It was his interrogation that prompted the military to authorize new coercive techniques. The log of al-Qahtani's interrogation, leaked to the press and initially published by Time magazine, provides a detailed, minute-by-minute account of the tactics employed against al-Qahtani, all of which had been approved by Rumsfeld in his one-page memo.

Over fifty-four days, beginning in late 2002, al-Qahtani was interrogated for eighteen to twenty hours each day, denied anything more than four hours' sleep per night, threatened with dogs, stripped naked, hooded, forced to wear women's underwear on his head, humiliated sexually by female interrogators, subjected to extreme heat and cold and loud noises, doused with cold water, and injected with intravenous fluid and not allowed to go to the bathroom so that he urinated on himself. The account has been public for some time, but Sands brings it to life, using it as a kind of drumbeat of reality throughout the book by closing nearly every chapter with a short excerpt from the log.

The Army investigated the interrogation of al-Qahtani and concluded that no laws were broken and that nothing inhumane was done. Sands took the log to Dr. Abigail Seltzer, a London-based psychiatrist who consults with the Medical Foundation for the Care of Victims of Torture, in order to obtain an expert assessment. She was exceedingly thorough, marking each time that al-Qahtani was subjected to abusive treatment, required medical care, or expressed distress, but also noting each time his rights were respected. She was cautious in her analysis, remarking on the absence of physical violence and the extremely organized and disciplined way in which the tactics were employed. (Only the US Army could conduct—and record—torture with such meticulous attention to detail.)

When Sands asked Dr. Seltzer whether she thought the treatment had produced severe physical or mental pain, the legal threshold for torture, she pointed to the Army's own recording of al-Qahtani's expressions of distress. Sands puts them together in a single quotation, editing out the tactics that produced the reactions. It is the closest thing we have to seeing the experience through the eyes of its victim, and it is truly harrowing. Here is a portion:

Detainee began to cry. Visibly shaken. Very emotional. Detainee cried. Disturbed. Detainee began to cry. Detainee butted SGT R in the eye. Detainee bit the IV tube completely in two. Started moaning. Uncomfortable. Moaning. Turned his head from left to right. Began crying hard spontaneously. Crying and praying. Began to cry. Claimed to have been pressured into making a confession. Falling asleep. Very uncomfortable. On the verge of breaking. Angry. Detainee struggled. Detainee asked for prayer. Very agitated. Yelled. Agitated and violent. Detainee spat. Detainee proclaimed his innocence. Whining. Pushed guard. Dizzy. Headache. Near tears. Forgetting things. Angry. Upset. Complained of dizziness. Tired. Agitated. Yelled for Allah. Started making faces. Near crying. Irritated. Annoyed. Detainee attempted to injure two guards. Became very violent and irate. Attempted to liberate himself. Struggled. Made several attempts to stand up. Screamed....

Dr. Seltzer concluded that al-Qahtani had undoubtedly suffered severe emotional and possibly physical distress.

What makes Sands's book most intriguing, however, is that he does not merely analyze the documentary evidence. Instead, he personally set out to interview as many of the participants in this sordid tale as would talk to him. Remarkably, nearly all of them did—including Diane Beaver; Major General Michael Dunlavey, commanding officer at Guantánamo until November 2002; Douglas Feith, a leading neoconservative and, as undersecretary of defense for policy, the number three man in the Department of Defense; and General Richard Myers, chairman of the Joint Chiefs of Staff. Sands also interviewed FBI lawyers, military interrogators, the general counsels for the Department of Defense and the Navy, and several others involved in the decision-making process.

Why would so many people willingly talk to a stranger about their roles in the development and implementation of a policy that led to torture, one of the most harshly condemned practices known to mankind? In part, Sands's ability to gain access may have turned on his outsider status—as a British lawyer studying the role of lawyers in the war on terror, he was not obviously identified with any side of the warring camps within the United States on this subject. A Google search, however, would have quickly led the people he interviewed to see that his previous book, Lawless World: America and the Making and Breaking of Global Rules from FDR's Atlantic Charter to George W. Bush's Illegal War,[3] was a biting critique of the United States' role in the realm of international law in recent years. In fact, several of the officials he approached appear to have done just that, and after initially agreeing to an interview, sought to back out at the last moment. But Sands always managed to talk his way into getting the interview anyway, and in most cases was able to build a strong rapport with his subjects, leading them to be remarkably candid in their responses to his questions.

The more convincing explanation for why so many decided to talk to Sands is that they felt they had done nothing wrong. Douglas Feith, for example, practically gloats about his role in formulating the administration's policy that the Geneva Conventions did not protect al-Qaeda or Taliban fighters. This determination, announced publicly by President Bush in February 2002, cleared the way for coercive interrogation, because if the Geneva Conventions applied, any cruel, inhumane, or degrading treatment of detainees was absolutely forbidden by Common Article 3, which sets a minimum baseline of human rights protections for all detained persons, whether or not they are uniformed fighters. Sands pressed this point with Feith, prompting a striking admission. As Sands relays the dialogue:

I was...curious about the connection between the decision on Geneva and the new interrogation rules approved by Rumsfeld at the end of 2002.... I observed to Feith that his memo to the President and the Geneva decision meant that its constraints on interrogation didn't apply to anyone at Guantánamo. "Oh yes, sure," he shot back. So that was the intention, I asked. "Absolutely," he replied, without any hesitation. Under the Geneva Conventions no one there was entitled to any protection. "That's the point."

Sands's interviews sometimes persuaded him to adopt a more sympathetic understanding of particular protagonists in the torture story. Thus, he portrays Diane Beaver, the lawyer who wrote the initial Army memo justifying coercive interrogation, including waterboarding, as well-meaning if deeply wrong. She was simply out of her depth, Sands suggests, since she had no real experience or serious training in the legal issues about which she was asked to give her opinions.

What's more, Sands contends, Beaver was in reality a scapegoat. The administration sought to portray the decision to use coercive tactics as originating from Guantánamo, but Sands makes a convincing case that the decision in fact came from the top—from Feith, Rumsfeld, Haynes, David Addington (Dick Cheney's legal counsel at the time), Justice Department lawyer John Yoo, and White House Counsel Alberto Gonzales, among others. Beaver's October 2002 memo was largely unnecessary, since it was written after the critical legal decisions had already been made in Washington. By the time Beaver wrote it, President Bush had already publicly declared that Guantánamo detainees were not protected by the Geneva Conventions, and John Yoo and Jay Bybee had already written the infamous August 2002 Justice Department "torture memo" at Gonzales's request. This memo argued that as commander in chief, the president could order torture without fear of criminal liability, and that in any event the torture statute did not prohibit threats of death, as long as the threatened death was not imminent; nor did it prohibit the infliction of intense physical pain, so long as the pain did not rise to the severity associated with organ failure or death itself. In the wake of such opinions, what a staff lawyer at Guantánamo thought was beside the point.

Others are also portrayed in a surprising light. General Richard Myers, chairman of the Joint Chiefs of Staff when the Rumsfeld memo was adopted, had, by his own account, astoundingly little understanding of what was at stake. At one point, he told Sands that all the coercive measures approved by Rumsfeld were already authorized by the Army Field Manual; in fact, none of the tactics were permitted under the manual. Sands concludes that Myers was "hoodwinked" by Rumsfeld and Haynes. General James Hill, who headed the Southern Command and passed Diane Beaver's memo up the chain to Washington, admits to Sands that he would never have approved some of the tactics Rumsfeld okayed. And military intelligence experts closely involved with the Guantánamo interrogations tell Sands that no valuable information was obtained from al-Qahtani.

Sands's book prompted the House Judiciary Committee to launch hearings last summer into the role of lawyers in the development of the interrogation policies, and those hearings in turn led the Senate Armed Services Committee to hold still further hearings. Addington, Yoo, Feith, and Haynes all testified very defensively, often refusing to answer political questions or not recalling key details. But documents disclosed in the course of the hearings now show that when the coercive measures were under consideration, top lawyers for every branch of the military—the Army, Navy, Air Force, and Marine Corps—objected that the tactics might be illegal. The comments encouraged Jane Dalton, legal counsel to General Myers, to undertake a more detailed review of the legal questions posed—until General Myers, at Haynes's request, ordered that the legal inquiry be quashed. It appears that General Myers may not have been hoodwinked after all.

Because so many of the facts surrounding the torture policy are now well known, Sands's book is illuminating not so much for breaking new factual ground as for the human insight he brings to the events. Through his interviews, he tells a story about how ordinary human beings, all working within an institution designed to fight by the rules, felt tremendous pressure to bend the rules—and in most cases did so without apparent concern or self-doubt. A narrowly pragmatic ethos guided virtually all actors. The real arguments were for the most part not about whether coercive tactics were legally or morally acceptable, but about whether they worked. Some, especially those in the FBI, felt strongly that they were counterproductive, and that building rapport through noncoercive questioning was the only way to gain credible intelligence from captives.[4] Others thought the idea of building rapport with al-Qaeda suspects was foolish; it could not be done. But with the courageous exception of Navy General Counsel Alberto Mora, few argued that coercive tactics were wrong because they were immoral and illegal, whether or not they worked. In America after September 11, idealists were few and far between, and an amoral, blinkered pragmatism ruled the day.

Sands is an unabashed idealist. He considers it the government lawyer's obligation to be the guardian of legality, even (and especially) where one's clients, the politically elected and appointed decision-makers, have decided that the law and the rules are inconvenient. Sands argues that torture is ineffective, and that building rapport with suspects is the better course. Indeed, he demonstrates in his own interviews the power of rapport to get subjects talking candidly. But in the end, his argument is not a pragmatic one—it is an argument of principle. The prohibition against torture is absolute, and expresses a fundamental norm about human decency, not a practical judgment about what produces results in interrogation.

2.

The critical question, now that the administration is changing hands, is how to address the fact that the United States after September 11 adopted an official practice of cruel, inhuman, and degrading interrogation tactics, some of which, including at a minimum the interrogation of al-Qahtani and the waterboarding of CIA suspects, rose to the level of torture. Some, including current Attorney General Michael Mukasey and former Bush administration lawyer Jack Goldsmith, have argued that no further investigations, much less prosecutions, are needed, and we should simply move on.[5]

Mukasey insists that everyone acted in good faith—but his judgment is compromised by his refusal even to acknowledge that waterboarding is torture. He never squares his finding of "good faith" with the fact that Haynes and Myers cut off an inquiry into the legality of the Army's tactics after the military's top lawyers objected that the tactics were illegal, or that Yoo and Bybee failed even to cite important contrary legal authority in their torture memo. And while good faith is certainly a factor to be considered in making the discretionary decision whether to prosecute, it is not in itself a legal defense to the crimes of torture or cruel, inhumane, or degrading treatment.

In Jack Goldsmith's view, the facts are already known, the normative judgments have been made, and the real risk is that an extensive investigation will induce federal officials to be overly risk-averse in their approach to controversial national security issues. Goldsmith, however, is not a disinterested party; he was Haynes's top lawyer on international law when Haynes drafted the Rumsfeld memo on interrogation tactics. Later, as head of the Office of Legal Counsel, he oversaw a review of the Yoo-Bybee "torture memo" that, while it ultimately resulted in the memo's replacement, did not reverse the office's authorization of any of the CIA's coercive tactics, including waterboarding.[6]

Others, such as Michael Ratner and the Center for Constitutional Rights, call for criminal prosecution. Their book, The Trial of Donald Rumsfeld, convincingly makes the case that Rumsfeld committed war crimes, and is a useful companion to Torture Team because it includes excerpts from all the critical evidence and a lucid explanation of the legal issues. The center has formally petitioned the German and French governments to bring criminal charges, but both have thus far declined.[7]

Sands's prescription is similar. His book begins with a discussion of the film Judgment at Nuremberg, which featured the trial of judges and lawyers complicit in Nazi atrocities, and closes with a discussion of the principle of "universal jurisdiction," which holds that any country has the right to prosecute certain war crimes and crimes against humanity, no matter where or by whom they were committed, so long as it observes the fundamental requirements of a fair trial. Sands himself played a part in the landmark UK extradition case against General Augusto Pinochet of Chile, in which the UK's Law Lords ruled that even a former head of state was not immune to prosecution by a foreign country (Spain) for torture and other crimes against humanity.

Criminal prosecution within or outside the United States is highly unlikely. At home, the Justice Department's "torture memo" would be a legal defense for any but the lawyers who wrote it, and Congress, in the Military Commissions Act, granted retrospective immunity to officials involved in the interrogation of al-Qaeda suspects in the wake of September 11. The latter immunity, Sands points out, actually makes US officials more susceptible to prosecution overseas, because it removes a major impediment to international prosecution—namely, the principle that universal jurisdiction should not be exercised as long as domestic remedies are available. Still, as a matter of realpolitik, it is difficult to imagine any nation greeting the Obama administration with an international prosecution of former high-level US officials.

But even if criminal prosecution seems unlikely, the acts of the past administration demand accountability. Here's what Eric Holder, whom Obama will nominate as attorney general, said several months ago:

Our government authorized the use of torture, approved of secret electronic surveillance against American citizens, secretly detained American citizens without due process of law, denied the writ of habeas corpus to hundreds of accused enemy combatants and authorized the procedures that violate both international law and the United States Constitution.... We owe the American people a reckoning.

That "reckoning," owed not just to the American people but to the world, will be made especially difficult by the fact that complicity in the torture policy reaches the very top of the Bush administration. The tactics used by the CIA in its interrogations of Khalid Sheikh Mohammed and other "high-level" detainees, including waterboarding, were specifically approved in the White House situation room by Vice President Dick Cheney, Director of Central Intelligence George Tenet, Attorney General John Ashcroft, National Security Adviser Condoleezza Rice, and Secretary of State Colin Powell. Ashcroft is reported to have remarked that "history will not judge us kindly," but none of the participants is reported to have objected to the tactics.[8] On December 15, Vice President Cheney acknowledged for the first time that he had authorized and continues to support techniques including waterboarding. "I was aware of the program, certainly, and involved in helping get the process cleared," Cheney told ABC News. Apparently CIA officials insisted on such high-level approval as a form of insurance against future prosecution.

This poses a real political dilemma: How is President Obama, committed to bipartisan leadership, to hold such officials accountable? A prosecution of any of these men would be as divisive a criminal case as the United States has ever seen—even if it could surmount the legal hurdles identified above. Just launching an investigation will be bruisingly controversial.

Must we then settle for the judgment of history that Ashcroft worried about? In some sense, that judgment has already begun to take shape, thanks to the efforts of Sands, Ratner, enterprising journalists like Mark Danner and Jane Mayer, and especially the ACLU, which forced the disclosure of over 100,000 documents on the interrogation policy by filing a lawsuit under the Freedom of Information Act. Administration of Torture, a guide to those documents with excerpts from the most interesting, will prove an immensely useful resource for future historians.

Without prosecutions or an independent investigation, significant progress toward repudiating the administration's approval of cruelty and torture has already been made. In 2006 the Supreme Court rejected President Bush's position that the Geneva Conventions do not apply to the conflict with al-Qaeda. The military rescinded its authorization of coercion, and has limited itself, in the Army Field Manual, to noncoercive interrogation tactics. The CIA has reportedly abandoned waterboarding, and there have been no reports of renditions to torture in foreign countries for several years. The Justice Department rescinded the August 2002 "torture memo"—although, as noted above, the replacement memo did not alter the department's approval of illegal CIA tactics. Congress, under the leadership of Senator John McCain, resoundingly rejected a White House interpretation that the Torture Convention's prohibition on cruel, inhuman, and degrading treatment exempted foreign nationals held outside the United States; the McCain Amendment provides that the prohibition applies to all persons held by US officials, no matter where they are located.

Critically, however, while the administration has been forced to retreat, there has been no official acknowledgment of high-level criminal wrongdoing. The treatment of prisoners authorized by the administration clearly violated the prohibitions on cruel, inhumane, and degrading treatment contained in Common Article 3 and the Torture Convention; and waterboarding unquestionably qualifies as torture. All these violations were war crimes. Yet no high-level official has been held accountable for the torture policy. The only officer convicted of any crime with respect to the Abu Ghraib scandal, for example, Lieutenant Colonel Steven Jordan, had his conviction reversed on appeal in January 2008. (And even that conviction was not for any role in the abuse itself, but for disobeying an order not to talk about the investigation.) No one has even been charged for any abuse inflicted at Guantánamo.

On December 11, the leaders of the Senate Armed Services Committee, Carl Levin and John McCain, released an important report on abusive interrogations that concluded that Donald Rumsfeld and other top Bush administration officials had

solicited information on how to use agressive (interrogation) techniques, redefined the law to create the appearance of their legality, and authorized their use against detainees.

Most of the report was classified, however. And apart from this, Congress has largely acted symbolically, avoiding any real measures to enforce accountability. The McCain Amendment, for example, provides no sanctions for its violation. The Military Commissions Act not only retrospectively gave immunity to interrogators, but prospectively watered down the War Crimes Act so that inhumane and degrading treatment of detainees is no longer a war crime.

While the CIA claims to have abandoned waterboarding, the administration has refused to say what tactics CIA interrogators are still permitted to use. Its secret prisons, into which suspects are disappeared for incommunicado interrogation, remain open. The administration has never repudiated the practice of rendering suspects to third countries for interrogation by torture, and has never held anyone accountable for that practice. And several still-secret and still-governing Justice Department memoranda from 2005 reportedly authorize the CIA to continue using coercive tactics even after the McCain Amendment was passed. In March 2008, President Bush vetoed a bill that would have required the CIA to limit itself to interrogation techniques approved in the Army Field Manual.

In short, the United States has never taken full responsibility for the crimes its high-level officials committed and authorized. That is unacceptable. In the long run, the best insurance against cruelty and torture becoming US policy again is a formal recognition that what we did after September 11 was wrong—as a normative, moral, and legal matter, not just as a tactical issue. Such an acknowledgment need not take the form of a criminal prosecution; but it must take some official form. We have been willing to admit wrongdoing in the past. In 1988, President Reagan signed the Civil Liberties Act, officially apologizing for the Japanese internment and paying reparations to the internees and their survivors. That legislation, a formal repudiation of our past acts, provides an important cultural bulwark against something similar happening again. There has been nothing of its kind with respect to torture.

We cannot move forward in reforming the law effectively unless we are willing to account for what we did wrong in the past. The next administration or the next Congress should at a minimum appoint an independent, bipartisan, blue-ribbon commission to investigate and assess responsibility for the United States' adoption of coercive interrogation policies. If it is to be effective, it must have subpoena power, sufficient funding, security clearances, access to all the relevant evidence, and, most importantly, a charge to assess responsibility, not just to look forward.[9] We may know many of the facts already, but absent a reckoning for those responsible for torture and cruel, inhumane, and degrading treatment—our own federal government—the healing cannot begin.

—December 17, 2008

Notes

[1]Mark Danner, Torture and Truth: America, Abu Ghraib, and the War on Terror (New York Review Books, 2004) ; Jane Mayer, The Dark Side: The Inside Story of How the War on Terror Turned into a War on American Ideals (Doubleday, 2008) ; Ron Suskind, The One-Percent Doctrine: Deep Inside America's Pursuit of Its Enemies Since 9/11 (Simon and Schuster, 2006).

[2]Michael Ratner and the Center for Constitutional Rights, The Trial of Donald Rumsfeld ; Jameel Jaffer and Amrit Singh, Administration of Torture ; The Torture Papers: The Road to Abu Ghraib, edited by Karen J. Greenberg and Joshua L. Dratel (Cambridge University Press, 2005).

[3]Viking, 2005; reviewed in these pages by Brian Urquhart, May 11, 2006.

[4]For an argument by a seasoned military interrogator that rapport-building is far more effective than torture and cruelty, see Matthew Alexander with John R . Bruning, How to Break a Terrorist: The US Interrogators Who Used Brains, Not Brutality, to Take Down the Deadliest Man in Iraq (Free Press, 2008). Alexander, a pseudonym, led an interrogation team in Iraq that located Abu Musab al-Zarqawi, the leader of al-Qaeda in Iraq. For a more detached historical account drawing the same conclusion, and finding that there is no evidence that torture "works," see Darius Rejali, Torture and Democracy (Princeton University Press, 2007).

[5]See "Remarks Prepared for Delivery by Attorney General Michael Mukasey at the 2008 Annual Meeting of the Federalist Society," November 20, 2008, at www.usdoj.gov/ag/speeches/2008/ag-speech-081120.html; Jack Goldsmith, "No New Torture Probes," The Washington Post, November 26, 2008.

[6]See my review of Goldsmith's book The Terror Presidency: Law and Judgment Inside the Bush Administration in these pages, December 6, 2007.

[7]I am a member of the Board of the Center for Constitutional Rights, although I did not take part in the efforts to have criminal proceedings initiated against Rumsfeld.

[8]Mayer, The Dark Side, p. 143.

[9]The International Center for Transitional Justice, which focuses on the question of how new governments can pursue accountability for the crimes of former regimes—a problem more common in the developing world, but one that the United States itself must now confront—has written a very useful brief on the benefits of such a commission, and on how it should be constituted: Policy Brief: US Inquiry into Human Rights Abuses in the "War on Terror" (November 2008).

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The Newsweekly’s Last Stand - The Atlantic (July/August 2009)

This is the front page of :en:The Economist, o...Image via Wikipedia

Newsweek’s recent decision to get out of the news-digesting business and reposition itself as a high-end magazine selling in-depth commentary and reportage follows Time magazine’s emergency retrenchment along similar lines. It accelerates a process by which the 76-year-old weekly will purposely reduce its circulation from 2.7 million to a bit more than half of that. (Its circulation was nearly 3.5 million in 1988.) Likewise, Time’s circulation, which 20 years ago was close to 5 million, is now at 3.4 million. Both newsweeklies are seeking to avoid the fate of U.S. News & World Report, which after years (decades?) of semi-relevance gave up on the idea of weekly publication entirely.

These tactical retreats by Newsweek and Time are brave stabs at relevance in a changing media environment. They’re also a decade late.

In the digital age, with its overabundance of information, the modern newsweekly is in a particularly poignant position. Designed nearly a century ago to be all things to all people, it Chaplin-esquely tries to straddle thousands of rapidly fragmenting micro-niches, a mainframe in an iTouch world. The audience it was created to serve—middlebrow; curious, but not too curious; engaged, but only to a point—no longer exists. Newsweeklies were intended to be counterprogramming to newspapers, back when we were drowning in newsprint and needed a digest to redact that vast inflow of dead-tree objectivity. Now, in response to accelerating news cycles, the newspapers have effectively become newsweekly-style digests themselves, resorting to muddy “news analysis” now that the actual news has hit us on multiple platforms before we even open our front door in the morning.

Given that even these daily digests are faltering, how is it that a notionally similar weekly news digest—The Economist—is not only surviving, but thriving? Virtually alone among magazines, The Economist saw its advertising revenues increase last year by double digits—a remarkable 25 percent, according to the Publisher’s Information Bureau. Newsweek’s and Time’s dropped 27 percent and 14 percent, respectively. (The Economist’s revenues declined in the first quarter of this year, but so did almost every magazine’s.) Indeed, The Economist has been growing consistently and powerfully for years, tracking in near mirror-image reverse the decline of its U.S. rivals. Despite being positioned as a niche product, its U.S. circulation is nearing 800,000, and it will inevitably overtake Newsweek on that front soon enough.

Unlike its rivals, The Economist has been unaffected by the explosion of digital media; if anything, the digital revolution has cemented its relevance. The Economist has become an arbiter of right-thinking opinion (free-market right-center, if you want to be technical about it; with a dose of left-center social progressivism) at a time when arbiters in general are in ill favor. It is a general-interest magazine for an ever-increasing audience, the self-styled global elite, at a time when general-interest anything is having a hard time interesting anybody. And it sells more than 75,000 copies a week on U.S. newsstands for $6.99 (!) at a time when we’re told information wants to be free and newsstands are disappearing.

All of this suggests that although digital media is clearly supplanting everything analog, digital will not necessarily destroy analog. A better word might be displace. And The Economist’s success holds a number of lessons for dead-tree revanchists on how to manage this displacement.

The easy lesson might be that quality wins out. The Economist is truly a remarkable invention—a weekly newspaper, as it calls itself, that canvasses the globe with an assurance that no one else can match. Where else, really, can you actually keep up with Africa? But even as The Economist signals its gravitas with every strenuously reader-unfriendly page, it has never been quite as brilliant as its more devoted fans would have the rest of us believe. (Though, one must add, nor is it as shallow as its detractors would tell you it is.)

At its worst, the writing can be shoddy, thin research supporting smug hypotheses. The “leaders,” or main articles, tend to “urge” politicians to solve complex problems, as if the key to, say, reconstituting the global banking system were but a simple act of cogitation away. A typical leader, from January, on the ongoing Gaza violence was an erudite, deeply historical write-around on Arab-Israeli violence that ended up arriving at the same conclusion everyone else arrived at long ago: Israel must give up land for peace. The science-and-technology pages tend toward Gladwell-lite popularizations of academic papers from British universities. A February report on new scientific analyses of crowd behavior seemed to promise a fresh look at how police might deal with potentially rowdy mobs, but it quickly degenerated into an unsatisfying gloss on a British professor’s explanation of why some crowds become violent and some do not, with some syntax-obliterating hemming and hawing for good measure. (“And it is that which may help violence to be controlled.”)

Pieces like these tend to support the Economist-haters, who believe the magazine is simply conventional-wisdom-spewing crack for Anglophiles. But then you come across a brilliant exploration of the current drug-fueled violence in Mexico, offered in support of The Economist’s long-held position in favor of legalization, and you suddenly feel like you have a handle on the world that you didn’t have before.

The Economist prides itself on cleverly distilling the world into a reasonably compact survey. Another word for this is blogging, or at least what blogging might be after it matures—meaning, after it transcends its current status as a free-fire zone and settles into a more comprehensive system of gathering and presenting information. As a result, although its self-marketing subtly sells a kind of sleek, mid-last-century Concorde-flying sangfroid, The Economist has reached its current level of influence and importance because it is, in every sense of the word, a true global digest for an age when the amount of undigested, undigestible information online continues to metastasize. And that’s a very good place to be in 2009.

True, The Economist virtually never gets scoops, and the information it does provide is available elsewhere … if you care to spend 20 hours Googling. But now that information is infinitely replicable and pervasive, original reporting will never again receive its due. The real value of The Economist lies in its smart analysis of everything it deems worth knowing—and smart packaging, which may be the last truly unique attribute in the digital age.

For a magazine that effectively blogged avant la lettre, The Economist has never had much digital savvy. It offered a complex mix of free and paid content (rarely a winning strategy) until two years ago and was so unprepared for the Internet that it couldn’t even secure theeconomist.com as its Web domain. (It later tried, unsuccessfully, to claim the URL.) Today, access to the site is free of charge, excepting deep archival material, but while editors have made some desultory efforts at adding social-networking features, most of the magazine’s readers seem to have no idea the site exists. While other publications whore themselves to Google, The Huffington Post, and the Drudge Report, almost no one links to The Economist. It sits primly apart from the orgy of link love elsewhere on the Web.

This turns out to have been a lucky accident. Unlike practically all other media “brands,” The Economist remains primarily a print product, and it is valued accordingly. In other words, readers continue to believe its stories have some value. As a result, The Economist has become a living test case of the path not taken by Time and Newsweek, whose Web strategies have succeeded in grabbing eyeballs (Time has 4.7 million unique users a month, and Newsweek has 2 million, compared with The Economist’s 700,000, according to one measure) while dooming their print products to near irrelevance.

It’s no surprise, then, that the redesigned Time seems to bear an ever-greater resemblance to The Economist (its editor is on record as being a fan; and every other editor of a vaguely upscale magazine nurses a hard case of Economist envy). The revamped Newsweek, not yet unsheathed at press time, no doubt will as well.

As it happens, the new-look Time is quite a good read—my earlier prejudice against it, I’m sure, being a learned response similar to that of millions of others who came to see it as doctor’s-waiting-room fodder. Perusing a recent issue, I found a sharp essay on the changing ethical landscape of “Great Recession” America, and a terrific piece of reportage about how Detroiters are responding to the accelerating collapse of their city and, more generally, how cities should respond when significant chunks of their metropolitan area become unsalvageable.

But it takes time and millions of dollars, and possibly risible branding campaigns, to turn quintessentially middlebrow secondary reads into upper-middlebrow must-reads. And even as Time and Newsweek attempt to copy The Economist’s success, they seem to be misunderstanding what it is, exactly, that they should be copying. By repositioning themselves as repositories of commentary and long-form reporting—much like this magazine, it’s worth noting, which has never delivered impressive profit margins—the American newsweeklies are going away from precisely the thing that has propelled The Economist’s rise: its status as a humble digest, with a consistent authorial voice, that covers absolutely everything that you need to be informed about. (Tellingly, the very lo-fi digest The Week, which has copped The Economist’s attitude without any real reporting or analysis at all, is thriving as well.)

The secret to The Economist’s success is not its brilliance, or its hauteur, or its typeface. The writing in Time and Newsweek may be every bit as smart, as assured, as the writing in The Economist. But neither one feels like the only magazine you need to read. You may like the new Time and Newsweek. But you must—or at least, brilliant marketing has convinced you that you must—subscribe to The Economist.

Perhaps Time and Newsweek simply can’t mimic The Economist in function as well as form. The rapid marketplace shifts that are forcing the newsweeklies to retrench may have bled them of the resources necessary to imitate their British rival’s globe-saturating coverage—say, the reports on trade policy in Botswana; the 30-page specials on fusion energy in Indonesia; the correspondents who scamper (or give the impression that they’re scampering) across backwaters and remote deserts, spraying assured advice along the way like so much confetti.

But even if the newsweeklies had millions of dollars to throw at covering the world, their efforts probably wouldn’t be enough. Repositioning your brand today is so much harder than it was in the old days, especially when you’re destined to be seen as a copycat product. In the digital age, razor-sharp clarity and definition are the keys to success. Knowing what and who you are, and conveying that idea to an audience, is the only way to break through to readers ADD’ed out on an infinitude of choices. General-interest is out; niche is in. The irony, as restaurateurs and club-owners and sneaker companies and Facebook and Martha Stewart know—and as The Economist demonstrates, week in and week out—is that niche is sometimes the smartest way to take over the world.

Michael Hirschorn is an Atlantic contributing editor.

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The Rating Game - The Atlantic (July/August 2009)

Image representing Yelp as depicted in CrunchBaseImage via CrunchBase

Rich Barton, a superstar of the Internet era, settles across from me in a coffee shop in Centreville, Virginia, looking like a 1950s sitcom dad—glasses, preppy haircut, V-neck sweater. He built Expedia in the 1990s, co-founded the real-estate site Zillow in 2005, and most recently launched Glassdoor.com, which lets employees grade their workplaces for the public to see. When I wonder what Barton might get into next, he leans forward to tell me his investment mantra: “If it can be rated, it will be rated,” he says.

Sounds so absurdly evident, yet it’s so big. Customers rate hotels and restaurants on Web sites like TripAdvisor and Yelp. College students dive into RateMyProfessors.com before signing up for courses. Readers rate books on Amazon.com. In 2007, the Pew Internet & American Life Project found that about one-third of all American Internet users rated something online.

But rating is about to spread like a pandemic. Everything—everyone—will get rated by Web users. You. Me. The dentist. All the hairstylists in town. The sermons in every place of worship. Youth soccer coaches. Lunch meats. Wine. The fact is, on tomorrow’s Internet, everyone will know if you’re a dog.

Web companies will drive a lot of the activity, using it to make money. Zillow just built a way to rate mortgage brokers alongside its information about housing prices, hoping to draw more house shoppers, who are targets for ads from Home Depot and Snapper lawn mowers. In other cases, online ratings will be less about business and will arise out of need or passion. Tom Seery says he started RealSelf.com to rate plastic surgeries, after his wife found it easier to get information about hotel towels than about a $2,000 laser skin treatment.

The proliferation in ratings is already changing societal dynamics. Look at its impact on the relationship between doctors and patients. According to Pew, 47 percent of Internet users now search online for information about doctors. Ratings, though still just a trickle, are increasingly part of that information. Now, if a medical practice routinely leaves patients in the waiting room for two hours—or leaves a spare scalpel in someone’s abdomen—the whole world will know. The power shift ticks off doctors so much, about 2,000 have turned to a company called Medical Justice, which offers advice about using legal and bullying tactics to stop doctor ratings. (Predictably, lawyers have sued—so far unsuccessfully—to shut down Avvo, a lawyer-rating site.)

Today’s ratings are only the raw material for what’s to come. Rearden Commerce’s Web-based personal assistant already helps employees in corporations like ConAgra make travel plans, by quizzing them about their age, income, job, family situation, lifestyle, and preferences like favorite types of restaurants. (JPMorgan Chase will roll out a Rearden-based travel adviser to its credit-card customers later this year.) The next step, says Rearden CEO Patrick Grady, is to pull in ratings from all over the Web and mash them up with anonymous information from Rearden users. Then, if a beef-loving cat-litter salesman is traveling to Dallas, the system can recommend a top-rated steak house where other cat-litter reps have had luck taking pet-shop owners to close deals.

“You’ll see more passive ratings turned into active suggestions by software that runs behind these sites,” Rich Barton says. “It’s a hard problem to get right, but it will be super-compelling.”

But the ratings game still faces, well, a few challenges. I talked to Dartmouth about RateMyProfessors, and was told that the site’s ratings often don’t match Dartmouth’s more rigorous survey results, in part because contributors to RateMyProfessors score teachers on some nontraditional criteria—like “hotness” and “easiness.” Yelp has been accused of not being transparent about how it filters ratings and reviews; anonymous bad ratings might come from the rated business’s competitors.

In theory, though, the more technology can help with decisions, the better life will be. Guided by ratings and personalized suggestions, I’ll more likely end up doing things I enjoy and using professionals who do their jobs well. On the other end, I won’t waste so much time or money trying to find the right kickboxing class or financial adviser. I can then devote my brain cells to higher-level problems the Web can’t yet solve, like how to get my teenagers to clean their rooms.

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Indonesia Weapons Smuggled to Philippines - Vivanews

Provinces and regions of the Philippines.Image via Wikipedia

VIVAnews - Philippines’ security officers held cargo boat ‘Capt Ufuk’ carrying 50 Pindad-made SS1-V1 weapons in Bataan on Thursday, August 20. Besides the weapons, there were also several military equipments found on the boat.

Spokesperson of Foreign Affairs Department, Teuku Faizasyah, said there was indeed a boat with a Panama flag on raided by the Philippino Navy. He also said they were investigating on whether or not the chests discovered on the boat were coming from Indonesia.

“Later we would ask the government of Philippines if there are any Pindad-made weapons being marketed. For your information, weapon sales in Philippines are legal,” Faisazyah said at the Foreign Affairs Department office in Pejambon, Jakarta on Friday, August 28.

The Department, he added, has received a clarification. “They said the weapons were being transported to Mali. Because there has been such confirmation, it is the related party (Pindad) who is now competent to explain,” Faizasyah said.

According to him, Philippines and Pindad have agreed to do weapon transactions. Does that mean the weapons found in Philippines are legal? “We haven’t received any explanation from Philippines,” Faizasyah answered.

Not only finding Pindad weapons and military equipments, Philippines’ officers also discovered 10 empty wooden chests. The contents of the chests were allegedly taken out before the raid.

“We are focusing on investigating the contents. They are suspected to be high explosive weapons which are feared to have been handed over to terrorists or any other criminals,” Bataan Head of Police, Insp. Manuel Gaerland as quoted by Manila Bulletin.

Meanwhile, customs intelligence, Dino Tuason suspected the weapons would be used by an international weapon seller syndicate to supply guns and ammunition to terrorists and criminals in Asia and Africa.

There is also another speculation. “The weapons may be used in the attack during the coming elections in Philippines,” Tuason said.

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Restive Balochistan - Dawn

The four major ethnic groups of Pakistan in 1980.Image via Wikipedia

Three years after security forces killed the Baloch leader Nawab Akbar Khan Bugti, Balochistan remains far from normal. Baloch nationalists observed a ‘black day’ yesterday as life ground to a halt across the province.

Violence claimed at least two lives; arson and bombings aimed at vital government installations were also reported. These are not just symptoms of the hurt the Baloch feel at the state’s apathy towards their grievances. They also indicate that the current situation can develop into a bigger problem if it is not tackled by Islamabad with foresight and wisdom. Unfortunately, the Balochistan government, too, has been looking the other way instead of assuming a more proactive role in bridging the political divide in the province which saw the nationalists boycott the 2008 elections.

Baloch nationalists are very angry at the disappearances of their cadres and the harassment of their workers and some of their leaders in exile have also called for independence. But the family of the slain sardar has still not given up its quest for justice.

On the family’s plea, a court in Balochistan has ordered the police to register a murder case seeking justice for the killing of Mr Bugti. Gen Musharraf (retd) and his top provincial executives have been named as accused. This is an indication that if the law is allowed to take its course and justice is seen to be done, there is hope of Baloch nationalists coming back to the national mainstream.

It is time the government actively engaged the nationalists in a meaningful and comprehensive dialogue aimed at normalising the restive situation. As a confidence-building measure, security forces must be made more accountable for their actions. They must be made to shun their gung-ho, highhanded approach, which is greatly responsible for the sorry situation in Balochistan today.

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China urges Myanmar to safeguard border stability - Xinhua

Local traders in Lijiang.Image via Wikipedia

BEIJING, Aug. 28 (Xinhua) -- China hoped Myanmar could properly solve its domestic issue to safeguard the regional stability of its bordering area with China, said Chinese Foreign Ministry spokesperson Jiang Yu Friday.

Jiang made the remarks when asked to comment on media reports that the confrontation between Myanmar government forces and an ethnic army in the Kokang area of Shan state in northeastern Myanmar has triggered influx of Myanmar border inhabitants into the Chinese territory.

She said China was paying close attention to the development of this issue and had expressed its concern to Myanmar through the diplomatic channel.

"We also urge Myanmar to protect the safety and legal rights of Chinese citizens in Myanmar," Jiang said.

A large number of panic-stricken Myanmar border inhabitants have fled to neighboring Yunnan province in southwest China, according to the foreign affairs office of the Yunnan provincial government.

Yunnan is helping them settle down in seven settlements with supply of life necessities, medical care and disease control measures as humanitarian assistance.

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Singapore Airlines Earns First Place Among Singapore Companies in the Asia 200 Survey - WSJ.com

It's been one of the toughest years yet for Singapore Airlines. The company reported a net loss of 307.1 million Singapore dollars (US$212.5 million) for the quarter ended June 30, compared with a net profit of S$358.6 million a year earlier -- the airline's first quarterly loss in six years. Singapore Airlines carried 19% fewer passengers in June 2009 compared with the same month last year; it also carried 19% less freight. Flight schedules have been cut and some routes have been axed. The hours and pay of staff and management have been trimmed.

"This particular recession is a more severe test than any other downturn I can recall in the last 25 years," says Singapore Airlines Chief Executive Chew Choon Seng.

All that bad news, however, hasn't fazed the public one bit. Singapore Airlines, the world's largest airline by market capitalization, once again landed in first place as the most-admired Singapore company in the Asia 200 survey of subscribers of The Wall Street Journal Asia and other businesspeople.

The airline has been voted Singapore's top company every year since 1993, when the Asia 200 survey began. It's the only company in Asia to win its country's first-place ranking every single year. Temasek Holdings, the Singapore government's investment fund, owns 54% of Singapore Airlines

Singapore Telecommunications Ltd., Southeast Asia's largest telephone company by market capitalization, was ranked second in the survey, and United Overseas Bank placed third. This year, Singapore Airlines ranked first in most subcategories, including reputation, quality of service and products, innovation in responding to customer needs and long-term management vision. It ranked fourth, however, in the category of financial reputation, reflecting concerns about the tough environment faced by airlines world-wide.

Singapore Airlines dominates the survey each year because the company consistently delivers on its brand promise: the airline boasts top-tier service, the latest in-flight entertainment and amenities, and one of the youngest fleets in the sky. The company, meanwhile, has continued to invest in new planes and staff training throughout the global economic crisis. Singapore Airlines has 10 more A380s, 11 more A330s, 20 Boeing 787s and 20 Airbus A350s on order today. There have been no cuts in core areas of service and fleet renewal, despite continued pressure on the bottom line, says Mr. Chew.

"That's kept us in good stead," he says. "It shows we are committed to staying true to our core values, our market positioning and the identity of the company."

[Consumer Spending chart]

The average age of Singapore's fleet right now is 6 years old, which puts it way ahead of the pack. The average fleet age of airlines world-wide is 14 or 15 years, according to Corrine Png, head of regional transportation research at J.P. Morgan. "This generates customer appeal," she says. "People are excited about traveling on the newest aircraft with the best technology."

Asian airlines are widely perceived to have among the best service in the world, and within Asia, Singapore Airlines sits at the apex. "Customer service is the cornerstone of our business strategy," says Mr. Chew. Any airline can buy the same aircraft with the latest gadgets, he says. It's the operating systems and the people that set SIA apart. The airline makes optimal use of its customer-relationship management software, so staff can tell what meals, drinks or extras its regular customers prefer. Staff members receive continuing training on both technical matters and customer-service skills. "We've managed, over the years, to inculcate that into our corporate DNA," Mr. Chew says. "We've honed it so it's not just one or two flights that you get good service on; it's all flights."

Employees buy into the service mantra when they join the airline. Last year, a flight attendant named Caroline Chou noticed an Indian passenger, who suffered from sclerosis, had fallen ill on a flight from Los Angeles to Coimbatore. The plane landed for a stopover in Taipei, where Ms. Chou was due a few days off. She escorted the man and his family to a hospital, and stepped in to translate for the Mandarin-speaking doctors. Although she wasn't required to, Ms. Chou visited the family on her days off. When the family was informed the man could continue his journey only on a flight equipped with specialized medical equipment, Ms. Chou helped source the equipment and get authorization from various authorities to take the gear on board.

[Singapore top 10 companies]

Providing the latest technology and attentive staff has helped make SIA the airline of choice for many business travelers. Singapore Airlines earns 60% of its revenue from business and first class; other Asian airlines earn, on average, 20% of their revenue from premium seats, according to Ms. Png.

To be sure, there is continued turbulence ahead. Mr. Chew, who has worked for the airline since 1972 and served as the CEO for six years, reckons this is the worst environment in decades, and doesn't anticipate a quick economic recovery. Past periods of economic turmoil, like the 1998 Asian economic crisis, the 2003 outbreak of SARS and even the dotcom crash, were largely regional in nature, so falling demand from one part of the world was largely offset by other regions, says Mr. Chew. This time the impact is global. The rest of the year will remain tough, and the prospect of a recovery in 2010 depends entirely on how governments around the world manage their economies and how consumers respond, says Mr. Chew.

There are some signs that while things have yet to get better, it's at least stopped getting worse. The decline in SIA's forward bookings has leveled off, which is good news. But the situation has yet to improve. The airline warned that it could post its first-ever annual loss if conditions didn't improve.

The company has moved to stem costs. Capacity has been cut by 11% for the current fiscal year by trimming routes and grounding planes. In June, the airline announced management would take a 10% pay cut, and the CEO and board pay would be cut by 20%. Pilots agreed to take one day unpaid leave a month and a salary cut equivalent to 65% of one day's salary per month. Agreements negotiated with staff unions, meanwhile, include a large variable component that links pay to the company's performance. When the company announced its quarterly loss last month, it also said that pay for 12,000 staff based in Singapore would be cut by 10% for at least three months starting Aug. 1

"Right now, our challenge is to manage our costs so we can keep our noses above water, and put us in a position to ride the upturn when things pick up," says Mr. Chew. "We also need to manage resources so we can uphold the values and the business strategy of the company."

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Banks on Sick List Top 400 - WSJ.com

The banking industry continues to deteriorate, with federal regulators adding 111 lenders to their list of endangered banks in the latest quarter, even as the economy shows signs of stabilizing.

Data released Thursday painted a gloomy picture of the state of banking.

[Banks on Sick List Top 400]

The government fund that protects consumer deposits fell to its lowest level since 1993. The continuing woes, which come despite trillions of dollars in government rescue financing and a rebounding stock market, raised questions about how quickly the economy can revive.

The Federal Deposit Insurance Corp. said it had 416 banks on its "problem list" at the end of June, equivalent to about 5% of the nation's banks, up from 305 at the end of March and 117 at the end of June 2008. Problem banks had a combined $299.8 billion of assets at the end of June, compared with $78.3 billion a year ago.

Landing on the FDIC's problem list means a bank is at a high risk of insolvency. State and federal regulators have already shut 81 banks this year.

"It's a continuation of the deterioration across the industry," said Gerard Cassidy, a bank analyst with RBC Capital Markets. "We think there are hundreds of failures to come."

The FDIC's insurance fund, which guards $6.2 trillion in U.S. deposits, fell to $10.4 billion at the quarter's end, the lowest since mid-1993.

This is after the agency had provisioned $32 billion to account in anticipated bank failures during the coming 12 months. The agency is backed by the full faith and credit of the U.S. government, and depositors haven't lost a penny of insured deposits since it was created in 1933. Its fund stood at more than $50 billion last year. Bankers and analysts say the FDIC's latest figures boost the odds of the agency having to replenish its fund by imposing a new fee on banks. The fund is typically supplied that way.

The FDIC data provided at least one ray of hope. The percentage of delinquent loans -- that is, borrowers who are 30 to 89 days past due -- declined modestly in the second quarter. That suggests loan defaults might be nearing their peak.

The swelling of the problem list could be a harbinger of further industry consolidation, analysts said. Large, healthy banks, several of which have paid back their government-rescue funds, are "chomping at the bit" to buy failed lenders from the FDIC, and Thursday's report is likely to further whet their appetites, said Ed Najarian, head of bank research at International Strategy & Investment Group Inc. "They're looking at it as more opportunity to acquire banks."

The report also spotlighted a potential risk to the broader economy. Banks are socking away cash and limiting risky business, leaving them less capital to lend and thus constricting credit just as the economy appears poised to revive.

Banks are also facing extra scrutiny from state and federal officials, another reason they are cautious. For example, the FDIC said loans to small firms declined 1.9% in the past year.

"That slows job creation and affects corporate spending" and could prove a hindrance to an economic recovery, said Lou Crandall, chief economist at research firm Wrightson ICAP.

At a news conference Thursday, FDIC Chairman Sheila Bair acknowledged "credit problems will outlast the recession by at least a couple of quarters."

Ms. Bair said FDIC officials were in discussions with the Treasury Department about ways to direct more government capital to smaller, community banks. The Treasury Department's Troubled Asset Relief Program still has $13.6 billion that can be invested in these banks. The Obama administration, in its latest budget forecasts, has indicated it doesn't intend to ask for more funds from Congress.

The banking industry lost $3.7 billion in the second quarter, mostly because banks wrote off $48.9 billion in soured loans and put away $66.9 billion to cover potential future losses. But loans are souring faster than banks are stockpiling cash. The FDIC said the industry's ratio of reserves to bad loans was just 63.5%, the lowest level since 1991, amid the crisis in the savings-and-loan sector.

The FDIC data underscore how the pain continues to spread beyond real-estate loans. In the second quarter, defaults on commercial and industrial loans more than doubled from a year earlier.

[Now on the FDIC's At-Risk List Are 416 Banks]

Credit-card losses climbed to a record 9.95%. Banks are sitting on $332 billion of loans more than 90 days past due and therefore at high risk of default. That is up by $41 billion at the end of March, and the highest level since the FDIC started collecting data 26 years ago.

Banks are holding more than $34 billion in repossessed real estate, according to a Wall Street Journal analysis of the FDIC data.

Even as banks modify billions of dollars of mortgages, their pools of foreclosed properties keep growing, up 12% from the prior three months and 72% from a year before. They now stand at the highest level since 1993.

With the U.S. jobless rate nearing 10%, even borrowers once deemed low-risk are falling behind on home payments, said Sanjiv Das, head of Citigroup Inc.'s mortgage business. While mortgage defaults had been concentrated largely among subprime borrowers, "now there's a second phenomenon, with prime rising," Mr. Das said.

He said the rise in mortgage delinquencies among these less-risky borrowers is infecting a "substantially larger" pool of loans and is likely to cause more foreclosures. Mr. Das said he worries that the trend could torpedo recent gains in housing prices.

Blunting bank losses are new fees and higher interest rates charged to consumers. In the second quarter, banks pocketed nearly $22 billion from service charges on deposit accounts, according to the Journal analysis, more than double the first quarter and up 5% from last year.

[FDIC] Getty Images

FDIC Chairman Sheila Bair briefs the media on the bank-and-thrift industry earnings for the second quarter of 2009 on Aug. 27.

FDIC officials face a tough decision in the next few months about the dwindling insurance fund.

The FDIC could hit the banking industry with a special fee, the second this year, bringing in a likely $5.6 billion. Or it could tap a pre-existing $100 billion credit line with the Treasury and pay the money back later. The FDIC borrowed from the Treasury during the savings and loan crisis, the last time the fund went into the red.

Ms. Bair said Thursday that she had no plans "at this point" to seek the Treasury's assistance, but added: "Never say 'never.'"

There are pitfalls either way. Executives at big banks say a second fee would amount to healthy institutions being forced to subsidize their weaker rivals. But borrowing money from the Treasury could send the unwanted signal that the FDIC needs its own bailout, fanning fears about the agency's solvency and worrying consumers -- precisely the opposite of what the FDIC is designed to do.

—Maurice Tamman contributed to this article.

Write to Damian Paletta at damian.paletta@wsj.com and David Enrich at david.enrich@wsj.com

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Pentagon Official Questions U.S. Message to Muslims - NYTimes.com

Reputation of AmericaImage by denmar via Flickr

WASHINGTON — The chairman of the Joint Chiefs of Staff has written a searing critique of government efforts at “strategic communication” with the Muslim world, saying that no amount of public relations will establish credibility if American behavior overseas is perceived as arrogant, uncaring or insulting.

The critique by the chairman, Adm. Mike Mullen, comes as the United States is widely believed to be losing ground in the war of ideas against extremist Islamist ideology. The issue is particularly relevant as the Obama administration orders fresh efforts to counter militant propaganda, part of its broader strategy to defeat the Taliban and Al Qaeda in Afghanistan and Pakistan.

“To put it simply, we need to worry a lot less about how to communicate our actions and much more about what our actions communicate,” Admiral Mullen wrote in the critique, an essay to be published Friday by Joint Force Quarterly, an official military journal.

“I would argue that most strategic communication problems are not communication problems at all,” he wrote. “They are policy and execution problems. Each time we fail to live up to our values or don’t follow up on a promise, we look more and more like the arrogant Americans the enemy claims we are.”

While President Obama has sought to differentiate himself from his predecessor, George W. Bush, in the eyes of the Muslim world — including through a widely praised speech in Egypt on June 4 — the perception of America as an arrogant oppressor has not changed noticeably, particularly in Iraq and Afghanistan, where United States forces remain engaged in war, and in Pakistan, where American-launched missiles aimed at militants from the Taliban and Al Qaeda have killed civilians.

Last week, during a visit to Pakistan by Richard C. Holbrooke, Mr. Obama’s special envoy, Pakistanis told his entourage that America was widely despised in their country because, they said, it was obsessed with finding and killing Osama bin Laden to avenge the Sept. 11, 2001, attacks.

Admiral Mullen expressed concern over a trend to create entirely new government and military organizations to manage a broad public relations effort to counter anti-Americanism, which he said had allowed strategic communication to become a series of bureaucracies rather than a way to combat extremist ideology.

He also challenged a popular perception that Al Qaeda operates from primitive hide-outs and still wins the propaganda war against the United States. “The problem isn’t that we are bad at communicating or being outdone by men in caves,” Admiral Mullen wrote. “Most of them aren’t even in caves. The Taliban and Al Qaeda live largely among the people. They intimidate and control and communicate from within, not from the sidelines.”

American messages to counter extremist information campaigns “lack credibility, because we haven’t invested enough in building trust and relationships, and we haven’t always delivered on promises,” he wrote.

As a guide, Admiral Mullen cited American efforts at rebuilding Europe after World War II and then containing communism as examples of successes that did not depend on opinion polls or strategic communication plans. He cited more recent military relief missions after natural disasters as continuing that style of successful American efforts overseas.

“That’s the essence of good communication: having the right intent up front and letting our actions speak for themselves,” Admiral Mullen wrote. “We shouldn’t care if people don’t like us. That isn’t the goal. The goal is credibility. And we earn that over time.”

Members of Congress also have expressed concern about the government’s programs for strategic communication, public diplomacy and public affairs. Both the Senate and House Armed Services Committees have raised questions about the Pentagon’s programs for strategic communication — and about how money is spent on them.

The Senate Armed Services Committee issued a budget report last month noting that while “strategic communications and public diplomacy programs are important activities,” it was unclear whether these efforts were integrated within the Pentagon or across other departments and agencies. “Nor is the committee able to oversee adequately the funding for the multitude of programs,” the Senate report stated.

Admiral Mullen did not single out specific government communications programs for criticism, but wrote that “there has been a certain arrogance to our ‘strat comm’ efforts.” He wrote that “good communications runs both ways.”

“It’s not about telling our story,” he stated. “We must also be better listeners.”

The Muslim community “is a subtle world we don’t fully — and don’t always attempt to — understand,” he wrote. “Only through a shared appreciation of the people’s culture, needs and hopes for the future can we hope ourselves to supplant the extremist narrative.”

He acknowledged that the term strategic communication was “probably here to stay,” but argued that it should be limited to describing “the process by which we integrate and coordinate” government communications programs.

Coinciding with the publication of his essay, Admiral Mullen released a YouTube video inviting questions from members of the armed services and the public on a range of national security and military personnel issues for an online discussion.

“The chairman intends to use social media to expand the two-way conversation with service members and the public,” said a statement announcing the interactive video question-and-answer session.

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