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After a document obtained by Al Jazeera revealed the Palestinian Authority (PA) has stalled the launch of a formal investigation into alleged Israeli war crimes in Gaza, Palestinian legal and human rights experts remain dubious that the PA ever truly intended to join the International Criminal Court (ICC). In a confidential letter obtained exclusively by Al Jazeera's Investigative Unit, the ICC's top prosecutor, Fatou Bensouda, said she "did not receive a positive confirmation" from PA Foreign Minister Riad al-Malki that the request submitted for an international investigation had the Palestinian government's approval. Palestinian officials have, on numerous occasions, threatened to head to the ICC to hold Israel accountable for possible war crimes and crimes against humanity. But their efforts so far, have proved fruitless. In July, a French lawyer filed a complaint with the court on behalf of the Palestinian minister of justice, accusing Israel of carrying out war crimes in the Gaza Strip. This came after a 2009 call for an ICC investigation into Israel's three-week military offensive in Gaza that was later dropped when the prosecutor said Palestine was not a court member. In August, Malki met with ICC officials to discuss the implications of ratifying the Rome Statute, the treaty that established the criminal court. "Everything that has happened...is clear evidence of war crimes committed by Israel, amounting to crimes against humanity," he told reporters in The Hague, referring to the recent 51-day Israeli military offensive on Gaza, which left more than 2,100 Palestinians dead. Six Israeli civilians were killed, along with 66 Israeli soldiers.

Two years ago, Palestine became recognised as a non-member observer state at the UN General Assembly. This made it eligible to join the ICC; however, to date, Palestinian officials have not signed the Rome Statute, even though almost 80 percent of Palestinians support going to the court. Senior Fatah official Mohammad Shtayyeh didn't say when the Palestinians would apply to the ICC, but said it would probably happen in another few months. "The indictment against Israel at the ICC and all the accompanying documents are ready," Shtayyeh told Al Jazeera. One of the remaining hurdles, Shtayyeh said, is getting one remaining Palestinian faction - Islamic Jihad - to sign an accession document before the Palestinians can present it. Hamas signed onto the proposal at the behest of the PA in August. "We're not in a situation of setting a deadline or making an ultimatum," he said. "We're following developments in the region and the world, and therefore, we'll wait for answers from the international community. But I believe that by November-December, the picture should be clearer."

In response to Al Jazeera's claims, the Palestinian Justice Minister Salim al-Saqqa said that Palestinian President Mahmoud Abbas was serious about going to the ICC and was "awaiting national dialogue" to pursue it. "This issue is our number-one priority," he said. "It is still on the table awaiting a few legal and technical procedures. We have not missed our opportunity to head to the court." So far, the Palestinians have struggled to use the court to pursue their claims, with some attributing this to the PA's use of an ICC investigation as a political bargaining chip. "The PA can go to the ICC in one day," said Shawan Jabarin, the director of Ramallah-based human rights group al-Haq. "Abbas, who has been turned this into a political issue, is balking." Many factors are working against setting off a war crimes investigation at the ICC, not least the international community's apparent opposition to the move. "It is the PA's trump card because the Israelis and the Americans have said it is a red line," said Diana Buttu, a lawyer and former adviser to the Palestine Liberation Organisation (PLO).

Debkafile, an Israeli website close to the military intelligence, has reported that the Trump administration has decided to take a series of punitive measures against the Palestinian Authority (PA) after its successful campaign on Jerusalem in the UN General Assembly. In a report issued on 23 December, the Israeli website cited its sources in Washington as stating that President Trump had decided to sever contacts and relations with the PA and President Mahmoud Abbas. According to Debkafile, the Israeli-Palestinian peace plan under preparation in Washington will not be submitted to Ramallah but only to Israel and the relevant Arab governments. These steps were taken after the PA had been warned more than once, and told to drop its campaign against the Trump pronouncement on Jerusalem because of its negative impact on the region, according to the Israeli website. It added that the White House move was communicated to the PA through a third Arab party. The Israeli website further reported that the US will not publicly announce its freeze of aid to the PA. However, the administration will stop support and delay the resumption of economic projects backed by US institutions and re-examine them. President Trump also decided not to invite Palestinian officials to the White House, State Department and US Treasury, and not to receive Palestinians at the US National Security Council where they used to participate in meetings aimed at shaping US strategy in the Middle East. According to the Israeli website: “The US will halt its contributions to the UN Relief and Works Agency for Palestine (UNRWA), an estimated one billion dollars per annum” and will order Saudi Arabia, the UAE and Qatar to reduce the amount of aid provided to the Authority. While no official statements were made by the US administration or the PA, the Israeli website confirmed that US officials have informed Saeb Erekat, the PA’s chief negotiator, that there is nothing to discuss with him anymore.

Hamas officials on Wednesday rejected demands by Fateh leadership to hand over rule of the Gaza Strip and called for an “uprising” against Palestinian Authority security forces.

Fateh leader Azzam al-Ahmad had said on Sunday that Hamas “foiled” efforts towards a unity government, and that the group must hand over rule of the Gaza Strip as a condition for forming the new government. Hamas spokesman Sami Abu Zuhri said that the Fateh leader’s comments created tension and were “untrue,” blaming the failure to form a unity government on Fateh’s “factionalism.” He added that Fateh’s calls to reform the unity government were a media maneuver, reiterating his movement’s willingness to form the government based on national consensus. The unity government formed in June 2014 repeatedly failed to overcome divisive issues between Hamas and Fateh, and the PLO appointed a committee last month to lead negotiations for reforming the government. The consultations have yielded little consensus thus far and received criticism by non-Fateh factions, who convened earlier this month to condemn recent PA arrests as hindering the negotiation process.

More than 20 years on, however, Hamas and other factions continue to accuse the PA of acting on Israel’s behalf through security cooperation. On July 7, Hamas accused the PA of having detained more than 200 of its members in the West Bank, in a sweep that MP Khalil al-Haya charged was aimed solely at “assisting the occupier” against anti-Israeli militants. Hamas leader Abd al-Rahman Shadid said at the time that many of those detained were left with signs of torture, and that the arrest campaign was part of an organized project aiming to “eradicate the movement.”

Al Jazeera English has once again removed an article by Columbia University professor Joseph Massad hours after publishing it. The article, “The Dahlan Factor,” appeared for several hours on the Qatar-based broadcaster’s website this morning at this link, but was later removed without explanation (the full article is republished below). The article had been extremely popular, appearing in the fifth spot on the website’s “What’s Hot” section.

Massad’s article: The Dahlan factor The Israeli and US betting on the Dahlan horse will only increase the resolve of the Palestinians and their supporters

The recent resurrection of Mohammad Dahlanby several Arab governments, Israel and the US is a most important development for the future of the Palestinian cause, Palestinian Authority (PA)-Israel negotiations, and Hamas-ruled Gaza. Dahlan is viewed, by many Palestinians, as the most corrupt official in the history of the Palestinian national movement (and there are many contenders for that title). Dahlan, it would be recalled, was the PA man in charge of Gaza after the Oslo Accords were signed, where he commanded 20,000 Palestinian security personnel who were answerable to the CIA and to Israeli intelligence. His forces would torture Hamas members in PA dungeons throughout the 1990s. His corruption, at the time, was such that he allegedly diverted over 40 percent of taxes levied against the Palestinians to his personal account in what became known as the Karni Crossing Scandal in 1997. Dahlan, who has been accused repeatedly by both Hamas and Fatah of being an agent of US, Israeli, Egyptian, and Jordanian intelligence, would attempt to stage a US-organised coup against the democratically elected Hamas government in 2007 in Gaza, an attempt that backfired on him and ended with his eviction from the Strip (I had forewarned about the coup several months before it occurred).

Abbas pledged to join the ICC and lodge charges against Israel there. On Wednesday evening he took the first step, signing the request along with applications to join 20 other international conventions during a meeting broadcast live on PA television, despite US criticism. Speaking to Arutz Sheva, Shurat Hadin legal center's director Nitsana Darshan-Leitner said that if Abbas follows through on his threats, the PA's case would likely center around alleged war crimes committed by the IDF during the past summer's war with Gazan terrorists, as well as "settlement-building" - a euphemism for any Jewish communities built in Judea, Samaria, and large parts of Jerusalem. The veteran attorney and legal campaigner warns that if such a case is launched the prospects for Israel are bleak. "Israel will of course try to defend itself, but chances are they will lose. And if they lose and they're convicted for war crimes, it would be a game-changer. It would drop Israel to the bottom tier internationally," she said.

The ICC has faced serious criticism over the years for only focusing on "third-world" countries, and particularly the African continent, (since its founding in 1998 all eight cases handled by the ICC have been in African states,) and there is heavy pressure for the court to also try a "western" or allied country as well to dispel those allegations. "They need to take a different type of case, and they would gladly take upon themselves the Arab-Israeli conflict... it's a more interesting and sexier issue to be involved with, and there is tremendous pressure from countries all over the world for the court to get involved." Despite that pressure, until now the ICC has been unable to get involved due to a lack of jurisdiction.

But could the move be a blessing in disguise, providing Israel with an opportunity to decisively knock down the many allegations against it in the international arena - including both the legality of "settlements" and alleged war crimes - once and for all? "No, this is a biased court," Darshan-Leitner answers bluntly. "Of course Israel will bring international legal experts and explain why the territories (Judea-Samaria) are only disputed, not occupied, and how Jordan never had a right to them in the first place, for example - but Europe, and many other countries, have a different perspective," and it's from that political perspective that the ICC will analyse the case. "Once Israel is charged with war crimes it's the 'end of the game' - that's why Israel should do whatever it can not to be charged." If found guilty, "Israel would have to extradite to the court those individuals or officials, IDF commanders, etc, who will be individually charged for war crimes. Israel will obviously refuse to do so - Israel is not insane, so it's not going to extradite its own people to be blamed for war crimes - and then as a result Israel will be sanctioned... then there will be a real boycott against Israel from the court's member states.

The Israel Electric Corporation CEO Eli Glickman warned Israel's security chiefs in a letter sent Sunday that the company would have to limit electricity to territories controlled by the Palestinian Authority and the Jerusalem District Energy Company (JEDCO) – which buys electricity from Israel and sells it to various cities in the West Bank – because of a debt totalling NIS 1,700,843,315.

The letter noted that as of December 31, debt owed by the Palestinian Authority and the Jerusalem District Electricity Company amounted to more than NIS 1.7 billion, of which NIS 1,054,914,845 were from the JDECO, and NIS 645,928,470 from the PA.  

he Palestinian Authority moved to join the International Criminal Court in The Hague on Wednesday, accusing Israel of committing genocide against the Palestinians amid Israel’s military campaign to stem rocket fire from the Gaza Strip

PA President Mahmoud Abbas called a crisis meeting of the Palestinian leadership in the afternoon with the intention of signing paperwork to apply to join the ICC in The Hague and other international organizations. Abbas charged Israel with committing “genocide” in Gaza during its Operation Protective Edge — launched to stem Hamas rocket fire on civilians across Israel — which has so far killed 43 Palestinians.

“It’s genocide — the killing of entire families is genocide by Israel against our Palestinian people,” he told the meeting of Palestinian leadership at his Ramallah bureau. “What’s happening now is a war against the Palestinian people as a whole and not against the [terrorist] factions.” “Shall we recall Auschwitz?” he added.

After freezing the transfer of tax revenues to the Palestinian Authority, Israel is taking additional steps to punish the PA’s for its request to join the International Criminal Court at The Hague. A senior Israeli official said on Sunday Jerusalem would be contacting pro-Israel members of the U.S. Congress to ensure the enforcement of legislation stipulating that if the Palestinians initiate any action against Israel at the ICC, the State Department would have to stop American aid to the PA, which comes to some $400 million annually. The stop-gap funding bill was passed in Congress last month. Both houses of the new Congress to be seated later this month will be controlled by the Republican Party, with many key positions filled by senators and representatives who are pro-Israel and anti-Palestinian. The law regarding the Palestinians initiating action at the ICC is strongly worded and states that President Barack Obama cannot waive a decision to halt aid to the PA.

The U.S. administration is concerned about the ramifications of halting the financial assistance, which is liable to make it impossible for the PA to pay the salaries of tens of thousands of employees. Although Arab states have promised to provide the PA with a financial security net, the Americans believe that, as in the past, the Arab states won’t cough up the money they promised and won’t work to keep the PA afloat. Earlier Sunday, Foreign Ministry Director-General Nissim Ben Sheetrit said that Israel’s response to the Palestinian bid at the ICC would be much harsher and more comprehensive than freezing the PA’s tax revenues. Ben Sheetrit made the remarks at a conference held in Jerusalem for Israel’s envoys to Europe. “Israel is about to switch from defense to attack mode,” he said. Sheetrit said, however, that unlike in the past, Israel will not launch a wave of settlement construction in response to the Palestinian moves. He also added Israel had no interest in undermining security cooperation with the PA or to cause its collapse.

The security cabinet is expected to meet later in the week to decide on the new measures.   Prime Minister Benjamin Netanyahu told the weekly cabinet meeting on Sunday that “The Palestinian Authority has chosen to launch a confrontation with Israel,” adding that Israel would not sit idly by but would respond. “We won’t let them drag Israel Defense Forces soldiers and officers to The Hague,” said Netanyahu. “The ones who must give an accounting are the heads of the Palestinian Authority, who formed an alliance with the Hamas war criminals.”

Likud Central Committee chairman Danny Danon, who is challenging Binyamin Netanyahu for leadership of the party, on Saturday night called on Israel to respond to an expected UN recognition of the Palestinian Authority (PA) as the "state of Palestine" by declaring sovereignty in Judea and Samaria. "We must clarify in the clearest terms to the world that every unilateral recognition of a Palestinian state will bring Israeli sovereignty," declared Danon in a meeting with Likud activists in Judea's Gush Etzion region.

Erekat announced last Friday that the UN will likely vote on Monday on a unilateral PA resolution, which demands recognition, Israeli withdrawals from eastern Jerusalem, Judea and Samaria by 2017, and prior to that a 12-month deadline for wrapping up negotiations on a final settlement. "If on this coming Monday the UN recognizes a Palestinian state, the state of Israel must respond with unilateral steps (as well), including implementing sovereignty," declared Danon.

Two weeks ago the European Parliament voted to recognize "Palestine," following a string of European nations voting to recognize the PA as a state - the parliamentary vote came the same day Hamas was removed from the European Union's (EU) official terrorist organization list on an alleged "technicality."

of Press Relations » Daily Press Briefings » 2016 » October » Daily Press Briefing - October 6, 2016John Kirby SpokespersonDaily Press Briefing Washington, DC October 6, 2016

MR KIRBY: Well, again, I think – and I think Mark walked you through this – there were three principal topics that they discussed. One was Syria; one was Ukraine; and the other, of course, was DPRK and our work inside the UN to pursue additional sanctions on the regime. The discussion on Syria focused on two things principally. One was the situation in Aleppo and the Secretary’s obvious and deep concern about the continued siege there and also about the potential to continue multilateral efforts to discuss the way ahead. And that’s – and that’s basically it. We certainly, when we said we were suspending U.S.-Russia bilateral engagement on the cessation of hostilities and the work to that end in Syria, there was never any expectation that the two foreign ministers wouldn’t speak about Syria again. And certainly, if we’re going to continue multilateral efforts, which we fully intend to do, whether it’s with the ISSG or other partners or through the UN, there’s no way you can do that without including Russia in that discussion. QUESTION: So and just – so are you trying to set up a meeting, for example? I mean, you’re talking about bilateral discussions. Are you trying to set up a meeting with other countries including Russia on this? MR KIRBY: I don’t have anything on the schedule to speak to today, but I certainly wouldn’t rule out the fact that there will be attempts and efforts through multi – through a multilateral fora to meet again and to try to work through this. I certainly wouldn’t rule that out. QUESTION: And just one other one. Given the failure of the previous efforts and given the main thing that you guys argued was that the carrot or the leverage you had was Russia’s eagerness for intelligence-sharing cooperation, et cetera, the JIC, what makes you think they’re going to be any more likely to work to halt or reduce the violence in a multilateral context absent those incentives than they were when they had the incentives on the table? MR KIRBY: We don’t know. We don’t know. That’s a call for them to make if they’re interested or willing in participating in a multilateral discussion or not. But speaking for Secretary Kerry, I can tell you that he fully intends to use multilateral efforts available to him, whether it’s the ISSG or the UN or something separate and distinct. Tom Shannon was in Berlin at the invitation of the German Government just yesterday to – a smaller but still multilateral discussion about Syria. The Secretary has every intent to continue to use those vehicles as best he can. But we don’t know whether Russia will come to those sessions. We don’t know whether they will do so --

QUESTION: Yeah, okay. And is there anything that you are doing to try to stop Aleppo from falling to the government, the Russian-backed government offensive, or have you kind of written it off? MR KIRBY: Nobody is writing off Aleppo. I think everybody’s deeply troubled and concerned about what appears to be a very continued, concerted, and if – and increased effort by the regime to conduct a siege and to take Aleppo. But -- QUESTION: Yeah. Are you doing anything to stop it? MR KIRBY: Well, we obviously are continuing – another reason why, as I said, they – Foreign Minister Lavrov and the Secretary spoke yesterday was the Secretary was expressing our concerns about what’s going on in Aleppo. We’re not turning a blind eye to that. And we still want – the short answer to your question is we’re still interested in pursuing a cessation of hostilities that can endure nationwide, and certainly in Aleppo. It’s just that now we’re going to have to pursue that goal through a multilateral effort and not any longer solely through a bilateral effort with Russia.

U.S. Senators Lindsey Graham (R-South Carolina), Robert Menendez (D-New Jersey), Chuck Schumer (D-New York), and Mark Kirk (R-Illinois) today made this statement on the Palestinian Authority's (PA) decision to join the International Criminal Court (ICC). "The Palestinian Authority's (PA) decision to join the International Criminal Court (ICC) is deplorable, counterproductive, and will be met with a strong response by the United States Congress. "Israel, like the United States, is not a member of the ICC and therefore is not subject to its jurisdiction. Further, existing U.S. law makes clear that if the Palestinians initiate an ICC judicially authorized investigation, or actively support such an investigation, all economic assistance to the PA must end. In light of this legal requirement, Congress will reassess its support for assistance to the PA and seek additional ways to make clear to President Abbas that we strongly oppose his efforts to seek membership in the ICC. If the ICC makes the egregious mistake of accepting the Palestinian Authority as a member, given that it is not a state, Congress will seek ways to protect Israeli citizens from politically abusive ICC actions. "Palestinian leaders will no doubt try to do to the ICC what they have done to international organizations like the UN Human Rights Council - take an organization with laudable goals and undermine its credibility by turning it into a political battering ram against Israel. The ICC and its members would be making a terrible mistake if they allow their important global role to be compromised.

"Today there is no viable Palestinian state, and nothing will bring about that goal other than direct negotiations. Rather than committing to direct negotiations with Israel for a sustainable, realistic two-state compromise, President Abbas seeks to launch unilateral, politicized investigations of Israel citizens. He would do better to commit to the exacting, demanding work of diplomacy. As an immediate demonstration of his intentions, President Abbas should end Palestinian actions to join the ICC and pledge to re-enter negotiations with Israel for an enduring, realistic solution to this ongoing conflict. We renew our calls for the Palestinian Authority to end its pact with Hamas, a recognized terror organization that is committed to Israel's destruction and whose charter calls for the murder of Jews."

A slip of the tongue from Prime Minister Benjamin Netanyahu last month is worthy of attention. In an unprepared response to a Likud Knesset member, Netanyahu said: “What I’m willing to give to the Palestinians is not exactly a state with full authority, but rather a state-minus, which is why the Palestinians don’t agree [to it].”

This almost never happens to Netanyahu. He is calculated, in contrast to Defense Minister Avigdor Liberman who once threatened to execute Hamas leader Ismail Haniyeh and destroy his movement. In his public appearances, Netanyahu’s statements are carefully worded. His mind operates mechanically, and it is for this reason that a slip of the tongue warrants attention. He has given away more than he intended to. Netanyahu’s words need to be tied back his stance during the negotiations with Palestinian President Mahmoud Abbas, as part of the 2013-4 peace talks initiated by then-Secretary of State John Kerry. Netanyahu’s position was that even following an agreement, Israel would retain security control over the entire area between the Jordan River and the Mediterranean Sea over the coming decades. The best case scenario for the Palestinians would have been a severely handicapped state. What would a less ideal scenario have looked like? In order to answer that question, we must also look at Netanyahu’s support for the Formalization Law and for settlement expansion, two processes he has pushed forward with since Donald Trump entered the White House. The significance of these processes, territorially-speaking, is the end of the “temporary” occupation and the effective annexation of around 60 percent of the West Bank.

Where Netanyahu differs from Jewish Home head Naftali Bennett is in the type and reach of annexation, not in the principle of annexation itself. Bennett wants to advance from legal to practical annexation as soon as possible. Netanyahu is more cautious. He first of all wants de facto annexation, and to do it in stages so that the world and the Palestinians can adjust to the new reality.

Yesterday the British Parliament voted overwhelmingly (274-12) to recognize a Palestinian state, and if you listened to the debate, one theme above all else explains the crushing victory: The British public has been horrified by Gaza and its opinion of Israel has shifted. Even Conservative members of Parliament cited pressure from the public.

The Parliamentary debate was conducted in moral terms throughout, a fact that the parliamentarians described as historic. And the discussion was astonishing in its contrast to the stifled debate on these issues in the US Congress. (The debate can be found online: Section one here.  Section two is here. Section three is here.) Below I have made excerpts of the debate, emphasizing the powerful ideas the parliamentarians sounded that you would never hear in Washington.

PA President Mahmoud Abbas signed the application for Palestine’s accession to the Rome Statute and the International Criminal Court (ICC). Abbas signed the application on Wednesday, in response to the UN Security Council’s rejection of a Jordanian sponsored draft resolution on Tuesday. The resolution called for a fixed timeline for the end of the Israeli occupation of Palestine.

The rejected resolution called for a 12-months timeline for a final peace accord between Israel and Palestine and the full withdrawal of Israeli troops from Palestinian territories by the end of 2017.

The rejected draft resolution was harshly criticized by imprisoned Fatah leader Marwan Barghouti, other progressive Fatah members as well as by the PFLP and others. One of the major points of contention was that the proposed draft resolution, according to its Palestinian opponents, risked waving the right of return of displaced Palestinians.

For what it’s worth, this is what I propose Obama should have said to Bibi but didn’t, with a transcript of the conversation also faxed over to Ron Lauder at the World Jewish Congress: “Nice to have you back Prime Minister, but not really as it’s close to lunchtime, to which, incidentally, you are not invited. Why don’t you stay home? You have been interfering in our politics and denigrating both me personally and my office for far too long. How would you like it if I were to go to Israel and endorse one of your opponents? If you keep up this crap I will revoke your visa and you’ll never visit here again.” “And by the way, your plan to expel thousands of Arabs from East Jerusalem and to shoot kids throwing stones at your occupying army is not acceptable to us. And then there are new reports of your harvesting organs and other medical transplant material from the bodies of Palestinians that you have killed. There’s a long history of that in your country, but it’s a bit much even by your standards, isn’t it, and it begs the question whether there is anything that you won’t do. Next time a motion comes up in the United Nations condemning your brutality we will support it. Maybe we’ll co-sponsor or even propose it to show that we’re serious.” “We are running out of money here in Washington and are thinking of cutting benefits to our own people. I note that Israelis have free medical care and university education, which means that we are subsidizing things that we Americans do not have so it hardly seems fair. We have been giving you more than $3 billion in aid every year and also looking the other way when you benefit from tax free charitable contributions that actually are illegal under American law. By executive order, I am stopping the cash flow and asking the IRS to look at your friends over here.”

“And speaking of Israel’s many friends, your good buddy at the State Department Victoria Nuland is now working down in the mail room. And I am asking the Justice Department to register the American Israel Public Affairs Committee (AIPAC) as a foreign agent, subject to having its finances and operations monitored by U.S. authorities. Oh, and your spy Jonathan Pollard will be denied parole later this month and will be the guest of a federal prison for the next twenty years.” “I cannot see where you have done anything for us except complain. As you are now pledging Israel to continue its occupation of Palestinian land and ‘live by the sword’, meaning the killing of Arabs will accelerate, I am suspending all military cooperation with you until you come up with a plan to remove most of your settlers from the West Bank. Come back when you have something to show me. Don’t let the door hit you in the ass on the way out.” Well, okay, it was never bloody likely to happen that way, but I can dream, can’t I? If you think Obama is spineless when confronted by Ron Lauder and the usual suspects, just think of how bad it will be when we have President Clinton or President Rubio, proxies for their Israel firster donors Haim Saban and Paul Singer respectively. The new president and his or her staff will have to learn how to perform proskynesis whenever Netanyahu enters the oval office.

There's more, much more. These four characters - Bersani, Monti, Grillo, Berlusconi - happen to be at the heart of a larger than life Shakespearean tragedy: the political failure of the troika (European Commission, European Central Bank and International Monetary Fund), which translates into the politics of the European Union being smashed to pieces. That's what happens when the EU project was never about a political ''union'' - but essentially about the euro as a common currency. No wonder the most important mechanism of European unification is the European Central Bank. Yet abandon all hope of European politicians asking their disgruntled citizens about a real European union. Does anybody still want it? And exactly under what format?

All hell is breaking loose in the EU. Le Monde insists Europe is not in agony. Oh yes, it is; in a coma. And yet Brussels (the bureaucrat-infested European Commission) and Berlin (the German government) simply don't care about a Plan B; it's austerity or bust. Predictably, Dutch Finance Minister Jeroen Dijsselbloem - the new head of the spectacularly non-transparent political committee that runs the euro - said that what Monti was doing (and was roundly rejected by Italians) is ''crucial for the entire eurozone''.

The verdict is of an Italy ''in the hands of polit-clowns that may shatter the euro or force the country to exit''. Even the liberal-progressive Der Tagesspiegel in Berlin defines Italy as ''a danger to Europe''

Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few Eurozone “troika” officials scrambling to salvage their balance sheets. A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear title to the banks of depositor funds.  

One might wonder why the posting of collateral by a derivative counterparty, at some percentage of full exposure, makes the creditor “secured,” while the depositor who puts up 100 cents on the dollar is “unsecured.” But moving on – Smith writes: Lehman had only two itty bitty banking subsidiaries, and to my knowledge, was not gathering retail deposits. But as readers may recall, Bank of America moved most of its derivatives from its Merrill Lynch operation [to] its depositary in late 2011. Its “depositary” is the arm of the bank that takes deposits; and at B of A, that means lots and lots of deposits. The deposits are now subject to being wiped out by a major derivatives loss. How bad could that be? Smith quotes Bloomberg:

The 15-page FDIC-BOE document is called “Resolving Globally Active, Systemically Important, Financial Institutions.”  It begins by explaining that the 2008 banking crisis has made it clear that some other way besides taxpayer bailouts is needed to maintain “financial stability.” Evidently anticipating that the next financial collapse will be on a grander scale than either the taxpayers or Congress is willing to underwrite, the authors state: An efficient path for returning the sound operations of the G-SIFI to the private sector would be provided by exchanging or converting a sufficient amount of the unsecured debt from the original creditors of the failed company [meaning the depositors] into equity [or stock]. In the U.S., the new equity would become capital in one or more newly formed operating entities. In the U.K., the same approach could be used, or the equity could be used to recapitalize the failing financial company itself—thus, the highest layer of surviving bailed-in creditors would become the owners of the resolved firm. In either country, the new equity holders would take on the corresponding risk of being shareholders in a financial institution.

Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few Eurozone “troika” officials scrambling to salvage their balance sheets. A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear title to the banks of depositor funds.  

Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay. (See here and here.) But until now the bank has been obligated to pay the money back on demand in the form of cash. Under the FDIC-BOE plan, our IOUs will be converted into “bank equity.”  The bank will get the money and we will get stock in the bank. With any luck we may be able to sell the stock to someone else, but when and at what price? Most people keep a deposit account so they can have ready cash to pay the bills.

No exception is indicated for “insured deposits” in the U.S., meaning those under $250,000, the deposits we thought were protected by FDIC insurance. This can hardly be an oversight, since it is the FDIC that is issuing the directive. The FDIC is an insurance company funded by premiums paid by private banks.  The directive is called a “resolution process,” defined elsewhere as a plan that “would be triggered in the event of the failure of an insurer . . . .”