Assassins in the spotlight

How does the recent murder of a Hamas militant compare with other high-profile assassinations?

The Dubai killing of the Palestinian militant Mahmoud al-Mabhouh could be straight out of a spy thriller. The hit squad -- which, it emerged today, was travelling under the identities of real British citizens, and with false passports -- underwent physical transformations with wigs, beards and hats.

The assassins employed counter-espionage tactics such as travelling in separate taxis, using only cash and changing mobile phone frequently. And they trailed their target so closely that he actually had to steer his luggage trolley past one of his assailants within moments of arriving in Dubai.

It has been alleged that Israel played a part in the killing. State-sponsored assassinations are couched in secrecy, unless they explode into the press in this way. What was the diplomatic fallout from some of the other meticulously executed murders that have made it into the public domain?

1. Alexander Litvinenko

The former KGB officer and Russian Federal Security Bureau agent was living in the UK after gaining political asylum. But on 1 November 2006, he suddenly became ill and was admitted to hospital. He died three weeks later of acute radiation syndrome, after drinking a cup of tea poisoned with polonium-210. It was the first recorded case of anyone having this lethal nuclear isotope in their body.

Litvinenko had previously written two books critical of Vladimir Putin, and also wrote an article in the Daily Mail from his deathbed, accusing the then president of being responsible for the poisoning. Investigations into the affair damaged diplomatic relations between Britain and Russia. In July 2008, a British secret service source told BBC2's Newsnight: "We very strongly believe the Litvinenko case to have had some state involvement."

2. Rafiq Hariri

The former Lebanese prime minister was killed on 14 February 2005 when the equivalent of about 1,000kg of TNT exploded as his motorcade drove past the St George Hotel in Beirut. The investigation into his death is still ongoing, but its initial reports suggested that the Syrian government could be linked to the assassination. Syria was occupying Lebanon at the time, and had extensive intelligence networks in the country. Hariri had adopted an anti-Syrian stance after resigning from office in 2004.

A UN report found evidence that both Damascus and Lebanese officials were involved. In 2005 Abdul Halim Khaddam, a former Syrian vice-president, suggested on television that President Bashar al-Assad was involved, prompting Syrian MPs to demand treason charges. The mandate for the investigation has been repeatedly extended.

3. Zoran Đinđić

The Serbian prime minister was assassinated in March 2003 after efforts to rid his country of organised crime. The targeted crime groups had close ties to parts of the Serbian secret police, many of which were still loyal to the deposed leader Slobodan Milosevic.

At the command of Milorad Ulemek, a former commander for the Yugoslavian secret police and leading player in a top organised crime gang, a soldier, Zvezdan Jovanović, shot Đinđić from a building opposite the main government headquarters in Belgrade. The single bullet went straight to the heart, and he died nearly instantly.

Ulemek -- who had spent four years prior to the assassination travelling on a false passport stolen from the Croatian embassy -- was later convicted. Of the 12 men convicted of the crime, five are still on the run.

4. Operation Wrath of God

And finally, one that has been the topic of several films. Over a period of up to 20 years, units under the control of Mossad assassinated individuals alleged to have been involved in the 1972 Munich massacre of Israeli athletes.

With the authorisation of Prime Minister Golda Meir, secretive squads killed dozens of people suspected of involvement, in countries across Europe. This led to the mistaken murder of an innocent man in Lillehammer, Norway, in 1973.

Information about the way the crimes were organised is limited: given the covert nature of the operation, we must rely on just a few sources. Those assassinated include Mahmoud Hamshari, killed by an exploding telephone in 1972, and Hussen al-Bashir, killed in 1973 when a bomb hidden under his bed in a hotel in Cyprus was remotely detonated.

Mossad agents involved in the 1979 killing in Beirut of the Black September leader, Ali Hassan Salameh, had travelled on British and Canadian passports.

Follow the New Statesman team on Twitter.

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?