Did Drug Money Save the Banks??

~~By InsightAnalytical-GRL

As if things couldn’t get even MORE bizarre…

The Guardian/Observer is reporting that the UN’s Office on Drugs and Crime suspects that “$352bn in criminal proceeds was effectively laundered by financial institutions” during the 2008 banking crisis:

Drug money saved banks in global crisis, claims UN advisor

snip

Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were “the only liquid investment capital” available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.

This will raise questions about crime’s influence on the economic system at times of crisis. It will also prompt further examination of the banking sector as world leaders, including Barack Obama and Gordon Brown, call for new International Monetary Fund regulations. Speaking from his office in Vienna, Costa said evidence that illegal money was being absorbed into the financial system was first drawn to his attention by intelligence agencies and prosecutors around 18 months ago. “In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system’s main problem and hence liquid capital became an important factor,” he said.

Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said.

Apparently, evidence of the drug money going to banks has come from officials in Britain, Switzerland, Italy and the US.

The British Bankers’ Association wants to see the evidence and maintains that central banks provided the liquidity to keep the system afloat.

It will be interesting to see if Costa’s suspicions get any attention here in the U.S.

Imagine, “money laundering”  to save the economic system…

Who pays back THOSE “loans”??

While Pakistan Has Our Attention, Look What’s Brewing in Somalia…

~~By InsightAnalytical-GRL

A few mornings ago I was listening to the BBC World Service as usual and heard a very brief mention about an Islamist leader returning to Somalia and how this might affect the Somali government. The story on the web, however, didn’t hit until yesterday.

Yes, Somalia DOES have a government.  Back in 2006, Ethiopian troops went into Somalia and shattered the Union of  Islamic Courts, a prime force in Somalia’s instablility, which hadn’t had a central goverment since 1991.  However, one of its leaders came back to become the new Somalian president in January– Sheikh Sharif Sheikh Ahmed. (BBC profile here.)

Between 2007-2008 Mr Ahmed was an exiled leader of a faction within the Eritrea-based Alliance for the Re-liberation of Somalia (ARS).

(SNIP)

He says he wants to make peace with Ethiopia, recruit Islamist militia fighters into a national security force and rebuild the country’s social services.

But a new group of insurgents has formed out of what was left of the Islamic Courts.  Al-Shabab (The Lads) are text-messaging Islamic insurgents believed to have ties to Al-Qaeda and they are controlling large areas of the country and posing a threat to the capitol, Mogadishu.

In an earlier story from March 16, 2009 the BBC published this report:

The Somali transitional federal government implemented Sharia law in the country in March in an effort to drain support for the radical Islamist guerrillas.

But a senior police officer in Mogadishu – who also asked the BBC to withhold his name – said the government’s move would not stop the killing because al-Shabab had a “hidden agenda… to make the world unsafe”.

The police officer said al-Shabab was led by foreigners, while some younger members of the organisation were Somalis who had spent time abroad.

They had often been dropouts or addicts and were the most vulnerable to be used as suicide bombers, he added.

So now, the other Islamic Courts leader has returned.  He’s on the U.S.’s most-wanted list of terrorists associated with Al-Qaeda.

BBC NEWS | Africa | Islamist leader back in Somalia.

Mr [Sheikh Hassan Dahir] Aweys and Mr Ahmed both headed the UIC, which ruled most of the country for the second half of 2006.

They fled to the Eritrean capital Asmara, where they formed the Alliance for the Re-Liberation of Somalia (ARS).

The two men split after Mr Ahmed – considered the more moderate of the two – agreed to UN-led talks with the government that brought him to power in January 2009 and saw Ethiopia withdraw its troops.

Mr Aweys accused Mr Ahmed of siding with the enemy, and last July declared he had taken control of the ARS.

Mr Aweys is an influential leader of one of Mogadishu’s most powerful clans, so his arrival in the capital suggests that relations between the two men has improved and some kind of agreement is one the table, our correspondent says.

If that is the case, it could significantly improve security in the capital, and give the government a badly needed boost of authority, he adds.

Radical Islamist guerrillas such as al-Shabab, which control parts of Mogadishu and much of central and southern Somalia, have sworn to topple the fragile government.

And, guess what?  International donors are going to spend $250 million to build up a police force (10,000) and national security force (6,000).  This is supposed to help combat piracy and bolster the new government which, according to BBC world affairs correspondent Mike Woolridge, “enjoys little practical authority at present.”

On a parallel track, we’re now hearing how Pakistan’s deal to allow the Taliban to impose Islamic law in a part of the country has opened a Pandora’s box.  We’ve got Sharia Law in the UK, and U.S. Treasury Department meetings about Sharia investing.

What comes next?