Phil Gramm and Undercutting the War on Terror

Given the predictable nature of American politics and its false sense of ideological diversity, it is guaranteed that a central theme of the coming general election will be that Barack Obama, and by extension all Democrats, are soft on national security and that only John McCain is capable of protecting the country. While a tired theme, consistently dispelled by all available evidence, it still has legs as conventional wisdom.

While any assessment of the last 8 eight years of the 'strong' foreign policy will see the strengthening of al Qaeda (in the FATA), Hamas (in Gaza), Hezbollah (in Lebanon), and Iran (by its proxies and in Iraq), the media narrative remains intact. In addition, the last 8 years have seen Iran continue its nuclear ambitions unabated--despite the furrowed brows and promises not to converse--and North Korea on the verge of achieving a working weapons program with nary a notice by the Bush administration.

In light of the obvious failure of the policy by any available criteria, John McCain will run on much the same platform. He often holds up his disagreement over the Iraq war as a significant divergence, but McCain's only complaint was that the US didn't send enough troops. Never did he question the wisdom of ignoring al Qaeda in favor of deposing an impotent white whale. Following that path to the nomination is fraught with potholes for McCain, however, as his team of lobbyists has a long history of shilling for brutal dictatorships--Myanmar, Zambia, Qaddafi to name but a few.

While those relationships may be in extremely bad taste, McCain's relationship with former Senator Phil Gramm illustrates a much more nefarious portent for US security and the War on Terror.

Gramm, as campaign co-chair, is "a valued voice on economic policy," according to McCain spokeswoman Jill Hazelbaker. Gramm's day job is vice president of US division of Swiss bank, UBS, a position which saw him lobby for the banking industry in the run-up to the sub-prime bubble burst as late as this past December. Now, UBS is under investigation for tax havens:

NEWSWEEK has learned that UBS is also currently the focus of congressional and Justice Department investigations into schemes that allegedly enabled wealthy Americans to evade income taxes by stashing their money in overseas havens.

McCain's campaign is already distancing itself from some of Gramm's other work for UBS: his involvement in attempts to sell financial products known as "death bonds," which BusinessWeek described last summer as one of "the most macabre investment scheme[s] ever devised by Wall Street."

Again, perhaps in bad taste, but its Gramm's lack of commitment to national security that should have McCain running for cover.

A six-year struggle to uncover Osama bin Laden's financial network failed because American officials did not skillfully use the legal tools they had, did not realize they needed stronger weapons, and faced resistance at home and abroad, officials involved in the effort say.

Federal officials say they have not persuaded foreign banks to open their books to investigators and that in this country, a law that would have allowed the United States to penalize foreign banks that did not cooperate was blocked last year by a single United States senator.

That single senator was Phil Gramm, then a member of the Senate Banking Committee. Given that al Qaeda could not have launched an operation on the scale of the World Trade Center attacks deprived of finances, tracking down and putting a stop to money laundering by terrorist organizations should have been and should be today a priority in any national security effort. Efforts to put the screws on foreign banks prior to 2001 met with resistance in the Bush White House, but it quickly reversed course after the attacks. Phil Gramm, though single-handedly responsible for blocking the bill, felt no such inkling.

"I was right then and I am right now" in opposing the bill, Mr. Gramm said yesterday..."The way to deal with terrorists is to hunt them down and kill them."

That anyone still believes that is a reliable and practically-feasible method is incredible, but to suggest using force to the exclusion of all other tools is ludicrous.

"We could have starved the organization if we put our minds to it," said Richard Palmer, who gained experience in money laundering as the Central Intelligence Agency's station chief in Moscow during the 1990's. "The government has had the ability to track these accounts for some time."

Clearly there were many moving parts in the failure of American intelligence which led to the attacks, and any attempt to place that blame on Gramm is erroneous, but the fact remains that Gramm placed the financial interests of the banking industry above that of national security. He was willing to sacrifice the ability to track dirty money before and (somehow) after the WTC attacks, yet has teamed with John McCain as the latter tours the country proclaiming to be strong on national security.

It is the reigning narrative that Democrats are weak on national security and Republicans strong, but the facts simply don't bear that out. There is no tangible evidence of an improvement of American or Israeli security over the past 8 years, though there is ample proof of al Qaeda's reconstitution, Hamas' control of Gaza, and Iran's new-found playground handed to them on a silver platter.

Now, on top of that, McCain employs the economic advice of a man who fought to keep American law enforcement from tracking and freezing money laundering by terrorist organizations. This contradiction may be of little concern, however, as the media is loathe to make any adjustments to its reigning narratives, lest they have to do some mental leg work.

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