Ami Isseroff writes:

Robert Dreyfuss points out, the Israeli deals with Hamas and Hezbollah drive a wedge in US policy, which has been to isolate these groups. US non-interference in Lebanon, acquiescence in the Doha compromise and its push to get Israel to give up Sheba farms, an issue invented by the Hezbollah, all play into the hands of the Hezbollah. They leave Lebanese moderates loyal to Prime Minister Seniora politically stranded. The French Mediterranean initiative will establish France as an important operator in the Middle East, independent of the US. Meanwhile, there is not the slightest sign that Hezbollah, Hamas or Syria are dissociating themselves from Iran or each other in any way." ….

The big losers so far are the moderate Palestinians in the West Bank and the moderate democratic regime of Fouad Seniora in Lebanon. The big winners are Syria, Hamas and Hezbollah.

Israel, Hamas Reach Cease-Fire Pact

Israel and Hamas agreed to a cease-fire aimed at ending months of violence in and around Gaza, in exchange for potentially easing the Palestinian enclave's isolation. The initial phase of the truce, the first since late 2006, will start Thursday morning.

Latest: 5 hurt in Ashkelon as close to 50 rockets hit southern Israel

IAEA says Syria lacks skills for nuclear facility
Tue Jun 17, 2008 5:44pm BST

DUBAI (Reuters) – There is no evidence Syria has the skilled personnel
or the fuel to operate a large-scale nuclear facility, the head of the
United Nations atomic watchdog said in remarks aired on Tuesday.

"We have no evidence that Syria has the human resources that would allow
it to carry out a large nuclear programme. We do not see Syria having
nuclear fuel," International Atomic Energy Agency Director General
Mohamad ElBaradei told Al Arabiya television.

Syria sees benefits of liberalisation
By Heba Saleh in Damascus
Financial Times FT.com, June 18 2008

Chic sidewalk cafés offering fashionable coffees and trendy western dishes have sprung up in the more upmarket areas of Damascus.

The clients are invariably well-dressed, and the neighbourhoods are studded with shops selling international brand name clothing such as Benetton and Stefanel, some of whose merchandise is made in Syria.

In the arcade attached to the Four Seasons Hotel, imported shoes and fashions from top designers are available to those who can pay more than £1,000 ($2,000) for a single item of clothing.

The picture is at odds with Syria’s image as a pariah state with a centrally planned economy, a large and unprofitable public sector and a security apparatus breathing down everyone’s neck.

But Syria has been forced to liberalise aspects of its economic system to make up for oil revenue that has been falling by about 10 per cent a year.

The economy remains in desperate need of restructuring, and privatisation has stalled. The country’s foreign policy, at odds with most of its neighbours in the Arab world, has been deterring investment from abroad.

However, in recent years the establishment of private banks and a dramatic reduction in tax rates and import duties have boosted private investment, trade and non-oil exports. The latter have strengthened, particularly in Arab markets.

The International Monetary Fund expects growth in real gross domestic product in 2008 to reach 4 per cent, up from 3.9 per cent last year.

Economists say the presence of 1.5m Iraqi refugees has fuelled local demand, tourism has been growing and petrodollars from the Gulf have been finding their way into Syrian property.

Foreign direct investment has grown – even if it was still modest at $700m in 2007. Most foreign investment is in oil and property, according to Nabil Sukkar, an economist who runs an independent consultancy.

“Foreign investment to manufacturing is not there,” he said. “The multinationals are not there. I can only think of two.” But he argues that “the business climate is no longer the deterrent to foreign investment. It is the media image and the United States accusing Syria of terrorism”.

The economic cost of a hardline foreign policy might be an additional factor driving the Syrian regime to send signals recently that it wants a better relationship with the west.

Officials are in contact with Israeli counterparts on reaching a peace agreement that would return the occupied Golan Heights to Syria.

Having acquiesced in a deal that ended almost two years of crisis in Lebanon – after being accused of blocking it – Syria is starting to reap benefits, with France in particular resuming its engagement with Damascus.

The US, however, remains unconvinced that the regime, accused of the 2005 assassination of Rafiq Hariri, the former Lebanese prime minister, deserves to be rewarded at this time.

Washington first imposed trade sanctions on Syria in 2004. Last month it was reported the US Treasury had been pressing Turkcell, a Turkish mobile phone operator, to abandon a $1bn (€645m, £512m) takeover of Syriatel, which is owned by Rami Makhlouf, the tycoon cousin of Bashar al-Assad, the Syrian president.

There is little expectation that Syria’s international image will change soon, so the country’s economic decision makers are concentrating on local and regional investment and on mitigating the impact of global inflation which has been exacerbated locally by poor harvests.

Ordinary Syrians are being squeezed by higher prices especially after the government reduced fuel subsidies recently.

Public sector salaries have been raised 25 per cent to help those on limited incomes, but most people work for the private sector. Mr Sukkar argues inflation is causing the middle class to “disappear” as its buying power erodes.

In the wake of what some now refer to as the May “events” in Lebanon – Hizbollah’s use of its weapons domestically, the Lebanese army’s evident complicity and the Doha Accords – something strange seems to be happening among those who used to view Hizbollah almost monolithically, as an absolute evil to be crushed.

The first stirrings of such nuance, if we can call it that, were heard in mid-May when Daniel Freedmen, a former foreign policy analyst for the Republican presidential candidate Rudolf Giuliani, wrote in the Wall Street Journal: “If Hizbollah really is on the brink of what could turn out to be a seismic change, the US should do everything to encourage this process. It should accept a greater role for Shiites in the Lebanese government as long as Hizbollah agrees to start, however gradually, decommissioning.”

Two weeks later, Theodore Karasik and Ghassan Schbley of the RAND Corporation pushed the idea further, arguing that Lebanon’s “four bleeding wounds” – illegal Israeli flyovers, prisoners, occupied territory such as the Shebaa Farms and the still unknown locations of Israeli mines – should be removed immediately.

“Once the four wounds are healed,” they said, “Hizbollah will face increasing internal Lebanese pressure to disarm. The Lebanese people will not so willingly accept rhetoric about where weapons are pointed.”

What the two RAND analysts fail to address, however, is the key factor that will determine whether or not the removal of the four bleeding wounds provides a viable roadmap for Hizbollah’s normalisation: a national defence strategy.

For unless Lebanon is allowed to develop a robust national army, trusted by Hizbollah, admired by the Shiite community in particular and believed in by all Lebanese, the removal of the four bleeding wounds simply won’t be enough to normalise Hizbollah – certainly not without violence……

Hizbollah’s number two, Shaykh Naim Qassem, recently expounded on exactly this subject – to an extent not previously seen in Hizbollah’s discourse – by saying, “We agree to a defence strategy that makes our national army capable of protecting Lebanon and of preventing Israel from attacking it. At that point, a solution to the weapons situation will be part of this defence strategy… We need to confront the Israeli danger [however]. If the Lebanese state tackles it in a certain way, we are ready to be part of this solution.”

Whether Qassem’s comments constitute a wily ruse or not matters little; the point is that Hizbollah has publicly affirmed its understanding that the basic logic of national defence, embedded in the landmark 2006 agreement between the Christian leader Michel Aoun and Nasrallah, is fast accelerating and that public support for resistance activities over time is now especially prone to this dynamic.

In order to push this logic decisively forward, however, the US, the EU and other states invested in Lebanon’s future must move quickly to help develop an overall roadmap focused on achieving Hizbollah’s normalisation through a strong national defence plan for Lebanon.

As a critical first step in this regard, the US must immediately drop the badly outmoded “redline” policy which prohibits giving any strategic weaponry to the Lebanese Armed Forces….

Nicholas Noe is a PhD candidate at the Lebanese University and is the author of “Voice of Hizbollah: the Statements of Sayyed Hassan Nasrallah”

'Curveball' speaks, and a reputation as disinformation agent remains intact
By John Goetz and Bob Drogin, Special to the Los Angeles Times
June 17, 2008

The Iraqi refugee and German intelligence source code-named Curveball, left, meets with reporter John Goetz somewhere in Germany. His tall tales of Saddam Hussein's mobile germ weapons labs helped the White House justify the invasion of Iraq.

The Iraqi speaks publicly for the first time. Charges that he fabricated intelligence that helped lead to war in Iraq are themselves fiction, he insists. But there are fresh doubts about his honesty.

Aleppo, Syria’s second-largest city, is home to one of the country’s most interesting art institutions. Issa Touma, a Syrian of Armenian descent and an artist, curator, and photographer by calling, has operated his Le Pont Organization as a site for exhibitions and international exchange since 1996. When I visited Issa Touma in his gallery in October 2007, he was preparing an exhibition about two politically explosive walls: the Berlin Wall and the wall between Israel and Palestine, the latter photographed by Rula Halawani. Issa Touma is all too familiar precisely with mental walls. He is known in Syria and internationally for his innovative and courageous presentations and projects, which are anything but easy to realize in a country with a notoriously conservative art scene.

Jews in Congress		Record number of Jewish U.S. congressmen? Haaretz
		Looking at all the toss-up races, it's a possibility, not yet a likelihood.

The class of 2006 gave us a record number of Jewish legislators on Capitol Hill. The numbers: 30 Jewish members of the House (29 Democrats), 13 Jewish senators (9 Democrats, 2 independents who caucus with the Democrats and 2 Republicans). This is the highest number ever.

The UN Special Tribunal for Lebanon has now taken control of the former Dutch intelligence building in The Hague which will serve as the tribunal's headquarters,