WASHINGTON — Despite publicly breaking with an American private security company in Iraq, the State Department continues to award the company, formerly known as Blackwater, more than $400 million in contracts to fly its diplomats around Iraq, guard them in Afghanistan, and train security forces in antiterrorism tactics at its remote camp in North Carolina.
The contracts, one of which runs until 2011, illustrate the extent to which the United States government remains reliant on private contractors like Blackwater, now known as Xe (pronounced zee) Services, to conduct some of its most sensitive operations and protect some of its most vital assets.
Disclosures that the Central Intelligence Agency had used the company, which most people still call Blackwater, to help with a covert program to assassinate leaders of Al Qaeda have touched off a storm in Washington, with lawmakers demanding to know why this kind of work is being outsourced. New details about Xe’s involvement in the covert program emerged Friday.
The C.I.A. and the State Department are both trying to reduce their dependence on outside contractors, but the administration is also struggling to deal with an overstretched military and spy service.
In the case of the C.I.A., outsiders still help carry out some of its most important jobs, including collecting intelligence in foreign countries, dealing with foreign agents, and taking part in covert programs.
The State Department continues to use Blackwater guards in Afghanistan, despite the company’s involvement in civilian shootings in Baghdad in 2007, and despite Secretary of State Hillary Rodham Clinton’s pledge to “reduce our dependence on private security contractors.”
The department declined to discuss its ties with Blackwater publicly, but a senior department official said it would be costly for the government to terminate, without cause, the other contracts that are in place. A spokeswoman for Xe Services did not respond to messages requesting comment.
Following the shootings in Baghdad, which killed 17 Iraqi civilians, the State Department required Blackwater contractors to undergo training in “Afghan cultural awareness,” said this official, who spoke on condition of anonymity because he was not authorized to speak publicly.
When the department announced it would not renew the company’s security contract in Iraq, it cited the refusal of the Iraqi government to issue a license for the company to operate in the country. But Xe has continued to supply aviation services to diplomats in Iraq under a two-year contract worth $217 million. That contract expires Sept. 3, and a spokesman for the State Department, Ian C. Kelly, said the work would be given to another security and logistics company, DynCorp International.
Xe’s contract to supply personal security to American diplomats in Afghanistan, which began in 2006 and runs through 2011, is worth $210 million. Xe earns $6 million under a three-year contract to train foreign security guards in antiterrorism tactics.
This web of ties is drawing the attention and anger of lawmakers, including Senator John F. Kerry, the Massachusetts Democrat who is chairman of the Senate Foreign Relations Committee.
On Friday, Mr. Kerry wrote to the founder and chairman of Xe, Erik D. Prince, asking for details of his company’s dealings with the C.I.A. In the letter, a copy of which was supplied to The New York Times, Mr. Kerry expressed concern that contractors could have used their State Department assignments as a “cover to gather information for the targeted killing program.” Leon E. Panetta, the C.I.A.’s director, canceled the program this year, in part because he learned the C.I.A. had used an outside company for the program, government officials who spoke on the condition of anonymity have said.
This week, government officials and current and former Blackwater employees said the company had also taken on a role in the United States’ most important counterterrorism program: the use of remotely piloted drones to kill Al Qaeda leaders.
Mr. Kerry also plans to write to Mrs. Clinton to raise his concerns, said one of his aides.
In a meeting with department employees in February, Mrs. Clinton said, “I certainly am of the mind that we should, insofar as possible, reduce our dependence.” But she added, “Whether we can go all the way to banning, under current circumstances, seems unlikely.”
The decision to use Blackwater contractors in the assassination program starting in 2004 was born partly out of desperation, said former C.I.A. officials: the spy agency had tried to operate the program in house, and had failed. The agency was still reeling from the botched assessments about Iraq’s weapons programs, said the officials who spoke on the condition of anonymity, and was desperate for information about Al Qaeda’s top leaders.
“You want to have everything when you know nothing,” said one former official familiar with details of the canceled program.
Top C.I.A. officials — including Jose A. Rodriquez Jr., the head of the agency’s clandestine service — found outside help.
Mr. Rodriguez had close connections to Enrique Prado, a career C.I.A. operations officer who had recently left the agency to become a senior executive at Blackwater. Both Mr. Prado and Mr. Prince signed agreements with the C.I.A. to participate in the program, officials said.
Over time, the officials said, Mr. Rodriguez and other senior members of the clandestine service gave up on the Blackwater arrangement to hunt Qaeda leaders. By then, the spy agency was starting to have regular success killing top militants in Pakistan and Afghanistan with drones, and the assassination program had yielded no successes. Robert S. Bennett, a lawyer for Mr. Rodriguez, declined to comment.
Government officials said that about $10 million was spent over the seven years of the assassination program. Experts who study government outsourcing point out that even a few million dollars is a significant sum when spent for training in a program that ultimately achieved nothing. "That’s a very expensive laser tag exercise or paint-ball war in the yard,” said Scott Amey, general counsel for the Project on Government Oversight.
Government officials have estimated that about 25 percent of the intelligence workforce consists of contractors, and as much as 70 percent of the entire intelligence budget goes to outside contracts. Yet these are rough estimates, and members of Congressional oversight committees lament that they cannot get reliable figures about the extent of intelligence outsourcing.
“Without even that basic information, you can’t render judgment about the risks associated with their growing role” in spy agencies, said Steven Aftergood of the Federation of American Scientists, an expert on intelligence contracting.
JACKSON HOLE, Wyo. — Central bankers from around the world expressed growing confidence on Friday that the worst of the financial crisis was over and that a global economic recovery was beginning to take shape.
“The prospects for a return to growth in the near term appear good,” declared Ben S. Bernanke, chairman of the Federal Reserve, offering optimism both about the United States and the worldwide outlook.
Though the Fed chairman repeated his warning that the economic recovery here was likely to be slow and arduous and that unemployment would remain high for another year, he went beyond the central bank’s most recent statement that economic activity was “leveling out.” Speaking to central bankers and economists at the Fed’s annual retreat here in the Grand Tetons, Mr. Bernanke echoed the growing relief among European and Asian central bankers that their own economies had already started to rebound.
Even as they indulged in a bit of self-congratulation over what had been achieved since the financial crisis of last year, these central bankers were beginning to focus quietly on another big task, how they will unwind the vast emergency measures they put in place to fight the crisis.
Investors reacted ebulliently to both the housing news and to the Fed chairman’s remarks. The Dow Jones industrial average jumped as soon as the markets opened and ended the day up 155.91 points, or 1.67 percent, at 9505.96. Though stock prices are far below their record highs, the Dow has risen 45 percent from March and is at its highest point this year.
Shares of major home builders surged on the improvement in home sales, which was the fourth monthly increase in a row. While forecasters had expected a gain, the size of it jolted investors.
But stocks for a wide range of other companies climbed higher as well, as did the prices of oil, copper and gold. Shares climbed for industrial companies, energy producers and manufacturers of chemicals, plastics and other basic materials.
“This is a bull market,” said Laszlo Birinyi Jr., president of Birinyi Associates, who said he was investing in large banks, well-established technology companies like Apple and big industrial companies like 3M and United States Steel. “There’s just a desire to be in the market and hope that the train will again leave the station.”
Here in Jackson Hole, the mood of relief and cautious confidence among central bankers and economists on Friday was almost palpable — a stark contrast to the anxiety and tension that permeated their retreat here one year ago.
“It is reasonable to declare that the worst of the crisis is behind us, and that the first signs of global growth have appeared earlier than we generally expected nine months ago,” said Stanley Fischer, governor of the Bank of Israel and a top former official at the International Monetary Fund.
In the past week, France and Germany both surprised forecasters by reporting positive growth after a string of quarterly contractions. Japan followed with its own growth report.
The Fed and other central banks will have to unwind a number of emergency measures deployed during the peak of the crisis as growth returns.
A growing number of economists and some Fed officials say the shift to tighter monetary policies and higher interest rates, though unlikely to start until at least the middle of next year, may have to be much more abrupt than normal if they are to prevent inflation two or three years from now.
“When you get into a crisis like this, gradualism is not the right strategy,” said Frederic S. Mishkin, an economist at Columbia University who was a Fed governor from 2006 until 2008. “Of course, when things turn around, you have to be aggressive in the other direction.”
Indeed, the Federal Reserve’s “exit strategy” could lead to a clash with the Obama administration. The White House plans to release its newest budget estimates next week, and administration officials said that the 10-year deficit will rise to $9 trillion — a big jump from its earlier estimate of $7 trillion.
Some Fed officials are already worried about criticism that they are financing the government’s deficits by buying up long-term Treasury securities, and the central bank announced last week that it would end that program next month.
In the future, Fed officials could feel more pressure to further tighten monetary policy as a way of countering the government’s deficit spending. The immense amount of borrowing could push up long-term interest rates, if foreign investors balk at buying up United States debt.
Assessing the extraordinary events of the last year, Mr. Bernanke argued that aggressive action by countries around the world prevented a collapse that would have been even worse than what actually took place.
Asserting that short-term lending markets are functioning more normally, that corporate bond issuance is strong and that other “previously moribund” securitization markets are reviving, Mr. Bernanke said that both the United States and other major countries were poised for growth.
In emphasizing not just an imminent end to the recession but also good chances for actual growth, Mr. Bernanke’s assessment was in some ways surprising.
Despite encouraging signs on many fronts, American retailers have reported unexpectedly weak sales in the last week — a sign that that consumer spending could drag down economic growth in the months ahead. And on Thursday, the Labor Department reported that new unemployment claims jumped again.
And on Friday, a prominent banking analyst warned that hundreds more American banks would fail over the next year, adding to the difficulties that small businesses have experienced in routine borrowing.
“There will be over 300 bank closures,” Meredith Whitney, the Wall Street analyst who accurately predicted last year that Citigroup would have to cut its dividend, said in an interview with Bloomberg Television in Jackson Hole.
“We still have a lot of work to do,” he said, adding that “it would be a catastrophe” if governments failed to heed the lessons of the crisis and financial regulation.
Mr. Bernanke acknowledged that the banking system’s problems were far from over.
“Strains persist in many financial markets across the globe,” he cautioned. “Financial institutions face significant additional losses, and many businesses and households continue to experience considerable difficulty gaining access to credit.”
Charlie Gasparino reports that senior executives inside Goldman are in a panic over its image, trying to hire a "brand manager"—and even blaming a prejudice against the firm's Jewish chiefs.
How worried are Goldman Sachs executives about their ability to manage the coming media tsunami when bonus season comes around?
Paranoia might not be too strong a word to describe the mind-set. People inside Goldman tell me that some senior executives say they believe the onslaught of negative stories detailing Goldman’s manifold ties to upper levels of government, charges that it somehow fraudulently profited from the subprime crisis, and now the press about the firm’s record earnings is so out of proportion to reality that the coverage contains an element of anti-Semitism—subtly playing off the racist myth of a conspiracy of Jewish bankers controlling the world for their own benefit. (Goldman was founded by a Jewish immigrant, and after years of being run by Gentiles Jon Corzine and Hank Paulson, is once again run by a Jew, Lloyd Blankfein.)
“Blankfein is scared to death about what might happen when the bonus numbers hit,” one executive says.
Blankfein, I am told, isn’t paranoid but really concerned about being placed in an untenable position for any CEO who needs to retain talent. If he doesn’t pay his people, many will simply jump ship to other firms—including private-equity firms—that will. If he does, he faces endless negative coverage about how Goldman is making its partners rich at the expense of taxpayers who bailed out the firm last year.
This quandary has resulted in some very serious discussions at Goldman to attempt to spin the bonus issue in the best possible (or least damaging) way. The Daily Beast has learned that Goldman is considering “a menu” of options: One possibility is to pay the vast majority of the bonus in stock. On Wall Street, executives receive a combination of stock and cash, with the cash portion comprising 65 percent of the total bonus. Goldman may just flip that around.
Another option, according to people close to the matter, is for Goldman to pay much smaller bonuses and just hand out larger salaries, meaning there won’t be a massive media event that occurs every year once all the bonuses, including Blankfein’s—which hit nearly $70 million for 2007, just months before Goldman’s bailout—are announced.
A third option, these people say, is for Goldman to forgo bonuses for the most part and just buy its stock in the open market. Because most of its executives have large pieces of their net worth tied up in shares of Goldman, the wealth effect would be bigger and less sensational than paying all those huge bonus packages at the end of the year.
Blankfein, of course, has a good reason to be worried. Brand and image is more important now than ever before, and the CEO’s internal research shows that Goldman is taking a beating like never before. Some of the criticism of Goldman is of course, absurd, like it committed securities fraud simply by shorting the housing market back in 2007.
Some of it isn’t: that the firm is now embracing the same type of risk that led to its near implosion back in 2008.
It almost doesn’t matter—it’s all starting to stick, and Goldman has suddenly replaced Citigroup, Merrill, and even Lehman as the leading culprit of Wall Street greed and abuse committed during the financial crisis. In the good old days, Goldman could just ignore the chattering class, make a lot of money, and tell the rest of the world to screw off.
No longer. The firm, like the rest of the former bastion of capitalism known as Wall Street, is protected by the federal government as a commercial bank. Goldman was bailed out with the rest of the financial system late last year, and while government bureaucrats don’t run Goldman like they run Citigroup, they are watching the firm like never before. And one thing government bureaucrats don’t like is bad publicity, even if it’s in fringe media publications.
That’s why Goldman has been looking for months for the right person to fill the job of “brand manager.” It’s the reason senior executives at the firm meet almost daily on how to repair the firm’s image. It’s the reason Blankfein “looks like shit,” according to one Wall Street CEO who considers himself a friend of the Goldman CEO and who says Blankfein has “become obsessed with the firm’s image problems.” And it’s the reason Goldman is weighing a menu of options that could soften what senior executives believe will be an onslaught of negative media attacks when the firm doles out bonuses to its best people at the end of the year.
“Blankfein is scared to death about what might happen when the bonus numbers hit,” one executive says.
Of course, there might not be any bonus money to hand out. The markets could implode over the next two months. The Fed could stop subsidizing Wall Street’s risk-taking and revoke Goldman’s charter as a commercial bank, meaning it is no longer Too Big to Fail and will have to pay more to finance trades and roll the dice in the bond markets. Goldman also could try to corner the market of drug stocks, betting President Obama’s health-care plan will fail, and guess what, the American people suddenly change their mind and embrace socialism and learn to love “the public option,” making Goldman’s trade an even worse bet than subprime debt back in 2007.
But barring any of this, Goldman will have a piggy bank of more than $11 billion to dole out in bonuses at year’s end, not exactly what most businesses would consider a problem, unless, of course, you’re Goldman and you’ve undergone the longest media-induced proctology exam in the firm’s long and storied history.
Spokesman Lucas Van Praag declined to discuss the specifics of the “menu” of options the bank is considering, but he said any stock-buyback program won’t be tied to bonuses.
What was interesting about Van Praag’s “denial” was that he won’t deny Goldman is weighing some large stock buyback. “I can’t comment on that,” he said before adding that analysts had been calling on the firm to do a stock buyback for some time.
One thing is certain: Goldman’s top executives might be getting much richer at the end of this year, but the firm’s reputation is sinking and may well sink further.
Consider this: Goldman produced record earnings in the second quarter, and if it just cranks out mediocre profits for the remaining two, Blankfein would be on course to receive a bonus of $50 million or more, according to people inside the firm.
This after Goldman was rescued from extinction (this is where I agree with the conspiracy theorists) nearly a year ago, when the financial crisis became most acute, with a $10 billion capital injection from the federal government, not to mention the tens of billions of dollars that flowed right to Goldman’s bottom line when the federal government bailed out AIG and honored all those insurance contracts Goldman held on its own portfolio of risky debt.
Of course, the flacks at Goldman would tell you that Goldman was among the first to repay its loan, and amazingly, they continue to spin that the firm wasn’t really bailed out when the Feds bailed out AIG. (Their rationale is too nonsensical to explain; trust me on this one, they’re full of shit.) Where they’re less full of shit on is the difficulties they face in dealing repairing the firm’s image.
The normally tight-lipped Van Praag put it this way: “We are obviously cognizant of the environment and the atmosphere that we’re operating in, but we also recognize that we have to pay our people to keep the firm competitive, which poses some issues for us.”
Van Praag also concedes that the recent attacks on the firm have hit home, particularly for Blankfein, after The New York Times reported that former Treasury Secretary (and former Goldman CEO) Hank Paulson spoke to Blankfein far more than any other CEO during the height of the financial crisis last year, suggesting that Goldman received preferential treatment. “Is Lloyd worried about our image? Nobody likes negative publicity. It’s unpleasant,” the spokesman says.
by Charlie Gasparino Charles Gasparino is CNBC's On-Air Editor and appears as a daily member of CNBC's ensemble. He is a columnist for The Daily Beast and a frequent contributor to the New York Post, Forbes, and other publications. His book about the financial crisis, The Sellout, is scheduled to be published later in 2009.
HONOLULU – Protesters will march the streets and Hawaiian chants will echo from the sprawling lawn of Iolani Palace on Hawaii's 50th anniversary of statehood, as high-minded panelists ponder the islands' future at a daylong conference.
While lacking much in the way of public parties or parades, Hawaii's official statehood day festivities will feature entertainment by local musicians and panel discussions emphasizing tourism's future, alternative energy and Native Hawaiian rights.
About 1,000 demonstrators who would rather see Hawaii's independence restored are expected to rally outside the conference at the Hawaii Convention Center.
"We want to show how U.S. imperialism has spread across the Pacific and across the world," said Lynette Cruz, an organizer of the Hawaiian Independence Action Alliance. "It'll be fun."
The protesters will be allowed inside the convention center lobby, but they can't get into the individual conference rooms without purchasing a $30 ticket.
"We're trying to set a standard that embraces dialogue over physical conflict, and that's the hope for Friday," said Trisha Kehaulani Watson of Honua Consulting, one of the Hawaiian panelists. "We can show people that we can have concerns and be emotional without losing control."
Previous statehood anniversaries haven't always been peaceful.
American-flag-waving Statehood Day celebrants and Hawaiian sovereignty advocates clashed in 2006 at Iolani Palace, the heart of the Hawaiian monarchy where officials declared in 1959 that Hawaii had joined the union. The conflict turned into a shouting match between those trying to sing "The Star-Spangled Banner" and others who used a public address system to drown them out.
Last year, police arrested 23 members of a Hawaiian pro-sovereignty group that broke into the palace, locked its gates and posted signs that read, "Property of the Kingdom of Hawaiian Trust."
"The state is very cognizant of Hawaiian protests, and I think they don't want to have any bad press," said Dean Saranillio, a student who wrote his dissertation on how statehood came at the expense of Hawaiian self-determination. "There's a very vibrant and vocal Hawaiian community that's well-versed in the history. They know statehood was a product of the overthrow."
The Hawaiian kingdom was overthrown in 1893 when a group of white businessmen forced Queen Liliuokalani to abdicate while U.S. Marines came ashore.
About 94 percent of Hawaii voters supported statehood in 1959, but opponents argue the vote was tainted because the only choice on the ballot was to become a state or remain a territory — independence was not an option.
At sunset Friday, 18 Hawaiians will recite chants in memory of Queen Liliuokalani from the balconies of Iolani Palace, said Kippen de Alba Chu, chairman of the Statehood Commission. He said the chanters and the conference discussions will help set the stage for Hawaii's future.
"The tone is reflective. We're looking back where we came from and looking at our accomplishments, but perhaps also the things we need to do better," he said.
Back at the convention center, Hawaii's commemorative 50th anniversary postage stamp will be unveiled. The stamp, available nationwide Friday, will show a painting of a longboard surfer and two paddlers on an outrigger canoe.
The day's events will end with a '50s-style concert by The Platters, the Coasters and the Drifters.
Other statehood events included a walking tour focused on the overthrow, with costumed guides and role-players along the way; a statehood mosaic unveiled earlier this month at the Honolulu airport with artwork from more than 8,000 students nationwide; TV and radio ads with "50 Voices of Statehood" interviews; and 50 time capsules buried around the state to be opened on the state's 75th anniversary in 2034.
State lawmakers allocated $600,000 for statehood events.
It is easy to find the courage necessary to support a moral position if that position benefits oneself. True moral courage, however, is proven when one chooses to support that which is morally and ethically right even when such a position is to one's one detriment.
The people of the United States find themselves in such a position right now, forced to choose between a moral and ethical position that carries with it the potential for "inconvenience", or supporting the status quo and having to admit to themselves that they are not the champions of justice they imagine themselves to be. By the end of this article, you will know for yourself which one you are.
Most folks have heard that Hawaii is a state, one of the United States of America. Most people, including those who live in Hawaii, accept that statement as a fact.
But the reality is that in a world in which nations are as bound by the rule of laws as are the citizens of nations (if not more so), the truth is quite different!
The truth is that each and every step along Hawaii's path from sovereign and independent nation, to annexed territory, to state, was done in violation of laws and treaties then in effect, without regard to the wishes of the Hawaiian people. Many people, including President Grover Cleveland, opposed the annexation of Hawaii.
But in the end, simple greed and military interest overrode any concerns or moral right and legality. Hawaii's legitimate government was toppled using threat of American military force. Hawaii was stolen from her people for the benefit of wealthy American plantation owners and military interests, and the justifications for the crime were invented after-the-fact.
Hawaii's government was overthrown on Jan. 17, 1893, by a relatively small group of men, most of them American by birth or heritage, who seized control of the Islands with the backing of American troops sent ashore from a warship in Honolulu Harbor. To this "superior force of the United States of America," Queen Lili`uokalani yielded her throne, under protest, in order to avoid bloodshed, trusting that the United States government would right the wrong that had been done to her and the Hawaiian people.
Who were this group of American men and why did they overthrow the government? Sugar!
Sugar was by far the principal support of the islands, and profits and prosperity hinged on favorable treaties with the United States, Hawaiian sugar's chief market, creating powerful economic ties. The plantation owners were, for the most part, the descendents of the original missionary families who had brought religion to the islands in the wake of the whaling ships. As ownership of private property came to the islands, the missionary families wound up owning a great deal of it!
Hawaii has little in the way of mineral wealth, so the land was useful only for agriculture. In a day when unrefridgerated sailing ships such as Captain Matson's "Falls Of Clyde" were the only means to ship produce to the US Mainland, sugar, and to a lesser extent coconuts, were the only produce which could survive the duration of the sea voyage.
But the United States had, in 1826, recognized Hawaii as a sovereign nation in its own right, and imposed the usual import tariffs on sugar coming from the islands. This cut into the profits of the sugar plantations. Indeed, being American citizens themselves, the plantation owners were rankled by the fact that the US government actually made more profit from their sugar then the plantation owners themselves did! To evade the tariff, it became necessary to the plantation owners that Hawaii cease being a separate and sovereign nation.
In 1887, during the reign of Lili`uokalani' s brother, King Kalakaua, a group of planters and businessmen, seeking to control the kingdom politically as well as economically, formed a secret organization, the Hawaiian League. Membership (probably never over 400, compared to the 40,000 Native Hawaiians in the kingdom) was predominantly American, led by Lorrin A. Thurston, a lawyer and missionary grandson.
Lorrin A. Thurston
Their goal, for now, was to "reform" the monarchy. But what was "reform" to the Americans was treason to the people of Hawaii, who loved and respected their monarchs.
It is important to recall that, unlike the hereditary rulers of Europe, Hawaii's last two Kings were actually elected to that office by democratic vote. Kalakaua and his sister Lili`uokalani were well-educated, intelligent, skilled in social graces, and equally at home with Hawaiian traditions and court ceremony. Above all, they were deeply concerned about the well-being of the Hawaiian people and maintaining the independence of the kingdom. They saw no reason to relinquish their independence solely to make already rich Americans richer still.
The Hawaiian League's more radical members favored the king's abdication, and one even proposed assassination. But they decided that the king would remain on the throne but with his power sharply limited by a new constitution of their making. Killing him would be a last resort if he refused to agree. Many Hawaiian League members belonged to a volunteer militia, the Honolulu Rifles, which was officially in service to the Hawaiian government, but was secretly the Hawaiian League's military arm.
Kalakaua was compelled to accept a new Cabinet composed of league members, who presented their constitution to him for his signature at `Iolani Palace. The reluctant king argued and protested, but finally signed the document, which became known as the Bayonet Constitution, as in "signed at the point of". As one Cabinet member noted, "Little was left to the imagination of the hesitating and unwilling sovereign, as to what he might expect in the event of his refusal to comply with the demands made upon him."
The Bayonet Constitution greatly curtailed the king's power, making him a mere figurehead. It placed the actual executive power in the hands of the Cabinet, whose members could no longer be dismissed by the king, only by the Legislature. Amending this constitution was also the exclusive prerogative of the Legislature. The Bayonet Constitution's other purpose was to remove the Native Hawaiian majority's dominance at the polls and in the Legislature. The righteous reformers were determined to save the Hawaiians from self-government.
The privilege of voting was no longer limited to citizens of the kingdom, but was extended to foreign residents -- provided they were American or European. Asians were excluded -- even those who had become naturalized citizens. The House of Nobles, formerly appointed by the king, would now be elected, and voters and candidates for it had to meet a high property ownership or income requirement -- which excluded most of the Native Hawaiians. While they could still vote for the House of Representatives, to do so they had to swear to uphold the Bayonet Constitution.
The Hawaiians strenuously opposed the diminution of their voice in governing their own country and resented the reduction of the monarch's powers and the manner in which the Bayonet Constitution had been forced on him. Hawaiians, Chinese and Japanese petitioned the king to revoke the constitution. The self-styled Reform Cabinet responded that only an act of the Legislature could do this - though their new constitution had never been put to a vote.
In 1889 a young part-Hawaiian named Robert W. Wilcox staged an uprising to overthrow the Bayonet Constitution. He led some 80 men, Hawaiians and Europeans, with arms purchased by the Chinese, in a predawn march to `Iolani Palace with a new constitution for Kalakaua to sign. The king was away from the palace, and the Cabinet called out troops who forcibly put down the insurrection. Tried for conspiracy, Wilcox was found not guilty by a jury of Native Hawaiians, who considered him a folk hero.
On Jan. 20, 1891, King Kalakaua died of kidney disease at age 54, leaving his sister, Lili`uokalani' as Queen of Hawaii, who childless herself, declared the young Princess Ka`iulani her successor to the throne. Just 7 months later, Lili`uokalani' s husband, John Dominis, an American sea captain's son, also died.
The next year, Lorrin Thurston and a group of like-minded men, mostly of American blood, formed an Annexation Club, plotting the overthrow of the queen and annexation to the United States. Thurston went to Washington to promote annexation, and received an encouraging message from President Benjamin Harrison: "You will find an exceedingly sympathetic administration here."
On Jan. 14, 1893 the queen attempted to proclaim a new constitution restoring power to the throne and rights to the Native Hawaiian people.
Alerted earlier of the queen's intention by two of her Cabinet members, the Annexation Club sprang into action. A 13-member Committee of Safety was chosen to plan the overthrow of the queen and the establishment of a provisional government. As they plotted revolution, they claimed that the queen, by proposing to alter the constitution, had committed ''a revolutionary act."
The American warship USS Boston was in port at Honolulu Harbor. With an eye toward landing troops, Lorrin Thurston and two others called upon the American minister in Hawaii, John L. Stevens, an avowed annexationist. Stevens assured them he would not protect the queen, and that he would land troops from the Boston if necessary "to protect American lives and property." He also said that if the revolutionaries were in possession of government buildings and actually in control of the city, he would recognize their provisional government. It is important to note that Stevens lacked any legal standing to recognize a new government on behalf of the United States.
The next day, Jan. 15, Thurston told the queen's Cabinet that the Committee of Safety would challenge her. and delivered a letter to Minister Stevens requesting him to land troops from the Boston, stating that "the public safety is menaced and life and property are in peril." This was a critical point. The "public safety" was threatened only by the Committee of Safety itself. Stevens had no legal basis to send American troops ashore in force. It was, by any definition of the word, an invasion using American troops, in order to overthrow a foreign government.
The Committee of Safety offered the presidency of the provisional government to Sanford B. Dole, another of the "mission boys," as Thurston called them. Rather than abolishing the monarchy, Dole favored replacing the queen with a regency holding the throne in trust until Princess Ka'iulani came of age. He accepted the presidency and submitted his resignation as a justice in Hawaii's Supreme Court.
Sanford Dole, President of the provisional government of Hawaii, whose brother founded the Dole Pineapple company.
On the morning of Jan. 17, Dole gave Stevens a letter from Thurston, asking for his recognition of the provisional government, which they planned to proclaim at 3 that afternoon. The American minister told Dole, "I think you have a great opportunity."
On Jan. 17, 1893, at dusk, Queen Lili`uokalani yielded her throne under protest, with these words:
"I, Lili`uokalani, by the grace of God and under the constitution of the Hawaiian Kingdom, Queen, do hereby solemnly protest against any and all acts done against myself and the constitutional government of the Hawaiian Kingdom by certain persons claiming to have established a Provisional Government of and for this Kingdom.
"That I yield to the superior force of the United States of America, whose Minister Plenipotentiary, His Excellency John L. Stevens, has caused United States troops to be landed at Honolulu and declared that he would support the said Provisional Government.
"Now, to avoid any collision of armed forces and perhaps loss of life, I do, under this protest, and impelled by said forces, yield my authority until such time as the Government of the United States shall, upon the facts being presented to it, undo the action of its representative and reinstate me in the authority which I claim as the constitutional sovereign of the Hawaiian Islands."
Note that the queen surrendered Hawaii's sovereignty not to the revolutionaries but to the "superior force of the United States of America". This firmly put the United States in the legal position of having invaded and overthrown the government of a foreign nation without provocation.
The Royal Guard surrender their arms at the Iolani Palace Barracks
The provisional government took over the palace and declared martial law. Later, at its request, Minister Stevens proclaimed Hawaii a temporary protectorate and raised the American flag over government buildings. He wrote the State Department urging annexation, saying, "The Hawaiian pear is now fully ripe, and this is the golden hour for the United States to pluck it."
The provisional government had chartered a steamer, and Thurston and four others hastened to Washington with a treaty of annexation in hand. The queen's envoys were refused permission to sail on the same ship, and by the time they reached Washington, President Harrison had already sent the annexation treaty to the Senate.
But Harrison was in his last days in power, and Grover Cleveland, who replaced him, withdrew the treaty, alarmed by the legal ramifications of what had happened.
President Cleveland sent to Honolulu special commissioner James H. Blount, former chairman of the House Committee on Foreign Affairs. Blount's job was to investigate the circumstances of the revolution, the role Minister Stevens and American troops played in it, and to determine the feelings of the people of Hawaii toward the provisional government. Blount immediately ordered the troops back to their ship and the American flag taken down and replaced by the Hawaiian flag.
Blount's final report charged that Minister Stevens illegally conspired in the overthrow of the monarchy, which would not have taken place without the landing of U.S. troops. Blount recommended restoring the queen, saying...The undoubted sentiment of the people is for the queen, against the provisional government and against annexation." He noted, "There is not an annexationist in the Islands, so far as I have been able to observe, who would be willing to submit the question of annexation to a popular vote."
Based on Blount's findings, President Cleveland decided that, in the name of justice, he would do everything in his power to reinstate the queen. Minister Stevens was recalled from Hawaii in disgrace, and replaced with Albert Willis, who expressed to the queen the president's regret that the unauthorized intervention of the United States had caused her to surrender her sovereignty
Willis next went to Sanford Dole and the provisional government, acknowledging the wrong committed by the United States in the revolution and requested them to resign power and restore the queen.
The answer, of course, was no. They repudiated the right of the American president to interfere in their domestic affairs and said that if the American forces illegally assisted the revolution, the provisional government was not responsible.
On Dec. 18, 1893, President Cleveland made an eloquent speech to Congress on the Hawaiian situation. He had harsh words for the landing of American troops at the revolutionaries' request:
"This military demonstration upon the soil of Honolulu was of itself an act of war; unless made either with the consent of the government of Hawaii or for the bona fide purpose of protecting the imperiled lives and property of citizens of the United States. But there is no pretense of any such consent on the part of the government of the queen ... the existing government, instead of requesting the presence of an armed force, protested against it. There is as little basis for the pretense that forces were landed for the security of American life and property. If so, they would have been stationed in the vicinity of such property and so as to protect it, instead of at a distance and so as to command the Hawaiian Government Building and palace. ... When these armed men were landed, the city of Honolulu was in its customary orderly and peaceful condition. ... "
The president continues:
"But for the notorious predilections of the United States minister for annexation, the Committee of Safety, which should have been called the Committee of Annexation, would never have existed.
"But for the landing of the United States forces upon false pretexts respecting the danger to life and property, the committee would never have exposed themselves to the plans and penalties of treason by undertaking the subversion of the queen's government.
"But for the presence of the United States forces in the immediate vicinity and in position to accord all needed protection and support, the committee would not have proclaimed the provisional government from the steps of the Government Building.
"And, finally, but for the lawless occupation of Honolulu under false pretexts by the United States forces, and but for Minister Stevens' recognition of the provisional government when the United States forces were its sole support and constituted its only military strength, the queen and her government would never have yielded to the provisional government, even for a time and for the sole purpose of submitting her case to the enlightened justice of the United States. ... "
He further stated,
"... if a feeble but friendly state is in danger of being robbed of its independence and its sovereignty by a misuse of the name and power of the United States, the United States cannot fail to vindicate its honor and its sense of justice by an earnest effort to make all possible reparation."
President Cleveland concluded by placing the matter in the hands of Congress.
The Senate hearings were conducted by the chairman of the Foreign Relations Committee, John Tyler Morgan, an annexationist, whose final report managed to find everyone blameless for the revolution except the queen. Many in the Senate disagreed, and the House censured Stevens and passed a resolution opposing annexation.
With their goal of annexation stalled, the leaders of the provisional government decided to form a republic, while waiting for a more opportune political climate. Meanwhile, vast tracks of Hawaiian land (including Pearl Harbor) were taken from their rightful owners without compensation by the new government and traded to the United States in exchange for a reduction of the sugar tariff. The United States Navy began to study how they would use the "Unsinkable Battleship Hawaii" in its Pacific commanding location.
The new provisional government drafted a constitution and declared it law by proclamation -- the very act for which they had forced Lili`uokalani from her throne. The new constitution required voters to swear allegiance to the republic, and thousands of Native Hawaiians refused, out of loyalty to queen and country. Foreigners who had sided with the revolution were allowed to vote. Property requirements and other qualifications were so strict that relatively few Hawaiians and no Asians could vote.
On July 4, 1894, (again pandering to the United States in the hopes of eventual annexation) Sanford Dole announced the inauguration of the Republic of Hawaii, and declared himself president.
Unwilling to give up, many Hawaiians and other royalists accumulated arms for a counterrevolution to restore the monarchy. In the January 1895 uprising, led again by Robert Wilcox, the royalists were forced by government troops to retreat into the valleys behind Honolulu, and after 10 days of fighting, most of them, including Wilcox, were captured.
The republic's prize catch was Queen Lili`uokalani. A search revealed a cache of arms buried in the flower garden of her home at Washington Place (now the state Governor's mansion). She was arrested Jan. 16, 1895, exactly two years from the date the American troops landed in support of the revolution. Imprisoned in a corner room on the second story of `Iolani Palace, she was guarded day and night, allowed only one attendant and no visitors. The windows of her room were painted over to prevent her from seeing out, and her supporters from seeing in. The paint remains on those windows to this very day. Lili`uokalani passed the long hours writing music (Lili`uokalani wrote many of Hawaii's most popular traditional tunes) and quilting.
Lili`uokalani was given a document of abdication to sign and was led to believe that, if she refused, several of her followers were to be shot for treason. She wrote, "For myself, I would have chosen death rather than to have signed it; but it was represented to me that by my signing this paper all the persons who had been arrested, all my people now in trouble by reason of their love and loyalty toward me, would be immediately released ... the stream of blood ready to flow unless it was stayed by my pen." It is worth noting that the Hawaiian Constitution did not provide a legal process for the Monarch's abdication and without the approval of the legislature, the document had no legal validity.
Despite Lili`uokalani's signing of the abdication document, Wilcox and four others were sentenced to death. Many other royalists received long prison sentences and heavy fines. Lili`uokalani noted, ''Their sentences were passed the same as though my signature had not been obtained. That they were not executed is due solely to a consideration which has been officially stated: 'Word came from the United States that the execution of captive rebels would militate against annexation.'" In other words, the Americans who had stolen the government were still lying to the queen to get what they wanted, stayed from killing Wilcox and the others only by intercession from the United States, which was still trying to figure out what its own role was in the fiasco.
The queen was charged with misprision of treason and was given the maximum sentence of five years imprisonment at hard labor and a $5,000 fine. Out of fear that seeing their Queen at hard labor would trigger yet another armed revolt among the populace, Lili`uokalani remained a prisoner in the palace for eight months, then under house arrest until 1896.
Upon gaining her freedom, Lili`uokalani went to Washington, armed with documents signed by many Hawaiians asking President Cleveland to reinstate their queen. But it was now too late for him to be of further help. His term was over and he could do no more. Grover Cleveland wrote: "I am ashamed of the whole affair."
His successor, President William McKinley, sent the annexation treaty to the Senate.
Hawaiians submitted a petition to Congress with 29,000 signatures opposing annexation, and petitions to the Republic of Hawaii, asking that annexation be put to a public vote. They were never permitted to vote on the issue.
In all, three separate Treaties of Annexation were sent to congress. All three failed. In the end, Hawaii was annexed by a joint resolution of Congress. But Congress did not have the legal authority to do so. A joint resolution of Congress has no legal standing in a foreign country, which is what Hawaii remained, even under the provisional government.
Sovereignty of Hawaii was formally transferred to the United States at ceremonies at `Iolani Palace on Aug. 12, 1898. Sanford Dole spoke as the newly appointed governor of the Territory of Hawaii. The Hawaiian anthem, ''Hawaii Pono `I" -- with words written by King Kalakaua -- was played at the Hawaiian flag was lowered, and replaced by the American flag and "The Star-Spangled Banner." The Hawaiian people had lost their land, their monarchy and now their independence. The American plantation owners were now free of the import tariffs; small matter that the Hawaiian people had lost their independence along the way.
Even this act of transfer was illegal under international, law. Beginning with Dewey's attack at Manila, the international rules of war went into effect, with Spain and the United States as belligerents and Hawaii as a neutral nation. Under the Hague convention of 1907, the United States government was required to enforce Hawaiian law rather than its own, but failed to do so.
By annexing Hawaii without a treaty, then stationing military forces on the islands, the US, while a belligerent nation in wartime, committed an unprovoked incursion into a neutral nation and established military forces there. This is what Hitler did across Europe and Japan did in China. This is an act of war under anyone's laws.
The following year saw the death of the beautiful young Princess. Ka'iulani, heir to the Hawaiian throne, at age 23. With her died the last hopes for the restoration of the Hawaiian monarchy. To this day, questions still linger as to exactly how and why such a young and healthy woman died. Lili`uokalani remained an indomitable spirit, honored and revered by her people as a queen to the end. She died in 1917, at the age of 79, still waiting for justice.
Hawaii remained a territorial possession of the United States for many years. The military presence illegally begun during the Spanish American war continued to grow, including the Naval base at Pearl Harbor. The plantation families grew richer and richer, while the original Hawaiian people were marginalized, often homeless in their own homelands. The animosity between Hawaiians and the Americans exploded into public view during the celebrated Ala Moana Rape case, in which famed lawyer Clarence Darrow argued for the defense. The thin veneer of a tropic paradise, crafted for the emerging tourist industry was shattered in moments by the anger shown on both sides.
In 1941, Franklin Delano Roosevelt decided that the best way to get a reluctant America into a war with Hitler was to "back door" a war by luring Japan into an attack against the United States. By cutting off oil exports to Japan, Roosevelt forced Japan to invade the Dutch East Indies, and by placing the US Pacific Fleet at Pearl, Roosevelt made an attack at Pearl the mandatory first move in any military move by Japan in any direction.
Following WW2, Hawaii was placed on the list of non self-governing territories by the United Nations, with the United States as trustee, under Article 73. Under Article 73 of the UN charter, the status of a territory can only be changed by a special vote, called a plebiscite, held among the inhabitants of the territory. That plebiscite is required to have three choices on the ballot. The first choice is to become a part of the trustee nation. In Hawaii's case that meant to become a state. The second choice was to remain a territory. And the third choice, required by article 73 of the UN Charter, was the option for independence. For Hawaii, that meant no longer being a territory of the United States and returning to being an independent sovereign nation.
In 1959 Hawaii's plebiscite vote was held, and again, the United States government bent the rules. The plebiscite ballot only had the choice between statehood and remaining a territory. No option for independence appeared on the ballot as was required under the UN charter. Cheated out of their independence yet again, Hawaiians voted for the lesser of two evils and became the 50th state.
The history of Hawaii's transition from sovereign nation to a state of the United States is a history of crime after crime after crime, of policy put forward by proclamation and reinforced by American weapons of war, of military incursion, of violations of international law and treaties then in effect. None of the events which turned Hawaii from a sovereign nation into a part of the US was legal and above board. It was robbery, by anyone's definition of the word, with the justifications and excuses made up after the fact to make the affair palatable to an American public that still wanted to view its government as fair, just, and honorable.
In 1988, a study by the United States Justice Department concluded that Congress did not have the authority to annex Hawaii by joint resolution. The ersatz annexation was a cover for the military occupation of the Hawaiian islands for purposes related to the Spanish American war.
On November 23, 1993, President Clinton signed United States Public Law 103-150, which not only acknowledged the illegal actions committed by the United States in the overthrow of the legitimate government of Hawaii, but also that the Hawaiian people never surrendered their sovereignty. The latter is the most important part of United States Public Law 103-150 for it makes it quite clear that the Hawaiian people never legally ceased to be a sovereign separate independent nation. There is no argument that can change that fact.
United States Public Law 103-150, despite its polite language, is an official admission that the government of the United States illegally occupies the territory of the Hawaiian people.
In 1999, the United Nations confirmed that the plebiscite vote that led to Hawaii's statehood was in violation of article 73 of the United Nations' charter. The Hawaii statehood vote, under treaty then in effect, was illegal and non-binding. (The same is true of the Alaska plebiscite).
In a world where nations are as governed by laws as are men, Hawaii is not and has never legally been a part of the United States. Hawaii was stolen from the Hawaiian people, and they want it back.
Unable to argue against these legal issues calling into question the legitimacy of the United States presence in Hawaii, supporters of the Status Quo have put forward various straw-man arguments to justify why, even if the Hawaiian people were deprived of their government and lands illegally, that things should stay just the way they are today.
One of the most often-used straw-man arguments is that a Monarchy limited by a Constitution would be a bad thing. It does not seem to have harmed England, Monaco, or any of the quite prosperous Saudi Emirates. Two of Hawaii's Kings were elected to that office by popular vote. No other Monarchy boasts such a democratic process. And as the Wilcox Rebellions proved, Hawaiians found life under American rule much less enjoyable than it had been under Queen Lili`uokalani.
Yet another straw-man argument is that Hawaiian independence would mean the total removal of the American military. This is nonsense. Those bases are not here for the benefit of Hawaii, but for the benefit of the US mainland. The American military maintains bases around the world in foreign nations including Okinawa, Germany, and Cuba. America would not hesitate to enter into a treaty with the government of an independent Hawaii to continue to lease its facilities here and there is no reason for the government of an independent Hawaii to refuse.
Yet another straw-man argument is that were Hawaii returned to the Hawaiians, that they would be obliged to pay for the improvements that have been put here since their lands were taken. This too is nonsense. If a thief steals your car and while it is in his possession paints it and installs a stereo, are you obliged to compensate the thief for the improvements when the police return your stolen car to you? Of course not. The thief put in the improvements on the stolen property for his own benefit, not yours. Likewise, the improvements made to Hawaii were made to benefit the overthrowers, not the overthrown. If one wishes to make a case for monies owed for improvements, let us be fair and include back rents owed for the property those improvements sit on.
The final straw-man argument is that Hawaiian independence would cause the society in the islands to fall apart. But the truth is that a new government of an independent Hawaii is well motivated to NOT change anything; to keep the industry, tourism, high tech, indeed all of Hawaiian life pretty much as it is now, and to displace or disrupt as little as possible. Extremists and obvious fear-mongers aside, a transition of Hawaii from a state to an independent nation would change to who rent checks and taxes are sent, and little else. Even the flag of Hawaii would likely remain the same. Hawaii would lose the massive and complex bureaucracy that connects Hawaii to the mainland, and Hawaii's citizens would be free of their shares of the $7 trillion dollar federal debt and its ruinous interest, but who would mourn the loss?
The military bases would still be here. The United States would want that. So would the government of an independent Hawaii. People would want to continue running their businesses. The government of an independent Hawaii would want exactly the same thing. Confusion and discord harm tourism. A new government of an independent Hawaii is well motivated to keep the islands serene.
But what it really comes down to is whether one believes in justice or not. It's easy to support justice that works to your own favor, but the true test of moral citizenship is when you uphold justice even when it is a personal inconvenience.
If one holds that the government of the United States is obliged to obey the laws and the UN charter it freely signed, then the status of the Hawaiian people as a distinct and sovereign nation is beyond debate. This makes the United States in Hawaii, as Gandhi described the British in India, acting as the masters in someone else's home.
Manufacturing employment in the U.S. peaked in June 1979 with 19,553,000 jobs (data here), and by July of this year manufacturing employment had fallen to 11,817,000, the lowest level of manufacturing jobs since April 1941 (see chart above).
As a percent of the total labor force, manufacturing employment fell below 9% in July (see chart below), the lowest level in BLS history (back to 1939).
