Israel, top Latin American bank sign pact for R&D, trade

Israel signed a cooperation agreement with Inter-American Development Bank, the largest investment authority in Latin America and the Caribbean Islands.

The IDB funds some $12 billion in projects annually.

“Implementing the agreement will give Israeli companies access to partners in R&D and trade in the region,” said the Israeli Ministry of Economy’s Avi Hasson, who signed the agreement on Monday.

The agreement could allow a joint $5 million fund for subsidizing innovative projects involving Israeli companies in Latin America, assistance from the bank in making Israeli technologies accessible to organizations in Latin American countries, helping Israeli companies become involved in development programs that are funded by the bank, and funding industrial R&D cooperation.

According to the Israeli Ministry of Economy, Israeli exports to Latin America in 2014 were at $2.53 billion, excluding diamonds. The fields of machines and mechanical devices led with 40 percent of exports, followed by chemicals at 20 percent, then plastics and rubber at 6 percent.

Brazil was Israel’s main export destination in Latin America in 2014 at $915 million, comprising 36 percent of Israeli exports to the region. Mexico, Costa Rica, Colombia and Chile were the next most significant export destinations.

Israel’s trade agreement with countries that belong to the South American joint market known as Mercosur — namely Brazil, Uruguay and Paraguay — went into effect in June 2010, and in September 2011 with Argentina.

Israel and the Palestinian Authority are the only countries outside Latin America that enjoy a free trade agreement with Mercosur states.

In May 2014, the Netanyahu administration approved a three-year plan to strengthen its economic ties with five Latin American countries: Colombia, Chile, Mexico, Peru, and Central American Costa Rica.

“We are making a very concentrated and focused effort to vary our markets, from our previous dependence on the European market, to the growing Asian and Latin American markets, in which Israel needs to take a small market share and bring about growth, employment and social welfare in the State of Israel,” Prime Minister Benjamin Netanyahu told the Israeli Cabinet at the time.

Janet Yellen to be named Fed chief, first woman in post

Janet Yellen, the vice chairwoman of the Federal Reserve, is expected to be named the central bank’s chairwoman — the first woman to serve in the post.

Various media reported Wednesday that President Obama would make the announcement of Yellen’s ascension to Fed chief on Wednesday.

If confirmed by the Senate, Yellen would succeed Ben Bernanke and be the third consecutive Jewish economist to serve as Fed chief. Bernanke, who is set to step down in January after serving since February 2006, had succeeded Alan Greenspan.

Obama had favored his first Treasury secretary, Lawrence Summers, for the job. Summers, who also is Jewish, pulled out because of opposition among Senate Democrats who blame his policies favoring deregulation for slowing the economic recovery.

Yellen and her husband, George Akerlof, a 2001 Nobel economics laureate, were active in the Bay Area Jewish community when Akerlof taught at the University of California, Berkeley.

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Calif. bars state banks from funding Iran, terror groups

California enacted a measure making it illegal for state-chartered financial institutions to be used, directly or indirectly, to funnel money to terrorist groups or the government of Iran.

The law signed Monday by Gov. Jerry Brown provides oversight mechanisms to ensure that the state-licensed banks and credit unions have policies to prevent the maintenance and opening of accounts with foreign financial institutions that legally assist Iran.

Violators would be fined and reported to the U.S. Treasury Department for prosecution.

The state Assembly and Senate overwhelmingly passed the measure.

The legislation “sends a clear message that California — the ninth largest economy in the world — will not tolerate efforts by this Iranian regime to achieve nuclear weapons capabilities,” said Bob Blumenfield, a member of the Los Angeles City Council who backed the measure along with the Jewish Public Affairs Committee of California.

Senators urge Europe to shut out Iran from bank transactions

A large bipartisan slate of U.S. senators urged European Union officials to authorize the body's central bank to shut Iran out of its money transfer system.

The Feb. 25 letter to the president of the European Council, initiated by Sens. Jeanne Shaheen (D-N.H.) and Mark Kirk (R-Ill.) and signed by another 34 senators, asks the council to direct the European Central Bank to ban access by Iranian regime officials to “Target2,” the bank's cross-border funds transfer system.

The senators allege that Iran uses the system to launder euros in its accounts, allowing it to alleviate tough U.S. and European sanctions aimed at forcing the regime to be more transparent about its nuclear program.

“It is critical that the U.S. and Europe present a strong, unified front with respect to Iran's nuclear program,” the letter said.

Separately, Iran and major power negotiators meeting in Kazakhstan agreed Wednesday to reconvene next month in Istanbul to further discuss proposals by the major powers that would alleviate some sanctions in exchange for greater access to Iran's nuclear facilities.

The top Iranian negotiator, Saeed Jalili, said the proposals were “more realistic” than previous such offers.

Similar talks ended in failure in 2011.

Western intelligence agencies suspect Iran plans to manufacture a nuclear weapon. Iran insists its program is peaceful.

Bank of Israel Governor Stanley Fischer to step down

Stanley Fischer is stepping down from his position as governor of the Bank of Israel.

Fischer, 69,  will be leaving office on June 30 after serving eight years that included shepherding the Israeli economy through the global financial crisis of 2007-08. His term was scheduled to end in 2015.

He reportedly informed Israeli Prime Minister Benjamin Netanyahu of his decision on Tuesday, according to the bank. He is scheduled to hold a news conference on Wednesday morning to discuss his decision to leave.

Fischer said in a statement issued Tuesday by the bank that he was grateful for the opportunity to serve as the governor of the Bank of Israel, “especially during a challenging period that included the global economic crisis, a complex geo-political reality, and domestic social issues.”

In 2010, Fischer was named the world's best bank governor. Following the global economic woes of 2007-08, in September 2009, the Bank of Israel became the first bank in the developed world to raise its interest rates.

Fischer became an Israeli citizen when he assumed his position. He is known for his American-accented but nearly flawless Hebrew.

He previously served as chief economist at the World Bank.

Fischer earned a doctorate in economics from the Massachusetts Institute of Technology, where he also worked as a professor.

Netanyahu said Fischer played a major role in the economic growth of the State of Israel and in the achievements of the Israeli economy.

“His experience, his wisdom and his international connections opened a door to the economies of the world and assisted the Israeli economy in reaching many achievements during a period of global economic crisis,” Netanyahu said after meeting with Fischer.

World Bank: Urgent action needed to avoid PA fiscal crisis

The World Bank called on donors to act “urgently” to prevent a “deepening fiscal crisis” in the Palestinian territories.

Israel also needs to remove barriers to developing the West Bank economy, the World Bank said.

In a statement about its report published this week on the PA’s economy, the World Bank called for “immediate donor action coupled with freeing of untapped West Bank resources.”

Yet, “even with this financial support, sustainable economic growth cannot be achieved without a removal of the barriers preventing private sector development,” Mariam Sherman, World Bank Country Director for the West Bank and Gaza.said in the statement.

She added this applied “especially” to Area C – a non-contiguous area which makes up 60% of the West Bank and is under full Israeli control. Approximately 5.8% of the Palestinian population of the West Bank lives in Area C. 

Entitled “Fiscal Crisis, Economic Prospects: The Imperative for Economic Cohesion in the Palestinian Territories”, the report highlights the untapped resources of the West Bank as a potential source of private sector growth.

Tokyo bank freezes Iranian assets

A Japanese bank has halted transactions by the Iranian government in response to a U.S. court ordering a $2.6 billion asset freeze over the 1983 bombing of the U.S. Marines barracks in Beirut.

A spokesman for the Bank of Tokyo-Mitsubishi UJF confirmed the move to the Agence France-Presse, on Thursday.

The court order reflects “the amount that the court in 2007 upheld for compensation demands by families of victims of the 1983 attacks on US forces in Beirut,” the spokesman said.

The bank lodged an appeal against the U.S. court order on Thursday, saying that the action is “problematic” under Japanese law. He would not reveal the amount of money involved or who held the assets. The spokesman, however, said the bank “handles a relatively large number of transactions for trade with Iran,” AFP reported.

The ruling stems from the Oct. 23, 1983 bombing of the U.S. Marines barracks in Beirut, which killed 24 U.S. troops. Tehran has denied responsibility for the attacks, but Washington subsequently named Iran on a list of terrorism-supporting states. A 2007 court ruling in the United States ordered Iran to pay $2.65 billion to victims’ families.

Shut down Iranian bank, Germany’s leaders say

A call by Germany’s top Jewish leader for the European Iranian Bank of Commerce in Hamburg to be shut down was echoed by the German government.

Shortly after Dieter Graumann, head of the Central Council of Jews in Germany, made his statement to the Handelsblatt online newspaper, the government of Angela Merkel announced that no further payments from India for Iranian crude oil may go through the German banking system.

“This bank should not be part of the world of German banking—it should be banned,” Graumann said Monday.

Graumann’s remarks followed revelations that India, under pressure from the United States to halt trade with Iran, planned to deposit billions of dollars in payments for Iranian crude oil in the Bundesbank, Germany’s Federal Bank. The intention was for the bank to transfer about $12 billion annually to Iran via the Bank of Commerce in Hamburg.

Now Merkel says no further Indian oil payments to Iran may be made through Germany, the Handelsblatt reported.

According to the German Ministry of Finance, the Bundesbank must be notified of transactions of more than 10,000 euro, or about $14,000, involving Iran, and must give explicit approval to any transaction worth more than 40,000 euro, or nearly $57,000, in keeping with EU sanctions imposed on Iranian business.

The Bundesbank had argued that it could not stop the deal because it had no relation to Iran’s nuclear ambitions.

In a statement issued to JTA last week, a bank spokesperson said both the German government and Bundesbank “abide strictly and completely by the standards set by the United Nations … and the European Union with regard to Iran.”

“If an account holder instructs the Bundesbank to make a payment that is permissible under these regulations … the Bundesbank is obliged to carry out this transaction. In this respect, the Bundesbank is no different than other banks,” the statement said.

The Hamburg-based EIH bank has been the focus of several protest rallies organized by the Stop the Bomb campaign in Germany in recent months.

“The bank is vital for the German and global trade with Iran, and with the revenues for energy trade flowing through this bank, sanctioning the EIH would severely hurt the Iranian regime and also increase its internal conflicts,” Jonathan Weckerle, a spokesman for the organization,  told JTA.

The bank is not the only problem, Graumann told the Handelsblatt.

“Too many German companies are still carrying on unchecked with their vile business with the Iranian terror regime, the reigning world champion in Holocaust denial,” he said, “and I simply cannot fathom how the Bundesbank, of all institutions, one which for me personally remains practically sacrosanct, could stoop to covering up for or even promoting business with this evil regime.”

Where Are Arafat’s Millions?


With Yasser Arafat’s burial, he took with him one of the enduring secrets of the Palestinian regime — the whereabouts of a missing fortune in ill-gotten public funds.

Ranked sixth on Forbes magazine’s 2003 list of “the richest kings, queens and despots,” with an estimated private coffer of at least $300 million, Arafat never divulged his finances during decades as a terrorist chieftain and later as Palestinian Authority president.

U.S. accountants commissioned by the Palestinian Authority, where Finance Minister Salem Fayyad has garnered global praise for instituting reform, found that part of Arafat’s personal wealth was in a secret portfolio worth close to $1 billion.

Arafat was declared dead of organ failure in a French hospital Nov. 11 after a week that included wrangling between his wife, Suha Arafat, and his financial adviser, Mohammed Rashid. According to Palestinian sources, one dispute was over the fortune’s fate.

“The president is not known to have left a will, let alone all the details on where the money is kept,” one Palestinian source said. “So now it’s a free-for-all on getting the bank information.”

Yet Rashid has been adamant in defending Arafat’s good name.

“If this money does exist, let the Israelis and Americans find it,” he told Israel’s Yediot Achronot newspaper. “It is impossible these days to hide those kind of sums anywhere in the world.”

For ordinary Palestinians, venting ire at the unseemly behavior of Suha Arafat was the limit of public censure, given the gravity of losing their “national father.”

There also was the fact that while Suha Arafat lived lavishly in Paris on a reported monthly allowance of $100,000, her husband led an ascetic existence locked away in his ruined Ramallah headquarters — hardly the picture of high-roller corruption.

But with poverty deepening in the West Bank and Gaza Strip amid the 4-year-old intifada, Arafat’s successors may find themselves at pains to explain the missing cash, much of which was donated by Arab states and the European Union.

“It’s the money of the Palestinian people,” Palestinian lawmaker Hassan Khreishe told the Associated Press, adding that he would urge a parliamentary investigation.

Arafat was believed to have used some of the money to buy loyalty and to finance the activities of terrorist groups under the umbrella of his Fatah movement.

French officials launched a probe earlier this year into the alleged transfer of $11.5 million from Swiss bank accounts to Suha Arafat. She denied any wrongdoing.

In 2003, the International Monetary Fund (IMF) found that from 1995 to 2000, $900 million had been “diverted” from the Palestinian budget to an account controlled by Arafat.

But the IMF said most of that money was invested in Palestinian assets and Fayyad had assumed public control of it.

Swiss investment adviser Jean-Claude Robard told Al Jazeera satellite television earlier this month that Arafat had bank accounts in Switzerland, Austria, Luxembourg and the Cayman Islands.

The Associated Press cited financial sources as saying that Arafat’s PLO also owned an airline in the Maldives, a Greek shipping company, banana plantations, an African diamond mine and real estate throughout the Middle East.

Israeli newspapers said Arafat also has an account in Tel Aviv, where Israel deposited tax and customs revenues collected on Palestinian salaries and goods under the Oslo accords.

According to Yediot Achronot, Israel put over $500 million into that account, before freezing it when the intifada erupted.


Diminished Returns

Matt Fong
California Treasurer Matt Fong is having second thoughts aboutthe sanctions he imposed on Swiss banks, partly due to what he saysare “mixed signals” from the Jewish community.

Since July, Fong has liquidated some $2 billion worth ofCalifornia funds in Swiss banks by not renewing short-terminvestments, and he has declared a moratorium on future deposits.

Fong took the publicly unannounced action after reading newspaperreports on the slow pace by Swiss banks in settling the accounts ofvictims and survivors of the Holocaust.

“As a banker, I questioned whether I could retain confidence in(Swiss) banks to handle my money, if they failed to identify theseaccounts and return the money,” Fong said in an interview in his LosAngeles office.

However, to his surprise and chagrin, he received little feedbackfrom the Jewish community on his action, after it was finally madepublic in October. He even received some criticism.

“Because the Jewish community is active in so many other issues, Iwas surprised that I received very little input, pro or con, on this,so it doesn’t seem to be as important to them as I had expected,” hesaid.

The initial objections came from U.S. Under Secretary Stuart E.Eizenstat, who told Fong that the Swiss were taking a number ofinitiatives to rectify past mistakes and that the Californiasanctions would antagonize the Swiss people and provecounterproductive.

What seemed to upset Fong the most, though, was a letter from theAnti-Defamation League, signed by its national director, Abraham H.Foxman, along the same lines as the Eizenstat communication.

“That letter took me by surprise, coming from ADL, a respectedorganization,” said Fong. “There were no phone calls, they didn’t askfor a meeting, they just sent me this letter saying, ‘butt out.'”

Commenting on Fong’s remarks, David A. Lehrer, the local regionalADL director, said that, “This is a very complicated issue. While wemay differ on the best tactics, we applaud Mr. Fong’s efforts andintentions.”

The state treasurer had earlier received strong verbal supportfrom the World Jewish Congress and individual Jewish leaders, and,like many outside observers, he seemed baffled that the Jewishcommunity was not speaking in one, monolithic voice.

Fong, a leader in the Chinese-American community and son of formerCalifornia Secretary of State March Fong Eu, is a declared Republicancandidate for the U.S. Senate seat held by Democrat Barbara Boxer.The question was put to him whether his action against the Swissbanks was linked to the hope of attracting Jewish votes in nextyear’s election.

He denied any ulterior motive. “I never even told anyone (aboutimposing the sanctions), because I believe in quiet diplomacy. If Ihad wanted attention, I would have stood in front of a synagogue andmade a big public announcement,” he said.

As things stand now, Fong is reassessing his position but willmake no decision until he attends a Dec. 8 meeting in New York,convened by New York City Comptroller Alan Hevesi.

The meeting will bring together state and city officials who haveinitiated sanctions against Swiss banks, representatives of majorSwiss banks, and leaders of various Jewish organizations to explorefuture courses of action.

“I will be satisfied with a process in which we can ‘trust’ theSwiss bankers, but at the same time enable us to verify and monitortheir promises,” said Fong.

The Swiss Spin

Swiss Ambassador Alfred Defago

Has unremitting pressure on the Swiss government and its banks byAmerican Jewish organizations and supportive politicians becomecounterproductive, or will only constant prodding move the Swiss todo the right thing?

The question is being spurred by a newly cohesive attempt atdamage control by leading Swiss spokesmen, aimed at Americanaudiences in general, and the Jewish community in particular.

During a recent week-long visit to California, Alfred Defago, theSwiss ambassador to the United States, spent his first day in LosAngeles, visiting the Simon Wiesenthal Center in the morning andholding back-to-back meetings with two Jewish leadership groups inthe afternoon and evening.

During his trip, Defago addressed an average of five to eightgroups a day, about a third of them Jewish. But even in meetings withgeneral audiences, “the Jewish aspect always comes up,” he saidduring a private interview in his hotel room.

Two weeks earlier, Dr. Pierre Braunschweig, a Swiss historian anddirector of a political-policy think tank, stopped in Los Angelesduring a national tour to defend his country’s role during World WarII. He said that he was the first Swiss representative to visitAmerican universities and to examine charges that neutral Switzerlandwas a willing collaborator of Nazi Germany during the war.

Defago struck one major theme in his public addresses and privatemeetings. After reciting his country’s current and future steps toidentify Swiss bank accounts opened by Holocaust victims and toestablish a fund to aid survivors, Defago added, in one typicalinstance:

“While it may sometimes appear that Switzerland moves slowly, thisis because the Swiss are a deliberate and prudent people…. We askAmericans to please respect democratic rule. Give us time forreflection and making up our minds. Nobody likes to be pushedaround.”

And, on another occasion, he said, “We react better toconstructive dialogue than unreasonable political and economicthreats.”

To bolster his plea for patience and calm discussion, Defagorepeatedly quoted U.S. Under Secretary of State Stuart E. Eizenstat,the leading American voice for lowering the level of anti-Swissrhetoric and sanctions.

It is not lost on the Swiss that Eizenstat, both as a prominentJewish figure and as director of a U.S. government study that’shighly critical of the Swiss government, enjoys a high credibilityrating in the Jewish community.

In opposing sanctions against Swiss banks by the state governmentsof California, New York and Massachusetts, Eizenstat said, recently:”Such actions have led to a negative reaction in Switzerland,creating the impression among the Swiss population that they areunder unfair attack.

“This impression undermines the Swiss government’s ability tocomplete those initiatives that are subject to a direct vote of thepeople in referenda.”

Eizenstat’s reference is to two separate referendums that Swissvoters must approve in order to allow the government to sell off aconsiderable part of its gold reserves and establish a $4.7 billionSolidarity Fund, part of which would benefit Holocaust survivors.

Braunschweig and other knowledgeable Swiss observers predict thatif the present mood of the Swiss electorate continues into next year,the referendums will fail, elevating the present acrimony to an evenhigher pitch.

Backing Eizenstat’s viewpoint is Abraham H. Foxman, nationaldirector of the Anti-Defamation League. In a letter to stateTreasurer Matt Fong, Foxman wrote that, given recent “very hopefulsigns” of cooperation by the Swiss government and banks,” punitivepolicies by California and other states and municipalities would becounterproductive to this positive effort.”

Defago concedes the present aggrieved state of most of hiscountrymen at what they perceive as bias by the American media,unfair accusations by Jewish organizations and demeaning threats byAmerican politicians. But many Swiss, he adds, especially among theyounger generation, are open to critical self-examination and willcorrect past errors if allowed to work through the process at theirown pace.

At least one Jewish leader, with intimate knowledge ofSwitzerland, sees some merit in Defago’s arguments. Arthur P. Stern,a Swiss-educated Holocaust survivor who is married to a Swiss-Jewishwoman and who is former president of Magnavox, said that while “I amnot an enthusiastic supporter of Switzerland, I feel that some thingshave gone too far.”

Stern, who chaired a meeting that the Jewish Federation Council’sJewish Community Relations Committee (JCRC) had with the Swissambassador, gave, as an example, the recent television documentary,”Nazi Gold.” The documentary charged that the Swiss allowed thetransshipment of Italian Jews across their territory to Germanconcentration camps.

Stern termed this charge preposterous, saying: “It is no minorthing to accuse a people of murder. It is very difficult,particularly for American audiences, to reconstruct a situation 50years later and to understand the attitudes and traditions of anothercountry.”

Stern’s relatively charitable viewpoint was not shared by StanleyKandel, who participated in the same meeting.

“I didn’t find the ambassador forthcoming; he would only admitwhat he was forced to admit,” said Kandel. “He never acknowledgedthat Switzerland prospered during World War II and acted way beyondwhat it needed for survival.”

The president of the American Jewish Committee’s Los Angeleschapter, Barry Sanders, who took part in a separate colloquium withDefago, suggested a balanced approach to Switzerland.

“We should continue to put appropriate pressure on the Swiss to dothe right thing, but acrimonious and not strictly accurateaccusations are not effective,” he said.

Yet such observations on the Swiss pleas for relief from Americanpressures and accusations are mild, compared with the reactions ofthose individuals and organizations that have led the fight to forceSwiss banks and the Swiss government to admit to and rectify theirwartime and postwar actions.

Sen. Alfonse D’Amato, R-N.Y., who chaired the Senate hearings thatexposed Swiss banking practices and brought them to world attention,minced no words.

“What do [the Swiss] expect me to do: surrender my right of freespeech?” he said in a phone call from his Washington office. “Dotheir banks think that by releasing their lists [of wartime Jewishaccounts] a little at a time, we’ll be satisfied? If we didn’t bringthis up, they wouldn’t have done a thing — give me a break.”

Injecting occasional expletives for emphasis, the senator promisedthat “I will do whatever is necessary to achieve justice…it is notI who creates antagonism, it’s their officials. It wasn’t me, butthey, who talked of Jewish blackmail and a war against the Jews.”

Elan Steinberg, executive director of the World Jewish Congress,was only slightly less emphatic. The WJC, as the lead organization inconfronting Swiss banks and government policy, “does not applypressure, but pursues the truth,” said Steinberg. “If the Swissconsider that truth is pressure, that’s their problem.

“Actions taken by the Swiss have undercut confidence in them. Theyhave been unwilling to admit that they have made mistakes. We willcontinue to pursue the truth.”

Another player in the Swiss arena is the Simon Wiesenthal Center.The Los Angeles-based organization found itself in a diplomaticcontretemps when the Swiss ambassador showed up for a scheduled 8a.m. visit to learn that neither of the center’s two top executives,Rabbis Marvin Hier and Abraham Cooper, were there to greet him. ASwiss official told a Jewish leader that the rabbis’ absence was “aslap in the face.”

Hier, who said that he was at a long-planned family wedding in NewYork and that Cooper was in Israel, ascribed the incident to amisunderstanding. Defago, in an earlier communication, had merelyasked for a tour of the Wiesenthal Center’s Museum of Tolerance, asdo many visiting dignitaries, Hier said.

“Had we known that the ambassador wanted to see us and discussissues with us, we would have notified him that we would not be intown,” Hier said. He added that he would phone Defago to apologizefor the inadvertent slight.

Otherwise, the Wiesenthal Center’s investigations will continue tofocus on what Hier called “the neglected question” of how manydormant wartime accounts in Swiss banks were opened by top Naziofficials and businessmen before the collapse of the Third Reich.

The sums deposited by perpetrators of the Holocaust may be muchlarger than the amounts deposited by Holocaust victims, but the Swisshad not exposed the Nazi assets, because it would be “tooembarrassing for the Swiss,” Hier said.

The visits to Los Angeles by the Swiss ambassador and a Swisshistorian were marked by a number of ironies.

The two men’s meetings with Jewish organizations were conductedwith considerable civility on all sides. The really aggressivecomments and questions took place in such elevated and supposedlyneutral forums as the Los Angeles World Affairs Council and UCLA, andcame from unrestrained freelance protesters.

At the university, for instance, a questioner stunned the Swiss byaccusing them of a form of original sin, which included profiteeringduring World War I and the hiring out of Swiss mercenaries to warringEuropean armies in centuries past.

The visiting Swiss officials and journalists acknowledged thatthey were psychologically unprepared for worldwide criticism becauseof their country’s squeaky-clean and oversentimentalized image as theland of fine chocolates, watches and ski resorts, inhabited bystolid, law-abiding burghers.

To dispel this unwarranted picture of “Heidiland,” as one Swissvisitor put it derisively, he and others went to great lengths toassure Americans that Switzerland was rife with drug problems,racism, alienation of the young, high unemployment and the illscommon to other nations.