Nuclear Radioactive Threat From Fukushima Spent Fuel Rods

REPORT FROM GLOBAL RESEARCH 10 APRIL 2012

Japan’s former Ambassador to Switzerland, Mr. Mitsuhei Murata, was invited to speak at the Public Hearing of the Budgetary Committee of the House of Councilors on March 22, 2012, on the Fukushima nuclear power plants accident. Before the Committee, Ambassador Murata strongly stated that if the crippled building of reactor unit 4—with 1,535 fuel rods in the spent fuel pool 100 feet (30 meters) above the ground—collapses, not only will it cause a shutdown of all six reactors but will also affect the common spent fuel pool containing 6,375 fuel rods, located some 50 meters from reactor 4.

In both cases the radioactive rods are not protected by a containment vessel; dangerously, they are open to the air. This would certainly cause a global catastrophe like we have never before experienced. He stressed that the responsibility of Japan to the rest of the world is immeasurable. Such a catastrophe would affect us all for centuries. Ambassador Murata informed us that the total numbers of the spent fuel rods at the Fukushima Daiichi site excluding the rods in the pressure vessel is 11,421 (396+615+566+1,535+994+940+6375).

I asked top spent-fuel pools expert Mr. Robert Alvarez, former Senior Policy Adviser to the Secretary and Deputy Assistant Secretary for National Security and the Environment at the U.S. Department of Energy, for an explanation of the potential impact of the 11,421 rods.

I received an astounding response from Mr. Alvarez [updated 4/5/12]:

In recent times, more information about the spent fuel situation at the Fukushima-Dai-Ichi site has become known. It is my understanding that of the 1,532 spent fuel assemblies in reactor No. 304 assemblies are fresh and unirradiated. This then leaves 1,231 irradiated spent fuel rods in pool No. 4, which contain roughly 37 million curies (~1.4E+18 Becquerel) of long-lived radioactivity. The No. 4 pool is about 100 feet above ground, is structurally damaged and is exposed to the open elements. If an earthquake or other event were to cause this pool to drain this could result in a catastrophic radiological fire involving nearly 10 times the amount of Cs-137 released by the Chernobyl accident.

The infrastructure to safely remove this material was destroyed as it was at the other three reactors. Spent reactor fuel cannot be simply lifted into the air by a crane as if it were routine cargo. In order to prevent severe radiation exposures, fires and possible explosions, it must be transferred at all times in water and heavily shielded structures into dry casks.. As this has never been done before, the removal of the spent fuel from the pools at the damaged Fukushima-Dai-Ichi reactors will require a major and time-consuming re-construction effort and will be charting in unknown waters. Despite the enormous destruction cased at the Da–Ichi site, dry casks holding a smaller amount of spent fuel appear to be unscathed.

Based on U.S. Energy Department data, assuming a total of 11,138 spent fuel assemblies are being stored at the Dai-Ichi site, nearly all, which is in pools. They contain roughly 336 million curies (~1.2 E+19 Bq) of long-lived radioactivity. About 134 million curies is Cesium-137 — roughly 85 times the amount of Cs-137 released at the Chernobyl accident as estimated by the U.S. National Council on Radiation Protection (NCRP). The total spent reactor fuel inventory at the Fukushima-Daichi site contains nearly half of the total amount of Cs-137 estimated by the NCRP to have been released by all atmospheric nuclear weapons testing, Chernobyl, and world-wide reprocessing plants (~270 million curies or ~9.9 E+18 Becquerel).

It is important for the public to understand that reactors that have been operating for decades, such as those at the Fukushima-Dai-Ichi site have generated some of the largest concentrations of radioactivity on the planet.

Many of our readers might find it difficult to appreciate the actual meaning of the figure, yet we can grasp what 85 times more Cesium-137 than the Chernobyl would mean. It would destroy the world environment and our civilization. This is not rocket science, nor does it connect to the pugilistic debate over nuclear power plants. This is an issue of human survival.

There was a Nuclear Security Summit Conference in Seoul on March 26 and 27, and Ambassador Murata and I made a concerted effort to find someone to inform the participants from 54 nations of the potential global catastrophe of reactor unit 4. We asked several participants to share the idea of an Independent Assessment team comprised of a broad group of international experts to deal with this urgent issue.

I would like to introduce Ambassador Murata’s letter to the UN Secretary General Ban Ki-moon to convey this urgent message and also his letter to Japan’s Prime Minister Yoshihiko Noda for Japanese readers. He emphasized in the statement that we should bring human wisdom to tackle this unprecedented challenge.

Ambassador Murata’s letter says:

It is no exaggeration to say that the fate of Japan and the whole world depends on NO.4 reactor. This is confirmed by most reliable experts like Dr. Arnie Gundersen or Dr. Fumiaki Koide.

Anti-nuclear physician Dr. Helen Caldicott says that if fuel pool 4 collapses, she will evacuate her family from Boston and move them to the Southern Hemisphere. This is an especially dramatic statement given that the West Coast is much more directly in the path of Fukushima radiation than the East Coast.

Will humanity rise to the occasion, and figure out how to stabilize fuel pool number 4 before catastrophe strikes?

Or will modern civilization win a Darwin award for failing to pay attention to the real threats?

ASK QUESTION:

WHO WILL SAVE OR RESCUE US/HUMANITY IF JAPAN CLOSE THIS TRUE UNFOLDING EVENTS ? LA HAULA WA LA QUWWATA ILLA BILLAHI ALIYYIL AZIM....FROM ALLAH, WE CAME AND UNTO HIM ARE OUR RETURNING.

Silver, China and Dirham

Let See and Think :

1. China silver output in 2010 = 104.6 million oz.

2. Equal to 1,093.6 million dirham coins (2.975 gm).

3. Based on price of RM25/dirham, it valued at RM26.84 billion.

4. Roughly China 1.3 billion population, each citizen can buy/own 1 Dirham.

5. Using same ratio of 28 million Malaysian, we all can buy/own 28 million silver Dirham valued at RM700 million ! (RM25 x 28 m ).

"China's silver market is roughly three times the size it was in 2000," CPM noted in its recently published Silver Yearbook 2011. "China is the third largest producer of mined silver in the world. China also is a major consumer of silver, absorbing large and rapidly growing volumes of silver in its electronic manufacturing sector." - MINEWEB Report 11 Mac 2011.

"Chinese silver mining witnesses significant growth and development in recent years, fueled by technological strides in exploration and an increase in production in response to steady growth in domestic and international demand," CPM said.

For instance, CPM found domestic demand for silver has outpaced supply growth. "China was a net exporter of silver until 2006, but became a net importer in 2007."

"Chinese investment demand for silver coins and medals began to rise at a double digit pace in 2008, a trend likely to continue as consumers seek to preserve their wealth amid rising inflation in the economy," CPM forecast.

The Chinese mine supply of silver totaled 102.7 million ounces in 2010, according to CPM. More than two-thirds of that output is from silver contained in copper, lead, zinc and gold concentrates. "Consequently, China's refined silver production has been growing in tandem with base metals output."

CPM predicts silver mine production could increase to 104.6 million ounces this year. "China's silver mine supply is expected to increase over the next few years, driven mainly by production expansions at silver-producing base metals mines."

Jiangxi Copper, one of the largest copper producers in China, was also among the biggest refined silver producers with 14.8 million ounces of refined silver in 2010. The country's total refined silver output in 2010 was estimated at 194.4 million ounces.

CPM forecast that Jiangxi could produce 15.6 million ounces of silver in 2011. The precious metals consultants estimated Jiangxi has about 341.8 million ounces of silver in proven reserves.

Postscript 2 :

Goldforecaster report 1 April 2011.

HSBC, the world's largest bullion dealer [in both gold and silver] is confirming that silver's role as a monetary metal is gathering the most momentum, particularly in emerging economies. They say that the macro economic trends from emerging markets are positive for both gold and silver. They put the growing Chinese middle classes [now well over 400 million people of the 1.3 billion Chinese citizens] as fueling an "explosive" growth in demand for silver as a hedge against fast rising inflation.

The Industrial and Commercial Bank of China, the world's largest bank by market value, agrees this. I.C.B.C. sold 13 tonnes [418,000 ounces] of physical silver to Chinese citizens in January, alone, compared with 32.97 tonnes [1.06 million ounces] for the whole of 2010.

We have seen China turn from an exporter of silver to a huge importer in the last three years. And that's just the start! China was a net importer of over 3,110.42 tonnes [100 million ounces] of silver last year, whereas while it was selling 'official' holdings of silver only a few years ago it was exporting an equal amount annually.

Gold Exchange Paper Trade Fund in Singapore

Welcome to SPDR Gold Shares (Launched in 2006)

1. SPDR Gold Shares offer investors an innovative, relatively cost efficient and secure way to access the gold market. SPDR Gold Shares are intended to offer investors a means of participating in the gold bullion market without the necessity of taking physical delivery of gold, and to buy and sell that interest through the trading of a security on a regulated stock exchange. The introduction of SPDR Gold Shares was intended to lower many of the barriers, such as access, custody, and transaction costs, that have prevented some investors from investing in gold.

2. SPDR Gold Shares represent fractional, u ndivided beneficial ownership interests in the Trust, the sole assets of which are gold bullion, and, from time to time, cash. SPDR Gold Shares are intended to lower a large number of the barriers preventing investors from using gold as an asset allocation and trading tool. These barriers have included the logistics of buying, storing and insuring gold. In addition, certain pension funds and mutual funds do not or cannot hold physical commodities, such as gold, or the derivatives.

Master Izi Commentary:

a. Beware if they offer you to buy paper gold. You may lose your 'money' anytime.

b. It means they can sell unlimited 'quantity' of paper gold or 'shares based on moving gold price'.

c. Are you an investor or buyer ? You may lose both ways if not careful !

d. It seems that they are replicating the old way of cheating your 'real gold' by promising to pay 'interest/guranteed profit' if your keep your gold with them/bankers. More sophiscated names will be better to confuse you.

e. If you read the current free media - there are 100 times traded gold fund/paper in the world than the real gold trade( physical delivery/stocks today). So 99% gold paper fund are just like shares stocks, have no relationship to true gold buying and selling to take possession.

f. In islamic ruling...all these are riba based financial trading and dubious instruments to increase paper wealth, manipulation, power and control over real gold and silver production/trading.

g. JP Morgan and HSBC control about 80% of world silver traded fund ! Then you know why and how they cheated you by opening up more funds in friendly states under their domination.

h. Alf Field (op.cit.) is talking about the „seven D’s” of the developing monetary disaster: Deficits, Dollars, Devaluations, Debts, Demographics, Derivatives, and Devolution. Let me add that the root of all evil is the double D, or DD: Delibetare Debasement. In 1933 the government of the United States embraced that toxic theory of John Maynard Keynes (who borrowed it from Silvio Gesell). It was put into effect piecemeal over a period of four decades. But what the Constitution and the entire judiciary system of the United States could not prevent, gold did. It was found that gold in the international monetary system was a stubborn stumbling block to the centralization and globalization of credit.

Zakat Wang Kertas Tak Sah

Zakat Sebenarnya Hanya Diterima Dengan Dinar Emas dan Dirham Perak, Bukannya Wang Kertas!

Pelancaran Matawang Syariah Dinar dan Dirham di Kota Bahru, Kelantan pada 2 Ramadhan 1431H (12 Ogos 2010) lalu menandakan berakhirnya darurat untuk orang Islam untuk pengambilan dan pembayaran zakat di samping titik permulaan untuk kembalikan semula Muamalat sebagai asas asas deen ul-Islam.

Dinar ialah syiling emas 22 karat (917/916) seberat 4.25 gram manakala Dirham ialah syiling perak tulen (999) seberat 2.975 gram. Timbangan ini dikenali sebagai Piawaian Umar Al-Khattab, Khalifah Islam kedua dan disetujui jumhur ulama serta digunakan sejak permulaan Islam lagi.

Kedudukan dwilogam ini sebagai matawang Syariah dijelaskan Ibn Khaldun dalam kitabnya, al Muqaddimah: "Asas nas dan dalil menyebut dan kaitkan banyak penghakiman kepada kedua-duanya, contohnya zakat, nikah kahwin, hudud dan lain-lain, oleh itu dalam nas dan dalil ia ada kepentingan tersendiri dengan ukuran tertentu untuk penilaian (zakat dan lain-lain) di mana hukum diasaskan berbanding (syiling-syiling lain) yang bukan syarie.

Maka sangat jelas, pengambilan dan pembayaran zakat hendaklah menggunakan matawang syariah iaitu dinar dan dirham terutama berkaitan zakat harta. Zakat harta merujuk kepada emas dan perak dalam semua bentuk dan barang dagangan. Jumlah nisab dan zakat harta ialah 20 dinar emas (85 gram) dan 200 dirham perak (595 gram). Bagi setiap 20 dinar, zakat ialah 1/2 dinar dan bagi setiap 200 dirham, zakat iaah 5 dirham. Ukuran di sini ialah beratnya.

Dua jenis zakat harta iaitu simpanan dan perniagaan Keuntungan pelaburan juga dikenakan zakat. Pada masa ini, wang kertas digunakan untuk membayar zakat kerana ianya sah diperlakukan melalui paksaan undang-undang sehinggakan pihak berkuasa pun akur kepada undang-undang itu walaupun mereka sebenarnya tidak terikat kepadanya. Menurut Imam Malik ibn Anas, wang dalam Islam ialah apa saja barangan diterima umum sebagai bahan perantaraan mereka dan tidak ada barangan boleh dipaksakan sebagai wang. Jelaslah wang kertas tidak memenuhi syarat sebagai wang. Ia bukan barangan diterima umum, tetapi undang-undang memaksa kita guna, malah dicipta atas angin, tiada sandaran dan bukan surat hutang. Ia hutang yang ada padanya Riba!

Menurut buku Shaykh Abdalhaq Bewley - Zakat Raising The Fallen Pillar...walaupun begitu, wang kertas masih tidak boleh digunakan untuk bayar zakat kecuali guna syiling emas dan perak yang dituntut syariah kerana tidak ada bukti barangan lain diterima untuk bayaran zakat dan tidak susah mendapatkan emas dan perak untuk penuhi kewajipan itu.

Telah berkata Imam Shafie di dalam kitabnya Ar Risalah: "Tiada harus diqias dengan emas dan perak atas yang lain daripada keduanya pada wajib zakat"

Menurut Imam Abu Bakr al-Kasani dalam kitabnya Bada'i al-Sana'i, zakat mesti dibayar dengan barangan 'ayn dan tidak boleh dibayar dengan dayn iaitu hutang, tanggungan atau mahupun nota janji. Satu bentuk zakat lagi ialah Zakat Fitrah. Amalan zaman Rasulullah S.A.W, zakat fitrah dibayar guna bahan makanan asasi seperti gandum, barli, beras, dan lain-lain. Ukuran di sini ialah timbangan dan bukan harga. Bagaimanapun menurut Imam Abu Hanifah, harus dikeluarkan zakat fitrah dengan wang seharga atau senilai dengan makanan wajib dikeluarkan zakat. Menurutnya zakat fitrah adalah hak fakir miskin.Untuk memenuhi hajat mereka boleh dengan makanan dan boleh juga dengan wang. Bagaimanapun, wang yang disebut oleh Imam Abu Hanifah itu bukanlah wang kertas, tetapi dinar emas dan dirham perak yang digunakan semasa pemerintahan Khalifah Uthmaniyah (di mana mazhab Hanafi menjadi pegangan) sehinnga ia jatuh pada 1924.

Kita berada dalam keadaan darurat kerana kerajaan-kerajaan dipimpin oleh orang Islam sendiri mengeluarkan wang kertas yang dimaktubkan dalam undang-undang negara yang diperkenalkan oleh bekas penjajah masing-masing. Dalam Islam, darurat ialah satu keadaan membolehkan sesuatu hukum itu dilonggarkan untuk sementara. Apa yang biasanya diharamkan menjadi harus, tetapi kita tidak boleh untuk berada dalam keadaan darurat untuk selama-lamanya.

Apa yang perlu dibuat ialah usaha keluar dari keadaan itu. Surah At-Talaq ayat 3, Allah berfirman maksudnya; "Dan (Allah) akan memberinya rezeki dengan tiada terkira. Barang siapa menyerahkan diri kepada Allah, maka Allah akan mencukupkan (memeliharanya). Sungguh Allah menyampaikan (melangsungkan) urusan Nya. Sungguh Allah mengadakan satu kadar (aturan yang tertentu) bagi tiap-tiap sesuatu"

Berasaskan kefahaman kita mengenai sifat sebenar wang kertas dan ada pula matawang syariah, maka tempoh darurat sudah berakhir. Orang Islam yang ingin membayar zakat dengan sempurna hendaklah melakukannya dengan dinar dan dirham. Kini, menjadi tuntutan ke atas semua Mufti 13 negeri dan 3 Wilayah Persekutuan Malaysia untuk mengkaji dan mengambil langkah perlu bagi memastikan bukan sahaja pengambilan zakat malah pengagihannya dibuat dalam mata wang syariah.

Rakyat Kelantan telah melakar sejarah dunia dan ia satu teladan semestinya dicontohi. Mengembalikan pengambilan dan pembayaran zakat dengan cara tepat akan membolehkan kita mendirikan semula tiang zakat yang telah runtuh.

Artikel asal oleh
Khalid Noorshah

Dimuatkan di dalam Akhbar Sinar Harian edisi Utara
29 Oktober 2010

Making Endless Money and Still Fear or Panic

Perhaps it hasn’t mattered for a long time now. The futurist John Casti, a maths genius, shows in his new book “Mood Matters: From Rising Skirt Lengths to the Collapse of World Powers” how the moods of a society govern its history. Casti’s argument is a radical one: it’s not events in the real world that shape the future, but solely collective expectations. As Epictetus said over two thousand years ago, “What upsets people is not things themselves but their judgments about the things.”

Not just wicked speculators are betting against the euro. A fear-and-anxiety industry among the media, which depend above all on escalating headlines, has been with us a long time.

Fearconomy

The Euro Apocalypse, the Twilight of Money, the End of Prosperity. Angry professors come on talk shows to grandstand with their I’ve-known-it-all-along gestures. In every debate the organ notes piping out doom and gloom have to be cranked an octave higher.

Has this “Fearconomy” not already been the true economy a long time, a much stronger economy than one that relies on change, improvement and renewal? Is “Terror, alarm, horror, end, downfall, crisis, bankruptcy, danger, abyss, anxiety, core meltdown” not the hottest business model of all time, because human beings, at their deepest level, are simply creatures of panic?

“Our most profound conviction,” says Dr. Hoffman in the novel by Robert Harris, “is that digitisation itself, universal connectivity, will provoke a global panic wave. And that’s how we’ll make money – a hell of a lot of money!”

The State = Bank + Government

Umar Vadillo-

We are simply pointing out that we cannot give validity to a word simply because we are comfortable with it. The value of a word, is that it helps you to discern, to discriminate, to identify. In our case, a good definition of State should give us understanding of this institution and by extension of our society. It should help us to act. And because we are Muslims this implies understanding from an Islamic perspective, and acting means acting fisabilillah.

It is in this light that I value the necessity to create a new definition of the State. Whether we like it or not, our cultural and historical values are embedded in language. When we challenge language -this is what a poet does- we are challenging the cultural and historical values of our society. For us this should be done in order to establish our own Islamic understanding of life. This is important. Our language should reflect who we are.

Words are windows that open “worlds” before us. Which words we use and how we use them determines the way we see the world. I forged this definition of the State out of necessity. I was not happy with the present definitions. They were too vague to create identity or too partisan to recognise a problem. They all seemed to ignore what I call “the event”. This event is the marriage between banking and government that took place somewhere in the past. This event was not nothing. It was a huge evolutionary step in our history and the consequences have been even bigger as they reached our days.

As a result of this event the way people interacted with government changed, including how revenues were collected, the creation of debt, the way of accumulation of capital, the meaning of money and investment, and many other collateral issues involving the basis of trading and finance between countries. In short, almost every way in which we relate to each other changed for ever. The world changed for ever after this event. Yet, I realised, no one had named this new institution. This institution was more than government, it was more than banking. But it had no adequate name. This is a danger, because if you cannot name it, you cannot think it.

The Event

The event that I am referring to took place in England in the year 1694 with the birth of the Bank of England as the national Bank. The Bank of England was not the first national bank. Two other national banks were created before the Bank of England. The first national bank was the Banco de Spiritus Sanctus or the Bank of the Holy Spirit (amazing name!) which became the first national Bank in 1605 of, which State? None other than the Vatican. The Bank, founded by Pope Paul V, has ceased to perform financial miracles for the Popes -now it is in the hands of the Italian State- but the Vatican possesses its own official bank, piously called the Institute for Religious Works.

The second was the Bank of Sweden (Sveriges Riksbank) founded in 1668. The reason why we have chosen the Bank of England as the birth of the State is because only England with the beheading of their King and the creation of the Parliament had the right social chemistry to trigger the unprecedented unfolding of this institution, the State. Only in England, and for the first time, the debt of the Sovereign had the conditions to become what became known as the National Debt. A concept whereby the debt incurred by the Sovereign, no longer belongs to him, but to the entire nation.

From Gold To Bank Notes and Paper Currency: New Turkey ?

Ottoman Public Debt

By the mid-19th century the financial situation of the Ottoman Empire was precarious. The Empire had remained far behind from European technological progress and it was also not able to maintain the military strength it needed. Although the world was going through the early wave of globalization, which was giving a boost to world trade and capital flows, the Ottoman Empire was not able catch up with its pace. Economic and financial reforms were urgently needed. The reform movements in the Ottoman Empire actually go back to the 18th century, however it was with the declaration of the Tanzimat Decree, which made way for a constitutional state in the Empire for the first time, when the reform movement entered a new phase in the sense that liberalism that rose and developed in Europe had begun to take steps in the Ottoman Empire. The Tanzimat period was to be one where European influence had a great influence not only on administrative and military, but also on economic transformations, although the latter lagged behind the general momentum of change.

Money was needed to finance the reforms. It was a time when the value of Ottoman currency was plummeting. When Sultan Mahmut II had ascended to the throne in 1808, one Pound Sterling was trading at 19 Piasters. When he died in 1839, the rate was 106 Piasters to one Pound Sterling. It was also a time when foreign borrowing was unimaginable in the eyes of those governing the Empire, because it was deemed synonymous with surrendering sovereignty. Hence, the only way left to create new resources was to imitate a European practice and print paper-money. Printing Paper Money The introduction of the first ever paper-money (in Turkish: kaime) took place in 1840. It had an interest of 12.5 percent, hence it was more a bond rather than banknote. It was to remain in circulation for 8 years, but the population found it hard to get used to this novelty. Soon its trading value fell 30-40 percent below its nominal value. Zafer Toprak explains the reason for the lack of confidence as follows: “In the West, banknotes were issued by strong banks authorized by the government. The banknotes in circulation were guaranteed by these banks. Furthermore, thanks to other tools of similar to money, there was an established confidence in paper. However, for the Ottomans money meant the gold and silver it contained rather than the imperial insignia on it. In an environment where even individual rights and freedoms were not secured and safety of life and property was questioned, it was extremely difficult to feel safe with paper money.”

One of the earlier Ottoman banknotes, which has a denomination of 100 Lira

The paper-money was followed by the adoption of a bi-metallic standard in 1844 and the establishment of Banque de Constantinople, a foreign currency regulating agency in 1845. Ethem Eldem states that these early measures had proved inefficient: “…mainly due to the fact that most of these innovations had remained at the level of —often contradicting— half-measures: the uncontrolled issue of paper-money had led to a disastrous depreciation of the kaimes while at the same time adding to the monetary chaos of the period; the 1844 monetary reform had been unable to eradicate the circulation of altered currency; and the Banque de Constantinople had been forced into bankruptcy by the government’s demand for cash advances which the insufficient capital basis and local resources of the bank had been unable to meet.” The Crimean War of 1854-56 was a turning point in the history of the Empire, in the sense that for the first time ever Ottomans sided with two great European powers, Britain and France, fighting against Imperial Russia. The war ended with the signing of the Paris Peace Treaty in 1856, only one month after the Islahat Decree was issued by Sultan Abdülmecit. This decree introduced a number of reforms, including financial ones based on European support.

Foreign Borrowing The Crimean War also marked the beginning of a period when the Ottoman Empire began to resort to foreign borrowing to finance its rapidly growing deficits. Additionally to attempting to finance the through repeatedly issuing new series of paper-money, the Sublime Porte took its first foreign loan in 1854. The £3 million loan, which was issued at a rate of 80 percent and an interest rate of 6 percent, was supported but not guaranteed by the British. It was the beginning of a series of loans obtained on European markets. The second one came in 1855, a £5 million loan issued at 102.6 percent with an interest rate of 4 percent and this time interests guaranteed by British and French governments. These were war time loans, Allies were supporting each other and therefore the conditions were favourable. Ethem Eldem comments: “Money was coming in at a much lower cost than when lent by local bankers; the temptation was strong to base the future of the Empire on the attractive prospect of a series of loans. Moreover, to a government that had decided to tie its destiny to a gradual process of integration with the West, it could easily be claimed that financial operations of this sort were bound to act as the cement of a future collaboration.” The British and French governments were concerned about the stability of the loans they had given. In these early stages, there were not many concerns about the Empire’s ability to pack and in order to prevent any risk; the lenders selected the prime revenues of the Ottoman state as backing for the loans. In 1855, a commission was set up to control the expenditures and to verify the Treasury accounts. What pushed the Ottoman government down the debt spiral in this stage was that the money was not being efficiently, it was spent for irresponsible and useless projects such as building new palaces along the Bosphorus. A third loan of £5 million was contracted in 1858 at a rate of 76 percent with an interest of 6 percent, but it was this time neither guaranteed nor supported by Western governments. It was supposed to be used for the redemption of paper money, but the government failed to realise this vital importance. Additionally, several foreign schemes to establish a firm control over Ottoman finances collapsed, which kept the European investors away from the Ottoman market. The Empire was in dire need for funds, but it was rapidly losing its creditworthiness. Soon the bubble burst and the state found itself in an intense financial crisis. Sultan Abdülmecit died in 1861 and was succeeded by Sultan Abdülaziz. His Grand Vizier Fuat Paşa presented a formal budget in 1862 and also thanks to an encouraging report on the financial situation of the Empire drafted by the British commission, there has been an upturn in the financial situation. A new loan of £8 million, issued at 68 percent with an interest of 6 percent was organized successfully. It was intended for the once and for all redemption of the paper-money in circulation and managed to bring back confidence to the market. Behind this operation, there were two organizations, Deveaux and Co. from London and the Ottoman Bank. The latter was a small London based commercial bank, established in 1856, which had in time gained credibility in the Ottoman market. The Sublime Porte had decided in favour of this bank for organizing the 1862 loan, with the provision that French capital was to be included to its existing British capital. As Ethem Eldem wrote, Fuat Paşa’s plan was simple and sensible: “The prospect of having a foreign state bank was worrying enough, but practically unavoidable; however, dividing its capital between the French and the British was likely to minimize the risk of being completely ruled by the British alone.”

Imperial Ottoman Bank The Ottoman Bank thus became a state bank and transformed into the Banque Impériale Ottomane (TR: Banka-i Şahane-i Osmani) in 1863. It had the privilege to issue banknotes, however it had no control over the financial decision making of the Empire. Foreign investors were disappointed by the fact that this bank was far from being able to constitute a mechanism of control over state finances; however its presence alone was still enough to create an atmosphere of security. The Banque Impériale Ottomane organized two loans in 1863 and 1865, of £8 million and £6 million and at 71 and 66 percent respectively, both at an interest rate of 6 percent. Meanwhile, the paper-money in use was withdrawn from circulation. The Ottoman government was now in a vicious cycle of debt. The new loans were being used for the payment of outstanding foreign and domestic debts. In addition to the foreign loans, the state was heavily involved in short-term borrowing from local bankers. There was also no incentive to bring this unhealthy situation to an end. Foreign investors, who were assured by the presence of the Banque Impériale Ottomane, had no intention to give up this lucrative business.

Announcement of the Imperial Ottoman Bank Source: Ottoman Bank Archives

Over the five years between 1865 and 1870, foreign borrowing continued and the government contracted a debt of £86 million, which corresponds to 2.3 times the sums borrowed over the previous eleven years. However, due to low rates of issue, only half of this nominal value had been cashed in by the Treasury and most of it was used to redeem previous debts. Between 1871 and 1874, five new loans were signed with a total value of £98.5 million. By then, 55 percent of the Empire’s budget was being absorbed by foreign debt. In May 1874, the Sublime Porte signed an agreement with the Banque Impériale Ottomane which extended this institution’s power in monitoring the revenues and expenditures. The government had agreed on harsher conditions in an attempt to restore western confidence in Ottoman bonds. A few months later the bank secured a £40 million loan at a very low rate of 40 percent. Ottoman Finances Going Bankrupt The agreement was, however, a futile attempt, since the Ottoman finances had already reached a point of insolvency. On 6 October 1875, the new Grand Vizier Mahmut Nedim Paşa issued a decree declaring that the payments on coupons would be reduced by half. By March 1876, payments ceased altogether and to make things works the troubles in Balkans resulted in the deposition of Sultan Abdülaziz and declaration of war by Serbia. The Empire was bankrupt and the investors in Europe were in panic. The political situation was worsening rapidly. Abdülaziz’s successor Sultan Murad V was mentally unstable and had to be removed soon after his accession to the throne. He was replaced by Sultan Abdülhamit II. The Empire was at war with Serbia and there was a grave threat of Russian aggression. The threat became a full scaled war in April 1877. The Turco-Russian war ended in January 1878 with the defeat of the Ottoman Empire. The Congress of Berlin reduced the status of the Empire to a minor power in European politics.

Ottoman finances were already bankrupt and the war with Russia had put an additional pressure. Since organizing further foreign loans were impossible, the government resorted once again to printing paper-money. Three issues of paper-money within two years, totalling 1.8 billion piastres, caused a depreciation of paper-money by nearly 65 percent. By 1880, the paper-money had dropped to 10-15 percent of its original value. The Sublime Porte was facing an urgent need to solve the problem of outstanding debts. With an agreement reached in November 1879 between the state and the local creditors, the problem of outstanding internal debts was solved to an extent by surrendering some indirect revenues to local creditors. Following the success of this arrangement, similar negotiations were started with foreign lenders as well. The negotiations led to the signing of the Muharrem Decree on 20 December 1881, which foresaw the establishment of the Ottoman Public Debt Administration (in Turkish: Düyun-u Umumiye), an organization of European bondholders (and through these bondholders, indirectly with the major powers of Europe except Russia) that was given the right to develop and collect taxes from some of the leading revenues sources of the Empire and direct them towards debt payments. The Muharrem Decree ceded irrevocably to the Ottoman Public Debt Administration, until the debt was liquidated, all the revenues from the stamp, spirits, fishing taxes, silk tithe, salt and tobacco monopolies as well as the Bulgaria tribute, surplus of Cyprus revenues and the revenues originating from Eastern Rumelia.

Although it was a great detriment to the sovereignty of the Empire, which had surrendered its rights over revenues and accepted unconditional control to foreigners, the establishment of the Ottoman Public Debt Administration proved to be successful in the sense that it restored the Ottoman creditworthiness. From 1886 to 1914, the government could secure another 23 loans, totalling £150 million at an average rate of issue of over 85 percent. Furthermore, as Krasner wrote, “the council could –with the consent of the government- initiate measures that would improve more general economic conditions since a more prosperous Turkey would mean higher revenue collections.” It promoted the export of salt, introduced new technologies for the silk and wine industries and facilitated the development of railways in the Empire. Foreign capital started to enter the Ottoman market at an increasing rate and gained control of the most of the most crucial sectors of the economy. According to Eldem: “From the 1890’s on, Ottoman integration with Europe had started to take a substantially different course, much akin to imperialism.” Despite the fact thatfore the Ottoman state managed to generate a budget surplus and to orderly pay its outstanding debt in the last two decades of the 19th century, rising military expenditures, especially after 1908, began to create serious problems again. Deficits appeared again and they had to be financed through further borrowing. By 1914, the outstanding debt of the government had reached £140 million, equivalent to nearly 60 percent of the Ottoman gross domestic product.