JFP 7/25: Rebels Say Qaddafi Can Stay in Libya

Just Foreign Policy News
July 25, 2011

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II) Summary:
U.S./Top News
1) Libyan rebel leader Mustafa Abdel Jalil has told the Wall Street Journal that Gaddafi and his family could stay in Libya if they gave up power, the Guardian reports. His concession reflects those by NATO governments, including Britain and France, which are now suggesting Gaddafi might not be sent to the ICC.

2) A draft report by the congressional Commission on Wartime Contracting says the US has wasted $34 billion on service contracts with the private sector in the wars in Iraq and Afghanistan, Reuters reports. The report blames a lack of oversight by federal agencies for misuse of funds and warns of further waste when the programs are transferred to Iraqi or Afghan control as the US withdraws its troops.

3) A year-long military-led investigation has concluded that U.S. taxpayer money has been indirectly funneled to the Taliban under a $2.16 billion transportation contract, the Washington Post reports. U.S. and Afghan efforts to address the problem have been slow and ineffective, and all eight of the trucking firms involved in the work remain on U.S. payroll, the Post says.

4) U.S. Ambassador to Afghanistan Ryan Crocker says the US has "no interest in using Afghanistan as a platform to project influence into neighboring countries," Reuters reports. He expressed confidence that the US would be able to "prevent any forcible return of the Taliban to power."

5) The Justice Department is preparing subpoenas as part of preliminary investigations into News Corp. relating to alleged foreign bribery, the Wall Street Journal reports. News Corp. and its recently bolstered legal team expect a possible broad investigation by the Justice Department into whether the alleged bribes paid to British police violated the Foreign Corrupt Practices Act, according to the people familiar with the company's strategy. News Corp.'s team also is anticipating a possible FCPA-related investigation by the SEC, the people said.

Bahrain
6) A Bahraini cleric says authorities have demolished 30 Shiite mosques during their five-month-old crackdown on dissent, AP reports.

Iran
7) Ambassador Lawrence Butler, the US diplomat assigned to negotiate with the MEK in Iraq so they can be dispersed from Camp Ashraf and relocated, says the MEK has not provided the US with useful information about the Iranian government or its nuclear program, the New York Times reports. He said that for six years the group provided unreliable information about Iran to the Defense Intelligence Agency, which he criticized as having taken years to discern that it was being fed what amounted to a slew of lies. "They are very good at telling stories," he said of the group.

Jamaica
8) Some have pointed to the Jamaican debt restructuring of last year as a model for Greece, writes Mark Weisbrot in the Guardian. It's hard to imagine a worse disaster. Jamaica has one of the worst debt burdens in the world. For the 2009/2010 fiscal year, Jamaica's interest payments on the public debt were 45% of its government spending. This crowding out of public investment and social spending has hurt Jamaica's progress towards the Millennium development goals. Last year's restructuring still left the country with unbearable interest payments.

Egypt
9) On Saturday, a peaceful march on the Defense Ministry was attacked by bands of men armed with sticks, knives and firebombs while security forces did nothing, AP reports. The incident is a sign that the military government is moving towards more open confrontation with youth protesters, AP says.

Contents:
U.S./Top News

1) Muammar Gaddafi could stay in Libya, William Hague concedes
Foreign secretary opens path for political peace as British planes step up bombing before Ramadan
Nicholas Watt and Richard Norton-Taylor, Guardian, Monday 25 July 2011 20.20 BST
http://www.guardian.co.uk/world/2011/jul/25/gaddafi-libya-william-hague-plan

Britain is prepared to agree to a political settlement in Libya that would see Muammar Gaddafi remain in the country after relinquishing his hold on power, the foreign secretary, William Hague, has said.

As British aircraft step up the bombing against Gaddafi's security and intelligence apparatus before the arrival of Ramadan on 1 August, Hague said the focus should be on ensuring that the Libyan leader leaves power. Speaking at a press conference in London Monday with his French counterpart Alain Juppé, who has been more relaxed about Gaddafi's personal future, Hague said it was up to the Libyan people to decide his future.
[...]
Libyan rebel leader Mustafa Abdel Jalil has said Gaddafi and his family could stay in the country if they gave up power. His concession, in an interview with the Wall Street Journal, reflects those by Nato governments, including Britain and France, which are now suggesting Gaddafi might not be arraigned before the international criminal court (ICC) in The Hague for war crimes.
[...]

2) U.S. wastes $34 billion in Afghan and Iraq contracting
Phil Stewart, Reuters, Sat, Jul 23 2011
http://www.reuters.com/article/2011/07/23/us-usa-afghanistan-waste-idUSTRE76M27Y20110723

Washington - The United States has wasted some $34 billion on service contracts with the private sector in the wars in Iraq and Afghanistan, according to a study being finalized for Congress.

The findings by a bipartisan congressional commission were confirmed to Reuters by a person familiar with the draft of the study, which is due to be completed in coming weeks.

The analysis by the Commission on Wartime Contracting, details of which were first reported by the Wall Street Journal, offers the most complete look so far at the misuse of U.S. contracting funds in Afghanistan and Iraq, where more than $200 billion has been doled out in the contracts and grants over nearly a decade.

It also gives the most complete picture of the magnitude of the U.S. contracting workforce in the two countries.

The source, who declined to be named, said more than 200,000 contractors have been on the U.S. payroll at times in Iraq and Afghanistan -- outstripping the number of U.S. troops currently on the ground in those countries.

The United States has fewer than 100,000 troops in Afghanistan and some 46,000 forces in Iraq.

The tally of private sector contractors in Iraq and Afghanistan can be surprisingly difficult to obtain since many U.S. contractors are outsourced to subcontractors who depend on temporary labor, the source said.

The report blames a lack of oversight by federal agencies for misuse of funds and warns of further waste when the programs are transferred to Iraqi or Afghan control as the United States withdraws its troops.
[...]

3) U.S. trucking funds reach Taliban, military-led investigation concludes
Karen DeYoung, Washington Post, July 24
http://www.washingtonpost.com/world/national-security/us-trucking-funds-reach-taliban-military-led-investigation-concludes/2011/07/22/gIQAmMDUXI_story.html

A year-long military-led investigation has concluded that U.S. taxpayer money has been indirectly funneled to the Taliban under a $2.16 billion transportation contract that the United States has funded in part to promote Afghan businesses.

The unreleased investigation provides seemingly definitive evidence that corruption puts U.S. transportation money into enemy hands, a finding consistent with previous inquiries carried out by Congress, other federal agencies and the military. Yet U.S. and Afghan efforts to address the problem have been slow and ineffective, and all eight of the trucking firms involved in the work remain on U.S. payroll. In March, the Pentagon extended the contract for six months.

According to a summary of the investigation results, compiled in May and reviewed by The Washington Post, the military found "documented, credible evidence ... of involvement in a criminal enterprise or support for the enemy" by four of the eight prime contractors. Investigators also cited cases of profiteering, money laundering and kickbacks to Afghan power brokers, government officials and police officers. Six of the companies were found to have been associated with "fraudulent paperwork and behavior."


"This goes beyond our comprehension," said Rep. John F. Tierney (D-Mass.), who last summer was chairman of a House oversight subcommittee that charged that the military was, in effect, supporting a vast protection racket that paid insurgents and corrupt middlemen to ensure safe passage of the truck convoys that move U.S. military supplies across Afghanistan.

The military summary included several case studies in which money was traced from the U.S. Treasury through a labyrinth of subcontractors and power brokers. In one, investigators followed a $7.4 million payment to one of the eight companies, which in turn paid a subcontractor, who hired other subcontractors to supply trucks.

The trucking subcontractors then made deposits into an Afghan National Police commander's account, already swollen with payments from other subcontractors, in exchange for guarantees of safe passage for the convoys. Intelligence officials traced $3.3 million, withdrawn in 27 transactions from the commander's account, that was transferred to insurgents in the form of weapons, explosives and cash.
[...]

4) No permanent U.S. bases in Afghanistan: U.S. ambassador
Michelle Nichols, Reuters, July 25, 2011, 4:02am EDT
http://www.reuters.com/article/2011/07/25/us-afghanistan-usa-ambassador-idUSTRE76O0Y320110725

Kabul - The United States has no interest in creating permanent military bases in Afghanistan and does not want to use the country as a platform to influence neighboring countries, the new U.S. ambassador to Afghanistan said Monday.

Washington is negotiating with the Afghan government on a deal to define the long-term American role in Afghanistan beyond the end of 2014, when NATO-led combat troops are due to leave after handing security control to the Afghan army and police.

It remains unclear whether the "strategic partnership" agreement would explicitly refer to possible U.S. military bases in Afghanistan beyond 2014. Afghan President Hamid Karzai has said the possibility of long-term U.S. bases can only be addressed once peace has been achieved.

"We have no interest in permanent bases in Afghanistan," said U.S. Ambassador Ryan Crocker shortly after he was sworn in at the U.S. Embassy in Kabul, in an apparent nod to Afghanistan's powerful and wary neighbors. "We will stay as long as we need to and not one day more."

Afghanistan has complex relationships with Pakistan and Iran, who see the country as vital to their own security and fear U.S. efforts to undermine their influence there, while both China and Russia are wary of U.S. ambitions in the region.

However, despite billions being poured into building up the Afghan security forces, the problems they face -- from illiteracy to corruption -- means both Afghans and foreigners expect some kind of continued military support beyond 2014, even if foreign troops are no longer on the front lines.

The United States may also be keen to keep bases for attacks on targets in Pakistan's lawless tribal areas believed to pose a terrorist threat, such as the base that was used to launch the raid that killed al Qaeda head Osama bin Laden earlier this year, analysts say.
Crocker said the United States had no hidden agenda.

"We have no interest in using Afghanistan as a platform to project influence into neighboring countries," he said.

"Our sole interest is in Afghanistan's security and sustainable stability and ensuring it will never again become a haven for international terrorism."
[...]
"Beyond 2014, even when Afghans have transitioned to a full security lead, I'm confident we and the international community will be in the position to work with Afghanistan to prevent any forcible return of the Taliban to power," he said.

5) Justice Department Prepares Subpoenas in News Corp. Inquiry
Jessica E. Vascellaro, Devlin Barrett and Dana Cimilluca, Wall Street Journal, July 22, 2011
http://online.wsj.com/article/SB10001424053111903461104576460393481721896.html

The U.S. Justice Department is preparing subpoenas as part of preliminary investigations into News Corp. relating to alleged foreign bribery and alleged hacking of voicemail of Sept. 11 victims, according to a government official.

The issuance of such subpoenas, which would broadly seek relevant information from the company, requires approval by senior Justice Department leadership, which hasn't yet happened, the person said.

The issuance of subpoenas would represent an escalation of scrutiny on the New York-based media company. While the company has sought to isolate the legal problems in the U.K., it has been bracing for increased scrutiny from both the Justice Department and the Securities and Exchange Commission, according to people familiar with the company's strategy.

The Justice Department has said it is looking into allegations that News Corp.'s now-defunct News of the World weekly in the U.K. paid bribes to British police. It has been unclear whether the Justice Department or the SEC have begun formal probes.
[...]
News Corp. and its recently bolstered legal team expect a possible broad investigation by the Justice Department into whether the alleged bribes paid to British police violated the Foreign Corrupt Practices Act, or FCPA, according to the people familiar with the company's strategy. The law is typically used to pursue charges against companies that bribe foreign officials to give them business contracts.

News Corp.'s team also is anticipating a possible FCPA-related investigation by the SEC, the people said. The SEC also could examine News Corp.'s prior disclosures, one of the people said. By law, companies must adequately alert investors to potential litigation or business pitfalls on the horizon.
[...]

Bahrain
6) Shiite Mosques Demolished In Bahrain Crackdown
Associated Press, July 23
http://www.washingtonpost.com/world/middle-east/bahraini-cleric-says-authorities-demolished-shiite-mosques-as-part-of-crackdown-on-dissent/2011/07/23/gIQAAERJVI_story.html

Manama, Bahrain - A Bahraini cleric says authorities have demolished 30 Shiite mosques during their five-month-old crackdown on dissent in the Sunni-ruled Gulf kingdom.

Seyyed Abdullah al-Ghoreifi says 30 Shiite mosques have been destroyed as part of the government's campaign against the Shiite majority demanding greater freedoms and more rights.
[...]

Iran
7) Iranian Exile Group Poses Vexing Issue For U.S. In Iraq
Tim Arango, New York Times, July 22, 2011
http://www.nytimes.com/2011/07/23/world/middleeast/23ashraf.html

Camp Ashraf, Iraq - The more than 3,000 people living here once represented a powerful paramilitary organization bent on overthrowing the government in Iran. In the 1970s, the group killed Americans in Tehran, and after being given refuge by Saddam Hussein its members were suspected of serving as a mercenary unit that took part in his violent suppression of the Kurds in the north of Iraq and the Shiites in the south.

Now they are unwelcome in Iraq but believe they should be given protection in the United States - even though their group, known as the People's Mujahedeen of Iran, remains on the State Department's list of terrorist organizations.

"You probably have in mind Hawaii," said Ambassador Lawrence E. Butler, the American diplomat who has been negotiating with the group in recent sessions here. "I suspect you don't want to go to Guantánamo," he added.

For the last three months, Mr. Butler, who is the foreign policy adviser to Gen. Lloyd J. Austin III, the top American military commander in Iraq, has been shuttling back and forth almost every week on the American embassy's behalf between Baghdad and Camp Ashraf, an outpost in Diyala Province near the Iranian border. Offering humor and bluntness, he has sought to cajole the exiles to leave their camp and avert what will almost certainly be another violent confrontation with the Iraqi security forces if they stay.

As the American military begins its final withdrawal from Iraq, the situation at Camp Ashraf is among the most vexing of the unfinished chapters of the American war here.

The group adheres to an ideology that is a mix of devout Shiism and Marxism, and in the initial phase of the war the Americans bombed the camp and killed several of its members before disarming the group, which had more than 2,000 tanks and armored personnel carriers. But the Americans later provided security for the camp as the Iraqi government, which is friendly with Iran, turned hostile to the group. A raid on the camp in April by the Iraqi Army left dozens dead and hundreds wounded.

Mr. Butler's mission has been to seek a solution that will save residents' lives by first moving them to another camp away from the Iranian border, and then to other countries for resettlement. His goal is humanitarian, he said. He betrayed no sympathies for the group's politics or forgiveness for its misdeeds. He wants them to move, he said, because he fears a slaughter at the hands of the Iraqi Army if they stay.

That solution has proved tricky, however, because the residents are refusing to leave, and no countries have come forward to welcome them. But the clock is ticking, and several times Mr. Butler has reminded members of the group that American forces will be leaving.
[...]
Adding to his difficulties, the group has a formidable and well-financed communications machine. It has attracted political figures like Howard Dean and Wesley K. Clark, the retired Army general, by paying them to make speeches in support of the group, fueling its resistance to a move and angering officials trying to bargain with it, like Mr. Butler.

Referring to General Clark, Mr. Butler asked the group, "How much was he paid?" He added, "He doesn't get out of bed for less than $25,000."

To this, one member replied that none of the group's famous advocates were "doing it for the money."

"I'm guessing about a million dollars was spent on this over the last six months," Mr. Butler said, referring to the overall advocacy campaign. "If I was on your board of directors, I wouldn't be pleased with the results."

He continued, "The bad news is, you only have me sitting across the table from you."

In an interview, General Clark acknowledged having been paid by the group, but he said he gives speeches around the world and always offers his "own personal opinion" based on his many years of government service. (Mr. Dean has previously said publicly that he took speaking fees from the group.)

In a written statement, a representative for the group said it had not paid anyone for speeches.
[...]
Mr. Butler is keen to puncture what he believes is the false narrative that has sprouted around the group since the American invasion, which has helped it secure such prominent support. Contrary to widespread belief, he says, the group never provided any valuable intelligence to the Americans about Mr. Hussein's government. Nor, he says, has it provided any useful information about the Iranian government or its nuclear program.

He said that for six years the group provided unreliable information about Iran to the Defense Intelligence Agency, which he criticized as having taken years to discern that it was being fed what amounted to a slew of lies.

"They are very good at telling stories," he said of the group.
[...]
The State Department's public documents show a litany of violent crimes against Americans in the 1970s, including the assassination of military officers and executives in Tehran.

"These people slaughtered Americans," Mr. Butler said out of earshot of the group's representatives during the recent negotiating session. "They have blood on their hands."

The Americans have offered a plan in which the group's members would vacate this camp, which during Mr. Hussein's tenure served as a military base, and relocate to another site in Iraq, where they would disband, an essential step before the United Nations would recognize the members as refugees.

"To the outside world, you look like a paramilitary organization," he told them, before adding, "As a group you are dangerous."
[...]

Jamaica
8) Jamaica Remains Buried Under a Mountain of Debt, Despite Restructuring
The experience of debt-ridden Jamaica shows the damage done when the interests of creditors are given too much weight
Mark Weisbrot, Guardian, July 22, 2011
http://www.guardian.co.uk/commentisfree/cifamerica/2011/jul/22/jamaica-debt-crisis

As the eurozone authorities move closer to the accepting the inevitable Greek debt default/restructuring, there are some who have pointed to the Jamaican debt restructuring of last year as a model.

It's hard to imagine a worse disaster for Greece. It is worth a closer look at what has been done to Jamaica, not only as a warning to Greece, but to shed some light on the damage that can be done when "the international community" is willing to sacrifice a country for the sake of creditors' interests.

Jamaica – a middle-income developing country of 2.8 million people – has one of the worst debt burdens in the world, with a gross public debt of 123% of GDP.

At first glance this looks better than Greece (166% of GDP) but the more important number is the interest burden of the debt: for Jamaica it has averaged 13% of GDP over the last five years. This is twice the burden of Greece (6.7% of GDP), which is in turn the highest in the eurozone. (It is worth keeping in mind that the burden of the debt can vary widely depending on interest rates, and on how much is borrowed from the country's central bank – Japan has a gross public debt of 220% of GDP but pays only about 2% of GDP in annual net interest, so it doesn't have a public debt problem.)

Not surprisingly, a country that is paying so much interest on its debt does not have much room in its budget for other things. For the 2009/2010 fiscal year, Jamaica's interest payments on the public debt were 45% of its government spending. This crowding out of public investment and social spending has hurt Jamaica's progress towards the Millennium development goals.

Jamaica's coverage rates for detection and treatment of tuberculosis declined from 79% in 1997 to 43% in 2006, the worst decline of 77 countries for which data was available. The net enrollment ratio in primary school declined from 97% in 1991 to 87% in 2006/2007.

Jamaica's long term development failure is striking, and has a lot to do with its debt burden. For the 20 years from 1988-2008, real income per person grew by just 14%, which is incredibly dismal. The country was hit by the U.S. and global recession at the end of 2008, losing export revenue, remittances, and other sources of aggregate demand.

The government turned to the IMF, which had already had a terrible track record in the country with almost continuous programmes from 1973-1996. Unfortunately the 2010 IMF prorgamme called for policies that would be expected to worsen the recession, including a reduction of the fiscal deficit, as well as real decreases in spending on health, education, and childhood development.

In February of last year the Jamaican government reached agreement with creditors on the Jamaica Debt Exchange, which restructured Jamaica's debt with the support of the IMF. The restructuring extended the average maturity of the debt and lowered interest rates enough to reduce the government's interest burden by about 3% of GDP annually over the next three years.

This would be quite substantial if Jamaica had a debt burden the size of Greece or Ireland, but unfortunately it still leaves the country with unbearable interest payments. There was no reduction in the principal, and Jamaica will have to refinance some 46% of its debt within the next one to five years – which could prove disastrous if there are unfavorable market conditions.

Jamaica's debt burden is outrageous, and needs to be drastically reduced. It is difficult to imagine the country making much progress in economic development while so much of its resources go to interest payments.

While the situation of every over-indebted country is different – in terms of the burden and structure of the debt, whom it is owed to (international or domestic creditors, official creditors such as the IMF or World Bank, and other specifics) – the most important issue is the same: how much should a country sacrifice in order to keep paying off its debt?

Unfortunately the people making these decisions – the European authorities, the IMF, the Paris Club and allied institutions – look at this issue from the point of view of the creditors.

But a responsible government will make its decisions on the basis of the needs of its people – for employment, economic growth, and better living standards. It is this conflict of interest that underlies the debt crises we are looking at in most over-indebted countries.

Egypt
9) Egypt's ruling generals, protesters seen moving toward outright collision
Associated Press, Monday, July 25, 2:59 PM
http://www.washingtonpost.com/world/middle-east/egyptian-court-says-mubarak-former-security-chief-to-be-tried-together-for-killing-protesters/2011/07/25/gIQAH3r6XI_story.html

Cairo - Egypt's ruling military and protesters seeking greater and faster change are moving into an outright collision, as the generals try to strip away public support for the movement while cozying up to the fundamentalist Muslim Brotherhood.

Youth activists are not backing down, betting that Egyptians' dissatisfaction with the military's running of the country will grow.

The generals, in power since the February ouster of longtime leader Hosni Mubarak, have launched an intensified media campaign against the protest activists, depicting them as a troublemaking minority and agents paid by foreign governments to grab power in an apparent attempt to turn the public against them. The message could have some appeal among Egyptians growing tired of continued unrest and fragile security.

At the same time, the military is cultivating ties with the powerful Muslim Brotherhood, which joined liberal and leftist youth in the 18-day uprising that toppled Mubarak but has since split with them on multiple issues. By cultivating the Brotherhood, the generals can take advantage of their large popular support base to counter the young protesters' influence.

Maj. Gen. Mohammed al-Assar, a member of the Supreme Council of the Armed Forces, the body of generals that have taken over from Mubarak, praised the Brotherhood on Monday, saying they were playing a constructive role in post-Mubarak Egypt.

"Day by day, the Brotherhood are changing and are getting on a more moderate track," he said in a speech in Washington at the United States Institute of Peace. "They have the willingness to share in the political life ... they are sharing in good ways."

The generals have also encouraged street protests by pro-military groups. Dozens of army supporters have held daily rallies the past two weeks in a square in northeastern Cairo, getting heavy TV coverage, aimed at counterbalancing a tent camp by the youth activists at Tahrir Square, the center of the anti-Mubarak uprising.

If the tension between the two camps boils over, it could plunge Egypt deeper into chaos, even sparking clashes. That could derail the country's transition to democratic rule, a failure that could have wider implications on a region that is looking to Egypt to provide a role model for pro-democracy uprisings elsewhere in the Arab world.

A sign of the dangers came Saturday, when thousands of protesters made a peaceful march on the Defense Ministry in Cairo to push demands that police officers responsible for the killing of some 850 protesters during anti-Mubarak uprising be brought to justice and that military trials of civilian protesters be stopped. They were attacked by bands of men armed with sticks, knives and firebombs.

Hundreds of military police backed by anti-riot policemen stood by without intervening as the two sides fought for several hours. At least 300 people were wounded in the clashes.

The protest movement began to hike up pressure on the military earlier this month, launching their sit-in protest in Tahrir. One of their top demands is that the killers of protesters be brought to justice, but they also complain that the generals have mismanaged the transition to democratic rule, operating without transparency and dragging their feet in weeding out Mubarak loyalists from the judiciary, the civil service and the police force. Their ultimate fear is that the military will allow much of Mubarak's authoritarian regime to stay in place.
[...]

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