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To: D. Long who wrote (26687)1/28/2004 3:36:22 AM
From: LindyBill  Read Replies (1) | Respond to of 793970
 
FA magazine has a good article this month on Nukes. Hat tip to Moenmac.



How to Stop Nuclear Terror
By Graham Allison
From Foreign Affairs, January/February 2004

THE THREE NO'S

President George W. Bush has singled out terrorist nuclear attacks on the United States as the defining threat the nation will face in the foreseeable future. In addressing this specter, he has asserted that Americans' "highest priority is to keep terrorists from acquiring weapons of mass destruction." So far, however, his words have not been matched by deeds. The Bush administration has yet to develop a coherent strategy for combating the threat of nuclear terror. Although it has made progress on some fronts, Washington has failed to take scores of specific actions that would measurably reduce the risk to the country. Unless it changes course -- and fast -- a nuclear terrorist attack on the United States will be more likely than not in the decade ahead.

The administration's inaction is hard to understand. Its behavior demonstrates a failure to grasp a fundamental insight: nuclear terrorism is, in fact, preventable. It is a basic matter of physics: without fissile material, you can't have a nuclear bomb. No nuclear bomb, no nuclear terrorism. Moreover, fissile material can be kept out of the wrong hands. The technology for doing so already exists: Russia does not lose items from the Kremlin Armory, nor does the United States from Fort Knox. Nascent nukes should be kept just as secure. If they are, terrorists could still attempt to create new supplies, but doing so would require large facilities, which would be visible and vulnerable to attack.

Denying terrorists access to nuclear weapons and weapons-grade material is thus a challenge to nations' willpower and determination, not to their technical capabilities. Keeping these items safe will be a mammoth undertaking. But the strategy for doing so is clear. The solution would be to apply a new doctrine of "Three No's": no loose nukes, no new nascent nukes, and no new nuclear states.

GETTING A GRIP

A few numbers starkly illustrate the scale of the problem the United States now faces in trying to control the spread of nuclear weapons materials. Just eight countries -- China, France, India, Israel, Pakistan, Russia, the United Kingdom, and the United States -- are known to have nuclear weapons. In addition, the CIA estimates that North Korea has enough plutonium for one or two nuclear weapons. And two dozen additional states possess research reactors with enough highly enriched uranium (heu) to build at least one nuclear bomb on their own. According to best estimates, the global nuclear inventory includes more than 30,000 nuclear weapons, and enough heu and plutonium for 240,000 more.

Hundreds of these weapons are currently stored in conditions that leave them vulnerable to theft by determined criminals, who could then sell them to terrorists. Even more "nascent nukes" (the heu and plutonium that are the only critical ingredients for making nuclear bombs) are at risk. Almost every month, someone somewhere is apprehended trying to smuggle or steal nuclear materials or weapons. Last August, for example, Alexander Tyulyakov -- the deputy director of Atomflot (the organization that carries out repair work for Russian nuclear icebreakers and nuclear submarines) -- was arrested in Murmansk for trying to do just that. The situation is so bad that three years ago, Howard Baker, the current U.S. ambassador to Japan and the former Republican leader of the Senate, testified, "It really boggles my mind that there could be 40,000 nuclear weapons, or maybe 80,000 in the former Soviet Union, poorly controlled and poorly stored, and that the world is not in a near-state of hysteria about the danger."

In making his case against Saddam Hussein, President Bush argued, "If the Iraqi regime is able to produce, buy, or steal an amount of uranium a little bigger than a softball, it could have a nuclear weapon in less than a year." What the president failed to mention is that with the same quantity of heu, al Qaeda, Hezbollah, or Hamas could do the same. Once built, nuclear weapons could be smuggled across U.S. borders with little difficulty. Of the seven million cargo containers that will arrive at U.S. ports this year, for example, only two percent will be opened for inspection. And once on U.S. soil, those weapons would likely be used. Prior to September 11, 2001, many experts argued that terrorists were unlikely to kill large numbers of people, because they sought not to maximize victims but to win publicity and sympathy for their causes. After the attacks on the Pentagon and the World Trade Center, however, few would disagree with President Bush's warning that if al Qaeda gets nuclear weapons, it will use them against the United States "in a heartbeat." Indeed, Osama bin Laden's press spokesman, Sulaiman Abu Ghaith, has announced that the group aspires "to kill 4 million Americans, including 1 million children," in response to casualties supposedly inflicted on Muslims by the United States and Israel.

THE DAY AFTER

If a terrorist nuclear attack did occur in the United States, the first questions asked would be who did it, and where did they get the bomb? Bin Laden would top the list of probable perpetrators. But the supplier would be less certain; it could be Russia, Pakistan, or North Korea, but it could also be Ukraine or Ghana. Russia would probably top the list not because of hostile intent but because of the enormity of its arsenal of nuclear material, much of it still vulnerable to insider theft. Pakistan would likely rank second due to the ongoing links between its security services and al Qaeda, and the uncertain chain of command over its nuclear weaponry. North Korea, the most promiscuous weapon proliferator on earth, has already sold missiles to Iraq, Iran, Pakistan, and Saudi Arabia and so would merit suspicion. As would Ukraine and Ghana, which operate Soviet-supplied research reactors with enough heu for one or more nuclear weapons. Interestingly, Saddam-era Iraq would not have even made the top ten.

To be fair, since September 11, the Bush administration has taken steps to reduce the danger of a nuclear attack by terrorists. It has attacked al Qaeda training bases in Afghanistan and around the globe and enlisted more than 100 nations in a global effort to share intelligence, enforce antiterrorism legislation, and curtail the flow of terrorists' money. Bush has repeatedly declared that the spread of weapons of mass destruction (WMD) would be "intolerable," prompting similar declarations from key allies. Recently, he also proposed a UN Security Council resolution that would criminalize WMD proliferation and promoted the Proliferation Security Initiative, an 11-nation group that, stretching existing legal frameworks, will search vehicles suspected of transporting WMD cargo on the high seas. After initial skepticism, the administration has also embraced the Nunn-Lugar Cooperative Threat Reduction Program to secure and eliminate former Soviet nuclear weapons and has enlisted other members of the g-8 group of leading industrialized countries to match Washington's $1 billion annual commitment to the program over the next decade. And the United States has cooperated with Russia to extract three potential nuclear weapons from Serbia and one from Romania.

But the list of actions not taken by the administration remains lengthy and worrisome. Bush has not made nuclear terrorism a personal priority for himself or those who report directly to him. And he has resisted proposals by Senator Richard Lugar (R-Ind.), former Senator Sam Nunn (D-Ga.), and others to assign responsibility for the issue to a single individual, who could then be held accountable. As a result, were the president today to ask his cabinet who is responsible for preventing nuclear terrorism, either a dozen people would raise their hands, or no one would. Bush has also not communicated his sense of urgency about nuclear terrorism to the presidents of Russia or Pakistan. Nor has Bush increased the pace of U.S. cooperation with Russia in securing former Soviet nuclear weapons and materials. As a result, after a decade of effort, half of the Soviet arsenal remains inadequately secured. More generally, the Bush administration has not acted to change the prevailing practice that allows states to decide for themselves how secure weapons and materials on their territories will be. More than 100 potential weapons, such as those extracted from Serbia, still sit in a dozen countries in circumstances that leave them vulnerable to theft.

In this context, it is impossible to avoid mentioning Iraq. The Bush administration used the danger that Saddam might supply WMD to terrorists as its decisive argument for war. The subsequent failure to find evidence of these weapons has compromised the administration's credibility on the general subject of WMD, as well as the perceived competence of the U.S. intelligence community. Moreover, during the year and a half in which the United States sought to get other countries to support its Iraq policy, North Korea and Iran were able to accelerate their own programs. Mounting a serious campaign now to prevent nuclear terrorism will thus be more challenging than it would have been before the Iraq war.

NO, NO, NO

Preventing nuclear terrorism will require a comprehensive strategy: one that denies access to weapons and materials at their source, detects them at borders, defends every route by which a weapon could be delivered, and addresses motives as well as means. Aggressive offense to disrupt and destroy organizations and individuals that could attack the United States must be matched by robust defenses at home. Washington may still sometimes have to act unilaterally. But the United States will not be able to bully other nations into taking all the necessary steps. Successful counterterrorism requires multinational intelligence and local police enforcement. For example, last summer's capture of al Qaeda's Southeast Asia mastermind resulted from a tip from suspicious neighbors, who informed Thai authorities who, in turn, called the CIA. If properly encouraged, foreign nationals and governments can play a huge role in tracking down terrorists. If not, they become a sympathetic sea in which terrorists can swim and hide.

The centerpiece of a serious campaign to prevent nuclear terrorism -- a strategy based on the three no's (no loose nukes, no new nascent nukes, and no new nuclear weapons states) -- should be denying terrorists access to weapons and their components. After all, no nuclear weapons or material means no nuclear terrorism; it's that simple.

The first part of the strategy -- no loose nukes -- would require rapidly securing all nuclear weapons or weapons-usable material under a new "International Security Standard" that would ensure that terrorists could not acquire weapons or their components. The United States and Russia should develop such a standard together and act quickly to secure their own weapons and materials in a manner sufficiently transparent to give each other assurance that their stockpiles could not be used by terrorists. Moscow and Washington should then go quickly to other nuclear-weapons states and demand that they too meet this new benchmark for nuclear security and be certified by another member of the club as having done so. If necessary, technical assistance in meeting these standards should be offered. But the United States and Russia should also make clear that this is not a negotiable demand.

Simultaneously, a "Global Cleanout Campaign" should extract all nascent nukes from all other countries within the next 12 months. Since all research reactors in non-nuclear weapons states contain fissile material that came from either the United States or Russia, each has a sufficient legal claim to demand its return. Compensation and wrangling may be required. But the United States and Russia must not take no for an answer.

A "no new nascent nukes" approach will require ensuring that all nuclear aspirants, especially Iran and North Korea, stop producing heu and plutonium. This effort should begin under the auspices of inspections mandated by the Nonproliferation Treaty (NPT) and the International Atomic Energy Agency (IAEA), including the NPT's Additional Protocol that allows more intrusive inspections of suspected nuclear sites. But two other elements must also be added to the current system: a prohibition on the production of fissile material, and actual enforcement mechanisms. Enforcement should begin with political and economic sanctions for recalcitrant states but should also include threats and the use of military force if necessary, whether covert or overt. Enhanced export controls and greatly strengthened intelligence capabilities (especially human agents) should focus on preventing the work of nuclear aspirants and stopping sales from potential suppliers. Ratification of the Comprehensive Test Ban Treaty (which the Bush administration has rejected, despite support from four former chairmen of the Joint Chiefs of Staff, including Secretary of State Colin Powell) and the negotiation of a cutoff in production of fissile material in current nuclear-weapon states would reinforce this principle.

Iran will be a decisive test of this strand of the new strategy. The administration has declared that the United States "will not tolerate the construction of a nuclear weapon" by Iran and has elicited similar threats from its allies. American assertiveness has galvanized the IAEA to demand that Iran prove a full account of past and present nuclear activity. Unless Iran complies, the IAEA will refer the case to the UN Security Council.

Note the differences between the administration's current approach and the "no new nascent nukes" approach proposed. The administration has named Iran a member of the "axis of evil" and threatened it with regime change. It has tried to persuade Russia to halt construction of Iran's Bushehr light-water nuclear power plant. And it has accepted verbal declarations of support from Iran's trading partners in Europe. The proposed strategy, in contrast, would focus on one objective only: denying Iran material from which nuclear weapons can be made. This would mean preventing Iranian enrichment of uranium or reprocessing of spent fuel to produce plutonium. With Russian President Vladimir Putin as his partner, Bush would remind Iran that in signing the NPT, it forswore nuclear weapons, and he would demand that Iran verifiably dismantle any emerging capability for enrichment or reprocessing.

To win Moscow's support, Washington should accept Russian completion of the Bushehr reactor, confirm Russia's role as fuel supplier to the reactor, initiate joint Russian-American research on new proliferation-resistant nuclear power plants, and agree that Russia become the secure depository for international spent fuel. Fuel supplied at favorable prices to Bushehr would be owned and managed by Russia and withdrawn at the end of the fuel cycle. (Russia's minister of atomic energy has even expressed a readiness to form a joint U.S.-Russian venture to supply this fuel.) To force Iran's hand, the United States and Russia would show Tehran that they are ready to do whatever is necessary to prevent it from acquiring the ability to produce its own fissile material.

The "no new nuclear weapons states" part of the strategy would draw a bright line under the current eight nuclear powers and say unambiguously, "no more." Four decades ago, President John F. Kennedy predicted that by the end of the 1970s, 25 countries would have nuclear weapons. His pessimistic forecast reflected a presumption then generally accepted: that as states acquired the scientific and technical ability to build nuclear weapons, they would do so. Thanks to far-sighted international efforts, however, including treaties, security assurances, and overt and covert threats, most nations have renounced nuclear weapons instead. Through the NPT, first signed in 1968 and extended indefinitely in 1995, 184 nations agreed to eschew such weapons, and existing nuclear weapons states pledged, in effect, to sharply diminish the role of nuclear weapons in international politics. But as with the nascent nukes, the problem has been enforcement.

During the Cold War, rival superpowers served as the enforcers, preventing nuclear proliferation within their spheres of control. Thus the United States scotched South Korean and Taiwanese aspirations, and the Soviet Union dissuaded North Korea. When the Soviet Union disappeared in December 1991, leaving weapons in Ukraine, Kazakhstan, and Belarus, intense U.S.-Russian cooperation was able to eliminate these, too. All 4,000 nuclear warheads were returned to Russia for dismantlement, and the newly independent states were compensated with nuclear fuel for their civilian reactors. But the United States and Russia then failed to devise a common strategy for dealing with nuclear weapons elsewhere. As a result, Pakistan and India both tested nuclear weapons during the 1990s and declared themselves members of the nuclear-weapons club.

The test case for a "no new nuclear weapons states" policy will be North Korea. That country remains, as former Secretary of Defense William Perry called it, "the most dangerous spot on earth." If it follows its current course, North Korea will soon be able to produce dozens of such weapons annually. Should it achieve this, South Korea and Japan will likely also go nuclear before the end of the decade. Taiwan could follow suit, risking war with China. And Pyongyang, already the world's leading supplier of missiles, could become a sort of Nukes"R"Us, supplying weapons to whoever could pay -- including terrorists. Should that happen, future historians will justifiably condemn today's leaders for their negligence.

Already, the challenge from Pyongyang has become less manageable and much more dangerous than it was when President Bush took office. Indeed, some members of his administration have reportedly concluded that the problem is beyond the point of no return and have started focusing on how to accommodate North Korea and avoid blame. The proposed strategy, by contrast, would begin with an unambiguous stance on this question: no nuclear North Korea. It would focus solely on this objective and subordinate all others, especially regime change. However despicable North Korea's regime, the United States has higher priorities than getting rid of it. The administration should start to recognize the urgency of this threat. Its mantra of "no crisis," evidently chosen to avoid distraction from Iraq, has served U.S. interests poorly. Bush must also get Putin and President Hu Jintao of China to contemplate the consequences of a nuclear North Korea for their own countries. Active cooperation in stopping Pyongyang should be a major test of their security relationships with Washington. That said, the administration should drop its objections and immediately accept North Korea's proposal for bilateral negotiations. North Korea is correct when it claims that only the United States can address its security concerns.

Direct talks will allow Washington to test its presumption that, above all else, Kim Jong Il is committed to his own survival. The United States should offer him a deal: survival in exchange for nuclear disarmament. This deal would offer big carrots and threaten a big stick. If North Korea is prepared to visibly and verifiably forgo nuclear weapons and dismantle its nuclear weapons production facilities, the United States should publicly pledge to abandon any attempt to change North Korea's regime by force. It should also arrange for generous economic assistance from South Korea and Japan, which they stand ready to provide if North Korea forgoes its nukes. If, however, North Korea refuses to verifiably relinquish nuclear weapons and persists in its current efforts, the United States should threaten to use all means, including military force, to stop it. Horrific as the consequences of a preemptive attack on North Korean nuclear facilities would be, the prospect of a nuclear North Korea willing to sell its weapons to al Qaeda and other terrorists would be worse.

A GRAND ALLIANCE

As the preceding discussion suggests, the United States cannot undertake or sustain its war on nuclear terrorism unilaterally. Fortunately, it need not try. All of today's great powers share an interest in the proposed campaign. Each has sufficient reasons to fear nuclear weapons in terrorists' hands, whether they are al Qaeda, Chechens, or Chinese separatists. All great powers can therefore be mobilized in a new global alliance against nuclear terrorism, aimed at minimizing this risk by taking every action that is physically, technically, and diplomatically possible to prevent nuclear weapons or materials from being acquired by terrorists.

Construction of this alliance should begin with Russia, where the close personal relationship between Presidents Bush and Putin will be a major asset. Russia will be flattered by the prospect of standing shoulder to shoulder with the United States -- especially on the one issue on which it can still claim to be a superpower. Americans and Russians should also recognize that they have a special obligation to address this problem, since they created it -- and since they still own 95 percent of all nuclear weapons and material. If they demonstrate a new seriousness about reducing this threat, the United States and Russia will also be able to credibly demand that China likewise secure its weapons and materials. China could sign up Pakistan. And the rest of the nuclear club would quickly follow.

Objections will surely be raised about the unfairness of a world in which some states are allowed to possess nuclear weapons while others are not. But that distinction is already embedded in the NPT, to which all non-nuclear weapons states except North Korea are signatories. Although the treaty also nominally commits nuclear weapons states to eventually eliminate their own weapons, it never set a timetable, and no one realistically expects that to happen in the foreseeable future.

The United States and its allies already have the power to define and enforce new global constraints on nuclear weapons. To make this order acceptable, however, they should undertake a concerted effort to eliminate nuclear weapons and nuclear threats from international affairs. The United States and Russia should accelerate current programs to reduce their arsenals. Moreover, the Bush administration should drop its current plans to conduct research for the production of new "mini-nukes."

Is the course of action outlined above conceivable? For perspective, consider the leap beyond the conventional box that the American president took in enunciating the "Bush Doctrine." With that strategy, the administration unilaterally revoked the sovereignty of states that provide sanctuary to terrorists. Declaring that "those who harbor terrorists are as guilty as the terrorists themselves," the president ordered American military forces to topple the Taliban regime in Afghanistan. Of course, this new principle has yet to be enshrined in international law. It has, nonetheless, already become a de facto rule of international relations. Any government that knowingly hosts al Qaeda or its equivalent knows that it is inviting attack. True, the move beyond the current war on terrorism to a serious war on nuclear terrorism based on the three no's would be ambitious. But the leap involved would be no greater than the distance already traveled since September 11.

Copyright 2003 by the Council on Foreign Relations, Inc. All Rights Reserved.



To: D. Long who wrote (26687)1/28/2004 3:49:52 AM
From: LindyBill  Respond to of 793970
 
Everyone here knows how upset I am over the Stewart case. Never liked her, but hate what the Government is trying to do to her.

dispatches from the martha stewart trial
An insider's view of the Martha trial.
By Henry Blodget
SLATE

From: Henry Blodget
Subject: Back-Room Deals and Heads on Platters
Posted Monday, Jan. 26, 2004, at 6:46 PM PT

A trial that crept along at a glacial pace for a week has suddenly accelerated. By noon on Monday, 12 jurors (eight women and four men) and six alternates (four women and two men) had been seated, sworn in, given instructions, and excused until Tuesday's opening statements. Then Judge Cedarbaum ruled on four government motions—and her rulings will probably have a "chilling effect" on the rhetoric the defense team can employ in the courtroom. Specifically, Judge Cedarbaum ruled that the defense can't argue, as it has, repeatedly and effectively, since the indictment was filed last summer, that:

1. The investigation and prosecution of Martha Stewart was "selective" or otherwise "improper." On one hand, this ruling is unfair. Of course the investigation and prosecution were selective. Would the government have us believe that it reviewed every sale of ImClone stock on Dec. 27 and 28, 2001, and then determined that, of the 15 million shares sold, only the hundred thousand or so sold by the Waksals and Martha Stewart appeared suspicious? Please. Even the government's claim that Stewart is not being prosecuted for who she is but for what she did seems, at one level, absurd. On the other hand, the judge's ruling was simply that the issue was a question for the court, not the jury, which seems fair.

2. The fact that the government didn't charge Stewart or Bacanovic with insider trading shows that the government doesn't believe they committed this crime. This has been another indignant defense contention. More likely, the prosecutors didn't charge Stewart and Bacanovic with insider trading because they didn't believe they could prove it. Even this interpretation damages the alleged motive, of course: If the government can't prove the trade was illegal, it is harder to argue that Stewart and Bacanovic were desperate to cover it up.

3. Stewart is being prosecuted for asserting her innocence and exercising free speech. This is additional defense spin that is not, strictly speaking, true. As discussed in a previous dispatch, I think the securities fraud charge against Stewart is unfair and sets a troubling precedent. The charge is not, however, based on Stewart's assertion of innocence.

4. The securities fraud charge is a novel use of securities laws. Judge Cedarbaum herself described the charge this way on Nov. 18. Now, however, she has ruled (fairly, I think) that the charge's "novelty," or lack thereof, is also not an issue for the jury.

Morvillo vs. Faneuil, Round 1. Today's electrifying moment came just before lunch. After the jury had been excused, in the middle of an otherwise hair-splitting argument about whether Douglas Faneuil had waived attorney-client privilege with regard to communications with his first attorney, Jeremiah Gutman, Martha Stewart's lead attorney, Bob Morvillo, suddenly lurched out from behind the defense table and, in mid-oration, marched alone up the courtroom aisle. Bob Morvillo is described as "volcanic" in part because his temper is explosive and in part because his shape is not dissimilar to that of a mountain. So imagine a small volcano barreling up the aisle, pausing in front of Judge Cedarbaum's bench and threatening to erupt.

Morvillo related a story that Douglas Faneuil supposedly told the government last year, a story that the government subsequently passed on to the defense team: After Faneuil's first interview with the SEC on Jan. 3, 2002, Faneuil retained Jeremiah Gutman and told him that, in his interview with the SEC, he had withheld information. Upon hearing this (according to Morvillo's description of Faneuil's story), Gutman immediately advised Faneuil to come clean. Then, however, Faneuil said that Gutman learned that Merrill Lynch was negotiating a back-room deal with the government in which the firm would serve up Sam Waksal's "head on a silver platter" in exchange for the government's looking the other way with regard to Martha Stewart. In light of this development, Faneuil said, Gutman changed his tune and advised Faneuil not to tell the SEC investigators what he had withheld in the interview.

Not surprisingly, Morvillo's story hit the courtroom like a shot of espresso. A secret deal? Backroom horse-trading? The government promising Stewart for Waksal and then stabbing everyone in the back? As Morvillo returned to his seat, the scandal meter flashed red.

In reality, Faneuil's story—at least as articulated by Morvillo—is implausible. Leave aside the fact that such blatant (and high-profile) inside dealings are less common in the real world than in movies, and just focus on motives. First, in terms of prosecutorial bragging rights, one Martha Stewart head is worth a dozen Sam Waksals, so no ambitious prosecutor would make this exchange. Second, the prosecutors would have had no incentive to trade anything for Waksal until they determined that they couldn't get him any other way (and Waksal gave them a mind-boggling array of ways). Third, Merrill Lynch would have had no reason to protect Martha Stewart, Peter Bacanovic, or anyone else; the firm's conduct in this matter appears to have been exemplary.

So, rather than to suggest there is veracity to Faneuil's tale, Morvillo probably told it for a more prosaic—and relevant—reason: to lay the groundwork for his first major whack at Faneuil's credibility. Faneuil will take the stand as early as Tuesday. If, indeed, he told such a story, Morvillo will probably argue 1) that it was to fabricate a self-serving excuse for not telling the truth earlier; and therefore, 2) that, as this and other instances show, Faneuil is clearly willing to lie whenever it benefits him.

--------------------------------------------------------------------------------

From: Henry Blodget
Subject: Opening Statements
Posted Tuesday, Jan. 27, 2004, at 11:42 PM PT

At first glance, the government's lead prosecutor, Karen Patton Seymour, seems about as intimidating as a preschool teacher. She wears understated gray suits and pearls. She eschews theatrics, bombast, and hysteria. She smiles often and warmly. She speaks in terms that a third-grader could understand. She comes off as smart, confident, forthright, and reasonable. In short, she is the perfect physical antidote to the defense's not-so-subtle suggestion that United States v. Martha Stewart and Peter Bacanovic is little more than a politically motivated lynching orchestrated by jack-booted thugs.

In her opening statement, Karen Seymour explained what, in the government's view, the case is about: "Obstruction. Lying. Covering up. Fabricating evidence. Cheating investors in the stock market." A "secret tip" that gave Martha Stewart an edge over other (honest) investors. Seymour described Peter Bacanovic as a man who, on Dec. 27, 2001, was annoyed that his assistant, Douglas Faneuil, didn't immediately know to break the rules and tell Stewart that Sam Waksal was desperately trying to sell all of his ImClone stock—"That's the point, you have to, you must"—a Peter Bacanovic who "knew this was a violation of Merrill Lynch policies, but didn't want his friend to get obliterated," a Peter Bacanovic who, upon learning of the investigation, screamed at Faneuil that Martha Stewart had sold her ImClone for tax-loss purposes, and then, when Faneuil grew anxious, soothed him with a fancy meal and smarmy assurances: Everyone was telling the same (bogus) story; everything would be okay.

Karen Seymour made some fresh points. She said that Mariana Pasternak, a friend of Martha Stewart's, will testify that Stewart confided that the Waksals were selling (the "secret tip" that Faneuil allegedly provided). She said that Peter Bacanovic initially told Merrill officials that Stewart had sold her ImClone for tax-loss reasons—and then, realizing how easily this lie could be refuted (Stewart had a gain in the stock), changed his story to the $60 agreement. She announced that the "@60" mark on the allegedly altered worksheet was the only mark made with different ink—making it less likely that, as Bacanovic attorney Richard Strassberg later argued, Bacanovic simply picked up a different pen. She also neutralized one of Douglas Faneuil's obvious weaknesses by acknowledging it herself: "Because he stands to benefit," she said, "you should scrutinize his testimony and see if it stands up."

Karen Seymour's opening statement was strong. If nothing else, it convinced me that she believes that Martha Stewart and Peter Bacanovic are guilty beyond a reasonable doubt. I still don't think she'll be able to convince the jury they are, though.

After Seymour yielded the podium, Peter Bacanovic's attorney, Richard Strassberg, took over. His opening statement was also strong. The Peter Bacanovic he described was hard-working, successful, trustworthy, and responsible. Strassberg's charts showed that the circle around ImClone Systems on the allegedly altered worksheet wasn't the only circle that Bacanovic had made on the page—and that the other circles helped corroborate the $60 story. The ink tests was were "flawed," Strassberg said; the government had simply seen what it wanted to see. Most importantly, Strassberg's Douglas Faneuil was an "admitted liar," a dazzled young assistant who was "fixated" on Martha Stewart, who bragged to his friends about his every contact with her, who lied to the government twice and then sought to minimize the damage by blaming his boss, who is aware that he will get off with a "free pass" if he can give the government what they want—and is eager to provide it.

"Douglas Faneuil is the one who spoke to the Waksals," Strassberg said. "Douglas Faneuil is the one who spoke to Martha Stewart. Douglas Faneuil is the one who lied to the government. Douglas Faneuil is the one who got the deal."

Strassberg provided the crucial context that is (understandably) missing from the government's version of events. He described the other business Peter Bacanovic and Martha Stewart were conducting in December 2001, as well as the other events of Dec. 27. In my opinion, he wrapped most of the government's key contentions in reasonable doubt. He also set the stage for the day's main event, the opening statement of Martha Stewart's lead defense attorney, Robert G. Morvillo.

At times, Bob Morvillo's voice completely filled the cavernous courtroom—something that no other speaker in this trial has yet come close to doing (even with the aid of microphones). At times, he nearly whispered. At times, he prowled the aisles like a grizzly bear, swiping paws, roaring in indignation; at times, he leaned on the edge of the jury box, as cuddly and unthreatening as a koala. At times, he launched into rhetoric that would have resonated in a Martin Luther King speech; at times, he spouted New York City vernacular. The message I imagine the jury took away from Morvillo's performance was, "Ladies and gentlemen, my client is innocent." The message I imagine the rest of the courtroom took away was, "We are in the presence of a master."

Bob Morvillo stopped just short of the line Judge Cedarbaum established yesterday about arguing that the government's prosecution of Martha Stewart was unfair—but only just. "You are the protectors of liberty," he murmured to the jurors, beseeching them to "focus hard" and see through the government's substitution of "speculation, surmise, and guesswork" for evidence. "This case is brought to you buy the United States Department of Justice under John Ashcroft," he then sneered, pronouncing John Ashcroft with the same disgust that most people reserve for Adolf Hitler. Later, referring to the tag-team efforts of the congressional committee that leaked the Stewart investigation in the summer of 2002 (an election year), and the Ashcroft Department of Justice prosecutors who are trying to finish the job, he concluded: "Some government: leak on one side, prosecute on the other…. George Orwell was about 20 years too early."

To my ears, anyway, Morvillo's anti-government rant was slightly off-key: The venom, I think, comes too early in the economic cycle, just as Karen Seymour's "secret tip" refrain comes a year or two late. Two years ago, at the nadir of the recession and stock market swoon, Seymour's "secret tip" theme would have been greeted with cheers: No news was more welcome than that everyone's pain had been caused by a few greedy insiders. Similarly, if we were two years further into the recovery, I think Morvillo's John-Ashcroft-is-Satan defense would have earned a unanimous standing ovation. Now, however, the seesaw is in mid-swing, and I think people are still suspicious enough of business and supportive enough of regulation that Morvillo perhaps went too far. But then, he wasn't speaking to me.

With regard to the evidence, Morvillo picked up where Strassberg had left off. Adding more context, he attacked the supposedly incriminating events one by one. Of Dec. 27, 2001, he said, "This is the day that Sam Waksal decided to go crazy. What he did that day was an act of sheer insanity. … I submit to you that no one in his right mind would have done this." And, by association, Morvillo implied, no one in their right mind—except the government—would interpret Sam Waksal's selling as a sign that the FDA was about to reject ImClone's Erbitux application. "It was only when the announcement came out on Dec. 28th," Morvillo said, "only then did everyone see that Sam Waksal had gone crazy."

Morvillo described how, on Jan. 7, 2002, 10 days after Stewart's ImClone trade, in his very first meeting with investigators, Peter Bacanovic outlined the $60 agreement. The government says, "No, no …it was concocted. …" Morvillo continued, his mockery resounding off the wood-paneled walls. How was it concocted? By "osmosis?" "Let the government produce a single record of any contact [between Bacanovic and Stewart] between Dec. 28th and Jan.7th. … I don't think they did it by carrier pigeon. I don't think that the pony express existed in Mexico. … How? When? Where did they concoct it?"

Morvillo said that Shakespeare wrote a play summarizing the import of Stewart's temporarily altered phone message: Much Ado About Nothing. "The incident lasted 25 seconds," he continued. "Martha Stewart altered the message to the best of her recollection and then immediately changed it back." Morvillo admitted that Stewart made some factual mistakes in her interviews with investigators, but asserted, as expected, that they were mistakes, not lies. Stewart's primary purpose in the interviews was to convince the government that she hadn't been tipped by Sam Waksal, Morvillo said—and in that, at least, she succeeded. …

As I described in my analysis of the evidence, I think the facts favor the defense; the government's story is plausible, but the defense's is, too, so I think the former will be tough to prove beyond a reasonable doubt. When Karen Seymour finished her opening statement this morning, I thought, "Well, maybe the government has a chance." When Richard Strassberg finished his presentation, I thought, "Nope, it's over." When Bob Morvillo finished his sermon, I thought, "It is so over that the next six weeks are going to be a waste of time." Then, still in awe of the Morvillo performance, I spilled out of the courtroom with the other spectators. A minute later, in the marble hallway outside, I asked another reporter what he thought. His level of conviction, it turned out, was even greater than mine.

"She's going down," he said.

Henry Blodget, a former securities analyst, lives in New York City.

Article URL: slate.msn.com