Economics « Aletho News

Obama’s Plan for Economic Immiseration

By ROB URIE | July 26, 2013

President Barack Obama spoke at length on the economy on Wednesday in the first of what is reported to be a series of speeches he will give around the country to push his economic ‘agenda.’ A question for his supporters is why Mr. Obama is now purporting to promote the interests of the middle class and working poor when he has remained silent for the last five years during the worst economic downturn since the Great Depression? If he cared one whit about these people the time to promote economic policies to help them was five years ago. And conversely, the economic policies he has pursued have decimated the very people he now claims to want to help.

Mr. Obama’s analysis of economic travails—globalization and its effects on an under-educated workforce, are the same neo-liberal pabulum the ‘Washington consensus’ has been serving up since Jimmy Carter was in office. And his economic prescriptions—public-private ‘partnerships’ to boost investment in technology, bringing corporate executives in to assess what is wrong with the educational system, building out lower cost ‘online’ education and community colleges to ‘boost American competitiveness,’ increased infrastructure spending and the creation of tax advantaged savings accounts for middle class families, are straight from the neo-liberal playbook as well. To ask the obvious question: if neo-liberal policies worked, why then the laundry list of economic travails?

Taking the speech at face value, the contention market forces (‘globalization’) are the central cause of the decades old downward mobility of the ‘American workforce’ leaves out the specific role Mr. Obama has played in pushing the monopoly capitalist coup forward with the Trans-Pacific Partnership agreement (TPP), the role he personally has played in reviving the Wall Street banks responsible for the ‘financialization’ of the economy, the bi-partisan effort by official Washington to diminish the lot of organized labor and the ‘privatization’ schemes he continues to push to hand the public economy over to corporate interests. Government policies in the service of capital are no more ‘market’ forces than the much derided ‘central planning’ is.

A recent paper by the International Labour Organization (ILO) presents a broad and reasonably nuanced effort that concludes financialization, and not ‘technology,’ is the central explanation for the increased, and still increasing, share of income going to corporations and away from labor. By changing the corporate motive from continuing economic production to ‘financialized’ production—the creation of corporate architecture designed for maximum extraction of previously existing value, the ‘balance of power’ between labor and capital was shifted to capital by its corporate agents (executives). A prime example can be found in Wall Street itself—individual firms willing to sink the entire financial system for short term trading gains. Additionally, through the permeation of debt-based leverage, rentier income is now drawn from every section of the economy.

Mr. Obama’s unconditional bailout of Wall Street, with upwards of $25 trillion of public funds made available to ‘save’ the banks, is the single greatest gift from working people to the forces of their own demise in world history. The ILO paper articulates the role of Wall Street in the immiseration of the West’s toiling classes– not only was the transfer of public resources to ‘private’ banks in the bailouts taken from the working class, the financial economy Mr. Obama ‘saved’ is the absolute enemy of working people. Wall Street provided the tactic of immiseration of the working poor and middle class through financialization of economic production and it facilitated the process through financialization of the broader economy. In fact, Mr. Obama’s economic agenda can be read as the explicit continuation of this process.

Mr. Obama’s plan to ‘work with’ private technology companies to provide every college student in America with high speed internet service has particular irony as apparently the main capability to be boosted is the NSA’s ability to spy on students, long known to be periodically politically active, all the more quickly. As there was no mention of this ‘enhanced’ service being free—Mr. Obama is providing students the ‘right’ to buy products from private companies who then sell the information they gather from their ‘customers’ to the highest bidder while inventing ever more intrusive and corporate-totalitarian methods of controlling them. It is agreed that in theory high speed Internet service has value. That Mr. Obama’s actual corporate-state policies have made it a tool of totalitarian control shines a light on his true constituency. Conversely, it illustrates the destruction of actual economic value (high speed internet service) through strategies of domination by the same capitalists claiming they create economic value.

Asking business leaders to opine on the system of public education is more cynical still given Mr. Obama’s appointment of long-term public school privatizer Arne Duncan as Education Secretary. Business leaders’ interest is to shift the cost of training ‘their’ workforces onto the public dime. Even granting the dubious proposition education is to benefit capitalist enterprise, truly educating ‘the workforce’ provides for a broad set of potentially socially beneficial applications whereas training teaches skills that benefit certain employers. Given the history of American corporations trying to limit the mobility of workers, such as pensions with long vesting periods, providing specific training in lieu of broad education serves corporate interests against those of labor. And ‘education’ only creates ‘American’ jobs to the extent Federal government policies put certain classes of labor into faux ‘competition’ with more effectively exploited workers overseas. ‘Education,’ as Mr. Obama presents it, is a phony solution to an engineered problem.

Even in the dim corporate-state worldview of Mr. Obama’s patrons there must be interest in education outside rote training and inculcating maximum consumption—otherwise, who will create? Additionally, the basic arithmetic of privatized education is revenue – costs = profits. If profits are zero, as is the case with public education, then expenditures equal revenues. Why extracting profits–increasing public expenditures that go to capitalists rather than to education, adds value to education when it so clearly detracts is a mystery Mr. Obama should explain. And paradoxically, his ‘private’ model for education finds precedence in his health care ‘reform’ plan, the ACA, with the central difference being that Mr. Obama’s explanation for retaining a private healthcare system is that it is already ‘private’ whereas the educational system Mr. Obama now wants to privatize is largely public. And there is no grimmer view of human existence than corporations training human ‘consumption units’ in the empty ideology of capitalist consumption.

Mr. Obama’s ‘tax advantaged’ savings accounts for middle class families are a particularly cynical ploy. Middle class wages were stagnant for thirty years before declining in the economic calamity associated with the financial ‘crisis’ of 2008. What middle class (and poor) families need is income, not accounts to put income they don’t have into. With more details allegedly forthcoming, the initial read is through his ‘private accounts’ Mr. Obama hopes to effectuate George W. Bush’s plan for his own ‘private accounts’ as a step toward privatizing Social Security. And in his Wednesday speech Mr. Obama made coded comments about cutting Social Security that tie directly to his Hamilton Project (Robert Rubin) speech nearly a decade earlier. To be clear, the working poor would be hurt most were Mr. Obama to push ‘private’ savings accounts only the rich can afford while cutting the Social Security the working poor most depend on.

The infrastructure spending Mr. Obama advocates may or may not be a good idea depending on how it is financed. In the U.S., given its geography and geopolitics, infrastructure has unambiguously provided an economic benefit in the post-WWII period. But corporations formerly paid a substantial proportion of the costs of building infrastructure through taxes. Over the last fifty years taxes on corporations and the wealthy have been massively cut leaving the middle class to pay an increased share of public expenditures. And a significant proportion of this burden, in the form of municipal debt, is coming due.

The struggle currently underway in ‘bankrupt’ Detroit between ‘bondholders’ and pensioners has the Democratic Party of the last forty years supporting the immiseration of pensioners to pay financial speculators for financing infrastructure spending. To be clear, public (and private) pensions are deferred income negotiated in lieu of current income. Democrat Robert Rubin, with whose acolytes Mr. Obama has continued to fill his Cabinet, is an insistent advocate of Detroit’s bondholders being fully paid. And the only way to do so is to take the money, earned income that was deferred, from pensioners. Mr. Obama’s threat to appoint arch Rubinite Larry Summers—the man who bears significant responsibility for deregulating Wall Street and for the ensuing economic calamity, to Chair the Federal Reserve is a clear signal increased infrastructure spending is intended to transfer even more public wealth to ‘private’ hands.

Mr. Obama refers to the student debt ‘crisis’ as if he had no role in it. In fact, about half of the total student loan debt outstanding was accumulated while Mr. Obama has been President. Mr. Obama ‘removed the banks’ from making student loans in 2009 as part of his effort to shift bad bank debts and economic risk from the banks onto the public balance sheet, not in an effort to help middle class students as he now asserts. Under Mr. Obama student loan debt fraudulently incurred through bogus ‘for-profit’ colleges and trade schools has exploded with fully one-third of indebted students failing to receive degrees. With full knowledge that student loan debt is nearly impossible to discharge, Mr. Obama encouraged students to take loans as part of his education ‘initiative’ creating a new generation of debt slaves to a particularly pernicious type of debt.

The ‘middle class’ jobs Mr. Obama now claims to have created through the automaker bailouts is a particularly offensive sleight of hand. Before the bailouts a proposal had been floated to create a ‘tiered’ wage system where new autoworkers would earn approximately one-half what existing workers made. As a condition of the automaker bailouts Mr. Obama forced the issue by putting tiered wages in place while no restrictions were put on executive compensation. In large measure the same executives who had sunk the auto industry were left in their jobs at full pay and were left free to continue relocating autoworker jobs to low wage countries. And in fact, the bailouts Mr. Obama now claims were his were largely engineered by the George W. Bush administration before it left office. As with Mr. Obama’s healthcare plan, right-wing Republicans conceived the automaker bailouts.

On a positive note, it was refreshing to hear Mr. Obama correctly characterize his healthcare ‘reform’ plan, the Affordable Care Act (ACA), as a plan to provide health insurance, rather than health care, to those lacking it. The Democrat partisans who tried to draw such a stark line between Mr. Obama’s policies and the likely policies of his Republican rival in the last election, Mitt Romney, largely avoided the fact that Mr. Obama’s health care ‘reform’ was the same plan Republican Mitt Romney had implemented as Governor of Massachusetts. The right-wing Heritage Foundation originally conceived the plan as the radical right’s ‘solution’ to the ‘threat’ of national health care. Under the guise of political feasibility Mr. Obama has pushed through the major policies of the radical corporate-right with his long-suffering constituents believing they got a good deal.

The genesis of the ACA as a corporate-right ‘solution’ to a public health crisis is what it is, but this alone doesn’t doom it to failure. What it leaves is a system that provides about two-thirds of the benefits of a functioning health care system at twice the cost. While implementation of the plan in Massachusetts initially reduced the number of medical bankruptcies —families that were bankrupted by medical costs, the number quickly recovered. The basic flaws of the existing healthcare system remain—monopoly power in pricing medical services and medical provision, a disjoint and ring-fenced system designed to maximize profits rather than to provide healthcare, and hugely asymmetrical political-economic power between insurance companies, medical providers and the ‘insured’. The ACA’s liberal supporters believe against all history that private insurers will willingly provide the health care they are contractually obligated to provide when they only have when forced to in the past. The question then, with the unconditional bank bailouts as guide, is who is going to force them?

Again, the received wisdom amongst the self-described ‘liberal’ economists supporting the ACA is that it is all that was politically feasible. In fact, with poll results showing 75% of the American people initially supporting a national (single payer) health care system, Mr. Obama could have taken his case to the people. Alternatively, Mr. Obama could have represented popular disillusion as a potential threat to the extractive, dysfunctional private health care providers and won concessions. Instead, he had a health insurance lobbyist write the ACA and proceeded to pass the Republican plan conceived by the right-wing Heritage Foundation off as his signature achievement.

What Mr. Obama apparently hopes to accomplish in the remainder of his term, as evidenced by his economic ‘agenda,’ is the conversion of every remaining socially beneficial public institution into private enterprises designed to provide the highest profits for connected capitalists while converting their (public institutions’) ‘products’ into tools for the domination and control of the populace. Postmodernist insights notwithstanding, there is a difference between education and capitalist-corporatist propaganda. There is a difference between education and technical training in the service of industry. Savings accounts for people who have no income to save are a hoax. Infrastructure designed to extract ongoing fees for private interests at public expense is a cynical ploy. And as ACA supporters will soon be learning in excruciating detail, there is a difference between health insurance and health care. Finally, privatization isn’t efficient rationalization of public institutions; it is the replacement of the public interest with private interests. Lest the result remain unclear, replacement means elimination of the public interest.

Rob Urie is an artist and political economist in New York. His book, Zen Economics, will be published by CP/AK Press in 2014.

Source

July 27, 2013 Posted by aletho | Deception, Economics, Progressive Hypocrite, Supremacism, Social Darwinism | Obama, United States, Wall Street | Leave a comment

Brazilians protest costly visit by Pope

Press TV – July 27, 2013

Brazilians have taken to the streets of the two megacities of Rio de Janeiro and Sao Paulo to protest the costly week-long visit of Pope Francis to the country.

On Friday, hundreds of demonstrators faced off with 1.5 million Catholic pilgrims in Rio’s Copacabana beach, where visiting Pope was wrapping up a massive ceremony marking World Youth Day.

Protestors were closely monitored by security personnel in scores of vehicles, including an armored vehicle equipped with a water cannon.

Meanwhile, in Sao Paolo, over 300 protesters ransacked five banks and set fire to garbage bins and blocked traffic late on Friday as a show of solidarity with demonstrators in Rio de Janeiro.

On Monday, a similar demonstration was held near the Rio state governor’s palace following a meeting there between the Pope and Brazil’s President Dilma Rousseff.

The demonstrations come just weeks after the country experienced a series of massive protests against government corruption, lagging public services, and the cost of the 2014 World Cup and 2016 Olympics.

The protesters argued that the government should spend public funds on health, education, and other public services rather than on costly international events.

July 27, 2013 Posted by aletho | Economics, Solidarity and Activism | 2014 FIFA World Cup, Brazil, Dilma Rousseff, Pope Francis, Rio de Janeiro, São Paulo | Leave a comment

Venezuela: Supporting a Once and Future Revolution

By Roger D. Harris | Dissident Voice | July 25th, 2013

Venezuela is at a critical moment in its Bolivarian revolution, dealing with serious economic issues due to its transitional economy that is under siege by local oligarchs. At the same time, President Nicolás Maduro’s decision to welcome Edward Snowden, if he opts for political asylum in Venezuela, means that the Obama administration is escalating its hostility towards his government.

Venezuela faces a situation analogous to that of the Popular Unity government of Salvador Allende from 1970 to 1973 when, as is well documented, the CIA and the local business class conspired to destabilize the economy, overthrow the democratically elected socialist government, and impose the military dictatorship of Augusto Pinochet.

It is in this context that we find it ill timed at best that Clif Ross has assailed the Venezuelan government with one-sided and flimsy arguments (e.g., criticizing Chávez for choosing to divert electrical power from basic industry to the populace when natural droughts curtailed hydroelectric production) in recent articles at Dissident Voice and CounterPunch Weekend Edition.

A former Chávista, Ross now takes what he describes as an “agnostic” view of the Bolivarian movement. His agnosticism extends to the US-backed opposition, which Ross argued in his talk in Berkeley could be even better for Venezuela if it were to come to power.

As solidarity activists, the Task Force on the Americas is not afflicted with agnostic angst; we support the social justice movements against imperialist intervention. Our responsibility is to allow the Venezuelans to resolve the contradictions within their movement without the interference of the US government.

A class analysis is needed of what is happening in Venezuela. The many problems with the Bolivarian revolution are inherent in trying to create socialism on the foundations of capitalism. Within Chávismo there is an acute awareness of problems, and President Maduro is working on them. We support the overall Bolivarian struggle against outside interference, because the alternative of the opposition in power would mean no opportunity for a people’s agenda.

Ross is concerned about the contagion of state power. None of the 21st century socialist governments in Latin America pass his muster. All are corrupt, authoritarian, and going in the wrong direction in his view.

But it was through state power that the Bolivarian movement in Venezuela distributed land to 300,000 families, halved the poverty rate, reduced extreme poverty by two-thirds, went from being among one of the most economically unequal nations in the Latin America to being the among the most equal, reduced child malnutrition by 40%, increased social expenditures by 60%, built 700,000 homes, and returned 1 million hectares to Indigenous communities.

This same government has promoted community councils and other instruments of participatory democracy. Not surprisingly, according to the annual World Happiness poll, Venezuela is the second happiest country in the world.

A mere decade and a half ago, most analysts would have ranked Venezuela as least likely to stand up on its own two feet to challenge the Empire, to be recognized as sovereign and equal. It was arguably the most sycophantically Americanized nation in South America. In a mere 14 years of the Bolivarian revolution, there has been a blossoming of home grown culture. A sense of national identity and pride has become universal, even among the Miami jet-setting opposition elements.

Today, 32-year old musical wunderkind and avowed Chavista Gustavo Dudamel is not only the music director of the Orquesta Sinfónica Simón Bolívar in Caracas but of the Philharmonic Orchestra in Los Angeles. Culture is still being imported, but the shipping lanes are going both ways now.

The Bolivarian revolution is considered a major threat by the US empire. The US has a stated policy of regime change for Venezuela, spending millions of dollars on “democracy promotion” to demonize and destabilize the Bolivarian movement. With the US as the sole super power having an uncontested military superiority, the Bolivarian revolution is all the more of a threat because it is a “threat of a good example.”

In 2008, when the US financial crisis precipitated a world recession, the capitalist solution was to impose austerity measures on working people with increased unemployment and economic insecurity. In contrast, the Venezuelan government reduced the gap between rich and poor by elevating the poor.

As James Petras has pointed out, US policy toward Venezuela has taken many tactical turns. But the enduring objective has been the same: oust the Chavistas, reverse the nationalization of big businesses, abolish the mass community and worker based councils, and revert the country into a client-state. These are the salient issues the solidarity movement needs to address.

Roger D. Harris is President of the Task Force on the Americas, a 29-year-old human rights organization based in Marin County, which works in solidarity with the social justice movements in Latin America and in opposition to US interference with their self-determination. V isit Roger’s website.

Venezuela ends normalization of US relations (alethonews.wordpress.com)
Venezuela arrests Colombian paramilitaries plotting instability (alethonews.wordpress.com)

July 26, 2013 Posted by aletho | Deception, Economics, Timeless or most popular | Bolivarian Revolution, Latin America, Nicolás Maduro, South America, United States, Venezuela | Leave a comment

Netanyahu proposes new “Marshall Plan” for Egyptian economy to support coup

MEMO | July 26, 2013

Netanyahu hopes that his “Marshall Plan” would see the emergence of a new Arab middle class.
Israeli Prime Minister Benjamin Netanyahu is pushing for the West to adopt a new “Marshall Plan” for the Egyptian economy in order for the coup to succeed. He is being backed by US Republican Senator Rand Paul in his efforts. If successful, Netanyahu will regard the burying of the democratic process in the neighbouring country as the achievement of one of his most important strategic objectives.

The original Marshall Plan was America’s way of helping to rebuild Europe after the Second World War to stem the tide of revolutionary liberation. According to Maariv newspaper, Netanyahu’s plan proposes significant economic growth in the Arab world in order to prevent “radical” Islamic groups from rising to power.

The deputy head of Israel’s National Security Council, Eran Lerman, has been pushing the plan in recent meetings in Washington with Congress members. Netanyahu himself suggested such a plan during his own recent visit to the US; finance for the scheme would come from private sources, he claimed. The prime minister believes that Arab countries should be encouraged to have stable democracies free of Iranian influence and that the international community should work towards that objective. Maariv’s report claims that the Israeli officials are looking at possible funding for the project to come from Arab states such as Saudi Arabia and the UAE.

Netanyahu hopes that his plan would see the emergence of a new Arab middle class, presumably more ready to do business with Israel. His thinking follows the logic behind US Secretary of State John Kerry’s proposal for massive financial investment in the occupied West Bank to boost the Palestinian Authority’s standing. “The capitalist West thinks that throwing ever more money at a problem will solve it,” said MEMO’s Senior Editor Ibrahim Hewitt. “The natural aspiration of a people to be free of economic, political and military occupation doesn’t register with Western governments for whom economic growth is the Holy Grail.”

The newspaper pointed out that the Israeli government is also preparing to ask the US Department of Defence for an increase in military aid on the pretext of potential threats from the popular uprisings in the Arab region.

Israel reacts positively to Egypt coup (rinf.com)

July 26, 2013 Posted by aletho | Civil Liberties, Corruption, Economics, Ethnic Cleansing, Racism, Zionism, Full Spectrum Dominance | Benjamin Netanyahu, Israel, John Kerry, Netanyahu, United States, Zionism | Leave a comment

Detroit: The Bell Tolls for All of Us

A Black Agenda Radio commentary by Glen Ford | July 23, 2013

In Detroit, even the thin gruel of democracy that America advertises to the world, has ceased to exist. Not one of its 700,000 residents retains the political rights of citizens, those rights having been usurped by the agents of Wall Street: Governor Rick Snyder and bankruptcy lawyer Kevyn Orr, the Lone Ranger and Tonto who were the sole authorities empowered to file bankruptcy for the city. Their mission is to render the judgment of capital that Detroit is too poor, in its present demographic composition, for participation in the democratic order, and must be forcibly reconstituted, beginning with a divvying up of its assets. At the end of this process, a “new” Detroit is supposed to emerge, which will have divested itself of enough Black and poor people to allow the reinstatement of some form of electoral franchise.

Or, maybe not. Direct rule by Wall Street, which is the real meaning of the Emergency Financial Manager regime, is not some idea especially concocted for Detroit. It is the political and economic superstructure that the plutocracy envisions for the whole country – for the entire planet, if they can get away with it. Due to the particular racial history of the United States, where Black citizenship rights have always been deemed illegitimate, those who would strip away democratic freedoms and privatize the public sphere have always found it easier to mount their offensives against heavily Black regions and sectors of society. White people with identical interests in democracy and fairness in schools, public services and in the workplace root for the plutocrats when Blacks are under attack, never imagining that the same weapons will soon be turned on them.

Thus, Detroit’s dissolution is perceived as a Black problem – more politely referred to by its euphemism: an “urban” crisis.

However, Wall Street and its mercenary law firms, like Kevyn Orr’s godfathers at Jones Day, are not motivated by petty racial prejudice; they are simply skilled at taking advantage of it, always aiming their daggers at the soft spots in democracy, where Black people live. With Detroit and the other largely Black cities of Michigan, where half of the state’s African American population has been disenfranchised, Wall Street is creating new law and new models for the total subjugation of American society to the Lords of Capital.

Primary elections are scheduled for Detroit, in August. Mayor Dave Bing, who swung wide the gates to the city for the conquistadors, won’t be running for reelection. City council president and former mayor Ken Cockrel Jr. says he doesn’t see any point in running. But, they are irrelevant. The Detroit model for imposing direct rule of the rich can only be challenged by a mass movement of the hundreds of thousands who remain in the city – either by choice, or by no-choice – and by the millions elsewhere in the country who are next on the corporate juggernaut’s quickening agenda. The resistance must choose its tactics from a menu of “By any means necessary,” make the enemy understand the meaning of “No Justice, No Peace,” and show him that we are deadly serious when we say, “We shall not be moved.”

BAR executive editor Glen Ford can be contacted at Glen.Ford@BlackAgendaReport.com.

Detroit Bankruptcy Takes Aim at Pensions (alethonews.wordpress.com)
Don’t buy the right-wing myth about Detroit (salon.com)
Leaked emails reveal conspiracy to throw Detroit into bankruptcy (counterinformation.wordpress.com)

July 24, 2013 Posted by aletho | Economics, Supremacism, Social Darwinism | Dave Bing, Detroit, Kevyn Orr, Rick Snyder, United States, Wall Street | Leave a comment

Latin America’s Tragic Engagement with Microcredit

By Milford Bateman | CEPR Americas Blog | July 23, 2013

Thirty years ago, the international development community was abuzz with excitement. This was because it appeared that the perfect solution to poverty, exclusion and under-development had finally been found in the form of microcredit. As originally conceived, microcredit is the provision of micro-loans to the poor to allow them to establish a range of income-generating activities, supposedly facilitating an escape from poverty through individual entrepreneurship and self-help. Perhaps nowhere more than in Latin America was the excitement so intense. Stoked by the uplifting claims of Peruvian economist, Hernando de Soto [1], that a vastly expanded informal economy would prove to be the economic salvation of the continent, the U.S. government through the World Bank and its own aid arm, USAID, along with the Inter-American Development Bank (IDB), led the charge to establish the microcredit movement as the dominant local intervention to address poverty.

However, the sour reality that Latin America faces today is that all the excitement over microcredit was fundamentally misplaced. As I argue in a recent article [PDF] published in the Mexican journal Ola Financiera, the microcredit movement has likely proved to be one of the most destructive interventions brought to Latin America over the last 30 years. A growing number of Latin American governments and international development agencies are now finally reconsidering their once unconditional support for the microcredit model. So what went wrong? Let me point to a few of the most important problems.

First, the overarching outcome of the microcredit model in Latin America has been an increase in the supply of “poverty-push” informal microenterprises and self-employment ventures. Yet rather than creating a De Soto-esque foundation for rapid growth and poverty reduction, the very worst possible foundation for promoting long-term poverty reduction and sustainable development was created. As economists such as Alice Amsden, Robert Wade and Ha-Joon Chang have convincingly shown, the now wealthy developed countries and the East Asian “miracle” economies found that what is really needed to escape poverty is for the state to engineer an entirely different constellation of the “right” enterprises: that is, enterprises that are formalized, large enough to reap important economies of scale, can innovate, can use new technology, are willing to train their workers, can supply larger enterprises with quality inputs, can facilitate new organizational routines and capabilities, and can eventually export. Economic history shows, too, that financing the expansion of the “wrong” sort of informal microenterprises and self-employment ventures will simply not lead to sustainable development. As Ha-Joon Chang brilliantly points out, Africa has more individual entrepreneurs than perhaps any other location on the planet, and many more are being created all the time thanks to rafts of microcredit programs backed by the developed countries, yet Africa remains in poverty precisely because of this fact. Likewise in Latin America: by programmatically channelling its scarce financial resources (savings and remittances) into informal microenterprises and self-employment ventures, and so away from virtually all other higher-value uses, the continent has actually been progressively destroying its economic base.

Mexico exemplifies the microcredit trap created in Latin America. Its financial institutions have all proved to be adept at channelling their funds into hugely unproductive and all too often temporary informal microenterprises and self-employment ventures – so-called “changarros” – leaving the bulk of potentially growth-oriented, but low profit and high risk, small and medium industrial enterprise projects increasingly without financial support. Over the last two decades this “crowding out” trend has undoubtedly undermined Mexico’s once powerful industrial and technological base.

A very similar story emerged in Bolivia since the 1980s, where the U.S. government-supported push for microcredit has played a not-unimportant role in gradually destroying an economy that was once slowly industrializing under Import Substitution Industrialization (ISI) policies. Essentially, Bolivia’s carefully built-up raft of efficient industrial small and medium-sized enterprises was starved of funding and left to collapse. Resources were instead shifted into promoting the hugely unproductive and no-growth informal microenterprise and self-employment sector, which has, not surprisingly, dramatically expanded in recent years. Today, with nearly 40 percent of Bolivia’s financial resources now independently intermediated into these “wrong” sort of (micro)enterprises, the Bolivian government has its work cut out to try to stop the damaging de-industrialization trajectory underway in the country.

The second key problem with the microcredit model in Latin America arises from the fact that in the neoliberal 1990s it was aggressively commercialized and extensively deregulated. The primary motive for this move was to eradicate all government and international development community subsidies from the world of microcredit. The use of subsidies (typically to maintain low interest rates) was felt to be ideologically suspect by the main U.S.-based international development agencies, and it was also thought to unjustifiably add to the tax burden on business elites. With extensive advice and financial support provided by USAID, Bolivia was turned into the “best practice” example of commercialised microcredit, thanks mainly to BancoSol, the world’s first dedicated commercially-driven microcredit bank. Yet turning microcredit into a for-profit business under minimal regulation has proved to be a singular disaster: spectacularly damaging levels of Wall Street-style greed, profiteering and financial market chaos soon ensued. Microcredit effectively became the developing world’s very own version of the USA ’s sub-prime lending crisis.

In Bolivia, the commercialization of microcredit has been a major development disaster for the poor. First, Bolivia’s scarce financial resources were disastrously shifted into the “wrong” enterprises, as I just pointed out. Commercialization also directly precipitated the “microcredit meltdown” that Bolivia experienced across 1999-2000, an event that inflicted very serious long-term damage on the Bolivian economy. Crucially, however, commercialization has been a massive success for those managing and investing in Bolivia’s microcredit institutions. The elite group of individuals involved in running Bolivia’s main microcredit institutions, famously including BancoSol and its predecessor, PRODEM, have all become very rich indeed. High salaries, bonuses and dividends have been important to those most closely associated with the management and ownership of BancoSol. The first employees in PRODEM, an institution that has its origins as an NGO funded by the international community to “help the local community,” eventually made millions of dollars after they gradually took control of PRODEM and then brazenly sold it off to a Venezuelan bank. We should, of course, not be surprised to find that little trust, respect or solidarity exists between Bolivia’s poor and the microcredit sector supposedly established at great expense to help them.

Mexico’s experience also exemplifies the tremendous damage wrought by the commercialization of microcredit in Latin America. Even more so than in Bolivia , it is not the poor that have been benefitting from the increased supply of microcredit, but a small financial elite that has been quietly profiteering to a simply stupendous extent. Probably the best/worst example here is that of Banco Compartamos, an organization founded in 1990 as an NGO and making extensive use of international donor grant funding. Even with laudable goals written into its founding articles, very early on it became clear that the main intended beneficiaries of Compartamos’s operations were going to be its senior staff. After 2000, for example, the senior staff began to reward themselves with Wall Street-style salaries, bonus packages and cheap internal loans which allowed them to buy shares in Compartamos. Then in 2007, when Compartamos underwent the inevitable IPO, key senior staff really hit the big-time, with a number of them pocketing several tens of millions of dollars when they off-loaded their shares into the market. A number of external investors also made vast fortunes from their shareholdings in Compartamos, notably the Boston-based microcredit advocacy and investor body ACCIÓN, which saw an initial $1 million stake in Compartamos (of which $800,000 was actually a grant to ACCIÓN) rise in value to nearly $270 million. Note also that Compartamos generates the revenues to support such high financial rewards to senior staff by charging as much as 195 percent real interest rates on its microloans to mainly poor Mexican women.

Inevitably, the supply of microcredit has begun to reach its saturation point in Mexico. Compartamos’s growth has been nothing short of dramatic, while many other domestic microcredit institutions have also grown very rapidly. Compartamos has been the world’s most profitable microcredit institution for five of the past six years, and its nearly $100 million dividend payout to investors is now larger than the balance sheets of most other microcredit institutions. With such huge financial rewards made possible by lending to Mexico’s poor, the big profit-hungry international banks, such as Citigroup, have entered the market, clearly adding to the lending frenzy underway. However, real fears exist that Mexico cannot now avoid a destructive sub-prime-like “microcredit meltdown” episode not unlike the one that hit the Indian state of Andhra Pradesh in 2010. Indeed, it is well known that multiple lending to households has begun to reach epidemic proportions in many parts of Mexico, especially in the massively over-supplied state of Chiapas.

Nevertheless, the question remains: has microcredit in Latin America in general, and Compartamos specifically, been helping the poor to escape their poverty? If the answer is broadly positive, then the spectacular financial rewards accruing to the providers of microcredit might be justified to an extent if meaningful benefits are accruing to the recipients – the poor. However, the unpalatable answer to this question is a resoundingly negative one: there is not a shred of real evidence to support the claim that Compartamos’s microcredit activities have played a role in resolving poverty. First consider that a U.K. government-funded study of virtually all previous impact evaluations of microcredit dramatically showed there is no empirical evidence anywhere [PDF] to show that microcredit has had a positive impact on poverty. Even long-standing supporters of microcredit now accept this extremely unpalatable fact.

More specifically, consider the findings of a just-released impact evaluation of Compartamos [PDF], financed by Compartamos itself and centrally involving one of the most high-profile microcredit supporters, professor Dean Karlan, who is based at Yale University in the U.S. In spite of Comapartamos’s huge presence in poor communities across Mexico, and its previous claims to be greatly helping Mexico’s poor, the impact evaluation team could only come up with a tiny amount of evidence of any positive impact arising from its activities. This was bad enough. But this tepid conclusion actually hides a much more disturbing fact, which is that the research team could only manage to arrive at this sliver of good news by effectively refusing to adopt/adapt an evaluation methodology that would capture the most important downsides to the microcredit model. One can only presume that this was felt necessary in order to ensure that they could come up with the required (very limited) positive impact result they later disingenuously claimed to have found, and which allowed Compartamos and other institutions involved to inevitably spin into the specious claim that Compartamos “generally benefits (its) borrowers”.”

Notably, the research team entirely overlooked so-called “displacement” effects – that is, the negative impact on incumbent microenterprises in the same community that lost business and income thanks to waves of new Compartamos-supported microenterprises. With most Mexican communities for a long time adequately served by simple informal microenterprises providing retail and other services to the poor, the arrival of rafts of new microenterprises operating in exactly the same sub-sector will inevitably have precipitated very large displacement effects. But these downside impacts were ignored. The team also failed to factor in the impact of exits, which is when a microenterprise fails – which the vast majority actually do, and usually very quickly – and the hapless individuals involved then have to either divert other funds (pensions, remittances, savings, etc.) to continue to repay their microloan, or else they lose assets lodged as collateral when they are forced into outright default.

But perhaps the most egregious downside impact ignored by the research team relates to the fact that they also chose to examine a very short and unrepresentative time period – introducing microcredit into a community where before there was none. This then allowed them to simply aggregate the short-term results in such virgin territory into a generally upbeat assessment of the longer-term impact. This is utter nonsense. By doing this, the research team chose to ignore, first, the fact that Compartamos has contributed to further inflating Mexico’s already over-blown and massively unproductive “changarros” sector, which a growing number of analysts now accept is creating an existential threat to the Mexican economy. Second, there was also no comment on the huge opportunity cost involved when scarce funds are gradually diverted away from the “right” enterprises. This silence prevailed in spite of the fact that even the neoliberal-oriented IDB had the guts to publicly admit in 2010 that this “crowding out” issue actually lies at the heart of Latin America’s recent history of poverty and exclusion. Third, you will find nothing in this impact evaluation that discusses the over-indebtedness problems that are clearly looming on the horizon for Mexico’s poor communities, and particularly for many of Compartamos’s long-standing clients.

The Latin American economies have all been ill-served by the microcredit model, which has provided, and continues to provide, a serious headwind to those governments in Latin America hoping to escape once and for all from poverty, exclusion and primitivizing development trajectories. That microcredit continues to attract such support today thus needs some explanation. I would argue it is down to two factors. First, the politics and ideology; principally the need by the U.S.-led international development community to ensure that individual entrepreneurship and self-help remain the only potential paths out of poverty for the poor in Latin America, and not the exercise of any form of “collective capabilities” through social movements, trade unions, pro-poor governments, or any other similarly “subversive” intervention that the poor might wish to collectively deploy to escape their poverty, and might even have voted for as part of the “pink tide” of leftist governments. Second, there is the issue of the massive wealth that a tiny financial elite has been able to generate for itself thanks to (over)lending to the poor, and which it is now, quite predictably, unwilling to forego. This wealth has allowed, among other things, for the microcredit industry to aggressively lobby governments, mount massive PR campaigns and effortlessly finance deliberately dodgy impact evaluations, all in order to persuade the key actors in Latin America to continue to support the microcredit model.

All told, Latin American governments urgently need to disentangle themselves from the egregious myths and neoliberal-inspired fantasies surrounding microcredit, and begin to completely re-think their (often imposed) allegiance to what has proved to be an ultimately destructive poverty reduction and local development model.

[1] Hernando de Soto (1986): El otro sendero: la revolución informal. Lima: ILD

Milford Bateman is a freelance consultant on local economic development and also, since 2005, a Visiting Professor of Economics at Juraj Dobrila at Pula University in Croatia.

Are Microcredits really the Rock Stars of International Aid? (tablenumbersix.wordpress.com)

July 24, 2013 Posted by aletho | Deception, Economics, Timeless or most popular | Africa, Bolivia, Import Substitution Industrialization, Inter-American Development Bank, Latin America, Mexico, Microcredit, United States, World Bank | Leave a comment

Detroit Bankruptcy Takes Aim at Pensions

By Jane Slaughter | Labor Notes | July 19, 2013

Detroit hit the Trifecta last week—the third in a series of body blows that politicians have landed on the city’s working people.

The Michigan legislature passed “right-to-work” in December and gave the governor the right to impose “emergency managers” on cities two days later. When Detroit’s emergency manager Kevyn Orr announced Chapter 9 bankruptcy Thursday, he was following a predicted trajectory that will lead to further impoverishment and privatization.

The bankruptcy will enable an appointed judge to impose further cuts to city expenses and to void union contracts. A prime target for cost-cutting is the pensions owed to 21,000 city retirees and 9,000 active workers. The city estimates its pensions are underfunded by $3.5 billion, and wants to reduce payments to both workers and the bondholders who have lent the city money over the years: equality of sacrifice.

Michael Mulholland, vice president of the city’s largest AFSCME local, said city workers are “in a state of somewhere between perplexion and total anger. Everything they’ve been promised, both contractually and kind of a social contract, is being pulled out from under them. It’s morally indefensible.”

Mulholland retired in February, after 29 and a half years in the Water Department. “I could have worked someplace else and made more money,” he said, “but I was told if I worked here I’d have a steady job and in my old age not be in poverty.”

The bankruptcy of Detroit, which now has fewer than 700,000 residents, is the largest city bankruptcy in U.S. history.

Orr sprung the hurry-up filing yesterday because union pension fund attorneys were scheduled to be in court on Monday, arguing for an injunction against bankruptcy.

The state constitution appears to protect public employee pensions: “The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof and shall not be diminished or impaired thereby.”

But proponents of making city workers bite the bullet note that bankruptcy judges have wide latitude to break contracts.

Tag-Teaming with the Governor and the Banks

Pundits said other states and cities would look to Detroit as a template for how to manage ailing city budgets. A recent law in Rhode Island specifies that in a city bankruptcy, bondholders must be paid first, before pensioners.

Asked if the Michigan legislature could pass a similar law, Mulholland laughed. “If they proposed a law that Detroiters should all be shot,” he said, “some of them would get up at midnight to sign that one.” Governor Rick Snyder has guided the process of putting Detroit through a “consent decree,” Orr’s rule, and now the bankruptcy.

The Republican-dominated legislature has long been hostile to majority-black Detroit. In November 2012, the state’s voters passed a referendum that threw out a previous “emergency manager” law, which had been used almost exclusively to take over majority-black cities and school districts. A few weeks later the legislature simply passed the law again.

Although the law requires negotiations with affected parties before a city files for bankruptcy, Mulholland, who was in the talks, said, “It wasn’t negotiations, it was PowerPoint presentations about how bad the situation is.

“Orr wouldn’t answer AFSCME’s requests for negotiations, so they went and taped a letter to the door of his office.”

As an AFSCME member who had reached the top of the pay scale, Mulholland’s pension is $1,600 a month before health care contributions are taken out. He said exactly how much Orr intends to take from retirees has always been left vague, though union leaders were told health care would be slashed.

Two years ago, he said, city officials encouraged workers to retire right away. Now active workers are told to “relax, we’re going after the retirees.”

Local 207 is planning a demonstration in downtown Detroit July 25.

Orr touts the bankruptcy as a way to improve city services—which often, in the world he comes from, is code for privatization. Water, garbage pickup, an island park called Belle Isle, and the Detroit Institute of the Arts have all been mentioned as potential salable items. “The only thing they’re going to ‘improve’ is somebody’s bottom line,” Mulholland predicted.

General Motors, which is headquartered downtown, said it wouldn’t be affected by the bankruptcy. Apparently, with Snyder—who ran on his record as a businessman—in charge, business is going to be just fine.

July 24, 2013 Posted by aletho | Economics, Supremacism, Social Darwinism | AFSCME, American Federation of State County and Municipal Employees, Detroit, General Motors, Jane Slaughter, Kevyn Orr, Michigan, Rhode Island, Rick Snyder | Leave a comment

Iran, Iraq to jointly explore, develop border gas, oil fields

Press TV – July 19, 2013

The Iranian Oil Ministry says Tehran and Baghdad have agreed to explore and develop oil and gas fields lying along the common border between the neighboring OPEC members, Press TV reports.

The ministry added that the two sides have agreed to work together to settle territorial and ownership differences.

Under the agreement, the two countries will establish joint ventures to carry out the exploration and development of joint oil and gas fields.

The energy cooperation is also expected to minimize the impacts of interferences made by international oil giants in regional affairs.

The agreement came during Iranian President Mahmoud Ahmadinejad’s official visit to Iraq.

Ahmadinejad arrived in Iraq on Thursday at the head of a high-ranking delegation for an official two-day tour aimed at strengthening bilateral relations between the two neighboring countries.

The Iranian president held talks with Iraqi Prime Minister Nouri al-Maliki and Vice President Khudayr al-Khuzai and also met with Iraqi Parliament Speaker Osama al-Nujaifi and the country’s lawmakers on Thursday .

Ahmadinejad also paid a visit to the holy shrine cities of Karbala and Najaf.

The two-term Iranian president will leave office on August 3 to be succeeded by Hassan Rohani, who won an outright victory in the country’s presidential elections of July 14.

Middle East: Ahmadinejad – Regional progress, security depend on Iran-Iraq cooperation (ionglobaltrends.com)
Iraq to import gas from Iran (iraqinews.com)
Zionists thrive on conflicts: Ahmadinejad (rinf.com)

July 19, 2013 Posted by aletho | Economics, Solidarity and Activism | Iran, Iraq, Mahmoud Ahmadinejad, Nouri al-Maliki | Leave a comment

The Coming Plantations

By Mubbashir Rizvi | Zamana

Recent reports about the Pakistan government’s plan to allot thousands of acres of land to foreign countries and private corporations are alarming to say the least. The proponents of the plan argue that this agricultural outsourcing will attract foreign investment, helping the country to reduce its debts while generating greater productivity and rural employment. However, there is little evidence that this plan will offer any major advantages to the rural poor. Far from benefiting the poor, in fact, one is concerned that peasants may be displaced from their lands to ensure access to foreigners. Moreover, if the land that will be given away is indeed lying “idle” as some reports have claimed, why not distribute it amongst landless farmers to ensure their food security instead of privileging the needs of foreign countries? Giving large chunks of land to other states that want to secure food availability for their population goes against the very logic of sustainable local and national development, especially in times of severe food crises that Pakistan is currently facing.

Given the history of exploitative work conditions in Saudi Arabia and Gulf states, it is very likely that the new corporate farms will function like colonial plantations. According to wikipedia, “a plantation is a large farm or estate, usually in a tropical or subtropical country, where crops are grown for sale in distant markets, rather than for local consumption.” Colonial planters, like today’s advocates for corporate farming, saw themselves as investors and innovators of commercial agriculture. The history of plantations in South America, Asia and the Caribbean tells us that far from eradicating poverty, this kind of intensive transnational agriculture accelerates dependency while weakening food sovereignty among the poorer nations.

In Pakistan, there has already been a radical neglect of important livelihood issues as the country has increasingly became embroiled in a series of security crises. A lot more ink has been spilled on explaining the proliferation of religious and sectarian violence, than on the effects of economic factors in feeding these movements. Missing in these analyses is a discussion of enduring forms of structural violence that lie in extreme disparities of wealth, diminishing protections for vulnerable populations like peasant farmers, the mass movement of rural workers to urban slums, and the increasingly precarious access to food. Far from serving the poor, the state has often resorted to a militarized response in order to suppress poor peoples’ struggles for land and sustenance. This is all the more reason for us to suspect the government’s claims of “rural investment” as a justification for its proposal to lease land to foreign investors.

At the military farms in Okara, for example, tenant farmers have been struggling to retain access to the land that they have been tilling for almost a century. Since 2000, the farmers have been defying the military’s edict to impose a new tenancy system of contract farming. They have refused to sign onto a cash tenancy system because it does not guarantee secure, long-term access to the land. In fact, the contract system will make them more vulnerable to evictions. During the course of their struggle, the mazarin (landless peasants) have discovered that the military farmlands are actually owned by the Punjab Government, as the military’s official lease expired long before the creation of Pakistan.

The tenant farmers see the new contract system as a threat to their subsistence and food security. I recall talking to Nazeer Bola, a tenant farmer, about what gave the tenant farmers the will to defy the military in 2003. He simply answered, “We knew that as soon as we accept this contract system, we will be thrown out of these lands. We can accept death but we don’t accept this contract system.” Nazeer gave the example of the slum-dwellers of Karachi to illustrate what life would be like for the mazareen if they lost their rights over their lands. He argued that in contrast with the extreme poverty in the cities, even the poorest group in the village (like the lower caste kammis) had a marla (a small plot) where they could grow enough food to survive, whereas being destitute in the city meant having no place to sleep and no land to grow one’s food.

Instead of giving away land to serve other people’s food needs, the government needs to provide greater support for farmers like Nazeer Bola by ensuring their access to land, as well as by facilitating policies such as farmer cooperatives that can hold distributors accountable and collectively promote the interests of rural families.

Cambodia’s sugar rush leaves farmers feeling bitter at ‘land grab’ (guardian.co.uk)

July 16, 2013 Posted by aletho | Economics, Ethnic Cleansing, Racism, Zionism, Malthusian Ideology, Phony Scarcity, Timeless or most popular | Pakistan | Leave a comment

US Congress calls for sanctions against Argentina over growing Iran ties

Press TV – July 15, 2013

Members of the US Congress have called for the imposition of sanctions against Argentina over its growing ties with Iran and Buenos Aires’ bid for joint investigations with Tehran into the 1994 AMIA Jewish center bombing.

In a letters to US Secretary of State John Kerry and US Attorney General Eric Holder, the Congressmen cited growing economic and diplomatic relations between Iran and Argentina as grounds for slapping sanctions against Buenos Aires.

A memorandum of understanding (MoU) signed by Iran and Argentina to probe the bombing at the Argentine Israelite Mutual Association (AMIA) was cited as another reason to take action against Buenos Aires.

The July 10 letter to Kerry said the US Congressmen found it “extremely troubling” that Argentina had agreed to a joint effort with Iran to investigate the AMIA bombing, which left 85 people dead.

Iranian Foreign Minister Ali Akbar Salehi and his Argentinean counterpart, Hector Timerman signed the MoU in Addis Ababa, Ethiopia, on January 27.

Under intense political pressure from the US and Israel, Argentina had previously accused Iran of having carried out the bomb attack. The Islamic Republic has categorically denied any involvement in the terrorist bombing.

Earlier in July, Washington reacted fiercely when Argentina prevented AMIA case special prosecutor Alberto Nisman from taking part in a US Congress meeting to level allegations against Iran.

Nisman had collected a 500-page indictment in which he accused the Islamic republic of “infiltrating” regional countries to spread an “intelligence network”.

In a letter personally addressed to Argentine President Cristina Fernandez de Kirchner, American lawmakers expressed disappointment over the veto of Nisman’s visit to the US Congress and questioned the “veracity” of the South American country’s intentions to probe the 1994 AMIA attack through the MoU with Iran.

Argentina to probe Jewish ex-minister over AMIA bombing

July 15, 2013 Posted by aletho | Economics, Wars for Israel | AMIA, Argentina, Cristina Fernández de Kirchner, Iran, United States, United States Congress | Leave a comment

Venezuela: An Ethical Foreign Policy?

By Ewan Robertson | Carnegie Council | July 10, 2013

CREDIT: Manu Dias, (CC)

Venezuela’s foreign policy under the late President Hugo Chávez, and now his successor Nicolas Maduro, has been subject to sharply differing interpretations. Some observers see the oil-rich country’s foreign relations since Chávez’s election in December 1998 as shaped by a visionary who has promoted international solidarity with the oppressed, combated poverty, and pushed for a just world order free of uni-polar domination. For critics, however, Venezuela’s foreign policy has been incoherent, militaristic, and prejudicial to regional stability.

Does Venezuelan foreign policy include ethical considerations, as its supporters claim? The evidence suggests it does and that as a result we can be more optimistic about possibilities for incorporating ethics into international affairs than some scholars would have us believe.

The Ethical Dimension of Venezuelan Foreign Relations

To evaluate a possible ethical dimension to Venezuelan foreign policy, it is necessary to understand the ideology Chávez imbued in the country’s international affairs. Five concepts are central. The first two are the primacy of national sovereignty and Latin American and Caribbean integration. These are based on an understanding of foreign policy as a continuation of the Pan-American vision of Venezuela’s founder and 19^th century independence hero Simon Bolivar, who also gives the name to Chávez’s “Bolivarian” political project. The third and fourth are the importance of international solidarity and south-south cooperation, which hold that Venezuela’s development should be based on mutual solidarity and cooperation with the countries of the global south. Finally, these concepts coalesce to form the pursuit of a multi-polar world order, which sees Venezuela’s international role in strengthening ties with emerging powers across different regions as part of a shift to a more balanced international system which will guarantee “world peace” and “universal well-being.” This implicitly involves an attempt to counter-balance the weight of the United States in international affairs.¹

One example of Venezuela’s pursuit of these values is the Bolivarian Alliance for the Peoples of Our America (ALBA). This alliance of leftist Latin American nations founded by Venezuela and Cuba in 2004 has implemented regional development strategies based on the principles of “solidarity, cooperation and complementing.” Programs aiming to guarantee food security, universal literacy, free health and education, and decent housing are strongly marked by values of social justice and human development.² Social programs promoted by the ALBA include the “Miracle Mission,” which provides free eye treatment and surgery to Venezuelan citizens and those of several Latin American countries. The program has treated around 1.2 million people in Venezuela since its launch in 2004.³

Development assistance and solidarity have also been evident in Venezuela’s outreach to the Caribbean, particularly with the PetroCaribe initiative. Launched in 2005, the program offers Venezuelan petroleum to Caribbean nations at a discount rate. Participating nations only pay a percentage of the oil’s market price up front, with the rest converted into low-interest, long-term loans. A portion of these loans can be amortised through payment in goods and services; for example, Cuba sends medical personnel to Venezuela in exchange for oil shipments. The loans also become important sources of capital spending for the region’s governments. Eighteen Caribbean states now participate in the program, and Venezuelan oil minister Rafael Ramirez estimated in 2011 that PetroCaribe covers 43 percent of participating nations’ energy needs.⁴ In the context of rising oil prices in the 2000s, a Council on Hemispheric Affairs (COHA) report on the scheme described it as “the most concrete proposal on the table to alleviate the region’s suffering.”⁵

Perhaps no other Caribbean nation has benefitted more from this kind of regional solidarity than Haiti. Following the devastating January 2010 earthquake, Venezuela pledged $2.4 billion in financial and relief aid, more than any other of 58 donors. This aid has included building power plants, shelters, a new hospital (in collaboration with Cuba), sending food and medical supplies, and assistance to develop Haiti’s agricultural sector.⁶ Venezuela even wrote off $400 million of Haiti’s PetroCaribe debt. This important reconstruction aid was given despite the fact that Haiti is by no means an ideological ally of Venezuela’s leftist government; its president, Michel Martelly, is close to Haiti’s business elite and the United States. Nevertheless Martelly has publicly thanked Venezuela for its solidarity and help since the earthquake, commenting in December 2011 that for Haiti, “cooperation with Venezuela is the most important right now, in terms of impact, direct impact.”⁷

Africa is another continent where relations seem to be driven as much by ideology and ethical values as by strategic interests. From 2005, Chávez began referring to Africa as a “motherland” and pursuing “south-south cooperation,” or mutual development strategies, in the region. Over the next six years Venezuela established diplomatic relations with all 54 African countries, opened new embassies, and signed over 200 cooperation agreements with the continent, where only 20 had existed beforehand.⁸ Many of these agreements contain a clear element of solidarity and humanitarian assistance. In 2009 Venezuela pledged $20 million to the West African ECOWAS group for malarial eradication programs, while in February 2013 it offered technical assistance and personnel training to the Sahrawi Democratic Republic to improve the population’s access to safe drinking water. Further, around 500 students from over 15 African countries study in Venezuela courtesy of government scholarships, many of these in medical courses, with the intention that after their studies these newly-trained professionals return to their home countries to provide much needed public services.⁹ A similar program is offered to Palestine, where Venezuela has also committed to build medical facilities.

Such attempts at greater cooperation with countries of the global south have led Venezuela to play a key diplomatic role in moves toward intensifying Latin American and south-south integration. In addition to founding the ALBA and PetroCaribe, Venezuela was also a founding member of the Union of South American Nations (UNASUR) in 2008, and played host to the founding conference of the Community of Latin American and Caribbean States (CELAC) in 2011, which brings together every nation in the Americas with the exception of the U.S. and Canada. Venezuela was also host to the II Africa–South America (ASA) summit in 2009, and is set to host the tri-annual summit of the Non-Aligned Movement in 2015, and thereafter become the president of the grouping of 130 developing nations. The country was also elected to serve on the UN Human Rights Council for 2013–2016 and is a mediator in peace talks underway between the FARC guerrilla group and the Colombian government. Taken together, these aspects of Venezuela’s foreign policy have led observers such as Venezuelan geographer and analyst Rosalba Linares to conclude that Bolivarian-era foreign relations aim to construct “a sovereign, democratic and more humanitarian multi-polar world, of greater social justice and fair trade in benefit of those most in need in Venezuela and the world.”¹⁰

The Pursuit of Strategic Interests

Of course, it would be mistaken to understand Venezuelan foreign relations as solely motivated by ethical or altruistic considerations. Even solidarity-based policies have clear “soft” benefits such as raising the government’s diplomatic and international standing. Venezuela’s foreign relations have also been shaped by concrete strategic interests. Chief among these are energy interests, which are woven throughout foreign policy, as Venezuela holds the largest crude oil reserves in the world. The Bolivarian government has sought to increase ties with other energy powers for the extraction of Venezuelan crude and to diversify its oil export markets. In the context of the deterioration of relations with the United States, strategic policy goals have also included creating a robust network of international alliances and securing alternative sources of financing, technological assistance, and military hardware.

In the first years of Chávez’s presidency the state oil company PDVSA was brought under greater government control. At the same time the government pushed for the revitalisation of OPEC, advocating the policy of production quotas to help ensure that world oil prices rose to levels favourable to exporting countries. The elevation of oil prices in the 2000s gave the Venezuelan government flexibility to pursue active energy diplomacy abroad while funding a wave of new social programs at home.

The government has built what it calls “strategic alliances” with several energy powers, including Russia and China. Russian energy giant Gazprom now works with PDVSA to explore gas deposits in the Gulf of Venezuela and Russian firms are active in the extraction of oil in Venezuela’s Orinoco Belt. Russia is also useful to Venezuela as a source of military hardware, with Chávez’s government becoming Russia’s biggest customer of military goods after India.¹¹

Meanwhile China has provided Venezuela with a new market for its petroleum exports. Oil exports to China rose from almost zero in 2004 to 460,000 bpd in 2010, a number that officials want to increase to one million.¹² The relationship has also resulted in over 300 bilateral agreements and 80 major projects, and has allowed the Venezuelan government access to financing and technology, the latter exemplified by the launching of Venezuela’s first satellites with Chinese assistance in 2008 and 2012.

Venezuela has formed a web of links with other countries enjoying oil and gas reserves, such as Iran, Syria, Brazil, and certain African countries. Given their relatively independent diplomatic stance in world affairs, strengthening ties with these nations has also fitted within the ideological goal of building “south-south cooperation” and a “multi-polar world order.”

Meanwhile relations with Venezuela’s traditional commercial partner and top recipient of crude exports, the United States, have been frozen at the charge de affairs level since 2010. Venezuelan officials blame this on the U.S. government’s belligerence and lack of respect for Venezuela’s independence and sovereignty, including support for and alleged involvement in the short-lived coup attempt to topple the Chávez administration in 2002. For its part, the United States has accused Venezuela of failing to sufficiently cooperate with counter-narcotics and anti-terrorism efforts, and of acting against U.S. interests by pursuing relations with “enemy” states such as Iran. Nevertheless, there are signs that the relationship is improving under the presidency of Nicolas Maduro, after Venezuelan foreign minister Elias Jaua met with Secretary of State John Kerry during an OAS summit in early June. “We would like to see our countries find a new way forward, to establish a more constructive and positive relationship,” said Kerry following the meeting. However, it remains to be seen whether the recent decision by President Maduro to offer asylum to ex-NSA intelligence leaker Edward Snowden will have an impact on efforts to improve bilateral relations.

Criticisms and Contradictions

Critics point to contradictions in the conduct of Venezuela’s foreign policy, and question the existence of an ethical dimension to Venezuelan foreign relations.

An accusation which emanates principally from the United States is that rather than seeking “world peace,” Venezuela in fact pursues an aggressive policy of building up its arms stockpile while forming alliances seen as threatening to U.S. national security. In September 2009 then-Secretary of State Hilary Clinton raised concerns over Venezuela’s arms purchases from Russia, arguing that the Chávez administration was engaging in a military build-up which could trigger a South American “arms race.” “They [Venezuela] outpace all other countries in South America [in military purchases] and certainly raise the question as to whether there is going to be an arms race in the region,” she said.¹³ Further, some conservative politicians and analysts have argued that Venezuela should be considered a “national security threat” due to its ties with countries regarded as hostile to the U.S, such as Iran and Syria.¹⁴

However, neither the figures nor events bear out fears that Venezuela is unduly arming itself or seeking military-style alliances with U.S. adversaries. According to the CIA World Factbook, in 2009 Venezuela put 1.4 percent of GDP toward military spending, the 5^th highest in the region and less than the U.S., Colombia, and Chile. By 2012, military spending in Venezuela had halved as a percentage of GDP to 0.7 percent, with the country spending less than most major countries in the region, being only 153^rd out of 173 countries measured globally for military spending.¹⁵ Venezuelan government officials meanwhile state that its international alliances are “about peace” and not in any way an aggression toward a third party. This point was highlighted during the visit from former Iranian president Mahmoud Ahmadinajad to Venezuela in January 2012. Nicolas Maduro, in his capacity of foreign minister, said to press at the time that bilateral ties between the two countries were part of a “peaceful relationship…we have a relationship of cooperation for development… and above all, for peace”.¹⁶

This appraisal of Venezuela’s diplomatic and defence policy appears to be shared by the U.S. military establishment. In August 2012 General Douglas Fraser, chief of U.S. Southern Command, said that although he would like greater cooperation from Venezuela against drug trafficking, he did not consider Venezuela a security threat to the United States. When asked if he thought Venezuela’s arms purchases constituted a danger to the U.S., Fraser replied, “From my standpoint, no…I don’t see them [Venezuela] as a national security threat.” Further, when asked whether Venezuela’s relationship with Iran amounted to a “military alliance,” the general disagreed, stating, “As I look at Iran and their connection with Venezuela, I see that still primarily as a diplomatic and economic relationship.”¹⁷ President Barack Obama has taken a similar stance, announcing in an interview in July 2012, “Overall my sense is that what Mr. Chávez has done over the last several years has not had a serious national security impact on us.”¹⁸

Thus the notion that Venezuelan military purchases and bilateral relationships represent a threat to the United States appears to be an overreaction from certain observers within U.S. political and media spheres, who confuse Venezuela’s independent foreign policy with one threatening U.S. security.

Others argue that there exists a contradiction in Venezuelan foreign policy between claims to pursue the values of democracy, humanitarianism, and solidarity, while supporting governments considered authoritarian or with poor human rights records. In 2011, political sociologist and author Gregory Wilpert argued that Venezuela ran a “significant” risk of losing legitimacy among progressives when Chávez continued to support former Libyan president Muammar Gaddafi against an insurgency in that country, a point that could be extended to several other of Venezuela’s allies in the Middle East.¹⁹

Another seemingly contradictory move by a government purporting to promote ethical values in its foreign policy is Venezuela’s decision to withdraw from the OAS’ Inter-American Court and Human Rights Commission (IACHR) in 2012, on the basis of the body’s alleged “shameful” bias against the Chávez administration. The decision is also part of a shifting focus toward Latin American autonomy and integration, with several states in the region pushing for the formation of new mechanisms to promote human rights within the UNASUR and CELAC. ²⁰

A final question for Venezuela’s foreign relations is the extent to which policies pursued under Chávez will continue under the presidency of Nicolas Maduro, who was elected to power in April, following Chávez’s death in March. Maduro was Chávez’s foreign minister from 2006–2012, and in that role helped to build Venezuela’s contemporary foreign relations. The new president has pledged to continue these policies and his active foreign diplomacy over the previous three months seems to confirm this. Present challenges for Maduro include assuming the presidency of the Mercosur trade bloc this summer, and seeking productive relationships with the U.S. and Europe; steps toward which appear to have already been taken.

Between Ethics and Interests

In common with all nation states, over the past 14 years Venezuela has pursued clearly defined strategic and economic interests through its foreign policy. These have included developing greater links with other energy powers and ensuring access to sources of financing and military hardware. The government has also sought commercial, technological, agricultural, educational, health, and other forms of cooperation considered beneficial to Venezuela’s national development.

Although certain criticisms of contradictory behaviour can be levelled at Venezuela’s foreign relations, policymaking has followed a coherent logic. From technological cooperation with China to malaria eradication assistance in Africa, Venezuela’s new foreign relations have been built within an ideological framework embodied by the notions of “south-south cooperation” and a “multi-polar world.”

Further, while all nations could be said to act in their own strategic interests, not all have also placed norms of cooperation, solidarity and humanitarianism as a central focus of foreign policy. These values can be seen in agreements Venezuela has made with countries across all continents, but especially in the Americas and Africa. Even in the United States, PDVSA subsidiary CITGO aids around 100,000 low-income families during the winter with donated Venezuelan heating oil.²¹ Thus while it would be false to state that Venezuelan foreign policy is solely motivated by ethical considerations, it would be misleading to explain the country’s external relations without reference to these. This ethical dimension to Venezuela’s foreign policy is a demonstration that if the political will exists, governments can pursue such values within their foreign relations. In doing so, concrete and mutual benefits can be reaped for both the development of societies and the wellbeing of peoples.

NOTES

¹ Chávez, H. (2012), Plan de la Patria: Programa del Gobierno Bolivariano 2013 – 2019, accessed at: http://www.minci.gob.ve/wp-content/uploads/downloads/2013/04/PLANDELAPATRIA-20133-4-2013.pdf.

² Ullán de la Rosa, F.R. (2012), La Alianza Bolivariana para las Americas – Tratado de Comercio de Los Pueblos (ALBA-TCP): Análisis de un Proyecto de Integración Regional Latinoamericana con Una Fuerte Dimensión Altermundista, Estudios Politicos, no. 25, (Enero – Abril), pp131 – 170, Mexico, D.F. (p151-152).

³ Morales, M. (27/5/2013), Hija de Chávez Manejará Presupuesto Millonario en la Misión Milagro, El Nacional.

⁴ Rojas, R. (December, 2011), Venezuela Increasing Influence in Caribbean through PetroCaribe, Press TV.

⁵ Lai, K. (January, 2006), PetroCaribe: Chávez’s Venturesome Solution to the Caribbean Oil Crisis, Council on Hemispheric Affairs (COHA).

⁶ Information taken from, Wyss, J. (05/07/2010), Venezuela Leads the World in Earthquake Relief, Miami Herald; Edmonds, K. (February 2012), ALBA Expands its Allies in the Caribbean, North American Congress on Latin America (NACLA.org); Robertson, E (01/06/2012), Venezuela, Cuba and Argentina Sign Development Assistance Agreements with Haiti, Venezuelanalysis.com.

⁷ The Editors, (April, 2012), Haiti Using Funds from PetroCaribe to Finance Reconstruction, Council for Economic and Policy Research (CEPR).

⁸ Bolivar, R. J., (February, 2011), “Entrevista: Reinaldo José Bolívar, Viceministro de Relaciones Exteriores para África,” Encontrarte.

⁹ (14/01/2011), “Venezuela ha Firmado 200 Acuerdos de Cooperación con África,” Agencia Venezolana de Noticias.

¹⁰ Linares, R., (2010), “La Estrategia Multipolar de la Political Exterior Venezolana,” Aldea Mundial, Año 15, No. 15, Julio – Diciembre (2), pp51-62, (p60).

¹¹ Rinna, A. (09/03/2013), “Russia’s Uncertain Position in Post-Chávez Venezuela,” Centre for World Conflict and Peace blog.

¹² Ellis, R.E. (2010), “Venezuela’s Relationship with China: Implications for the Chávez Regime and the Region,” Centre for Hemispheric Policy, University of Miami, pp1-10; Cornejo, R. & Garcia, A.N. (2010), “China y América Latina: Recursos, Mercados y Poder Global,” Nueva Sociedad, No. 228 (Julio-Agosto), pp79-99 (p95); Manduca, P.C. (2012), “La Energía en la Política Sudamericana: Características de las Relaciones entre Brasil y Venezuela,” Revista Mexicana de Ciencias Políticas y Sociales,” no. 216, (Septiembre – Diciembre), pp81-100.

¹³ Labott, E. (16/09/2009), “U.S. Fears Venezuela Could Trigger Regional Arms Race,” CNN.

¹⁴ Noriega, R. (08/02/2013), “Hugo Chávez: An Uncounted Enemy,” The Washington Times.

¹⁵ Central Intelligence Agency: The World Factbook (Military Expenditures, Venezuela), accessed at: https://www.cia.gov/library/publications/the-world-factbook/rankorder/2034rank.html?countryname=Venezuela&countrycode=ve&regionCode=soa&rank=153#ve.

¹⁶ Pearson, T. (10/01/2012), “Iran-Venezuela Relationship “About Peace,” Venezuelanalysis.com.

¹⁷ (01/08/2012), ” Top US General: Venezuela Not a National Security Threat,” Associated Press.

¹⁸ Mazzei, P., Bolstad, E., (11/07/2012), “Mitt Romney, GOP howl over President Barack Obama’s remark about Hugo Chávez,” Miami Herald.

¹⁹ Wilpert, G, (06/03/2011), “Venezuela and Libya: An Interview with Gregory Wilpert,” Venezuelanalysis.com.

²⁰ Britto Garcia, L. (12/05/2013), Avanza el Golpe Judicial, Aporrea.org.

²¹ Citgo Press, (31/01/2013), “Eighth Annual Citgo-Venezuela Heating Oil Program Launched,” Venezuelan Embassy, Washington.

US NSA Spied on Venezuela When President Chavez Died, Documents Reveal (alethonews.wordpress.com)
Venezuela Reaffirms Commitment to Haiti’s Reconstruction | venezuelanalysis.com (rapadoo.com)
PetroCaribe moves closer to Economic Zone (antiguaobserver.com)
Toward a new Venezuela-Caribbean relationship (caribbean360.com)

July 14, 2013 Posted by aletho | Deception, Economics, Militarism, Solidarity and Activism, Timeless or most popular | Caribbean, Haiti, Hugo Chávez, Latin America, Nicolás Maduro, PetroCaribe, United States, Venezuela | Leave a comment

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By Maryanne DemasiMaryanne Demasi | Brownstone Institute | June 15, 2026

For decades, vaccines have been treated as the sacred cow of modern medicine. I was taught that they were the holy grail. To question them was heresy. To raise concerns about safety was to risk professional exile.

Aaron Siri makes it clear in Vaccines, Amen: The Religion of Vaccines that the story we’ve been told about vaccine science rests far more on belief than proof.

“No child should be sacrificed on the altar of the religion of vaccines,” Siri writes, as he turns his focus to America’s overcrowded childhood immunisation schedule.

I assumed little in this book would surprise me. I’ve spent years reporting on drug safety, regulatory capture, and the corruption of science. But Siri showed me how wrong I was.

Siri is not a doctor or a scientist. He is an attorney, and this, he says, is his advantage. In court, rhetoric won’t save you. Evidence does. As he puts it, he doesn’t get to say “trust me” the way many doctors do. “I need to prove claims with real data.”

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