Crisis and Class Struggle in the Eurozone
The Cases of Spain, Greece, Ireland and Portugal
By VICENTE NAVARRO | CounterPunch | August 19, 2011
To understand the situation in the countries at the periphery of the European Union, four countries within the Eurozone, Portugal, Ireland, Greece and Spain, we have to understand the political context they have in common. All of them were governed by fascist or fascist-like dictatorships (Spain, Portugal, and Greece) or by authoritarian right-wing regimes (Ireland) for most of the period from the late 1930s or early 1940s until the late 1970s. This history is usually ignored in analyses of these countries.
This shared history, however, has determined the nature of their states, a critical variable for understanding countries’ economic behavior. Their states have been very repressive. Even today, these countries have the largest number of policemen per 10,000 individuals in the EU-15. Another shared characteristic is their very low level of state revenues and their highly regressive fiscal policies. The revenues to the state are much lower than the EU-15 average: approximately 34% of GNP in Spain, 37% in Greece, 39% in Portugal, and 34% in Ireland, compared with the EU-15 average of 44%, and compared with 54% in Sweden – the EU-15 country where the left has governed for the longest period. The low state revenues result from extremely regressive policies. The super-rich, rich, and high-income upper middle classes do not pay taxes at the same level and intensity as those in most of the central and northern EU-15 countries – a consequence of a history of government by ultra-right-wing parties. Of course, progress has been made since the dictatorships ended. But the dominance of conservative forces in the political and civil lives of these countries explains why their state revenues are still so low.
As a result, the public sectors in Portugal, Ireland, Greece, and Spain are extremely underdeveloped. And their welfare states are poorly funded and very limited, including their public transfers (pensions) and public services (medical care, education, childcare services, homecare services, social services, and others). Indicators of this are many. One example is public social spending as percentage of GNP, which is lower in these countries than the EU-15 average (27%): Spain, 22.1%; Greece, 25.9%; Portugal, 24.3%; and Ireland, 22.1% (compared with Sweden, 29.3%). Another example is the percentage of the adult population working in public services of the welfare state – again, lower than the EU-15 average (15%): Spain, 9%; Greece, 11%; Portugal, 7%; and Ireland, 12% (compared with Sweden, 25%). In fact, Greece’s percentage is three points higher, 14%, because it includes services for the military, (which represents approximately 30% of public employees).
The specificity of the political regimes
Thus, for these four countries, not enough attention has been paid in the economic literature to the consequences of being governed by ultra-conservative forces. The influence of such forces has been enormous. It is also important to emphasize that the conservative forces in these peripheral countries are different from those in northern and central EU-15 countries. They do not belong to democratic traditions since they are the inheritors of either fascist or authoritarian regimes. Even today, after almost 30 years of democracy, such forces continue to be very influential in the four states, even when the states are governed by social democratic parties. As just one example, Spain’s Supreme Court has taken Judge Baltasar Garzon, who used to be a member himself of the Court, to trial for daring to inquire about crimes committed by General Franco’s fascist regime. It is not fully comprehended outside Spain just how influential the ultra-right-wing forces still are within the Spanish state. They dominate political culture in many different ways, including control of the major media. There are no major left or left-of-center media in Spain, or in the other countries in this group.
The domination of the state by ultra-conservative forces has many consequences besides their low level of state revenues, their regressive fiscal policies, and their underdevelopment of the welfare state. Labor income, as percentage of national income, has declined since 1992, when policies were implemented (including by social democratic governments) in preparation for entering the Eurozone. This income decline has occurred more rapidly in Portugal, Ireland, Greece, and Spain than the EU-15 average, and is particularly accentuated in Spain, with a decrease from 70% to 61% of national income – despite an increase in the percentage of working adult population.
As noted, a consequence of domination by conservative forces, considerably limiting the public reforms approved and implemented by social democratic governments from the early 1980s onward, is regressive fiscal policies. As a result of these policies, the impact of state interventions on income redistribution has been very limited. For example, in Spain, as late as 2009, the level of poverty (60% of median income) declined only 4 points after implementation of state interventions (public social transfers): from 24% before to 20% after transfers. The EU-15 average decreased from 25% to 16%. Sweden’s poverty rate fell from 27% to 13%. The decline in poverty rate resulting from public social transfers in Spain is the lowest in the EU-15. Another indicator of the limited redistributional impact of state interventions is that the Gini coefficients in all four countries are higher than the EU-15 average (29.2). Spain’s Gini coefficient is 31.3, the same as Ireland’s; Greece’s is 34.3; and Portugal’s is the highest at 36.8.
How the crisis has been building up
Another characteristic of this group of countries is the acceptance by the governing social democratic parties of most of the neoliberal policies pushed by the EU establishment. This acceptance has been generalized among the social democratic parties of the European Union. Actually, these parties were part of the consensus in developing neoliberal policies (usually referred to as the “Brussels consensus,” the European version of the “Washington consensus”). As part of this consensus, both conservative-liberal and social democratic governing parties have been reducing taxes, particularly for the top income brackets. It was none other than Spain’s socialist candidate in the 2004 election (and later prime minister), Jose Luis Rodriguez Zapatero, who promised to reduce taxes if elected, saying that lowering taxes was a cause to be promoted by the left. The major economic thinker of Spain’s socialist party at that time was Jordi Sevilla, an economist who wrote in his book The Future of Socialism that “the left had to stop raising taxes and increasing public expenditures” – this said in the EU-15 country with the lowest state revenues and poorest welfare state.
The tax reductions over the past 15 years have led to a structural public deficit that was disguised by the fast economic growth created by the housing bubble, responsible for the banking–real estate–construction industry complex at the center of the bubble. When the bubble burst, and the economy came to a halt, the structural public deficit appeared in all its intensity. The public deficits in Portugal, Ireland, Greece, and Spain were the result of declining state revenues, not expanding public expenditures. This is why the public policies of these governments are profoundly wrong. They have been cutting public spending, assuming, incorrectly, that the cause of public deficits was an exaggerated growth of public expenditures.
Arguments used to justify cuts in public expenditures
The slogan now being used to justify these cuts is: “The country has been living beyond its means.” Major political figures in the four countries claim that their welfare states are larger than they can pay for. But the data show otherwise. In Spain, for example, the GNP per capita is 94% of the EU-15 average, but public social expenditure per capita is only 72% of the EU-15 average. If it were 94%, the Spanish state would have 66,000 million more euros than it does today. So, Spain has the resources. The problem is that the state does not collect them, because its fiscal policies are so regressive and fiscal fraud is widespread among high-income groups and economic and financial corporations. Actually, banking in Spain is the primary entity responsible for fiscal fraud. Mr. Botin, the country’s major banker (president of Santander Bank, the third most profitable bank in the world, after two Chinese banks), was discovered this year to have 2,000 million euros in a Swiss bank account – not declared until two whistleblowers at the bank went to the press. Such fraud is general practice. The tax inspectors of Spain’s Ministry of Economy estimate there are 88,600 million euros that the state does not collect because of tax fraud.
How and why the crisis arose
Before the financial crisis there was an economic crisis, largely the result of the decline in labor income as percentage of total national income. The neoliberal policies developed since the 1980s (accentuated over the past 15 years, and carried out by governments of various political persuasions, including social democratic, in Spain, Greece, and Portugal) have had a strong impact on income distribution, accelerating the concentration of income in the high income brackets. The decline of labor-derived income diminished the purchasing power of the popular classes, forcing them into debt in order to maintain their standard of living. And credit was relatively easy to obtain, because house values were rising and provided a means of borrowing from banks by putting up homes as security. The growth of the credit sector (and of financing) was based on the decline of labor income. But the decline of labor income was creating a major problem for demand and limited profitability in the economy.
With this limited profitability in the productive economy, the super-rich, rich, and upper-income middle class invested in sectors with higher returns, especially in real estate. The deregulation of banking (and deregulation of zoning laws) during the 1990s led to a real estate bubble, based on the complex of banking, real estate, and construction industries. In Spain, this complex was the main motor of economic growth and was supported by both central and local authorities, since local authorities were primarily funded by property taxes.
Stimulating the growth of housing construction was the influx of immigrants, with the immigrant population increasing from 4% to 10% of the population in only 10 years. Housing construction reached 10% of GNP, and this sector produced the most (but very low-paid) jobs. The Spanish “miracle” of job creation was based on large investments in a speculative sector of the economy. And it was funded with debt. This is the cause of the enormous private debt in Spain, which was facilitated by introduction of the euro – much more stable in the economy than the national currency it replaced. Introduction of the euro dramatically increased the size of the financial sector in the four peripheral Eurozone countries. When the bubble burst, the whole credit economy came to a stop.
The political origins of the public debt
In the four countries, there has been an alliance between the upper income brackets (the super-rich, rich, and upper middle class, whose taxes have been reduced in the past 15 years) and the banks, on the one hand, and the state, on the other. A fruit of this alliance was the reduction in taxes that created the structural public deficit, masked by the economic growth within the bubble.
The decline of revenues to the states (the consequence of tax cuts) forced the states to borrow from the banks, where the rich deposited the money saved due to reduced taxes. The indebtedness of the states and the need to borrow were clearly related to the reduction of taxes. When the economy came to a stop as the bubble burst, the structural public deficit became apparent. Public deficits as percentage of GNP, increased substantially in all four countries from 2007 to 2009 as a consequence. Spain went from a surplus of 1.9% of GNP in 2005 to a public deficit of 11.1% in 2009. Greece went from a deficit of 6.4% in 2007 to 15.4% in 2009, with Ireland moving from 0% to 14% in the same period. In all of them, rapid growth of the public deficit was based on the extremely regressive nature of state revenues. With most taxes based on labor income and consumption, when employment declined, unemployment grew, and consumption declined, the public deficit escalated dramatically.
Solutions that are never considered
The neoliberal response to this situation, which entails cuts in public expenditures, is making the situation worse because it reduces demand. The trade unions have accurately described neoliberalism as the ideology of banks and large employers. The major media support this doctrine, based more on faith than on evidence. At the root of the problem is class power and its realization through the state.
If Spain implemented the same fiscal policy as Sweden, the Spanish state would take in 200,000 million more euros than it now does. With those millions of euros, it could create 5 million new jobs (particularly in the underdeveloped welfare state services, such as the national health service, educational system, childcare services, and other social services). If one in every four adults worked in such services (as occurs in Sweden), instead of one in every ten adults (as occurs now in Spain), Spain would create 5 million more jobs, eliminating unemployment: 5 million is more or less the number of people currently unemployed in Spain.
A second point is that the fiscal stimulus applied by most of the governments in this group of countries in 2008 was basically tax cuts and transfers. Only a miniscule part of the stimulus went to creating jobs (through investment by local authorities). Stimulating the economy through the creation of jobs has not occurred in any of these countries. Moreover, reduction of the deficit is achieved by cutting public expenditures, not by increasing taxes. The European Federation of Trade Unions has proposed alternative ways of reducing the deficit, primarily by increasing taxes (reversing the tax reductions of the past 15 years). Class power, however, is the most potent opposition to these alternative policies. A manufacturing worker in Spain pays taxes estimated at 74% of the taxes paid by a manufacturing worker in Sweden. The top 1% of income earners in Spain, however, pay only 20% of the taxes paid by the top 1% in Sweden. This is what explains the enormously regressive fiscal policy in the four peripheral EU-15 countries and the enormous resistance to change by their dominant classes.
The problem of the public debt is thus basically a political, not an economic or financial one. The current situation is untenable because Europe’s dominant classes and their allies, the EU leadership (“the troika”: the European Council, European Commission, and European Central Bank), are trying to reduce the power of labor using the argument of “pressure from the financial markets” – the aim being to get labor to accept the huge sacrifices that the dominant classes have wanted for many years. In Spain, for example, the socialist government is cutting public social expenditures, which, besides adversely affecting economic growth and reducing level of demand, is hurting the popular classes. The parties to the left of the governing socialists have clearly shown that for each cut in public social expenditures, the government could obtain even larger revenues by selectively increasing taxes, which would not affect taxes for the majority of the population. Moreover, they have shown that the revenues obtained with those taxes could create jobs in the underdeveloped public sector, especially in the welfare state.
Another issue is that, at this time, no major force on the left has called for exit from the euro. An explanation for this is that Europe has always been a point of reference for progressive democratic forces. In Spain, for example, under the fascist dictatorship, Europe meant liberty, democracy, and the welfare state. The attraction of Europe is now waning, though not very rapidly. Because of this, most of the debate centers on correction of the fiscal regressiveness of the state and development of expansionary policies as a way of stimulating economic growth and job production. Sectors of the left in Spain believe this is not possible, pointing to the Mitterrand case as an example of how one country cannot follow expansionary policies. This needs to be shown as wrong, although expansionary policies at the European level would help a lot. This is unlikely to occur at this time, however, given the control of the major EU institutions by neoliberal dogma.
The indignados movement
Meanwhile, a new movement has appeared which has surprised everyone. Initially led by the young unemployed, it has attracted enormous support from the majority of the population. Its primary focus is on denouncing the absence of democracy, in Spain and elsewhere in Europe, showing how governments are making decisions not mandated by the population. This movement is going to the root of the problem: the nature of democracy and who it is that democratic institutions are representing. Of course, in Spain, the government is worried about this movement. The candidate of the governing socialist party, hoping to succeed Zapatero (the Spanish president with the least popular support during the democratic period), has called for increased taxation of the bankers and the banks to help resolve the fiscal problems of the state. This is important because the proposal is a response to the public outrage directed at banking and the wealthy. The financial and industrial bourgeoisie are seen as using the “pressure of the financial markets” as a way of getting what they have always wanted: to weaken labor. And what is really threatening to the establishment is that all the polls show enormous sympathy for this popular movement, including among large sectors of the conservative parties. We will see what happens next.
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Vicente Navarro is Professor of Public Policy, the Johns Hopkins University and Director of the Public Policy Program jointly sponsored by the Pompeu Fabra University (Barcelona, Spain) and the Johns Hopkins University (Baltimore, MD)
The work of Marta Tur, Miquel Campa Sole and Maria Allwine in the preparation of this article is gratefully acknowledged.
Donors help keep Palestinians in cages
By Charlotte Silver | The Electronic Intifada | 16 August 2011
Ramallah – “Israel besieges us, puts us in cantons — in cages — and the international community is feeding us in these cages. It’s anything but developmental and it’s helping Israel’s colonization, ethnic cleansing and dispossession,” Dr. Samia Botmeh said, as she sat in her office in the Center for Development Studies (CDS) at Birzeit University near Ramallah in the occupied West Bank.
Despite the massive amounts of development aid that have been poured into the West Bank, the productive capacity of the Palestinian economy — measured by examining the agricultural and manufacturing sectors — is half that of 1994, and accounts for no more than 12 percent of employment. While the World Bank and Palestinian Authority boast an 8 percent growth in gross domestic product (GDP), real per capita income is still 8.4 percent lower than what it was in 1999, signifying that the GDP growth is not reflective of income growth for the average Palestinian.
Egypt provides an elucidative comparison. Two decades of serious neo-liberal reforms produced a GDP growth in Egypt that was similarly applauded by the International Monetary Fund (IMF): between 2006 and 2008, GDP grew 7 percent and there was a 4.6 percent spike in 2009 alone. However, as was made stunningly clear at the end of January, the country’s GDP growth had not trickled down to the majority of the people: unemployment had actually increased and 40 percent of the population lived on less than two dollars per day.
With former IMF representative Salam Fayyad at the helm since 2007, the PA has adopted the strategy of neo-liberal “good governance” as its framework for the state-building project. As post-colonial states have done in the past, the PA has sought to create an environment conducive for efficient and free-flowing markets by privatizing public services, emphasizing private property rights and reducing corruption. This agenda — state-building through neo-liberal policies — is most patently set forth in a PA program titled “Ending the Occupation, Establishing a State.”
As Mustaq H. Khan, an economics professor at London’s School of Oriental and Afrian Studies, pointed out in a lecture in Ramallah last winter, the injection of development aid into Palestine has deceptively flattered the PA’s good governance program, leading onlookers and promoters such as the IMF and World Bank to attribute the boost in GDP to a successful market economy (“Post-Oslo State-Building Strategies and their Limitation,” 1 December 2010 [PDF]).
There is still a stark contrast between the perceived improvement in the Palestinian economy and the actual standard of living for the majority of Palestinians. Development aid — which comprises roughly 40 percent of Palestine’s GDP — has been complicit in obscuring economic reality and in some cases truncating Palestine’s struggle for national liberation.
In June 2011, Birzeit University held a conference at which activists and academics spoke with donors and a representative from the PA on the failures of development, as well as the troubling role development aid plays in Palestine’s national movement.
“The framework of development is extremely unrealistic and problematic,” Dr. Samia Botmeh told The Electronic Intifada. The framework under scrutiny at Birzeit was the United Nations Development Programme’s Conflict-Related Development Analysis (CDA), which seeks to maximize the impact of development aid in conflict zones.
Botmeh added that the current international framework for assessing development aid in the West Bank treats the Israeli-occupied region either as a conflict zone or a post-colonial zone. “This is completely unrealistic because we are not in a conflict, we are in a colonization process,” she said.
The conference took place after the university’s Center for Development Studies concluded a project commissioned by the UNDP that examined how development funds could be better allocated in the occupied West Bank and Gaza Strip amid Israel’s continued occupation.
Because the CDA framework attempts to implement “development” projects while avoiding any political position, the study found that it implicitly assumes both parties have a reason to compromise. This fundamentally flawed approach refuses to acknowledge — and therefore address — the stark power imbalance that allows Israel to remain intransigent.
Realizing that reallocating funds would not address the fundamental hindrances to achieving economic self-determination through development in Palestine, the center articulated what development should look like in the context of an active colonization process. “Development should be about more than helping people survive; it should be about ending colonization,” Botmeh explained.
The Center for Development Studies’ critique shows how development fails to achieve much of anything tangible for Palestinians, and — even more ominously — serves to fortify Israel’s occupation and further annexation of land.
Development confined to “state-building”
After the implementation of policies dictated by the Oslo Accords, signed by Israel and the Palestine Liberation Organization in the mid-1990s, international aid to Palestine took a turn toward development. Previously, aid to Palestine was earmarked for “humanitarian” purposes such as UN operations and charity. With the establishment of the Palestinian Authority as a transitional government, development aid was ostensibly intended to promote an independent economy that would facilitate a smooth transition to a Palestinian state.
After 18 years of an ostensible peace process — of which the agency of the Palestinian national liberation struggle has been confined to a “state-building” project by the PA and Israel — Palestinians’ standards of living have decreased, while inequality has increased.
Botmeh believes that the underlying assumption of this development aid is that it is being funneled into a post-colonial state and that Israel has an intention to withdraw from the West Bank and Gaza Strip. These assumptions, blatantly oblivious to any political reality, have allowed development aid to reinforce Israel’s colonization through the continued degradation of Palestine’s territorial contiguity and the ongoing depopulation of Area C — more than 60 percent of the West Bank, including East Jerusalem, that is under full Israeli military control.
Under the Oslo accords, the occupied West Bank and Gaza Strip were carved up into areas A, B and C, the last of which is administered and controlled by the Israeli government and its military. Israel has declared three-quarters of the land as “closed military zones” or nature reserves, and therefore “off-limits” to Palestinians. Approximately 40,000 Palestinians live in Area C.
The 1999 deadline for the termination of the West Bank’s geographic stratification into Areas A, B and C has long passed. Far from assisting in the formation of a viable state, development aid has served to entrench the partitioning of the land.
Peter Lundberg, a representative of the Swedish International Development Cooperation Agency, confirms these faults in the current development paradigm in Palestine. Speaking from the perspective of an international donor, Lundberg excoriated the complicity of development aid in fragmenting Palestinians by only working in Area A due to Israeli restrictions in Area C.
“Donors and the PA have been too focused on state-building, which is important, but they are going to lose critical parts of the land,” Lundberg said. “Development should help Palestinians stay on their land; too many have left [their land in] Area C.”
Because implementing projects in Israeli-controlled Area C are logistically burdensome and in many cases impossible, donors are inclined to contribute to projects in Area A.
According to Lundberg’s statistics, there has been an exodus of Palestinians from Area C mostly due to the impossible living conditions Israel has created and the predatory nature of surrounding settlements. Israel does not allow communities to be connected to sources of water or electricity and refuses nearly every request for a building permit, thus leading to the destruction of water-collecting devices, schools and homes. In contrast, settlements sitting next to these Palestinian villages are afforded free-running water, electricity, roads and expanding infrastructure.
In 1967 there were approximately 200,000 Palestinians living in the Jordan Valley, which is designated Area C, except for the Palestinian city of Jericho. Today, there are only 56,000, 40,000 of whom live in Jericho (in Area A), according to statistics from the international aid agency Save the Children.
The devastating picture that these statistics reveal is that donors have been complicit in aiding Israel’s process of cantonizing the West Bank into the 18 percent that comprises Area A. By doing so they have helped to surrender the majority of the West Bank’s land and agriculture — which could form the basis of a genuine self-sustainable Palestinian economy and state — to Israel’s control.
Neo-liberalism undermining Palestinian rights for self-determination
Raja Khalidi, a senior economist with the United Nations Conference on Trade and Development (UNCTAD), has written that the development enterprise — representing $1.5 billion a year — is taking place inside territories that have been tagged by the World Bank, European Union, IMF and United States as a site for expanding a neo-liberal project (see “Neoliberalism as Liberation: The Statehood Program and the Remaking of the Palestinian National Movement,” Journal of Palestine Studies, Vol 40, no. 2, Winter 2011).
In the PA’s neo-liberal paradigm — as enshrined in the “Palestinian Reform and Development Plan” of 2008-10 and “Ending the Occupation, Establishing the State” — economic growth is promised as a consolation for occupation rather than a strategy to resist it.
Speaking at the conference, Khalidi remarked on the absurdity of such an agenda in the context of an occupation that ultimately determines Palestine’s economy. “For the last three years, the PA has been routing out internal obstacles to state-building, while the PA has no structure to tackle external obstacles,” he said.
Moreover, without sovereignty, genuine economic growth is out of reach. Khalidi explained that the PA is not only unable to counteract Israel’s aggressive policies of colonization but it also does not have the ability to exercise control over Palestine’s macro-economic policies — such as its own currency and control over interest or exchange rates.
Development aid has long been faulted for its inadvertent assistance in sustaining the occupation by reducing its humanitarian impact and thus making it more palatable. However, Omar Barghouti, a leading figure of the boycott, divestment and sanctions (BDS) movement, revealed the disingenuous nature of international development aid.
“Development exudes complicity in colonialism; it’s intentional and it’s complicit — ignorance is not an excuse,” he said at the conference.
Barghouti proffered several examples of countries throwing some money at the cause of development in Palestine while concurrently supporting projects or companies that actively undermine Palestinian sovereignty.
Veolia, a French transportation corporation that according to Barghouti is mostly owned by the state, is currently building Jerusalem’s new light rail system. The Jerusalem light rail connects West Jerusalem to illegal settlement blocs in occupied East Jerusalem. Despite targeted pressure on Veolia to withdraw from the light rail project — part of a global BDS campaign that has cost the company up to $10 billion, according to Barghouti — the company and by extension France have held onto their contract with Israel.
Restoring class struggle to the national liberation struggle
Adam Hanieh, a lecturer in development studies at the School of Oriental and African Studies, situates development aid in the longer arc of Israel’s colonization of the land through systematic fragmentation of the Palestinian people and nation. In his lecture at Birzeit, Hanieh restored the importance of class struggle to the goal of national liberation and exposed development aid as working against Palestinian unity undivided by wealth or class, against the occupation.
“Sixty-three years of colonization have seen the division, fragmentation and fracturing of the Palestinian people. Development must confront this fragmentation, not aid it,” Hanieh explained to the audience.
Illustrating how neo-liberalism has encouraged the notion that the solutions to problems are individual in nature rather than collective, Hanieh stressed that much of the “development” one sees arising in the West Bank benefits Israeli business. For example, consumption in Ramallah’s flourishing restaurant and café culture is mostly funded by this development aid — and in turn sustains the importation of Israeli products. Poignantly, this new consumer class — enabled by development aid — creates one more isolated stratum of Palestinian society.
All this continues against the backdrop of the regional popular uprisings against, among other things, neo-liberal policies. These uprisings showcase an exemplary shaking off of dictators and the present world order and the inspiring potential of class struggle.
If development aid programmes set freedom — rather than the introduction of a neo-liberal state — as their principal objective for Palestinians, then they may begin to counter the 63-year process of confiscation and colonization. Otherwise, they will be offering that process a helping hand.
Charlotte Silver is a journalist based in the West Bank. She can be reached at charlottesilver A T gmail D O T com.
Egypt accepts US$2 billion from World Bank
By Sara Nour Eldeen | AlMasry AlYoum | August 11, 2011
The Ministry of International Cooperation has accepted US$2 billion in grants and loans from the World Bank under the Partnership for Development program.
Minister for Planning and International Cooperation Fayza Abouelnaga has signed an agreement for a grant of US$247 million for ministry employees dealing with international and regional organizations and financial institutions. The grant comes from the World Bank’s Institutional Support Fund.
The minister will also sign an agreement for a US$330 million loan from the bank, in order to modernize the 250 km railway line between Beni Suef and Assiut, in addition to another US$100 million loan for modernizing a 200,000 acre irrigation system in the New Valley region.
The World Bank will also give Egypt a loan of US$600 million to finance the North Giza power station, and another two totaling US$219.75 million to connect the Gulf of Suez wind energy station to the main electrical grid.
Does the World Really Need New and Improved Nuclear Weapons?
How to Save a Quarter Trillion Dollars
By LAWRENCE S. WITTNER | CounterPunch | August 10, 2011
In the midst of the current stampede to slash federal spending, Congress might want to take a look at two unnecessary (and dangerous) “national security” programs that, if cut, would save the United States over a quarter of a trillion dollars over the next decade.
The first of these is the Obama administration’s plan to spend at least $185 billion in the next ten years to “modernize” the U.S. government’s nuclear weapons arsenal. At present, the U.S. government possesses approximately 8,500 nuclear warheads, and it is hard to imagine that this country would be safer from attack if it built more nuclear weapons or “improved” those it already possesses. Indeed, President Barack Obama has declared—both on the 2008 campaign trail and as president—that he is committed to building a world without nuclear weapons. This seems like a perfectly sensible position—one favored by most nations and, as polls show, most people (including most people in the United States). Therefore, the administration should be working on securing further disarmament agreements—not on upgrading the U.S. nuclear arsenal in preparation for future nuclear confrontations and nuclear wars.
In late June of this year, Archbishop Desmond Tutu, a Nobel Peace Prize laureate, wrote: “It is deeply troubling that the U.S. has allocated $185 billion to augment its nuclear stockpile over the next decade, on top of the ordinary annual nuclear-weapons budget of more than $50 billion.” Not only has the International Court of Justice affirmed that nations “are legally obliged to negotiate in good faith for the complete elimination of their nuclear forces,” but “every dollar invested in bolstering a country’s nuclear arsenal is a diversion of resources from its schools, hospitals, and other social services, and a theft from the millions around the globe who go hungry or are denied access to basic medicines.” He concluded: “Instead of investing in weapons of mass annihilation, governments must allocate resources towards meeting human needs.”
Another project worth eliminating is the national missile defense program. Thanks to recent congressional generosity, this Reagan-era carryover, once derided by U.S. Senator Edward Kennedy as “Star Wars,” is currently slated for an increase in federal spending, which will provide it with $8.6 billion in fiscal 2012.
The vast and expensive missile defense program—costing about $150 billion since its inception—has thus far produced remarkably meager results. Indeed, no one knows whether it will work. As an investigative article in Bloomberg News recently reported: “It has never been tested under conditions simulating a real attack by an intercontinental ballistic missile deploying sophisticated decoys and countermeasures. The system has flunked 7 of 15 more limited trials, yet remains exempted from normal Pentagon oversight.”
Carl Levin, the Michigan Democrat who chairs the Senate Armed Services Committee, reported that his committee was “deeply concerned” about the test failures of the nation’s missile defense program. He also implied that, given the disappearance of the Soviet Union, the United States might not need such a system to deter its potential enemies, which have a far inferior missile capability. “The threat we have now is either a distant threat or is not a realistic threat,” he remarked.
Why, then, do other nations—for example, Russia—fiercely object to the deployment of a U.S. missile defense system near their borders? Perhaps they fear that, somehow, U.S. scientists and engineers will finally figure out how to build a system, often likened to hitting a bullet with a bullet, that makes the United States invulnerable while they are left vulnerable. Or perhaps they think that, one day, some U.S. government officials might believe that the United States actually is invulnerable and launch a first strike against their own nations. In any case, their favorite solution to the problem posed by U.S. national missile defense—building more nuclear-tipped missiles of their own—significantly undermines the security of the United States.
Projecting the current annual cost of this program over the next decade, the United States would save $86 billion by eliminating it.
Thus, by scrapping plans for nuclear weapons “modernization” and for national missile defense—programs that are both useless and provocative—the United States would save $271 billion (well over a quarter of a trillion dollars) in the next ten years. Whether used to balance the budget or to fund programs for jobs, healthcare, education, and the environment, this money would go a long way toward resolving some of the nation’s current problems.
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Dr. Lawrence S. Wittner is Professor of History at the State University of New York/Albany. His latest book is Confronting the Bomb: A Short History of the World Nuclear Disarmament Movement (Stanford University Press).
Iran discovers new gas field
Press TV – August 8, 2011
Managing director of the National Iranian Oil Company (NIOC) Ahmad Qalebani says a new gas field has been discovered in eastern Asalouyeh.
“The gas field, named Madar and located 15 kilometers east of Asalouyeh, has reserves of about 495 billion cubic meters of gas,” Qalebani said on Monday.
Qalebani estimated the value of the gas field at USD 133 billion, Fars News Agency reported.
In June, Iran discovered Khayyam gas field with in-place reserves of 277 billion cubic meters of natural gas in the southeastern port city of Asalouyeh in Hormozgan Province.
The Islamic Republic discovered 13 new oil and gas fields with in-place reserves of 14 billion barrels of oil and 45 trillion cubic feet of natural gas from August 2009 to August 2010, Iran’s Oil Ministry reported.
Iran has 137.6 billion barrels of proven oil reserves, and 29.61 trillion cubic meters of proven gas reserves. It has the world’s third largest oil reserves and second largest gas reserves.
Shop and Shoot
By Linh Dinh – State of the Union – 8/3/11
We are being ruled by thespians and gangsters. Far from incompetent, they are lethally good at what they do. They create crisis after crisis, then solve each by sacrificing countless innocents while enriching themselves. Whatever the challenge, domestic or international, their only goals are to gorge and to gouge, so they never fail, actually, even when they miscalculate. They’ll make money blowing things up, and they’ll make even more pretending to fix what they have destroyed. They never pay for their mistakes, only you do, and when they function perfectly, you will still pick up the check, if not bleed. In fact, you will pay even more if they’re in top form.
During this never ending public spectacle, they’ve introduced us to a cast of rather outlandish characters: a stuttering Texas idiot; a fist bumping, long range shooting and Harvard educated Muslim Commie; a blow job-loving burger clown. Splitting into opposing camps, they’ve climbed into a ring to perform for the whole world. In the front row, a mob of rightish and leftish pundits. These ad-peddling charlatans have parsed each choke slamming and brain busting move as if it was real. Thus, Obama tapped out on canvas. Thus, Obama steam rolled by Republicans. Thus, Obama’s bad bargain. Obama caved in. He’s no criminal, he’s weak. Thus, Obama surrendered.
Those who don’t swallow entire these farcical blow by blows are branded nutcases and conspiracy theorists. Whether it’s about 9/11, Bin Laden, Iraq, Afghanistan, War on Terror, Iran, Underwear Bomber, BP oil spill, Corexit, Libya, death of Bin Laden, on and on and on, the official narrative is always, and I mean always, nonsense, yet repeated often enough, from all angles, left, right and center, these clumsy fairy tales will coalesce in the brainpans of the inattentive or stupid as uncontestable truths and history.
In spite of all the recent bombast about fiscal responsibility and shared sacrifice, the wasteful wars continue, though few Americans can tell you why or even where we’re unleashing horror, hatred and sorrow. America must kill because wars are so lucrative. No other country has been fighting so continuously, for so long. Anham, a Northern Virginia company, has just been busted for charging the Pentagon $900 for a $7 control switch, $3,000 for a $100 circuit breaker, and $80 for a $1.41 piece of plumbing equipment. Blah, blah, blah. Tell me something new, why don’t you? And Lockheed Martin has just been given a $72 million contract to install those universally despised irradiating scanners at 300 U.S. airports.
Meanwhile, one in six Americans is on food stamps, and more and more Americans are losing jobs, including teachers, firemen and cops, as unemployed and deranged teens run wild in “flash mobs” to beat up random strangers. It has happened repeatedly in Philadelphia, my neck of the woods, as well as Chicago, Milwaukee, Kansas City, Boston, Brooklyn, South Orange and Greensboro. There are racial and class components to this phenomenon, as these wilding youngsters are invariably poor blacks converging on white shopping districts. In the latest episode, an 11-year-old Philly kid was arrested for assaulting a stranger.
With these mobs, all the pathologies of a post-industrial, post productive society, with its dead-end jobs, bad schools and a nonstop, stupefying media, are on full display. Another factor not often cited is the phenomenon of children being raised almost exclusively by strangers, practically right after birth, and the poorer the kids, the crappier the quality of daycare and subsequent schooling. How many times have you seen black women push strollers with well dressed white children, so the rich kids are pampered by their parents and nannies, while the poor ones are left alone in nightmarish neighborhoods. Also, when your government is so openly corrupt, anger is inevitable, although punching a stranger in the face is certainly not a solution. The biggest criminals are out of sight, leaving us bottom feeders to inflict pain on each other.
In any struggle, it’s important to know the nature of your enemy. Is he a klutz, prone to a goofy mistake now and then, or does he have murder on his mind? Again, we are being lorded over by a gang of criminals. War criminals.
For two years, there was a military entertainment complex inside a Philadelphia area shopping mall. At the Army Experience Center, young teens could play shoot them up, blood splattering video games for free, while those over 18 could climb into a realistic mockup of a tank or chopper to massacre bad guys in desert settings, also for free. An advertisement: SHOP FOR SOCKS. GRAB A BITE. PILOT AN AH-64 ATTACK HELICOPTER. After receiving 40,000 visitors and enlisting 236 recruits, the Army decided to shut down this 13-million dollar facility on July of 2010, “It’s been a great success. Basically it’s mission accomplished.”
Though it had planned on opening more of these centers, the Army soon realized there was no longer a need. Thanks to the Mother of All Depressions and rapidly increasing unemployment, desperate Americans are flocking to recruitment stations even without the promise of a free video game. It’s a win, win situation for our military industrial complex: destroy the economy, and Americans will enlist. They will beg to be blown up.
Barack Obama and the Debt Crisis: a Successful Con Game Explained
By Bruce A. Dixon – Black Agenda Report – 08/03/2011
The phony debt ceiling crisis was, from beginning to end, a con. It was an elaborate and successful hoax in which the nation’s first black president, the Democratic and Republican parties, Wall Street and corporate media all played indispensable parts. The object of the supposed “crisis” was to short circuit public opinion, existing law, democratic process and traditions of public oversight, in order to deal fatal blows to Medicaid, Medicare, social security, job growth and public expenditures for the common good. It worked. We’ve been conned.
President Barack Obama as First Actor in the Con
The key actor in the con was and is Barack Obama, leader of the Democratic party and president of the United States. When the Bush and Obama administrations bailed out the banksters in 2008, 2009 and 2010 they didn’t print new warehouses of greenbacks and send them over in a fleet of trucks. The Federal Reserve simply opened its spreadsheets, and wrote numbers with lots of zeroes crediting the banksters’ accounts. It literally created the new money by giving it away, and next proceeded to borrow those funds back from the banksters at interest. The debt ceiling crisis was nothing but those same banksters twirling their mustaches and oinking “Well, we don’t think you (the government that created the money by giving it to them) can really afford to repay all these loans you’ve been taking out… We might have to downgrade your credit rating…”
The whole notion of excessive government indebtedness, or that government might not be able, as the president threatened, to issue or cash social security checks was always a crock, a sham. There was never, ever a moment when Barack Obama didn’t know that his homey analogies about government having to live within its means just like a family were just cynical fairy tales.
The president could have prevented this “crisis” by passing a debt ceiling when he had a 50 vote majority in Congress for all of 2009 and 2010. He could have avoided it again by allowing the Bush tax cuts to expire. Instead the president renewed the Bush tax cuts when he had a 50 vote majority in Congress. The president could have defused it in the last month by any of a number of means, including simply calling it fake. But giving away the game is not what actors in a con do.
The Second Actor: Corporate Media
The second key actor in the con was and is the corporate media establishment. Media is nothing less than the sum total of the public conversation. Our corporate media is owned by a tiny group of greedy billionaires and soulless corporations who get to decide what most of us see and hear, what gets in and what gets left out of that supposedly public conversation. So corporate media cynically repeated the bankster’s doubts about getting their free money paid back.
Over the years, corporate media moguls had manufactured an entire Matrix-like world of fake “money experts” and economists who assured us in the 90s that tech stocks would never go down, and in the 2000s that real estate prices would never decrease, and always that lower taxes on the rich would trickle down to create jobs for the poor.
For these masters of alternative realities, re-branding the white nationalist wing of the Republican party as “the tea party” portraying it as a mass movement, and riffing on a new/old set of lies about the government going broke were par for the course. Corporate media set the limits of the political discourse inside a false reality — one where the myths that the US government could and might go broke, and where trickle down economics were unquestioned facts. It portrayed the only political choices available in that universe as the president’s accommodation vs the “tea party’s” extremism.
The Third Actors: Republicans and their tea party faction
Every Jeff needs a Mutt, every good cop needs a bad cop. This was the role played by Republicans. Throughout the Obama presidency their job has been to refuse the president’s pre-emptive compromises to meet them fifty, seventy, ninety percent of the way, moving the goal ever rightwards. Along the way a secondary function is to gratuitously insult the president, sometimes in openly racist terms, thus enabling some of the president’s backers to try to rally black and progressive support around him despite his utter abandonment of any progressive agenda.
The power of Republicans and their tea party subsidiary to dictate the course of events has always been exaggerated. During the first two years of the Obama presidency they had no legislative majorities anywhere and could not even call a committee meeting. Even with a majority in the House since the beginning of this year, Republican power to do damage is always limited by the combined power of the Democratic White House and a large Democratic minority in Congress. Despite the insistence of Republicans and the power of corporate media the imaginary “debt crisis” would not have existed unless the White House and Congressional Democrats co-signed it into existence.
The Fourth Actors, Hand Wringing Democrats, Progressives, and the Black Establishment
Last week we decided that Barack Obama, far from being weak, vacillating, and too spineless to stand up for the tens of millions of working and poor people who elevated him to office, was simply smarter than they were. Barack knows which side he’s on — only Democrats and so-called “progressives” don’t know, or pretend not to know.
Every abusive relationship has two parts. There’s an abuser, who does what he does, and there’s an enabling victim who forgives and makes excuses for the abuser. When Democrats and progressives waste ink and air on President Barack Obama trying to “make him do it” or discoursing on his “weakness” and lack of progressive backbone, they are effectively enabling his serial abuse by ascribing it to curable causes open to democratic remedies rather than deliberate intent and the people-proof mechanisms of their own party and of US governance in general. They enable their abuser.
The most pitiful and sometimes the most unprincipled of these are members of the Black Misleadership Class who support President Obama. The only card they have left is to point to the daily stream of racist quips and quotes from Republicans and tea partyers or Glen Beck, or whoever they can find that day calling the president a White House porch monkey, or some other racist epithet, as the reason to circle the wagons, squelch examination of Obama policies and silence criticism of his many betrayals in office of the cause of peace and justice.
The Directors of the Skit: Wall Street and Corporate America
Was there every really any danger of the US going broke? The stock market didn’t crash. The holders of US Treasury bonds didn’t try to unload them with this horrific train wreck a mere 24 hours distant. That was because they knew the train and the tracks were imaginary, they knew it was a hoax. They knew that President Obama could have declared it a foolish stunt and ignored it. They knew they would get their money any damned way.
President Obama expects to raise more than 1 billion dollars in direct financing of his 2012 presidential campaign alone, most of it from corporate sources and from Wall Street. This doesn’t count the money going to other Democrats in the House and Senate, or Democratic candidates for governor, for state and county level judges and other offices, for state legislatures and the like. Substantially the same contributors not only fund and own both parties, but also bankroll and dictate the policy positions of organizations like the Urban League, the National Council of LaRaza, and the NAACP.
If you don’t think dependence on corporate money, as a politician, or say as the National Urban League, whose keynote address this weekend was delivered by billionaires Bill Gates, makes you subservient to a corporate agenda, you’re living in some other world. All the actors in this drama live at the corporate trough. That’s it, and that’s all.
The Deal: Super-committees, Automatic Cuts, and Default Governing By Budget Cutting
With all the players acting their parts, the rigged game produced its expected outcome. Contrived in the imaginary universe where trickle down economics are the accepted norm, The Deal contains no new taxes on corporations and the wealthy.
President Obama announced that he has averted a crisis with more than a trillion dollars in immediate spending cuts, a number much higher than the value of the stimulus package passed at the beginning of his administration. A bipartisan “super-committee” of perhaps only a dozen Senate and House members will earmark a further $3 trillion in near term budget cuts, which will be submitted to Congress as up-or-down no-amendment, take-it-or-leave-it votes. And should Congress reject them, a round of automatic budget cuts dictated by some unknown formula will ensue. Medicare, Medicaid, social security, environmental protection and much more will inevitably fall.
Thus on the strength of a single vote in Congress drummed up by this fake crisis, the will of the American people has been subverted. Medicare, Medicaid and social security, if put up for popular votes would all win. If Congress had to debate them under scrutiny and take votes in public on them, Wall Street and the corporations would lose and the people would win. But that’s the purpose of a modern political “crisis:” to engineer the enactment of measures on behalf of elites that normal political processes would not allow.
Welcome to the future, where a black president has been the indispensable anchor player in the con game that ended the New Deal and Great Society.
Enormous Cuts in Military Spending? Read the Fine Print
By Medea Benjamin and Charles Davis | Dissident Voice | August 3rd, 2011
In this age of austerity, all the politicians are talking about the need for spending cuts. But when it comes to shared burdens and slashed budgets, don’t expect the Pentagon to start holding bake sales, despite what you may have heard about reductions to its obscenely bloated funding.
Citing the U.S. government’s $14.3 trillion debt, lawmakers from both parties have seized the moment to try and attain long hoped-for cuts to Social Security and Medicare. But the recent deal does seem to include some good news for lovers of peace: the push for reductions would encompass the war-making part of the state. Indeed, according to a “fact sheet” released by the White House on the bipartisan compromise, the recent deal to raise the national debt ceiling “puts us on track to cut $350 billion from the defense budget over 10 years.”
Popular liberal pundits, such as The Washington Post’s Eugene Robinson and Ezra Klein, reacted by calling the supposed defense cuts “gigantic” and “unprecedented.” The White House says they’re the first spending reductions since the 1990s.
But don’t start cheering yet. As with any other major bipartisan initiative in Washington – the Iraq war and the Wall Street bailouts come to mind – there’s ample reason to be skeptical.
First, the cuts for 2012 are virtually nil. Security spending—which includes the Pentagon, State Department, Homeland Security, part of Veterans Affairs and intelligence spending—will be capped at $684 billion in 2012, a decline of merely $5 billion (less than 1 percent) from this year.
Yes, there are potentially far more drastic cuts down the road. In addition to the first $1 trillion in cuts over the next decade, a bipartisan Congressional committee must come up with an additional $1.5 trillion cuts by November — or trigger an automatic across-the-board reduction of $1.2 trillion starting in 2013, half of which would be expected to come from military spending.
However, expect this threat of deep military cuts – if cutting defense by 3 percent a year can be called “deep” when it has grown at a rate of 9 percent over the last decade – to be used as a bargaining chip by Democrats to extract concessions on tax increases from Republicans; don’t hold your breath expecting them to actually materialize. And with House Republicans already pledging to “fight on behalf of our Armed Forces,” by which they mean the military-industrial complex, don’t expect Democrats to put up much of a fight. Even were Obama so inclined, the idea that he will expend political capital on cutting military spending even as he expands the war on terror in Libya, Yemen and Somalia is doubtful, especially with an election looming.
But let’s put aside cynicism and accept the Obama administration at its word. Let’s assume the White House and Congress agree to cut military spending by $350 billion a year over 10 years. While the numbers may sound impressive out of context, that’s like draining an Olympic-sized pool with a glass from your kitchen: you’re going to be at it for awhile. The military budget has ballooned so much over the last decade that even if it were cut in half tomorrow, the U.S. would still spend more than it did in 2001.
Indeed, the Obama administration’s proposed military budget for 2012 – the baseline from which future cuts are projected – is at its “highest level since World War II,” according to the non-partisan Center for Strategic and Budgetary Assessments, “surpassing the Cold War peak” set by Ronald Reagan and a Democratic House of Representatives in 1985. Even if, instead of over a decade, the whole, entirely-subject-to-change $350 billion were cut from the defense budget in one fiscal year alone, the U.S. would still lead the globe in military spending, devoting twice as much to guns and bombs as its closest and much more populous rival, China. And that’s without factoring in the cost of any new wars.
Of course, official budget numbers don’t tell the whole story. Factoring in interest payments for past military expenditures, spending on veterans’ care and other defense-related items not included in the Pentagon budget, economist Robert Higgs estimates the yearly grand total spent on the military is $1 trillion or more, with over half of the federal income tax going to the military. And that massive national debt that’s being used to justify cuts in social spending? Nothing has contributed to it more than the dramatic rise in military spending over the last decade, a factoid you might have missed if you get your news from a television.
The tragic irony is that debt caused in large part by foreign military adventures is being used to further a class war here at home, even as the bloodshed continues in Afghanistan, Iraq, Libya and beyond. Too bad that, rather than denounce this morally and fiscally damaging addiction to militarism, politicians prefer to orchestrate the decline of the American empire from within.
Medea Benjamin can be reached at (medea@globalexchange.org)
The War on You
By Michael Collins | The Money Party | July 31, 2011
Let the word go forth from Washington! The corporate rulers occupying our nation’s capital have declared war on just about every citizen.
Have no doubt: those in the upper ranges of the top 1% of wealth in this country (aka The Money Party) want to kick you to the curb.
They want to reduce your social security and make you go broke paying for medical care.
They want to lower your wages and trash your retirement.
They ignore the clear facts that we’ve had negative job growth since 2000 and the situation is just getting worse.
They want to ship jobs, factories, and entire businesses overseas and give companies that do that a big fat tax credit for doing so.
They’ve been given so much for nothing for so long. Now, they’re ready to take it all. It’s their time!
The most recent assault is the ridiculous debate about raising the debt ceiling. There should be no debate. Failing to raise the ceiling right now means deliberate default on debts, refusing to pay bills the government can pay. It’s called fraud.
The pressing need to fix the budget is a separate issue. Reduced spending and increased revenues should come through broad public involvement and open debate. It mandates that the rulers behave like adults.
But this crisis isn’t about putting together a real budget. It’s about creating a budget that punishes you, your family, and friends. It’s about taking your attention away from your vital interests to maximize income and control by The Money Party.
Were the leaders on either side of the debate serious, the Bush era tax cuts would be rescinded. These cuts on the top 1% were temporary. Guess what? Congress lied. When the temporary tax breaks ran out a few months ago, they were revived and renewed just when we had the greatest need for revenues.
The Money Party won’t give up its wars either. Iraq and Afghanistan have added $4 trillion to the national debt of $14 trillion. Why not stop the wars? How hard is that to figure that out?
Getting rid of Bush tax cuts for the super-rich, ending the wars, and moving out of the recession/depression would be huge steps toward balancing the budget. But that won’t happen with this Congress and this president. Why? That would cost the financial elite money for taxes and lost income for all those weapons they sell to support the wars.
The Attack on You Began in Earnest Just Years Ago
Congress repealed Depression era banking regulation that kept your banks from risky investments in 1999.
Congress enacted legislation in 2000 that allowed extremely risky investments in real estate and other derivatives, illegal for nearly a century.
In 2001, the big banks and Wall Street celebrated its newly purchased freedoms with a decade-long binge of fraud and risky investments. Like a greedy con artist, they took everything they could from people here and around the world until there was no more to take. We have now hit the wall thanks to them.
The outrageous expenses of wars based on lies caught up with us and shoved the deficit to new heights. The tax cuts for the top 1% took away revenues needed to balance the budget.
The money they steal from the Social Security surplus is no longer enough. They want to keep the tax in place for us and take an even bigger rake-off.
This crisis is manufactured by the ongoing greed of The Money Party. It is funded by the US Treasury. You pay for it, all of it.
