By Raúl Zibechi* | La Journada | 26 April 2012
After the recent sixth Summit of the Americas there remains little doubt that the Latin American region has changed. It stopped being the back- yard of a decadent empire that has very little to offer save military bases and threatening fleets. The double failure of the United States, by Barack Obama in Cartagena and by Hillary Clinton the following week in Brasilia, shows the lack of constructive proposals for the region.
As Dilma Rousseff pointed out, countries of the region demand “ relations among equals,” which was interpreted by some analysts as “a rebellion against the United States.” The summit’s principal consequence is proof of US isolation and the non-existence of policies capable of attracting the region jointly as happened until the middle of the 1990s. I find five reasons for the deterioration of Washington’s relations with the entire continent, which anticipate the new scenario in formation.
The first is the double failure of the drug war and the embargo of Cuba. After the fall of the Soviet Union, Washington had to fabricate an enemy to continue forcing the militarization of international relations. Illegal drug trafficking fulfilled that function for a while, despite never being credible because it did not include a reduction of consumption in northern countries, the big consumers of illegal drugs.
Now the war against drugs lost the battle for legitimacy. The International Institute of Strategic Studies just launched a study in which it affirms that it not only failed in combating consumption and trafficking, but also the war against drugs “has created an important threat to international security” (La Jornada, April 17). Was that not perhaps the desired objective?
The second is the end of the OAS’ time and the consolidation of Unasur (Union of South American Nations) and Celac (Community of Latin American and Caribbean States), both of which exclude the United States and Canada and adjust to the new global reality. Following the already marked tendency by Unasur since 2009, Celac is rapidly becoming the organism capable of resolving the region’s problems and of tracing the direction of its sovereignty before the extra-continental powers. It can be discussed whether that is the type of integration that the Latin American peoples need, but there is no room for doubt that, whatever the path they elect, they are excluding the old property owners from the back yard.
In third place, the United States no longer is the principal trade associate of the region’s principal countries, particularly of South America, and its decreasing internal market no longer has the attraction of old nor is it in any condition to capture Latin American exports. The tendency is that China and the Asia group substitute for the role that the United States had from the beginning of the 20th Century until the 2008 crisis as the decisive trade and political ally.
Until 2005, the United States purchased 1.5 million barrels per day from Venezuela, a number that fell in 2011 to less than one million. To the contrary, Venezuelan exports to China, which were almost non-existent in 2005, climbed to almost a half million barrels per day n 2011 (Geab No. 60, December 2011). The tendency is that one market substitutes for the other.
The United States and the European Union, in fourth place, are on the way to being displaced as the principal investors in Latin America. China is the principal investor in Venezuela, the first world reserve for oil, third for bauxite, fourth reserve for gold, in sixth position in natural gas and tenth reserve of iron in the world. China also has strong investments in Argentina and Brazil, the two largest South American economies.
The second Chinese oil company, Sinopec, was interested in buying a part of Repsol in YPF for 15 billion dollars before the nationalization decided by the government of Cristina Fernández (Financial Times, April 18, 2012). Now it can expand its investments in Argentina, where it is responsible for 6 percent of the offer of crude and for 1.7 percent of gas.
The region also has endogenous capabilities for investment. The best example is the announcement of the investment of 16 billion dollars by three Brazilian companies (Petrobras, Odebrecht and Braskem) in Peru, to extract gas in Camisea, to construct a gas duct of more than a thousand kilometers toward the south and a petrochemical pole in the port city of Ilo, the first on the Pacific Coast.
In fifth place, the United States no longer is the region’s only military ally. Venezuela maintains a solid alliance with Russia, Brazil has co-operation agreements with India in aeronautics and with China in the space industry. But the most notable is the progressive integration of the region’s military industries, in other words the coupling of the South American countries with the growing Brazilian military industry.
The most notable case is the strategic alliance between Brazil and Argentina, which translates into joint development of protection, a military carrier that will substitute for the Hercules, the development of air-to-air missiles that Brazil worked on with South Africa, and unmanned planes for border vigilance. Both countries form a critical mass capable of trumping the rest to set up a regional military industry autonomous from the north.
The imminent victory of the socialist François Hollande in the French elections “will activate a series of strategic changes” that accelerate the geopolitical transitions underway, according to what the European Laboratory of Political Anticipation (Laboratorio Europeo de Anticipación Política) estimates. See: (Geab No. 54, April 17, 2012). One of the principal turns will be the formation of a Europe-BRICS strategic alliance. In some way, this alliance already started with the 2009 France-Brazil military agreement to construct submarines and attack planes. The region’s autonomization can have unexpected allies.
* Translation by Chiapas Support Committee
April 27, 2012
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Economics, Militarism | Brazil, China, Community of Latin American and Caribbean States, Dilma Rousseff, Latin America, Raúl Zibechi, South America, United States |
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KHARTOUM – The president of South Sudan Salva Kiir pleaded the case of his country with China saying that Khartoum has declared war on Juba as he started a five day visit to Beijing.
“It [this visit] comes at a very critical moment for the Republic of South Sudan because our neighbor in Khartoum has declared war on the Republic of South Sudan,” Kiir said during his meeting with China’s president Hu Jintao.
“I have undertaken this visit because of the great relationship that I value with China. China is one of our economic and strategic partners,” Kiir added.
Last Friday, the Sudanese army managed to recapture the oil-rich region of Heglig after South Sudan occupied it for 10 days sparking the worst military conflict between the two sides since the country split into north and south in July 2011.
On Monday witnesses and officials in South Sudan said that Khartoum’s air force carried out bombing raids in Unity states that fell on a market in Bentiu.
The escalation comes as a reflection of the failure of Khartoum and Juba to settle through negotiations a number of key post-independence items and particularly the issue of how much the landlocked south should pay to transport its oil through the north’s pipelines.
China has been the largest single importer of oil from Sudan prior to the south’s breakup. The latter took 75% of the country’s oil when it seceded.
But earlier this year South Sudan suspended its oil production after Sudan started taking part of the oil as payment in kind to make up for what it called unpaid fees.
Last February, Juba ordered Liu Yingcai, the head of the Chinese-Malaysian oil consortium Petrodar, out of the country and accused him of not honoring the terms of reference of the memorandum of understanding which they signed in December.
The latest Chinese customs data show crude imports from Sudan fell nearly 40 percent in January and February compared to a year earlier.
China made a failed attempt last December to mediate between the two countries on the oil issue. Following that, Beijing remained largely silent while calling on Khartoum and Juba to continue dialogue.
But last week, Sudan’s President Omer Hassan al-Bashir threatened to crush the “insect” government of the South, and said the time for talks was over.
The Chinese president appeared careful not to take sides on the Khartoum-Juba row and urged continuation of dialogue.
“The urgent task is to actively cooperate with the mediation efforts of the international community and halt armed conflict in the border areas,” Hu was quoted as telling Kiir during a meeting in Beijing.
“China sincerely hopes that South Sudan and Sudan can become good neighbors who coexist in amity and good partners who develop together,” Hu added.
Kiir and Hu witnessed the signing of several agreements between the two countries that cover humanitarian aid, solar energy and financial cooperation.
Gum Bol Noah,an official from Salva’s office, said China National Petroleum Corporation (CNPC) was willing to offer South Sudan technical support if Juba decided to build an alternative oil pipeline, making it less reliant on the pipeline running through Sudan.
Information Minister Barnaba Marial Benjamin confirmed to Dow Jones China’s interest in financing the project.
“The Chinese are already there and we will continue with them, no problem” Benjamin said.
“Everybody will apply and we will see who has the capacity and who can generate a good consortium of companies to create money” he added.
Kiir attended the opening ceremony of the South Sudanese embassy in Beijing yesterday and will meet Vice-Premier Li Keqiang today.
April 25, 2012
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Aletho News | China, Hu Jintao, Salva Kiir Mayardit, South Sudan, Sudan |
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Introduction
The economic, political and social outlook for the second decade of the 21st century is profoundly negative. The almost universal consensus, even among mainstream orthodox economists, is pessimistic regarding the world economy.
Although, even here, their predictions understate the scope and depth of the crises, there are powerful reasons to believe that beginning in the second decade of this century, we are heading toward a steeper decline than what was experienced during the Great Recession of 2008 – 2009. With fewer resources, greater debt and increasing popular resistance to shouldering the burden of saving the capitalist system, the governments cannot revive the economic system.
Many of the major institutions and economic relations which were cause and consequence of world and regional capitalist expansion over the past three decades are in the process of disintegration and disarray. The previous economic engines of global expansion, the US and the European Union, have exhausted their potentialities and are in open decline. The new centers of growth, China, India, Brazil, Russia, which provided a new impetus for world growth during the first decade are de-accelerating rapidly and will continue to do so throughout the new decade.
The political and military outlook is equally bleak, especially in the Middle East and South Asia where the US and the EU are engaged in prolonged colonial wars, either directly or through proxies. Imperial wars are deepening the economic crises, draining resources, rather than extracting wealth, and in particular with regard to US-Israeli war preparations against Iran threatening to provoke a major economic depression.
We will proceed with an overview of the principal regions of the world political economy beginning with the ongoing crises in the European Union and follow with a discussion of the causes and consequences of the decay of the US Empire. We will then analyze the negative impact of the US proxy wars for Israel in the Middle East before turning to the dynamic growth, conflicts and reforms in the BRICs: China as it emerges as a major world economic power; Russia under the dynamic leadership of President Putin and Brazil as an emerging hegemon in Latin America. We will conclude by examining the social and political consequences of prolonged crises, especially the effects of prolonged class based austerity programs and new colonial wars on the class struggle and the reshaping of the global configuration of power in a world without a dominant hegemon.
The Crises of the European Union
The Eurozone faces a triple economic crises: an economy immersed in an ongoing recession including a depressed manufacturing sector; a severe decline in trade; and a precarious financial sector in which bankers in Greece, Italy, Spain, and Portugal are on the verge of bankruptcy [1].
A crisis is developing in the empire resulting from sequential costly colonial wars and economic sanctions toward the Arab-Islamic world – Syria, Libya, Iraq, Afghanistan and Iran.
A constitutional crises as rising mass protests have led to the extension of police state measures including the suspension of constitutional guarantees and the criminalization of social protests in Spain, Greece and England.
Throughout 2012 unemployment rose to the highest levels since the introduction of the single currency in 1999. Annual trade with the EU’s main-commercial partners in Asia fell precipitously – over 18% with China, 14% with South Korea and a similar downturn with Japan [2].
Specifically, the crises wracked European Union is on the verge of a break up and the de facto multi-tiered structure is turning into a series of bilateral/multi-lateral trade and investment agreements. Germany-France the Low and Nordic countries are best placed to attempt to weather the downturn. England, namely the City of London – in splendid isolation – is sinking into negative growth, its financiers scrambling to find new speculative opportunities among the Gulf petrol-states and other ‘niches’. Eastern and central Europe, particularly Poland and the Czech Republic, have deepened their ties to Germany but are suffering the consequences of the general decline of world markets. Southern Europe (Greece, Spain, Portugal and Italy) are in a deep depression suffering double digit negative growth over the period 2009-2013 while unemployment skyrockets to over 20% as the massive debt payments fueled by savage assaults on wages and social benefits and the decline of public investments, severely reduce consumer demand [3].
Depression level unemployment and under-employment, running to one-third of the labor force and youth (17-24) unemployment of nearly 50% in southern Europe, detonates prolonged social conflicts, repeated general strikes in Greece, Spain, Portugal, Italy intensifying into popular uprisings. A break-up of the European Union is almost inevitable. The euro as a currency of choice may be replaced followed by a return to national currencies, accompanied by devaluations and protectionism. Nationalism and class struggle are the order of the day. Banks in Germany, France and Switzerland are preparing to suffer “haircuts” – huge losses on their loans to the South. Major bailouts have become necessary, polarizing German and French societies, between the tax-paying majorities and the bankers. Trade union militancy and rightwing pseudo ‘populism’ (neo-fascism) are challenging incumbent rightist (Spain, Portugal), social democratic and “technocratic” regimes (Greece, Italy).
In response to crises and mass protest, police state measures have increased in Spain. The neo-Franco regime of Mariano Rajoy has implemented new repressive laws, which penalize social movements for engaging in passive or active resistance to public authority, with jail terms ranging from one to three years [4]. In Britain, Prime Minister Cameron has approved measures allowing police to intervene in any and all personal e-mails or other correspondence without any judicial authorization.
A depressed, fragmented and polarized Europe is less likely to join in any Zionist inspired US-Israeli military interventions. Already economic sanctions against Libya, Iran and even Syria, have caused a crippling 20% increase in the price of oil in 2012, undermining any chances of economic recovery. If crises ridden Europe follows Washington’s confrontationalist approach to Russia and China it will limit access to two of the most dynamic markets for its exports.
Wars and economic crises, each mutually reinforce the other in a downward spiral. As costly imperial wars multiply, the Eurozone domestic economy decays.
The US Crisis Continues
The US crisis has several inter-related dimensions: a decline in world market shares and hegemony especially in Asia and Latin America; rising class based inequalities and differential economic ‘recovery’ between capital and labor; and a increasingly repressive police state designed to forestall domestic opposition to new overseas wars (especially with Iran) and a long term decline in living standards.
Nothing illustrates the decline of the US empire as clearly as its shrinking share of world trade and manufacturing, in the latter case by China’s forceful entry as the “workplace of the world” [5]. Even in traditional US “spheres of influence”. Latin America and the Caribbean the US no longer is the dominant trader and financier [6].
Between 2005-2010 Chinese state banks lent more than $75 billion to Latin America more than the World Bank, the Inter-American Development Bank and the Ex-Imp Bank combined. The US has been displaced by China as the leading trading partner of Brazil, Argentina, Chile, Peru and Ecuador – specializing in agro-mineral exports [7]. US de-facto devaluation of its currency and state subsidized interest rates has prejudiced Brazilian exports and created what its Finance Minister describes as a “currency war” – setting the US on a collision course with the biggest and most important economy in the region [8]. The US came up with no major economic initiatives to recast US relations with Brazil in recent meetings with President Rouseff. Nor did the US succeed in imposing its oil sanctions policy toward Iran in Latin America and Asia. India and China have rejected US policy and have continued to purchase Iranian oil [9].
Despite a slight and tenuous decline in unemployment, mainly a result of the shrinking o the labor force due to the fact that many long term unemployed workers have given up looking for jobs, the US economy has been incapable of dealing with a ballooning $1.6 trillion fiscal deficit. Because of cumulative public and household debt, Washington is finding it difficult to spend its way toward a robust recovery. Nor can it count on ‘exporting’ its way out of stagnation by turning to Asia, as China, India and the rest of Asia are losing economic steam. China’s growth for 2012 is likely to be 7.5% far below its 9% average and India will decline from 8% to 5% or lower [10].
The US economic crisis has hit the working and middle class the hardest They received nothing similar to the trillion dollar Wall Street bailout to ameliorate their socio-economic plight [11].
According to one report “about 12 million borrowers, or one in five of US homeowners with mortgages, owe more than their property is worth” depressing the housing market and reducing the net worth of US households by several trillion dollars [12].
The “decline in unemployment” claimed by the Obama regime is largely a result of the decline of the labor force from 146 million in 2007 to 140 million in 2011. In 2008 62.7% of the population was employed by 2012 it had dropped to 58.5%, thus accounting for the decline in unemployment from 9.3% to 8.3%. If the same number of workers were seeking work in 2012 as there were in 2007, unemployment [13] would be over 11%. The decline of the median income is cause and consequence of the sharp decline in the “middle class”. Well paid manufacturing jobs are replaced by low paid “service jobs”: over 90% of the 27.3 million new jobs added over the last two decades are in the service sector [14].
Exploitation of labor is evidenced in the growing productivity of labor even as the number of workers decreases: all the gains from technological innovations accrues to capital, as robots replace line workers. As efficiency rises, jobs dissolve and profits increase. Labor’s share of national income has fallen from 63% to 58% over the past 20 years. While median wages declined 2.7% since the recession of 2008-2010, profits have increased nearly 30%. While the domestic market shrinks, the Standard and Poor 400 draw 33% of their profits from exploiting cheap labor overseas. Globalization has clearly prejudiced US labor and benefited the multinational corporations (MNC). A case in point is General Motors which in 2011 recorded $7.6 billion, its largest profit ever in 2011 [15]
The Obama 2013 budget plan proposes to deepen the social divide by cutting health care and social security by $364 billion while only increasing taxes on the rich by less than one-third that amount. [16]
Faced with growing discontent with the economic crisis, overseas imperial wars, rising oil prices and declining living standards, the US has vastly increased police state legislation allowing the state to assassinate citizens suspected of fraternizing with ill-defined terrorists, suspending judicial oversight (habeas corpus) on the use of police intervention in homes and offices and cyber sites.
A presidential decree on March 16, 2012, authorized the state seizure of all major work sites and the militarization of labor in time of “emergency” – including in peace time. [17]
The US and England are the biggest losers from the Iraqi post war economic reconstruction. Of $1.86 trillion dollars in infrastructure projects, US and UK corporations will gain less than 5% [18]. A similar outcome is likely in Libya and elsewhere. US imperial militarism destroys an adversary, plunging into debt to do so, and non-belligerents reap the lucrative post-war economic reconstruction contracts. In fact empire building drains trillions in military spending without any commensurate extraction of economic wealth. In fact the domestic economy is drained to fund the military empire of 700 military bases. As the wars multiply, domestic consumption shrinks.
US economic stagnation and jobless recovery is evident in the rising number of Americans dependent on food kitchens, the epidemic in home foreclosure – over 10 million are 3 months or more behind in mortgage payments – and 30% of school children dependent on free lunches and breakfasts.
Labor exploitation (“productivity”) has intensified as capitalists force workers to produce more, for less pay, thus widening the income gap between wages and profits. [19] Several decades ago the average US CEO to worker salary differential was 70 to 1. Today it is 350 to 1. Inequalities have reached unprecedented levels and are increasing: over the past 10 years the top 1% of the class structure received 90% of the growth of income, leading to a real decline in median income of over 5%.
The economic downturn and growth of unemployment is accompanied by savage cuts in social programs to pay for the bailout of financially troubled banks, Wall Street investment houses and the automobile industry. The debates among the Democratic and Republican parties are over how much to cut the public health programs for retirees (Medicare) and for the poor (Medicare) and how to proceed in privatizing Social Security in order to secure the ‘confidence’ of the bondholders. Faced with limited political choices, the electorate is reacting by voting out incumbents, abstaining in large numbers – over 60% in congressional elections and 50% in presidential elections – or via spontaneous and organized mass movements, such as the “occupy Wall Street” protest. Dissatisfaction, hostility and frustration pervade the North American political culture. Both major parties attempt to deflect criticism and distract discontented voters by demonizing Islamic citizens and countries as “threats to national security” and augmenting the police powers of the state at the expense of constitutional freedoms. Democratic Party demagogues blame unfair trading practices of China rather than the massive flight of US MNC to mainland China. The Republican Party demagogues blame largely Latin American immigrant workers for “stealing American jobs” for Wall Street’s financial destruction of US manufacturing sector. Both, following the lead of the “Israeli Lobby, fulminate against Iran’s Islamo-fascists.
New Wars in the Midst of Crises: Zionists Pull the Trigger
In what is likely a first in world history, a global imperial power the US is subject to the dictates and pays tribute (in the form of military and economic aid to the tune of over a hundred billion dollars over the past half century) to a marginal state, Israel, with little significance to the world economy and few allies. [20] Never in past empires, has a tiny minority, US Zionists forcefully acted on behalf of the tributary state, and had such a powerful influence in harnessing an imperial state to serve the military interests of a foreign power. Never in history has a prosperous elite, educated in the most prestigious schools and occupying strategic economic, cultural and political positions of power, driven an empire into a series of prolonged colonial wars which prejudice major private institutions (oil) industry, drain the public treasury, impoverish the vast majority of taxpayers and consumers of energy in pursuit of the goal of a “Greater Israel”.
Finally never in the history of modern social analysis has the public and blatant display of elite power and political manipulation on behalf of a foreign regime been so deliberately slighted and obfuscated, by complicit or intimidated scholars and journalists, another instance of the pervasive power of intimidation of the Zionist power configuration [21].
It is precisely this elite exercise of power on behalf of a foreign regime that explains the repeated costly imperial wars against Arab and Islamic countries, even in the midst of a major prolonged economic crisis. Since the Israeli Lobby’s first and abiding loyalty is to Israel, they have no qualms about deepening the US fiscal deficit based on trillion dollar military expenditures for wars to advance Israeli domination in the Middle East.
The 52 Presidents of the Major American Jewish Organizations and their “Israel First” followers in Congress, State, Treasury and the Pentagon have escalated economic sanctions and military preparations for war with Iran despite the loss of a major market for US exports and the sidetracking of scarce economic resources to unproductive military expenditures. As a result of war threats emanating from Washington and Tel Aviv, speculators have pushed up the price of oil by 20% in the first 6 months of 2012, further undercutting any hope of an economic recovery. A US-Israeli attack on Iran will not result in a short localized war: it will result in a regional conflagration, sharply reducing the flow of oil, sending prices skyrocketing and in short order lead to a world depression. [22] Given the extremist Israeli regime’s success in securing blind obedience to its war polices from the US Congress and White House, with regard to Iraq (2003), Libya (2011), Lebanon (2006) any doubts about the real possibility of an attack on Iran, with a major catastrophic outcome, can be set aside.
China: Neo-Liberalism and the Compensatory Mechanisms in 2012
China’s dynamic growth over the past 30 years owes as much to the socialist revolution in 1949 as it does to capitalist investment from 1980 to the present. The revolution created the modern state and defeated the Japanese imperial army, local warlords and corrupt political rulers of the Kuo Ming tan and ended Euro-US foreign coastal enclaves. The revolution laid the bases for a unified country. By mobilizing labor, it created the essential infrastructure linking economic sectors; via an agrarian reform liberated the peasantry from semi-feudal constraints and created a domestic market; via universal free public education and health programs it created a modern healthy, educated labor force and an army of scientists, engineers and technicians, producing innovations and spurring double digit growth. The capitalist transition began in 1980 and accelerated thereafter via the de-collectivization of agriculture, privatization of industry, trade and urban land and the large scale, long-term entry of major MNCs.
The transition and consolidation of capitalist China had a dual effect: it unleashed the forces of production leading to double digit growth and it polarized class relations between a super-rich ruling class, a privileged ‘new petty bourgeois’ and a vast army of poorly paid exploited factory workers and migrant construction and domestic service workers.
As China became the ‘workplace of the world’ it also became the locus of the world’s worst social inequalities. Chinese capital in partnership with foreign capital turned it into the world’s second biggest economy. But China’s second and third generation of post-socialist working class increasingly has engaged in mass action demanding a greater share of the wealth, a return to free public health and education and low cost housing[23]. China’s elite is faced with dual pressures: on one side from private capital demanding greater financial de-regulation to allow for overseas investment and on the other side from labor’s clamor for greater political freedom and social spending on housing and an end to vast networks of corruption between Party officials and business elites[24]. As China’s economy matured it turned to greater investments in basic research and advanced engineering, moving China up the value chain toward complex and innovat6ive manufacturing[25]. Faced with shrinking trade surpluses due to declining demand from the crises ridden Euro zone and the US an increasingly sharp inter-elite struggle emerged, pitting neo-liberals against populists. The core leadership around premier Wen Jiabao embraced the opening of financial markets, the entry of foreign finance capital, the liberalization of the political system to allow for competing elites and the repression of advocates of neo-populist policies such as those proposed by former mayor of Chongging and ex- politburo member Bo Xilai. Bo promoted greater social insurance, environmental protection and social housing, greater social equality and robust prosecution of corrupt business-Party mafias [26]. The defeat of the symbolic head of the “populist faction”, with the arrest of BoXilai, heralded by the western financial press as a victory over “neo-Maoist demagogy”, signals the deepening and open embrace of neo-liberalism and the gradual discarding of the public regulatory regime over foreign financial flows [27]. This in turn increases China’s vulnerability to financial turmoil and opens opportunities for outward flows of capital by China’s new rich billionaires. The announced growth of domestic social spending has yet to ameliorate the class inequalities: China and its elite have become a mecca for luxury goods manufacturers and fashion designers both domestically and overseas in Paris, London, Milan and New York.
Faced with intensifying pressures from below and especially in light of the deepening of the neo-liberal option [28], the Chinese elite also has to deal with the crises in its principal export markets in the Euro zone.
China faces the US-EU crises of the new decade with several possibilities for ameliorating its impact. Beijing is shifting toward producing goods and services for the 700 million domestic consumers currently out of the economic loop. By increasing wages, social services and environmental safety, China is compensating for the loss of overseas markets. China is vastly increasing public spending on expanding public health coverage, increasing wages, and plowing billions into basic research and technology. China’s economic growth, which depended on real estate speculation, has shifted gears, as the regime has tightened lending and demanded greater municipal investment in low cost social housing for the middle and working class. To avoid a sharp downturn, leading to job losses, municipal bankruptcies and increased social and class conflicts, China is prepared to launch a massive stimulus package as it did in 2008/9. Faced with rising demands for greater economic and political liberalization from the new economic elite and working class demands for social equality and higher wages, the different factions in the Communist Party debate over greater liberalization and gradual democratization [29]. The outcome will profoundly affect China’s class structure, political institutions as well as the relative strength of market – state relations. A turn toward greater liberalization and deregulation of financial markets, as appears most likely could heighten class conflicts and provoke an economic crisis which will likely strengthen opposition to the market.
Russia Faces the Crises
The post-Soviet decade (1990-1999) witnessed the greatest peacetime human catastrophe: life expectancy fell from 66 years to 58 years in the course of three years, with over 3 million Russians dying prematurely, as newly minted capitalist oligarchs plundered the economy and public treasury [30]. Incumbent dictator Yeltsin literally bombarded the opposition led parliament in buttressing his regime. He was elected President in 1996 thanks to oligarchical media manipulation, gangster dominated regional electoral processes and massive State and private funding. Over a trillion dollars of public resources, from diverse sectors including oil, gas ,banks and transport, were seized by thugs and oligarchs for a fraction of their value [31]. Living standards plunged, pensioners suffered extreme hardships and many were evicted from public housing in choice locations.
At the height of the neo-liberal onslaught over 60% of the Russian population fell below the poverty life – the greatest decline since the end of WW II. Russia fell from co-equal world superpower to a vassal state of the Euro-US Empire.
With the advent of the Putin era, at the onset of the new century, Russia began a rapid and steep recovery. During the first decade of the 21st century poverty was reduced to less than 20% of the population. Wages and salaries were paid on time and increased by over 90%. The Russian economy grew by nearly 8% per annum and its trade surpluses led to foreign reserves exceeding 300 billion dollars, Russia regained its status as a respected power in the international political arena, forming part of the rising BRIC quartet (Brazil, Russia, India and China).
Putin, while not reversing the privatization or prosecuting the oligarchic elites for illicit enrichment, did limit their stranglehold over public policy. For his pursuit of Russian national interests and opposition to US missile encroachment on its borders, he was targeted by the western media as “hardline” [32]. For winning elections and imposing some restraints on the western funded and influenced propaganda – think tanks, NGOs and media outlets – he was dubbed “authoritarian” by the imperial mass media. Nevertheless, Putin’s stabilization and state promoted prosperity marginalized the western backed opposition and received the popular backing of close to two-thirds of the electorate.
The election of President Putin with over 60% of the vote in 2012 was a major blow to the western backed opposition intent on turning the clock back to the Yeltsin era … Putin promised a more independent policy and less collaboration in backing US promoted uprisings and sanctions against Russian allies like Syria and trading partners like Iran. Putin has turned toward greater trade and diplomatic ties with China. Russia benefits from the rise in oil prices, exceeding $120 a barrel. The crisis of the EU and weakening of NATO makes Obama’s planned missile placements pointed at Russia less palatable and more a provocation.
The western media backed opposition, despite its financial clout failed to degrade Putin’s image: its investment boycotts went nowhere and they were thoroughly beaten in the Presidential elections by a big margin. The recession has not weakened the Russian economy. Putin continues to rely on public ownership and greater dependency on overseas oil giants and oligarchs to sustain growth, an unstable and contradictory coalition.
The Transition 2011 – 2012: From Regional Stagnation and Recession to World Crises
The year 2011 laid the groundwork for deepening the crisis of the European Union. The crisis began with the recession in the Eurozone, stagnation in the US and the outbreak of mass protests against the brutal austerity programs that slashed living standards on a continent wide scale. The events of 2011 were a dress rehearsal for a new year of popular rebellions and general strikes. Moreover, the escalation of Zionist orchestrated war fever against Iran in 2011 led to brutal sanctions and the greater likelihood of the biggest regional war since the US-Indo-Chinese conflict. The electoral campaigns and outcomes of Presidential elections in the US and France offer no relief or alternatives – neither of the leading candidates offers an alternative to the deepening global conflicts and economic crises.
During 2011 the Obama regime announced a policy of military confrontation with Russia and military encirclement of China. His policies are designed to undermine Russia’s strategic defense and degrade China’s rise as a world economic power. In the face of a deepening economic recession and with the decline of overseas markets, especially in Europe, Washington perversely and aggressively pursues policies limiting lucrative export to the China market and the inflow of its investments. The White House effort to disrupt China’s trade and investments in Asia, Africa and elsewhere has been a dismal failure. In fact China has replaced the US as the principal aid beneficiary in Latin America and even the Caribbean. US efforts to exploit China’s internal ethnic and popular conflicts and to increase its military presence off China’s coastline has only encouraged China to increase its defense budget by 12% annually and to increase its investments in domestic security and social programs. A major provocation or fabricated offshore incident in this context is not to be excluded. US failed efforts to stem the rise of China has led to rabid chauvinist calls by right-wing pundits for a costly new ‘Cold War’. Obama’s Far East military build-up has provided the framework and justification for a large-scale, long-term costly confrontation with China. This is a desperate effort to prop up declining US influence and strategic positions in Asia. However, the US military “quadrangle of power” – US-Japan-Australia-South Korea – with satellite support from the Philippines is no match to China’s deepening trade, investment and currency ties with regional partners in Asia, and its growing financial links with Latin America and Africa. Washington’s military build-up exists in an economic vacuum, devoid of any new economic initiatives. It only serves to exacerbate the domestic fiscal deficit, while its military bases, troop emplacements, and arms spending add to the balance of payments deficit.
The austerity programs imposed in Europe, from England to Latvia to southern Europe took hold with a vengeance in 2012. Massive public sector firings and reduced private sector salaries and job opportunities, led to a year of permanent class warfare and regime challenges. The ‘austerity policies’ in Southern Europe were accompanied by debt defaults resulting in substantial bank losses in France, Germany and England. The British financial ruling class successfully pressured the Conservative/Liberal coalition regime to increase regressive taxes, reduce corporate taxes, privatize public health and education and repress popular unrest. A new tough neo-Thatcherite style of autocratic rule based on greater police powers over private communications has been legislated. The opposition Labor-trade union alliance has relied on vacuous verbal protest while tightening the leash on the rebellious rank and file. The regressive socio-economic policies put in place from 2008 to 2012 throughout Europe have set the stage for new non-elected technocratic and police-state regimes which in turn lead to more acute social confrontations. The second decade looms as a “lost decade” for workers and unemployed youth with no future.
The Coming Wars that End America “As We Know It”
The impossible demands that the Israeli regime dictated when the P-5 plus one announced the opening of a new round of negotiations with Iran have become the bases for Washington’s ‘non-negotiable demands’. Israel, via Washington, demands that Iran dismantle its newly built multi-billion dollar modern nuclear research center at Fordo, stop all uranium enrichment, destroy what they call “military grade enriched material”, (uranium enrichment to 20%) and allow permanent and pervasive International Atomic Energy Agency monitoring of all Iranian defense facilities [33]. No country among the over one hundred engaged in nuclear research is subject to these conditions. In fact, Iran is well within the parameters of international law and the non-proliferation agreement – while Israel rejects any international inspection of its nuclear weapons stockpile and never signed the non-proliferation agreement.
The Iranians propose to negotiate the terms of enrichment limiting the quantity, level of enrichment and inspection. But certainly and justifiably they will not destroy their advanced research facilities, nor end all enrichment. In other words the Israeli-Zionist-Washington position is devised specifically to sabotage a reasonable compromise that assures the peaceful usage of Iran’s nuclear program. The purpose is to create a pretext for claiming that “negotiations” were “tried” but failed and that a military attack is “justified”. [34]
Under Obama, as with his predecessor, the US has demonstrated its unyielding embrace of the doctrine of foreign policy by unilateral fiat in pursuit of a unipolar world.
Washington rejected a negotiated settlement of the Libyan crisis: it backed an all-out air and maritime war, marked by military success and the total destruction of its economy, society and political order. [35]
The US and its NATO satraps and Gulf state clients demand that the Syrian government unilaterally curtail its military defense of the country while they continue to provide arms, financial aid and mercenaries to the armed opposition. In effect the US backs a unilateral cease fire to facilitate the advance of their client mercenary “rebels”. [36]
The US, alone and without a single supporting country, insisted that Cuba be excluded from the “summit of the Americas” in Cartagena, Colombia on April 14-15, 2012 [37]. The attending countries made it clear to Obama that this will be that last summit in which Cuba will be excluded [38]. A unilateral US veto over Latin America’s progressive policies is dead and buried. In contrast the US, the Euro zone and Israel ally with the most retrograde regimes, like the Gulf petrol-dictators in pursuit of their colonial wars. Policies rejected by the major power in Asia (China, India) Latin America (Brazil, Argentina) Africa (South Africa) and Russia. In other words, despite growing international isolation and the tremendous chaos and destruction which colonial wars bring in their wake, the Zionist-militarist-Wall Street complex that rules the US and therefore NATO, refuses to reflect and reconsider the realities of the 21st century. Washington fails to recognize a multi-polar world, that colonial wars destroy empires and that an imperial policy dictated by a minority elite aligned to a racist-military-colonial regime can only lead to disasters.
Obama has laid the groundwork for a new and bigger war in the Middle East by relocating troops from Iraq and Afghanistan and concentrating them against Iran. To undermine Iran, Washington is expanding clandestine military and civilian operations against Iranian allies in Syria, Pakistan, Venezuela and China. The key to the US and Israeli bellicose strategy toward Iran is a series of wars in neighboring states, world- wide economic sanctions , cyber-attacks aimed at disabling vital industries and clandestine terrorist assassinations of scientists and military officials. The entire push, planning and execution of the US policies leading up to war with Iran can be attributed to the Zionist power configuration occupying strategic positions in the US Administration, mass media and ‘civil society’. Even the financial press highlights the political influence of Jewish money in the election and selection of presidential candidates and policy makers: The Financial Times highlights the role of the 1% Jewish power elite in its tittle article “The Jewish Vote: Small segment but a big role in raising funds” [39]. Equally important, it is public knowledge that leading Israeli backed and Zionist run foundations play a deciding role in designing US and Euro- zone sanctions policy toward Iran, which prejudices their economies. According to the Financial Times “Mark Dubowitz, executive director of the Washington-based Foundation for Defense of Democracies (sic) who helped write the latest sanctions bill admits that there is a risk oil prices could rise even further” [40]. A systematic analysis of policymakers designing and implementing economic sanctions policy in Congress finds prominent roles for leading Zionists such as Waxman, Ileana Ros-Lehtinen, Levin, Cantor, Berman and their numerous camp followers. Dennis Ross in [concert with] the White House, Jeffrey Feltman in the State Department and David Cohen in the Treasury, ensure that the White House toes the Israeli line. The Obama regime, in the midst of the presidential re-election campaign, is especially beholden to multi-millionaire Zionist fund raisers and takes its cue from the ‘52 Presidents of the Major American Jewish Organization. Combined they raise over 50% of the Democratic party campaign funds. The Israeli-US Zionist strategy is to encircle Iran, weaken it economically and attack its military. The Iraq war is the US “model” for its current build up for an attack on Iran. Israel is the principal political and military beneficiary of the Iraq and Libyan wars as is the case in the current proxy war against Syria. These wars have destroyed Israel’s adversaries or are in the process of doing so. But the economic, political and human cost to the US has been enormous: trillions of dollars in war debts have bled the US treasury, without any economic returns, as US oil profits have been sacrificed in Iraq and Iran.
Economic sanctions, which were designed to create domestic discontent in Iran, are the principal weapon of choice. This policy has backfired as it boosted the price of oil by 20% in 2012, undermining any economic recovery in the EU and the US. The global sanctions campaign which engaged the energies of the major Jewish-Zionist lobbies succeeded as the Obama regime followed with an escalation of financial sanctions. The US-NATO- Israeli regimes have faced no opposition from the mass media, Congress or the White Office. The Zionist power configuration (ZPC) is even virtually exempt from criticism by most progressive writers, peace movements and leftist grouplets – with a few notable exceptions. The past year’s re-positioning of US troops from Iraq, the dispatch of aircraft carriers off the coast of Iran, the economic sanctions and the rising pressure from Israel’s “lobby” in the US increases the likelihood of war in the Middle East. This likely means a “surprise” aerial and maritime missile attack by US-Israel forces. Israel’s pretext of an “imminent nuclear attack” and White House claims that the “failure” of Iran to negotiate in good faith will be faithfully transmitted by the Israel lobby to their lackeys in the US Congress and to the western public for consumption and transmission to the rest of the western world. Contrary to Israeli leaders this will not be a limited war: Iran is capable of sustaining a prolonged war, extending across the Gulf region. Iran is capable of crossing borders into Iraq aided by its Shi’a allies. It can paralyze the flow of oil in the Hormuz Straits. It can send missiles into the Saudi oilfields. A US-Israeli war on Iran will be a destructive, bloody, prolonged war which could provoke a global depression. The US will bear the direct military cost by itself and the rest of the world will pay a dear economic price. The Zionist promoted US war will convert the recession of 2008- 2012 into a major depression and probably provoke mass upheavals.
Conclusion
The world configuration of power in the new decade is far more complex than the designation concocted by the leading banking houses[41]. For example, the “BRICs” includes a truly global power, China, a center of manufacturing, science and growth; Russia a military power highly dependent on energy exports and lacking a competitive manufacturing sector; Brazil is a commodity-dependent export economy suffering economic stagnation; and India where three quarters of the populace live at a or below $3 a day. The decline of the US-EU axis is not accompanied by a new multi-polar global power configuration. The crises engendered by neo-liberalism in the West is accompanied by its growth in Asia, especially China, India, South Korea and Indonesia. The decline of neo-liberalism is not accompanied by the rise of socialism: in Southern Europe, authoritarian rightist regimes buttress the crises-racked neo-liberal order by imposing policies by fiat and by criminalizing the social movements and civil disobedience and by centralizing executive power. By ignoring financial speculation as the detonator of the crises and the state bailout of the banks for the high indebtedness, the regimes perversely blame popular social program for the crises and impose harsh anti-popular austerity programs which lower living standards and increase profits. The debate between neo-liberals and neo-keynesians focuses on ‘austerity’ versus ‘spending’ – neither of which faces the class bases of state policy and the class relations which define economic costs and benefits. What is clear throughout the prolonged socio-economic crises is the impermeability of the state: despite mass disaffection, repeated general strikes and multitudinous and demonstrations, the capitalist state ignores majoritarian interests and persists in imposing savage retrograde reductions in living standards. Capitalist rule in the West is based on a reversal of seventy years of social gains. The reality of growing immiseration replaces the idea of social progress. We have passed from the so-called “golden age” of post-World War II capitalism to the long night of the “dark ages” of capitalism, an epoch of decay and descent into barbarism.
All indications point to the second decade of the 21st century being an epoch of unrelenting economic crises spreading outward from Europe and the US to Asia and its dependencies in Africa and Latin America. Catastrophic imperial and proxy wars accelerate the continued decay of the US empire and facilitate the rise of Asia as the epicenter of world capitalism and as the site for rising class conflict. The crisis in capitalist class rule is truly global and is spilling over into sharpening inter-imperialist trade confrontations. Colonial wars are undermining any efforts to ameliorate this crisis. Prolonged economic crises and a never ending downward spiral in living standards, fueled by class based austerity programs designed to reduce wages and social benefit and increase profits. In response emerging mass social movements are playing a dominant role within the anti-capitalist opposition. Direct action is gradually overshadowing electoral politics, moving over time from protests and rebellions, toward overt struggles for state power.
[1] On the continuing recession in the euro zone especially in Greece, see Financial Times, 2/16/12, p.2.
[2] Financial Times, 12/15/11, p. 3.
[3] BBC Business News, 4/2/12.
[4] LaJornada, 4/12/12.
[5] Edward Luce, Time to Start Thinking: America and the Spectre of Decline (Little, Brown: 2012)
[6] Financial Times, 2/16/12.
[7] ibid
[8] LaJornada, 4/10/12, and Financial Tines 1/11/12, p.7.
[9] Financial Times 3/2/12
[10] International Monetary Fund “Projections for Growth 2012”, March 2012.
[11] Financial Times, 4/11/12, p. 6.
[12] ibid
[13] Financial Times, 12/12/11, p. 1.
[14] Financial Times, 12/15/11, p. 1
[15] Earthlink news 2/6/2012
[16] BBC News 2/13/2012
[17] Executive Order – National Defense Resource Preparedness, March 16, 2012; Stephen Lendman, “Police State America”, http://www.FreedomsPhoenix.com
[18] Financial Times 12/16/2011 p 3
[19] Financial Times 12/16/2011 p6
[20] James Petras, The Power of Israel in the United States (Clarity Press, Atlanta 2006).
[21] James Petras, “On Bended Knee: Zionist Power in American Politics” in James Petras War Crimes in Gaza (Clarity: Atlanta 2010) pp. 69 -104
[22] James Petras, “US-Israeli War on Iran: The Myth of Limited Warfare”, Axis of Logic, 4/15/2012; New York Times, 3/21/2012; Financial Times, 3/24/2012 p 7. http://petras.lahaine.org/?p=1894
[23] Chinaworker.info 3/18/12.
[24] Financial Times 2/29/12, p. 13.
[25] “A Bumper Year for Chinese Science” Science Vol. 335, March 9, 2012, p. 1156.
[26] Dexter Roberts “Chinese Premier Wen Jialao Talks Like a Bold Reformer”, Bloomberg Business Week, 4/4/12.
[27] Editorial Financial Times, 4/13/12, p. 8.
[28] Martin Hart-Landsberg, “China and Neoliberalism” http://media.1clark.edu
[29] Martin Wolf, “China is Right to Open Slowly”. Financial Times, 2/29/12, p. 13.
[30] David Hoffman, The Oligarchs (Public Affairs: New York 2002).
[31] Hoffman op. cit. Part Two, pp. 177 – 324.
[32] The entire western press including the New York Times: the Financial Times, to the Washington Post and El País, Le Monde have waged a savage propaganda campaign against Putin and in defense of the Yeltsin era, overlooking the enormous differences in quality of life.
[33] BBC News, 4/5/12.
[34] Financial Times, 3/6/12, p. 9.
[35] BBC News, 4/15/12.
[36] BBC News, 4/16/12.
[37] LaJornada 4/16/12.
[38] Ibid.
[39] Financial Times 3/6/12, p. 9.
[40] Ibid.
[41] Claudio Katz “El ajedrez global de la crisis” http://www.lahaine.org/index.php?p=27426, p. 7.
April 24, 2012
Posted by aletho |
Economics, Timeless or most popular, Wars for Israel | China, European Union, Germany, Greece, Middle East, Portugal, Spain, United States |
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In contrasting China and America, pundits often cite our free and independent media as one of our greatest strengths, together with the tremendous importance which our society places upon individual American lives. For us, a single wrongful death can sometimes provoke weeks of massive media coverage and galvanize the nation into corrective action, while life remains cheap in China, a far poorer land of over a billion people, ruled by a ruthless Communist Party eager to bury its mistakes. But an examination of two of the greatest public-health scandals of the last few years casts serious doubt on this widespread belief.
First, consider the details of the Chinese infant formula scandal of 2008. Unscrupulous businessmen had discovered they could save money by greatly diluting their milk products, then adding a plastic chemical compound called melamine to raise the apparent protein content back to normal levels. Nearly 300,000 babies throughout China had suffered urinary problems, with many hundreds requiring lengthy hospitalization for kidney stones. Six died. A wave of popular outrage swept past the controlled media roadblocks and initial government excuses, and soon put enormous pressure on Chinese officials to take forceful action against the wrongdoers.
China’s leaders may not be democratically elected, but they pay close attention to strong popular sentiment. Once pressed, they quickly launched a national police investigation which led to a series of arrests and uncovered evidence that this widespread system of food adulteration had been protected by bribe-taking government officials. Long prison sentences were freely handed out and a couple of the guiltiest culprits were eventually tried and executed for their role, measures that gradually assuaged popular anger. Indeed, the former head of the Chinese FDA had been executed for corruption in late 2007 under similar circumstances.
Throughout these events, American media coverage was extensive, with numerous front-page stories in our leading newspapers. Journalists discovered that similar methods of dangerous chemical adulteration had been used to produce Chinese pet food for export, and many family dogs in America had suffered or died as a result. With heavy coverage on talk radio and cable news shows, phrases such as “Chinese baby formula” or “Chinese pet food” became angry slurs, and there was talk of banning whole categories of imports from a country whose product safety standards were obviously so far below those found in Western societies. The legitimate concerns of ordinary Americans were fanned by local media coverage that sometimes bordered on the hysterical.
However, the American media reaction had been quite different during an earlier health scandal much closer to home.
In September 2004, Merck, one of America’s largest pharmaceutical companies, suddenly announced that it was voluntarily recalling Vioxx, its popular anti-pain medication widely used to treat arthritis-related ailments. This abrupt recall came just days after Merck discovered that a top medical journal was about to publish a massive study by an FDA investigator indicating that the drug in question greatly increased the risk of fatal heart attacks and strokes and had probably been responsible for at least 55,000 American deaths during the five years it had been on the market.
Within weeks of the recall, journalists discovered that Merck had found strong evidence of the potentially fatal side-effects of this drug even before its initial 1999 introduction, but had ignored these worrisome indicators and avoided additional testing, while suppressing the concerns of its own scientists. Boosted by a television advertising budget averaging a hundred million dollars per year, Vioxx soon became one of Merck’s most lucrative products, generating over $2 billion in yearly revenue. Merck had also secretly ghostwritten dozens of the published research studies emphasizing the beneficial aspects of the drug and encouraging doctors to widely prescribe it, thus transforming science into marketing support. Twenty-five million Americans were eventually prescribed Vioxx as an aspirin-substitute thought to produce fewer complications.
Although the Vioxx scandal certainly did generate several days of newspaper headlines and intermittently returned to the front pages as the resulting lawsuits gradually moved through our judicial system, the coverage still seemed scanty relative to the number of estimated fatalities, which matched America’s total losses in the Vietnam War. In fact, the media coverage often seemed considerably less than that later accorded to the Chinese infant food scandal, which had caused just a handful of deaths on the other side of the world.
The circumstances of this case were exceptionally egregious, with many tens of thousands of American deaths due to the sale of a highly lucrative but sometimes fatal drug, whose harmful effects had long been known to its manufacturer. But there is no sign that criminal charges were ever considered.
A massive class-action lawsuit dragged its way through the courts for years, eventually being settled for $4.85 billion in 2007, with almost half the money going to the trial lawyers. Merck shareholders also paid large sums to settle various other lawsuits and government penalties and cover the heavy legal costs of fighting all of these cases. But the loss of continuing Vioxx sales represented the greatest financial penalty of all, which provides a disturbing insight into the cost-benefit calculations behind the company’s original cover-up. When the scandal broke, Merck’s stock price collapsed, and there was a widespread belief that the company could not possibly survive, especially after evidence of a deliberate corporate conspiracy surfaced. Instead, Merck’s stock price eventually reached new heights in 2008 and today is just 15 percent below where it stood just before the disaster.
Furthermore, individuals make decisions rather than corporate entities, and none of the individuals behind Merck’s deadly decisions apparently suffered any serious consequences. The year after the scandal unfolded, Merck’s long-time CEO resigned and was replaced by one of his top lieutenants, but he retained the $50 million in financial compensation he had received over the previous five years, compensation greatly boosted by lucrative Vioxx sales. Senior FDA officials apologized for their lack of effective oversight and promised to do better in the future. American media conglomerates quietly mourned their loss of heavy Vioxx advertising, but continued selling the same airtime to Merck and its rivals for the marketing of other, replacement drugs, while their investigative arms soon focused on the horrors of tainted Chinese infant food and the endemic corruption of Chinese society.
This story of serious corporate malfeasance largely forgiven and forgotten by government and media is depressing enough, but it leaves out a crucial factual detail that seems to have almost totally escaped public notice. The year after Vioxx had been pulled from the market, the New York Times and other major media outlets published a minor news item, generally buried near the bottom of their back pages, which noted that American death rates had suddenly undergone a striking and completely unexpected decline.
The headline of the short article that ran in the April 19, 2005 edition of USA Today was typical: “USA Records Largest Drop in Annual Deaths in at Least 60 Years.” During that one year, American deaths had fallen by 50,000 despite the growth in both the size and the age of the nation’s population. Government health experts were quoted as being greatly “surprised” and “scratching [their] heads” over this strange anomaly, which was led by a sharp drop in fatal heart attacks.
On April 24, 2005, the New York Times ran another of its long stories about the continuing Vioxx controversy, disclosing that Merck officials had knowingly concealed evidence that their drug greatly increased the risk of heart-related fatalities. But the Times journalist made no mention of the seemingly inexplicable drop in national mortality rates that had occurred once the drug was taken off the market, although the news had been reported in his own paper just a few days earlier.
A cursory examination of the most recent 15 years worth of national mortality data provided on the Centers for Disease Control and Prevention website offers some intriguing clues to this mystery. We find the largest rise in American mortality rates occurred in 1999, the year Vioxx was introduced, while the largest drop occurred in 2004, the year it was withdrawn. Vioxx was almost entirely marketed to the elderly, and these substantial changes in national death-rate were completely concentrated within the 65-plus population. The FDA studies had proven that use of Vioxx led to deaths from cardiovascular diseases such as heart attacks and strokes, and these were exactly the factors driving the changes in national mortality rates.
The impact of these shifts was not small. After a decade of remaining roughly constant, the overall American death rate began a substantial decline in 2004, soon falling by approximately 5 percent, despite the continued aging of the population. This drop corresponds to roughly 100,000 fewer deaths per year. The age-adjusted decline in death rates was considerably greater.
Patterns of cause and effect cannot easily be proven. But if we hypothesize a direct connection between the recall of a class of very popular drugs proven to cause fatal heart attacks and other deadly illnesses with an immediate drop in the national rate of fatal heart attacks and other deadly illnesses, then the statistical implications are quite serious. Perhaps 500,000 or more premature American deaths may have resulted from Vioxx, a figure substantially larger than the 3,468 deaths of named individuals acknowledged by Merck during the settlement of its lawsuit. And almost no one among our political or media elites seems to know or care about this possibility. A recent Wall Street Journal column even called for relaxing FDA restrictions aimed at avoiding “rare adverse events,” which had been imposed after the discovery of “unanticipated side effects of high-profile drugs like Vioxx.”
There are obvious mitigating differences between these two national responses. The Chinese victims were children, and their sufferings from kidney stones and other ailments were directly linked to the harmful compounds that they had ingested. By contrast, the American victims were almost all elderly, and there was no means of determining whether a particular heart attack had been caused by Vioxx or other factors; the evidence implicating the drug was purely statistical, across millions of patients. Furthermore, since most of the victims were anyway nearing the end of their lives, the result was more an acceleration of the inevitable rather than cutting short an entire young life, and sudden fatal heart attacks are hardly the most unpleasant forms of death.
But against these important factors we must consider the raw numbers involved. American journalists seemed to focus more attention on a half-dozen fatalities in China than they did on the premature deaths of as many as 500,000 of their fellow American citizens.
The inescapable conclusion is that in today’s world and in the opinion of our own media, American lives are quite cheap, unlike those in China.
April 20, 2012
Posted by aletho |
Corruption, Deception, Timeless or most popular | China, Food & Drug Administration, Merck, Ron Unz, United States, Vioxx |
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By PAUL CRAIG ROBERTS | April 13, 2012
The US government pretends to live under the rule of law, to respect human rights, and to provide freedom and democracy to citizens. Washington’s pretense and the stark reality are diametrically opposed.
US government officials routinely criticize other governments for being undemocratic and for violating human rights. Yet, no other country except Israel sends bombs, missiles, and drones into sovereign countries to murder civilian populations. The torture prisons of Abu Gahraib, Guantanamo, and CIA secret rendition sites are the contributions of the Bush/Obama regimes to human rights.
Washington violates the human rights of its own citizens. Washington has suspended the civil liberties guaranteed in the US Constitution and declared its intention to detain US citizens indefinitely without due process of law. President Obama has announced that he, at his discretion, can murder US citizens whom he regards as a threat to the US.
Congress did not respond to these extraordinary announcements with impeachment proceedings. There was no uproar from the federal courts, law schools, or bar associations. Glenn Greenwald reports that the Department of Homeland Security harasses journalists who refuse to be presstitutes, and we have seen videos of the brutal police oppression of peaceful OWS protestors. Chris Floyd has described on CounterPunch the torture-perverts who rule the US.
Now Washington is forcing as much of the world as it can to overthrow international treaties and international law. Washington has issued a ukase that its word alone is international law. Any country, except those who receive Washington’s dispensation, that engages in trade with Iran or purchases Iran’s oil will be sanctioned by the US. These countries will be cut off from US markets, and their banking systems will not be able to use banks that process international payments. In other words, Washington’s “sanctions against Iran” apply not to Iran but to countries that defy Washington and meet their energy needs with Iranian oil.
According to the Christian Science Monitor, so far Washington has granted special privileges to Japan and 10 European Union countries to continue purchasing Iranian oil. Requiring countries to shut down their economies in order to comply with Washington’s vendetta against Iran, a vendetta that has been ongoing ever since the Iranians overthrew the Washington-installed puppet, the Shah of Iran, more than three decades ago, was more than Washington could get away with. Washington has permitted Japan to keep importing between 78-85 per cent of its normal oil imports from Iran.
Washington’s dispensations, however, are arbitrary. Dispensations have not been granted to China, India, Turkey, and South Korea. India and China are the largest importers of Iranian oil, and Turkey and South Korea are among the top ten importers. Before looking at possible unintended consequences of Washington’s vendetta against Iran, what is Washington’s case against Iran?
Frankly, Washington has no case. It is the hoax of “weapons of mass destruction” all over again. Iran, unlike Israel, signed the non-proliferation treaty. All countries that sign the treaty have the right to nuclear energy. Washington claims that Iran is violating the treaty by developing a nuclear weapon. There is no evidence whatsoever for Washington’s assertion. Washington’s own 16 intelligence agencies are unanimous that Iran has had no nuclear weapons program since 2003. Moreover, the International Atomic Energy Agency’s weapons inspectors are in Iran and have reported consistently that there is no diversion of nuclear material from the energy program to a weapons program.
On the rare occasion when Washington is reminded of the facts, Washington makes a different case. Washington asserts that Iran’s rights under the non-proliferation treaty notwithstanding, Iran cannot have a nuclear energy program, because Iran would then have learned enough to be able at some future time to make a bomb. The world’s apex bully has unilaterally decided that the possibility that Iran might one day decide to make a nuke is too great a risk to take. It is better, Washington says, to drive up the oil price, disrupt the world economy, violate international law, and risk a major war than to have to worry that a future Iranian government will make a nuclear weapon. This is the Jeremy Bentham tyrannical approach to law that was repudiated by the Anglo-American legal system.
It is difficult to characterize Washington’s position as one of good judgment. Moreover, Washington has never explained the huge risk Washington sees in the possibility of an Iranian nuke. Why is this risk so much greater than the risk associated with Soviet nukes or with the nukes of the US, Russia, China, Israel, Pakistan, India, and North Korea today? Iran is a relatively small country. It does not have Washington’s world ambitions. Unlike Washington, Iran is not at war with a half dozen countries. Why is Washington destroying America’s reputation as a country that respects law and risking a major war and economic dislocation over some possible future development, the probability of which is unknown?
There is no good answer to this question. Lacking evidence for a case against Iran, Washington and Israel have substituted demonization. The lie has been established as truth that the current president of Iran intends to wipe Israel off the face of the earth.
This lie has succeeded as propaganda even though numerous language experts have proven that the intention attributed to the Iranian president by American-Israeli propaganda is a gross mistranslation of what the president of Iran said. Once again, for Washington and its presstitutes, facts do not count. The agenda is all that counts, and any lie will be used to advance the agenda.
Washington’s sanctions could end up biting Washington harder than they bite Iran. What will Washington do if India, China, Turkey and South Korea do not succumb to Washington’s threats?
According to recent news reports, India and China are not inclined to inconvenience themselves and to harm their economic development in order to support Washington’s vendetta against Iran. Having watched China’s rapid rise and having observed North Korea’s immunity to American attack, South Korea might be wondering how much longer it intends to remain Washington’s puppet state. Turkey, where the civilian and somewhat Islamist government has managed to become independent of the US- controlled Turkish military, appears to be slowly coming to the realization that Washington and NATO have Turkey in a “service role” in which Turkey is Washington’s agent against its own kind.
The Turkish government appears to be reassessing the benefits of being Washington’s pawn.
What Turkey and South Korea face is basically a decision whether they will be independent countries or be subsumed within Washington’s empire. The success of the American-Israeli assault on Iran’s independence depends on India and China.
If India and China give the bird to Washington, what can Washington do? Absolutely nothing. What if Washington, drowning in its gigantic hubris, announced sanctions against India and China?
Wal-Mart’s shelves would be empty, and America’s largest retailer would be hammering on the White House door.
Apple Computer and innumerable powerful US corporations, which have offshored their production for the American market to China, would see their profits evaporate. Together with their Wall Street allies, these powerful corporations would assault America with more force than the Red Army. The Chinese trade surplus would cease to flow into US Treasury debt. The offshored-to-India back office operations of banks, credit card companies, and customer service departments of utilities throughout the US would cease to function.
In America, chaos would reign. Such are the rewards to the Empire of globalism.
Obama and the neoconservative and Israeli warmongers who urge him on to more wars do not understand that the US is no longer an independent country. America is owned by offshoring corporations and the foreign countries in which the corporations have located their production for US markets. Sanctions on China and India (and South Korea) mean sanctions on US corporations. Sanctions on Turkey mean sanctions on a NATO ally.
Do China, India, South Korea and Turkey realize that they hold the winning cards? Do they understand that they can give the bird to the American Empire and bring it down in collapse, or are they brainwashed like Europe and the rest of the world that the powerful Americans cannot be resisted?
Will China and India exercise their power over the US, or will the two countries fudge the issue and adopt a pose that saves face for Washington while they continue to purchase Iranian oil?
The answer to this question is: how much will Washington pay China and India in secret concessions, such as eviction of the US from the South China Sea, for their pretense that China and India acknowledge Washington’s dictatorial powers over the rest of the world?
Without concession to China and India, Washington is likely to be ignored while it watches its power evaporate. A country that cannot produce industrial and manufactured goods, but can only print debt instruments and money is not a powerful country. It is a washed-up two-bit punk that can continue to strut around until the proverbial boy says: “the Emperor has no clothes”.
Source
- The Real Nuclear Outlaws (alethonews.wordpress.com)
April 15, 2012
Posted by aletho |
Economics, Timeless or most popular, Wars for Israel | China, India, Iran, South Korea, United States |
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The BRICS – Brazil, Russia, India, China and South Africa – have agreed to provide credit to each other in local currencies. Officials say the deal will facilitate economic growth in times of crisis.
The currency swap deal is aimed at promoting trade and investment in local currencies as well as to cut transaction costs. It’s also seen as a step to replace the dollar as a reserve currency in trade between BRICS.
“The idea is in line with many interests and economic exigencies in the world economy,” Yaroslav Lissovolik, the chief economist at Deutsche Bank told RT. “The euro and dollar are no longer seen as unquestionable monopolies in the role of reserve currencies. Clearly the world needs more reserve currencies.”
The deal would also increase the BRICS influence on the international arena and will make their cooperation less sensitive to sanctions from the West, experts say.
“The BRICS countries are in the first rank to do the job that international financial system now needs. What the BRICS said was a very welcomed wake up call,” John Kirton, the Co-Director of the BRICS Research Group told RT.
Russia and China have been trading in the ruble and yuan for several years, now Russia plans to expand local currency settlement with India.
“With China it took us three years to (evolve) from initial conversations to trading in local currencies,” Vladimir Dmitriev, the chairman of Russia’ s VEB told reporters. “I think we will meet similar terms with India”.
Meanwhile the swap requires a lot of technical work by each country such as the synchronization of national banking legislation, according to Mr. Dmitriev.
The BRICS countries are also going to announce plans on a joint development bank which is considered a possible rival to the World Bank and the IMF. If established, it would function as a lending agency and would provide finance for joint BRICS projects.
“They made it very clear it would be built to benefit not only BRICS countries themselves, but developing countries more broadly,” said KIrton. “But the big message was to give the World Bank more resources, only then would they see how the BRICS bank would fit in the supplement what they’ve already got.”
March 29, 2012
Posted by aletho |
Economics | BRIC, China, India, John Kirton, Russia, South Africa, World Bank |
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A year after the nuclear catastrophe began at the Fukushima Daiichi station in Japan, the world has a historic chance to put an end to one of the biggest frauds ever played on the global public to promote a patently unsafe, accident-prone, expensive and centralised form of energy generation based upon splitting the uranium atom to produce heat, boil water, and spin a turbine. Candidly, that’s what nuclear power generation is all about.
The lofty promise of boundless material progress and universal prosperity based on cheap, safe and abundant energy through “Atoms for Peace”, held out by US President Dwight D Eisenhower in 1953, was mired in deception and meant to temper the prevalent perception of atomic energy as a malign force following the horrors of Hiroshima and Nagasaki.
Eisenhower was a hawk committed to building up the US nuclear arsenal from under 1,500 to over 20,000 warheads and sought to “compensate” for this by dressing up nuclear energy as a positive force. “Atoms for Peace” camouflaged the huge US military build-up in the 1950s.
The nuclear promise was also based on untested, unrealistic assumptions about atomic electricity being safe and “too cheap even to meter”. The projection sat ill at ease with the subsidies, worth scores of billions, which nuclear received. The US navy transferred reactor designs developed for its nuclear-propelled submarines to General Electric and Westinghouse for free. The US also passed a law to limit the nuclear industry’s accident liability to a ludicrously low level.
Fifty-five years on, the world has lost over $1,000 billion in subsidies, cash losses, abandoned projects and other damage from nuclear power. Decontaminating the Fukushima site alone is estimated to cost $623 billion, not counting the medical treatment costs for the thousands of likely cancers.
All of the world’s 400-odd reactors are capable of undergoing a catastrophic accident similar to Fukushima. They will remain a liability until decommissioned (entombed in concrete) at huge public expense, which is one-third to one-half of what it cost to build them. They will also leave behind nuclear waste, which remains hazardous for thousands of years, and which science has no way of storing safely.
All this for a technology which contributes just two percent of the world’s final energy consumption! Nuclear power has turned out worse than a “Faustian bargain” – a deal with the devil. Even the conservative Economist magazine, which long backed nuclear power, calls it “the dream that failed.”
Nuclear power experienced decline on its home ground because it became too risky and “too costly to hook to a meter”. The US hasn’t ordered a single new reactor since 1973, even before the Three Mile Island meltdown (1979). Western Europe hasn’t completed a new reactor since Chernobyl (1986). As a former member of the US Nuclear Regulatory Commission put it: “The abiding lesson that Three Mile Island taught Wall Street was that a group of NRC-licensed reactor operators, as good as any others, could turn a $2 billion asset into a $1 billion cleanup job in about 90 minutes.”
Nuclear power is now on the run globally. The number of reactors operating worldwide fell from the historic peak of 444 in 2002 to 429 this past March 1. Their share in global electricity supply has shrunk from 17 to 13 percent. And it’s likely to fall further as some 180-plus 30 years-old or older reactors are retired. Just about 60 new ones are planned.
After Fukushima, nobody is going to build nuclear reactors unless they get a big subsidy or high returns guaranteed by the state – or unless they are China, India or Pakistan. China’s rulers don’t have to bother about democracy, public opinion, or safety standards.
Nor are India’s rulers moved by these considerations. They are desperate to deliver on the reactor contracts promised to the US, France and Russia for lobbying for the US-India nuclear deal in the International Atomic Energy Agency. Manmohan Singh has even stooped to maligning Indian anti-nuclear protesters as foreign-funded, as if they had no minds of their own, and as if the government’s own priority wasn’t to hitch India’s energy economy to imported reactors. Pakistan’s nuclear czars are shamefully complacent about nuclear safety.
Nuclear power is bound up with secrecy, deception and opacity, which clash with democracy. It evokes fear and loathing in many countries, and can only be promoted by force. It will increasingly pit governments against their own public, with terrible consequences for civil liberties. A recent BBC-GlobeScan poll shows that 69 percent of the people surveyed in 23 countries oppose building new reactors, including 90 percent in Germany, 84 percent in Japan, 80 percent in Russia and 83 percent in France. This proportion has sharply risen since 2005. Only 22 percent of people in the 12 countries which operate nuclear plants favour building new ones.
Nuclear reactors are intrinsically hazardous high-pressure high-temperature systems, in which a fission chain-reaction is barely checked from getting out of control. But control mechanisms can fail for many reasons, including a short circuit, faulty valve, operator error, fire, loss of auxiliary power, or an earthquake or tsunami.
No technology is 100 percent safe. High-risk technologies demand a meticulous, self-critical and highly alert safety culture which assumes that accidents will happen despite precautions. The world has witnessed five core meltdowns in 15,000 reactor-years (number of reactors multiplied by duration of operations). At this rate, we can expect one core meltdown every eight years in the world’s 400-odd reactors. This is simply unacceptable.
Yet, the nuclear industry behaves as if this couldn’t happen. … Full article
March 19, 2012
Posted by aletho |
Deception, Militarism, Nuclear Power, Timeless or most popular | China, Dwight D Eisenhower, Fukushima, Fukushima Daiichi nuclear disaster, India, International Atomic Energy Agency, Japan, Nuclear power |
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Introduction
From the Financial Times to the far left, tons of ink has been spilt writing about some variant of the “Crisis of Global Capitalism”. While writers differ in the causes, consequences and cures, according to their ideological lights, there is a common agreement that “the crisis” threatens to end the capitalist system as we know it.
There is no doubt that, between 2008-2009, the capitalist system in Europe and the United States suffered a severe shock that shook the foundations of its financial system and threatened to bankrupt its ‘leading sectors’.
However, I will argue the ‘crisis of capitalism’ was turned into a ‘crisis of labor’. Finance capital, the principle detonator of the crash and crisis, recovered, the capitalist class as a whole was strengthened, and most important of all, it utilized the political, social, ideological conditions created as a result of “the crises” to further consolidate their dominance and exploitation over the rest of society.
In other words, the ‘crisis of capital’ has been converted into a strategic advantage for furthering the most fundamental interests of capital: the enlargement of profits, the consolidation of capitalist rule, the greater concentration of ownership, the deepening of inequalities between capital and labor and the creation of huge reserves of labor to further augment their profits.
Furthermore, the notion of a homogeneous global crisis of capitalism overlooks profound differences in performance and conditions, between countries, classes, and age cohorts.
The Global Crisis Thesis: The Economic and Social Argument
The advocates of global crisis argue that beginning in 2007 and continuing to the present, the world capitalist system has collapsed and recovery is a mirage. They cite stagnation and continuing recession in North America and the Eurozone. They offer GDP data hovering between negative to zero growth. Their argument is backed by data citing double digit unemployment in both regions. They frequently correct the official data which understates the percentage unemployed by excluding part-time, long-term unemployed workers and others. The ‘crisis’ argument is strengthened by citing the millions of homeowners who have been evicted by the banks, the sharp increase in poverty and destitution accompanying job loses, wage reductions and the elimination or reduction of social services. “Crisis” is also associated with the massive increase in bankruptcies of mostly small and medium size businesses and regional banks.
The Global Crisis: The Loss of Legitimacy
Critics, especially in the financial press, write of a “legitimacy crisis of capitalism” citing polls showing substantial majorities questioning the injustices of the capitalist system, the vast and growing inequalities and the rigged rules by which banks exploit their size (“too big to fail”) to raid the Treasury at the expense of social programs.
In summary the advocates of the thesis of a “Global Crisis of Capitalism” make a strong case, demonstrating the profound and pervasive destructive effects of the capitalist system on the lives of the great majority of humanity.
The problem is that a ‘crisis of humanity’ (more specifically of salary and wage workers) is not the same as a crisis of the capitalist system. In fact as I shall argue below growing social adversity, declining income and employment has been a major factor facilitating the rapid and massive recovery of the profit margins of most large scale corporations.
Moreover, the thesis of a‘global’ crisis of capitalism amalgamates disparate economies, countries, classes and age cohorts with sharply divergent performances at different historical moments.
Global Crisis or Uneven and Unequal Development?
It is utterly foolish to argue for a “global crisis” when several of the major economies in the world economy did not suffer a major downturn and others recovered and expanded rapidly. China and India did not suffer even a recession. Even during the worst years of the Euro-US decline, the Asian giants grew on average about 8%. Latin America’s economies especially the major agro-mineral export countries (Brazil, Argentina, Chile, ) with diversified markets, especially in Asia, paused briefly (in 2009) before assuming moderate to rapid growth (between 3% to 7%) from 2010-2012.
By aggregating economic data from the Euro-zone as a whole, the advocates of global crisis overlooked the enormous disparities in performance within the zone. While Southern Europe wallows in a deep sustained depression, by any measure, from 2008 to the foreseeable future, German exports, in 2011, set a record of a trillion euros; its trade surplus reached 158 billion euros, after a 155 billion euro surplus in 2010. (BBC News, Feb. 8 2012).
While aggregate Eurozone unemployment reaches 10.4%, the internal differences defy any notion of a “general crisis”. Unemployment in Holland is 4.9%, Austria 4.1% and Germany 5.5% with employer claims of widespread skilled labor shortages in key growth sectors. On the other hand in exploited southern Europe unemployment runs to depression levels, Greece 21%, Spain 22.9%, Ireland 14.5%, and Portugal 13.6% (FT 1/19/12, p.7). In other words, “the crisis” does not adversely affect some economies, that in fact profit from their market dominance and techno-financial strength over dependent, debtor and backward economies. To speak of a ‘global crisis’ obscures the fundamental dominant and exploitative relations that facilitate ‘recovery’ and growth of the elite economies over and against their competitors and client states. In addition global crisis theorists wrongly amalgamated crisis ridden, financial-speculative economies (US, England) with dynamic productive export economies (Germany, China).
The second problem with the thesis of a “global crisis” is that it overlooks profound internal differences between age cohorts. In several European countries youth unemployment (16-25) runs between 30 to 50% (Spain 48.7%, Greece 47.2%, Slovakia 35.6%, Italy 31%, Portugal 30.8% and Ireland 29%) while in Germany, Austria and Holland youth unemployment runs to Germany 7.8%, Austria 8.2% and Netherlands 8.6% (FT 2/1/12, p2). These differences underlie the reason why there is not a ‘global youth movement’ of “indignant” and “occupiers”. Five-fold differences between unemployed youth is not conducive to ‘international’ solidarity. The concentration of high youth unemployment figures explains the uneven development of mass- street protests especially centered in Southern Europe. It also explains why the northern Euro-American “anti-globalization” movement is largely a lifeless forum which attracts academic pontification on the “global capitalist crises” and the impotence of the “Social Forums” are unable to attract millions of unemployed youth from Southern Europe. They are more attracted to direct action. Globalist theorists overlook the specific way in which the mass of unemployed young workers are exploited in their dependent debt ridden countries. They ignore the specific way they are ruled and repressed by center-left and rightist capitalist parties. The contrast is most evident in the winter of 2012. Greek workers are pressured to accept a 20% cut in minimum wages while in Germany workers are demanding a 6% increase.
If the ‘crisis’ of capitalism is manifested in specific regions, so too does it affect different age/racial sectors of the wage and salaried classes. The unemployment rates of youth to older workers varies enormously: in Italy it is 3.5/1, Greece 2.5/1, Portugal 2.3/1, Spain 2.1/1 and Belgium 2.9/1. In Germany it is 1.5/1 (FT 2/1/12). In other words because of the higher levels of unemployment among youth they have a greater propensity for direct action ‘against the system’; while older workers with higher levels of employment (and unemployment benefits) have shown a greater propensity to rely on the ballot box and engage in limited strikes over job and pay related issues. The vast concentration of unemployed among young workers means they form the ‘available core’ for sustained action; but it also means that they can only achieve limited unity of action with the older working class experiencing single digit unemployment.
However, it is also true that the great mass of unemployed youth provides a formidable weapon, in the hands of employers to threaten to replace employed older workers. Today, capitalists constantly resort to using the unemployed to lower wages and benefits and to intensify exploitation (dubbed to “increase productivity”) to increase profit margins. Far from being simply an indicator of ‘capitalist crises’, high levels of unemployment have served along with other factors to increase the rate of profit, accumulate income and widen income inequalities which augments the consumption of luxury goods for the capitalist class: the sales of luxury cars and watches are booming.
Class Crises: The Counter-Thesis
Contrary to the “global capitalist crisis” theorists, a substantial amount of data has surfaced which refutes its assumptions. A recent study reports “US corporate profits are higher as a share of gross domestic product than at any time since 1950” (FT 1/30/12). US companies cash balances have never been greater, thanks to intensified exploitation of workers, and a multi-tiered wage systems in which new hires work for a fraction of what older workers receive (thanks to agreements signed by ‘door mat’ labor bosses).
The “crisis of capitalism” ideologues have ignored the financial reports of the major US corporations. According to the General Motors 2011 report to its stockholders, they celebrated the greatest profit ever, turning a profit of $7.6 billion, surpassing the previous record of $6.7 billion in 1997. A large part of these profits results from the freezing of its underfunded US pension funds and extracting greater productivity from fewer workers-in other words intensified exploitation-and cutting hourly wages of new hires by half. (Earthlink News 2/16/12)
Moreover the increased importance of imperialist exploitation is evident as the share of US corporate profits extracted overseas keeps rising at the expense of employee income growth. In 2011, the US economy grew by 1.7%, but median wages fell by 2.7%. According to the financial press the profit margins of the S&P 500 leapt from 6% to 9% of the GDP in the past three years, a share last achieved three generations ago. At roughly a third, the foreign share of these profits has more than doubled since 2000 (FT 2/13/12 P9. If this is a “capitalist crisis” then who needs a capitalist boom ?
Surveys of top corporations reveal that US companies are holding 1.73 trillion in cash, “the fruits of record high profit margins” (FT 1/30/12 p.6). These record profit margins result from mass firings which have led to intensifying exploitation of the remaining workers. Also negligible federal interest rates and easy access to credit allow capitalists to exploit vast differentials between borrowing and lending and investing. Lower taxes and cuts in social programs result in a growing cash pile for corporations. Within the corporate structure, income goes to the top where senior executives pay themselves huge bonuses. Among the leading S&P 500 corporations the proportion of income that goes to dividends for stockholders is the lowest since 1900 (FT 1/30/12, p.6).
A real capitalist crisis would adversely affect profit margins, gross earnings and the accumulation of “cash piles”. Rising profits are being horded because as capitalists profit from intense exploitation, mass consumption stagnates.
Crisis theorists confuse what is clearly the degrading of labor, the savaging of living and working conditions and even the stagnation of the economy, with a ‘crisis’ of capital: when the capitalist class increases its profit margins, hoards trillions, it is not in crisis. The key point is that the ‘crisis of labor’ is a major stimulus for the recovery of capitalist profits. We cannot generalize from one to the other. No doubt there was a moment of capitalist crisis (2008-2009) but thanks to the capitalist state’s unprecedented massive transfer of wealth from the public treasury to the capitalist class – Wall Street banks in the first instance – the corporate sector recovered, while the workers and the rest of the economy remained in crises, went bankrupt and out of work.
From Crisis to Recovery of Profits: 2008/9 to 2012
The key to the ‘recovery’ of corporate profits had little to do with the business cycle and all to do with Wall Street’s large scale takeover and pillage of the US Treasury. Between 2009-2012 hundreds of former Wall Street executives, managers and investment advisers seized all the major decision-making positions in the Treasury Department and channeled trillions of dollars into leading financial and corporate coffers. They intervened in financially troubled corporations, like General Motors, imposing major wage cuts and dismissals of thousands of workers.
Wall Streeters in Treasury elaborated the doctrine of “Too Big to Fail” to justify the massive transfer of wealth. The entire speculative edifice built in part by a 234 fold rise in foreign exchange trading volume between 1977-2010 was restored (FT 1/10/12, p.7). The new doctrine argued that the state’s first and principle priority is to return the financial system to profitability at any and all cost to society, citizens, taxpayers and workers. “Too Big to Fail” is a complete repudiation of the most basic principle of the “free market” capitalist system: the idea that those capitalists who lose bear the consequences; that each investor or CEO, is responsible for their action. Financial capitalists no longer needed to justify their activity in terms of any contribution to the growth of the economy or “social utility”. According to the current rulers Wall Street must be saved because it is Wall Street, even if the rest of the economy and people sink (FT 1/20/12, p.11). State bailouts and financing are complemented by hundreds of billions in tax concessions, leading to unprecedented fiscal deficits and the growth of massive social inequalities. The pay of CEO’s as a multiple of the average worker went from 24 to 1 in 1965 to 325 in 2010 (FT 1/9/12, p.5).
The ruling class flaunts their wealth and power aided and abetted by the White House and Treasury. In the face of popular hostility to Wall Street pillage of Treasury, Obama went through the sham of asking Treasury to impose a cap on the multi-million dollar bonuses that the CEO’s running bailed out banks awarded themselves. Wall Streeters in Treasury refused to enforce the executive order, the CEO’s got billions in bonuses in 2011 . President Obama went along, thinking he conned the US public with his phony gesture,while he reaped millions in campaign funds from Wall Street!
The reason Treasury has been taken over by Wall Street is that in the 1990’s and 2000’s, banks became a leading force in Western economies. Their share of the GDP rose sharply (from 2% in the 1950’s to 8% in 2010 (FT 1/10/12, p.7).
Today it is “normal operating procedure” for Presidents to appoint Wall Streeters to all key economic positions; and it is ‘normal’ for these same officials to pursue policies that maximize Wall Street profits and eliminate any risk of failure no matter how risky and corrupt their practioners.
The Revolving Door: From Wall Street to Treasury and Return
Effectively the relation between Wall Street and Treasury has become a “revolving door”: from Wall Street to the Treasury Department to Wall Street. Private bankers take appointments in Treasury (or are recruited) to ensure that all resources and policies Wall Street needs are granted with maximum effort, with the least hindrance from citizens, workers or taxpayers. Wall Streeters in Treasury give highest priority to Wall Street survival, recovery and expansion of profits. They block any regulations or restrictions on bonuses or a repeat of past swindles.
Wall Streeters ‘make a reputation’ in Treasury and then return to the private sector in higher positions, as senior advisers and partners. A Treasury appointment is a ladder up the Wall Street hierarchy. Treasury is a filling station to the Wall Street Limousine: ex Wall Streeters fill up the tank, check the oil and then jump in the front seat and zoom to a lucrative job and let the filling station (public) pay the bill.
Approximately 774 officials (and counting) departed from Treasury between January 2009 and August 2011 (FT 2/6/12, p. 7). All provided lucrative “services” to their future Wall Street bosses finding it a great way to re-enter private finance at a higher more lucrative position.
A report in the Financial Times Feb. 6, 2012 (p. 7) entitled appropriately “Manhattan Transfer” provides typical illustrations of the Treasury-Wall Street “revolving door”:
Ron Bloom went from a junior banker at Lazard to Treasury, helping to engineer the trillion dollar bailout of Wall Street and returned to Lazard as a senior adviser. Jake Siewert went from Wall Street to becoming a top aide to Treasury Secretary Tim Geithner and then graduated to Goldman Sachs, having served to undercut any cap on Wall Street bonuses.
Michael Mundaca, the most senior tax official in the Obama regime, came from the Street and then went on to a highly lucrative post in the Ernst and Young corporate accounting firm, having helped write down corporate taxes during his stint in “public office”.
Eric Solomon, a senior tax official in the infamous corporate tax free Bush Administration made the same switch. Jeffrey Goldstein whom Obama put in charge of financial regulation and succeeded in undercutting popular demands, returned to his previous employer Hellman and Friedman with the appropriate promotion for services rendered.
Stuart Levey who ran AIPAC sanctions against Iran policies out of Treasury’s so-called “anti- terrorist agency” was hired as general counsel by HSBC to defend it from investigations for money laundering (FT 2/6/12, p. 7). In this case Levey moved from promoting Israels’ war aims to defending an international bank accused of laundering billions in Mexican cartel money. Levey, by the way spent so much time pursuing Israels’ Iran agenda that he totally ignored the Mexican drug cartels’ billion dollar money laundering cross-border operations for the better part of a decade.
Lew Alexander a senior advisor to Geithner in designing the trillion dollar bail out is now a senior official in Nomura, the Japanese bank. Lee Sachs went from Treasury to Bank Alliance, (his own “lending platform”). James Millstein went from Lazard to Treasury, bailed out AIG insurance run into the ground by Greenberg, and then established his own private investment firm taking a cluster of well-connected Treasury officials with him.
The Goldman-Sachs-Treasury “revolving door” continues today. In addition to past and current Treasury heads Paulson and Geithner, former Goldman partner Mark Patterson was recently appointed Geithner’s “chief of staff”. Tim Bowler former Goldman managing director was appointed by Obama to head up the capital markets division.
It should be abundantly clear that elections, parties and the billion dollar electoral campaigns have little to do with “democracy” and more to do with selecting the President and legislators who will appoint non-elected Wall Streeters to make all the strategic economic decisions for the 99% of Americans. The policy results of the Wall Street-Treasury revolving door are clear and provide us with a framework for understanding why the “profit crisis” has vanished and the crisis of labor has deepened.
The “Policy Achievements” of the Revolving Door
The Wall Street-Treasury Conundrum (WSTC) has performed herculean and audacious labor for finance and corporate capital. In the face of universal condemnation of Wall Street by the vast majority of the public for its swindles, bankruptcies, job losses and mortgage foreclosures, the WSTC publicly backed the swindlers with a trillion dollar bailout. A daring move on the face of it; that is if majorities and elections counted for anything. Equally important the WSTC dumped the entire “free market” ideology that justified capitalist profits based on its “risks”, by imposing the new dogma of “too big to fail” in which the state treasury guarantees profits even when capitalists face bankruptcy, providing they are billion dollar firms. The WSTC dumped the capitalist principle of “fiscal responsibility” in favor of hundreds of billions of dollars in tax cuts for the corporate-financial ruling class, running up record peace time budget deficits and then having the audacity to blame the social programs supported by popular majorities. (Is it any wonder these ex-Treasury officials get such lucrative offers in the private sector when they leave public office?) Thirdly, Treasury and the Central Bank (Federal Reserve) provide near zero interest loans that guarantee big profits to private financial institutions which borrow low from the Fed and lend high, (including back to the Government!) especially in purchasing overseas Government and corporate bonds. They receive anywhere from four to ten times the interest rates they pay. In other words the taxpayers provide a monstrous subsidy for Wall Street speculation. With the added proviso, that today these speculative activities are now insured by the Federal government, under the “Too Big to Fail” doctrine.
Under the ideology of “regaining competitiveness” the Obama economic team (from Treasury, the Federal Reserve, Commerce, Labor) has encouraged employers to engage in the most aggressive shedding of workers in modern history. Increased productivity and profitability is not the result of “innovation” as Obama, Geithner and Bernanke claim; it is a product of a state labor policy which deepens inequality by holding down wages and raising profit margins. Fewer workers producing more commodities. Cheap credit and bailouts for the billion dollar banks and no refinancing for households and small and medium size firms leading to bankruptcies, buyouts and ‘consolidation’ namely, greater concentration of ownership. As a result the mass market stagnates but corporate and bank profits reach record levels. According to financial experts under the WSTC “new order” “bankers are a protected class who enjoy bonuses regardless of performance, while relying on the taxpayer to socialize their losses” (FT 1/9/12, p.5). In contrast labor, under Obama’s economic team, faces the greatest insecurity and most threatening situation in recent history: “what is unquestionably novel is the ferocity with which US business sheds labor now that executive pay and incentive schemes are linked to short term performance targets” (FT 1/9/2012, p. 5).
Economic Consequences of State Policies
Because of the Wall Street “ takeover” of strategic economic policy positions in Government we can now understand the paradox of record profit margins in the midst of economic stagnation. We can comprehend why the capitalist crisis has, at least temporarily, been replaced by a profound crisis of labor. Within the power matrix of Wall Street-Treasury Dept. all the old corrupt and exploitative practices that led up to the 2008-2009 crash have returned: multi-billion dollar bonuses for investment bankers who led the economy into the crash; banks “snapping up billions of dollars of bundled mortgage products that resemble the sliced and diced debt some (sic) blame for the financial crisis” (FT 2/8/12, p.1). The difference today is that these speculative instruments are now backed by the taxpayer (Treasury). The supremacy of the financial structure of the pre-crisis US economy is in place and thriving … “only” the US labor force has sunk into greater unemployment, declining living standards, widespread insecurity and profound discontent.
Conclusion: The Case Against Capitalism and for Socialism
The profound crises of 2008-2009 provoked a spate of questioning of the capitalist system, even among many of its most ardent advocates (FT 1/8/12 to 1/30/12) criticism abounded. ‘Reform, regulation and redistribution’ were the fare of financial columnists. Yet the ruling economic and governing class took no heed. The workers are controlled by doormat union leaders and lack a political instrument. The rightwing pseudo populists embrace an even more virulent pro capitalist agenda, calling for across the board elimination of social programs and corporate taxes. Inside the state a major transformation has taken place which effectively smashed any link between capitalism and social welfare, between government decision-making and the electorate. Democracy has been replaced by a corporate state, founded on the revolving door between Treasury and Wall Street, which funnels public wealth to private financial coffers. The breach between the welfare of society and the operations of the financial architecture is definitive.
The activity of Wall Street has no social utility; its practitioners enrich themselves with no redeeming activity. Capitalism has demonstrated conclusively, that it thrives through the degradation of tens of millions of workers and rejects the endless pleas for reform and regulation. Real existing capitalism cannot be harnessed to raising living standards or ensuring employment free of fear of large scale, sudden and brutal firings. Capitalism, as we experience it over the past decade and for the foreseeable future, is in polar opposition to social equality, democratic decision-making and collective welfare.
Record capitalist profits are accrued by pillaging the public treasury, denying pensions and prolonging ‘work till you die’, bankrupting most families with exorbitant private corporate medical and educational costs.
More than ever in recent history, record majorities reject the rule by and for the bankers and the corporate ruling class (FT 2/6/12, p. 6). Inequalities between the top 1% and the bottom 99% have reached record proportions. CEO’s earn 325 times that of an average worker (FT 1/9/12, p.5). Since the state has become the ‘foundation’ of the economy of the Wall Street predators, and since ‘reform’ and regulation has dismally failed , it is time to consider a fundamental systemic transformation that begins via a political revolution which forcibly ousts the non-elected financial and corporate elites running the state for their own exclusive interests. The entire political process,including elections, are profoundly corrupt: each level of office has its own inflated price tag. The current Presidential contest will cost $2 to $3 billion dollars to determine which of the servants of Wall Street will preside over the revolving door.
Socialism is no longer the scare word of the past. Socialism involves the large-scale reorganization of the economy, the transfer of trillions from the coffers of predator classes’ of no social utility to the public welfare. This change can finance a productive and innovative economy based on work and leisure, study and sport. Socialism replaces the everyday terror of dismissal with the security that brings confidence, assurance and respect to the workplace. Workplace democracy is at the heart of the vision of 21st century socialism. We begin by nationalizing the banks and eliminating Wall Street. Financial institutions are redesigned to create productive employment, to serve social welfare and to preserve the environment. Socialism would begin the transition, from a capitalist economy directed by predators and swindlers and a state at their command, toward an economy of public ownership under democratic control.
February 18, 2012
Posted by aletho |
Corruption, Economics, Timeless or most popular | Capitalism, China, Crisis theory, Germany, Southern Europe, United States |
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Russia and China condemned Monday the angry Western reaction to its veto of a UN resolution over Syria where the US envoy expressed her “disgust” and the French Defense Minister said such countries deserve a “kick in the ass”!
“Some comments from the West on the UN Security Council vote, I would say, are indecent and bordering on hysteria,” Russian Foreign Minister Sergei Lavrov told reporters in Moscow after a meeting with Bahraini counterpart Sheikh Khalid bin Ahmed al-Khalifa. Lavrov expressed frustration that Western states did not postpone Saturday’s UN Security Council vote until after his visit Tuesday to Damascus, where he will deliver a message to President Bashar al-Assad.
“Such hysterical comments are aimed at suppressing what is actually happening and what has happened,” said Lavrov. “It reminds me of the proverb: ‘he who gets angry is rarely right’,” he added.
Lavrov reaffirmed Russia’s position that the resolution was wrong to blame Assad’s regime for the “violence” and should have also taken aim at the so-called opposition. “In Syria there is more than one source of violence. There are several there,” he said.
China also denied US accusations and criticisms on Monday. Foreign ministry spokesman Liu Weimin told reporters that “China does not have its own selfish interest on the issue of Syria. We don’t shelter anyone, nor do we intentionally oppose anyone. We uphold justice and take a responsible attitude.”
A top Chinese diplomat said over the weekend that other nations had failed to take account of “reasonable” revision proposals suggested by Russia. Moscow has also defended its UN veto, saying Western powers had refused to reach a consensus. “The authors of the draft Syria resolution, unfortunately, did not want to undertake an extra effort and come to a consensus,” Deputy Foreign Minister Gennady Gatilov wrote on Twitter.
France’s outspoken Defense Minister Gerard Longuet slammed China and Russia for their veto.”It is a disgrace for countries to refuse to assume their responsibilities,” Longuet told Europe 1 radio. “Frankly, there are some political cultures that deserve a kick in the ass.”
“Everyone must face up to their responsibilities. We must wake up those who accept conformity, and conformity that closes its eyes about a bloody dictator is unacceptable,” he said.
French Foreign Minister Alain Juppe said on Sunday that Europe will strengthen sanctions imposed on Damascus in a bid to boost pressure on the regime and called the dual veto a “moral stain” on the United Nations.
The US representative to the UN said she was “disgusted” by Russia and China’s veto, considering that the two countries’ stances were the results of particular interests.
Syria’s Representative to the United Nations Bashar Al-Jaafari said he respected her opinion. “However,” he asked: “Is she also disgusted of the 60 vetoes used in the past to prevent inclusive peace in the region and any just solution for the Arab-Israeli conflict?”
February 6, 2012
Posted by aletho |
Mainstream Media, Warmongering | China, Lavrov, Russia, Syria, United Nations Security Council |
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President Barack Obama blew a kiss to Apple in the State of the Union speech, praising the entrepreneurial spirit of its founder, the late Steve Jobs, as the cameras panned to his widow in the audience.
Obama’s timing couldn’t be weirder. In the last month, Apple has released a damning audit which found that almost 100 of Apple’s supplier factories force more than half their workers to exceed a 60-hour week. The company announced responsibility for aluminum dust explosions in Chinese supplier factories that killed four workers and injured 77. Hundreds more in China have been injured cleaning iPad screens with a chemical that causes nerve damage.
Apple was just subjected to a “This American Life” radio special reporting on its abysmal factory conditions in China (Jon Stewart gigged ‘em on the issue, too). Last weekend a front-page New York Times story asked why the company offshored all of its manufacturing, mostly to China. (The answer is found in the what its executives call “flexibility.” Tens of thousands of workers there live in factory dorms on-site, where, the Times reports, they are woken in the middle of the night and forced onto 12-hour shifts when Apple decides a product needs tweaking.)
In the face of all this bad press, the tech darling’s response has been to reveal its supplier factories and to announce a partnership with the Fair Labor Association to do stepped-up factory inspections. The FLA is the partly corporate-funded group that until now only monitored apparel factories, and which Nike helped establish after its own scandals in the ’90s.
In sum, Apple is now doing what Nike has been doing for nearly 15 years: the apology-plus-transparency formula, straight out of the manuals offered by “reputation management” consultants.
This was certainly enough for most mainstream media and even some activists. Some were a bit more dubious but still pinned their hopes for stemming the abuses on the chimera of “consumer pressure.” For those who may believe that rich-country consumer pressure should not be so summarily dismissed, I believe that it’s useful to turn to Jeffrey Swartz, until mid-2011 the CEO of Timberland, who says that consumers don’t care at all about workers’ rights. In a late-2009 article he wrote, “With regard to human rights, the consumer expectation today is somewhere in the neighborhood of, don’t do anything horrible or despicable… if the issue doesn’t matter much to the consumer population, there’s not a big incentive for the consumer-minded CEOs to act, proactively.” In a 2008 interview he mused about his desire to “seduce consumers to care” so that Timberland’s CSR report was not mere “corporate cologne”.
It must be said that Apple looked more serious this week than it did two years ago, when it shrugged off 18 worker suicides at its main supplier, Foxconn, in China. Steve Jobs told the press that the high number of suicides was about average for the Chinese population as a whole. Just last week, Terry Gou, CEO of Foxconn, referred to his workers as “animals” during an appearance at the Taipei City Zoo—not a lot of empathy there, either.
Change the Image, Not the Actual
When anti-sweatshop campaigners in the ’90s relentlessly called Nike out for its miserable, toxic factories around the world, sneaker-buying Americans did have an impact on Nike.
U.S. sales fell for four successive years, despite billion-dollar marketing outlays every year. So CEO Phil Knight rented the National Press Club and told reporters his shoes were “synonymous with slave wages, forced overtime and arbitrary abuse.” He vowed to put things right.
Since then, Nike has spent hundreds of millions of dollars on factory “monitoring” and hired on a “corporate social responsibility” staff of over 200. Nike became a charter member of the FLA in 1999, and has a representative on its board.
What has it wrought? Very little. Richard Locke, a highly-regarded business professor and long-time observer of Nike, has been granted extraordinary access by the shoe giant. “A decade’s-worth of high-profile efforts to change sweatshop conditions in overseas apparel factories hasn’t worked,” Locke concludes.
Why hasn’t it? He who pays the piper calls the tune. All these new workers’ rights experts work for the corporations they’re monitoring—either directly, as on Nike’s social responsibility staff, or in NGO mode. NGOs sell their monitoring services to the big brands that are seeking cover while their supplier factories continue the same profitable patterns of worker abuse.
The most recent example where this kind of voluntary monitoring has proved ineffective comes from Indonesia. An Indonesian union won in court a $950,000 settlement this month for 4,500 workers at a factory that supplied Nike. They were forced to work seven days a week without overtime pay—at a big factory supposedly under FLA monitoring for a decade. (It’s easy to miss 570,000+ unpaid overtime hours, right?)
A decade’s-worth of high-profile efforts to change sweatshop conditions in overseas apparel factories hasn’t.
This is not to say that these high-profile monitoring operations are worthless. Just ask the shareholders who saw Nike bounce back from being equated with slavery to join the top rankings of “responsible” companies. “Corporate social responsibility” has proved invaluable at repairing brand images and wrong-footing the anti-sweatshop movement – maybe what Bill Clinton had in mind when launching the Apparel Industry Partnership, precursor to the FLA.
In fact, one could argue that the FLA has made the situation worse. It has been monitoring and certifying “compliance” for Nike and other apparel giants for more than a decade, apologizing for the corporations as they continue to squeeze suppliers, crush worker organizing, and cheat workers out of severance pay when their factories flee to lower-cost havens.
FLA CEO Auret van Heerden has excused Nike and its other corporate “partners” for the below-subsistence prices paid to sweatshop contractors, saying “simply blaming buyers and the prices they pay is too simple.”
Meanwhile sportswear companies unabashedly gloat over the power they have to dictate prices paid to supplier factories.
When Reebok and Adidas merged in 2006, an executive bragged on an investor call about negotiations “with all our key footwear and apparel suppliers to lock in cost savings for 2007 that should be in the double-digit million range.”
A New Hope?
With Apple, however, we may be able to turn the FLA’s involvement to the workers’ advantage.
An independent Hong Kong-based group, Students and Scholars Against Corporate Misbehavior (SACOM), has years of experience interacting with Foxconn workers.
The situation is similar to what we’ve seen happen with United Students Against Sweatshops, which has developed on-the-ground relationships with garment worker organizations in Latin America for a decade.
USAS and the Worker Rights Consortium, an independent factory monitor funded by its member colleges, have used a combination of pressure inside boardrooms and outside retail stores.
When companies that supply garments to colleges close their contracted factories in the face of worker organizing, or subject workers to unsafe working conditions, the WRC investigates and USAS students agitate.
Through pressure on the corporations at the top of the supply chain, several factories have reopened and hired back workers—with a union.
In China, it is quite possible that SACOM could bird-dog the FLA, insisting on real-time sharing of its reports, for example.
So far Apple, following Nike’s playbook, has produced audits that say violations are occurring, but does not reveal in which factories they’re happening. The FLA also doesn’t insist on that level of transparency, essentially saying “trust us.”
The WRC, by contrast, insists on knowing where the factory is and what’s happening, so it can gauge progress. The FLA could use some pressure to do the same.
One of the most refreshingly honest voices in the global worker rights field is the business professor, Prakash Sethi. For years he was the architect of Mattel’s supply chain code-and-monitoring apparatus and has done consulting work in this field for several other Fortune 500 firms (including – ugh! – Freeport McMoRan). He says that the major global players – the World Bank, OECD countries and the International Labor Organization – have failed to apply pressure on low-cost producing countries that do not protect workers’ human rights or health and safety. He has also called on corporations to pay restitution to developing-world workers for ‘years of expropriation’ enabled by corrupt, repressive regimes. (Particularly poignant was his brusque assertion in a New York Times interview that ‘bigotry’ was at the root of most companies’ refusal to even try to grapple with some of these issues.) Mattel ended its supplier-factory monitoring in 2009 and there were no untoward consequences, such as negative press reports.
In any case, more attention paid to Apple’s supplier factories will further anti-sweat groups’ communications with workers, and help build networks through social media and texting. It’s not the UAW in the ’30s yet, but it’s a beginning.
Jeff Ballinger is a researcher and writer on sweatshop monitoring. He is a member of Worker Rights Consortium’s advisory council. Follow his tweets @press4change & ballingerjd@gmail.com is the e-mail
January 27, 2012
Posted by aletho |
Economics, Timeless or most popular | Apple, China, Fair Labor Association, Nike, Sweatshop |
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By Ismael Hossein-zadeh
July 9, 2008
A most widely-cited factor behind the recent U.S. wars of choice is said to be oil. “No Blood for Oil” has been a rallying cry for most of the opponents of the war. While some of these opponents argue that the war is driven by the U.S. desire for cheap oil, others claim that it is prompted by big oil’s wish for high oil prices and profits. Interestingly, most antiwar forces use both claims interchangeably without paying attention to the fact that they are diametrically-opposed assertions.
Not only do the two arguments contradict each other, but each argument is also wanting and unconvincing on its own grounds; not because the U.S. does not wish for cheap oil, or because Big Oil does not desire higher oil prices, but because war is no longer the way to control or gain access to energy resources. Colonial-type occupation or direct control of energy resources is no longer efficient or economical and has, therefore, been abandoned for more than four decades.
The view that recent U.S. military adventures in the Middle East and the broader Central Asia are driven by energy considerations is further reinforced by the dubious theory of Peak Oil, which maintains that, having peaked, world oil resources are now dwindling and that, therefore, war power and military strength are key to access or control of the shrinking energy resources.
In this study I will first argue that the Peak Oil theory is unscientific, unrealistic, and perhaps even fraudulent. I will then show that war and military force are no longer the necessary or appropriate means to gain access to sources of energy, and that resorting to military measures can, indeed, lead to costly, not cheap, oil. Next, I will demonstrate that, despite the lucrative spoils of war resulting from high oil prices and profits, Big Oil prefers peace and stability, not war and geopolitical turbulence, in global energy markets. Finally, I will argue a case that behind the drive to war and military adventures in the Middle East lie some powerful special interests (vested in war, militarism, and geopolitical concerns of Israel) that use oil as an issue of “national interest”—as a façade or pretext—in order to justify military adventures to derive high dividends, both economic and geopolitical, from war.
Has Oil Really Peaked—and Is It Running Out?
Peak oil thesis, as noted above, maintains that world oil reserves, having reached their maximum capacity, are now dwindling—with grave consequences of oil shortage and high energy prices. While this has led many to call for more vigorous conservation, it has led others to argue in favor of unrestrained exploration and extraction of oil reserves, especially those located in the Alaskan Wildlife regions.
Significant policy and/or political implications follow from the view that oil is running out. For one thing, this view provides fodder for the cannons of war profiteering militarists who are constantly on the look out to invent new enemies and find new pretexts for continued war and escalation of military spending. For another, it tends to disarm many antiwar forces that accept this thesis and, therefore, “internalize responsibility for U.S. foreign policy every time they fill their gas tank. Thus they own the wars.”[1]
The Peak Oil thesis serves as a powerful trap and a clever manipulation in that it lets the real forces of war and militarism (the military-industrial complex and the pro-Israel lobby) “off the hook; it is a fabulous redirection. All evils are blamed on a commodity upon which we are all utterly dependent.”[2]
The fact, however, is that there is no hard evidence that oil has peaked, or that global oil reserves are shrinking, or that the current skyrocketing price of oil is due to a supply shortage. (As shown below, there is actually an oil surplus, no shortage.)
Peak oil theory is not altogether new. It was originally floated around in the 1940s, arguing that world oil reserves would be exhausted within the next two decades or so. It then resurfaced in the 1970s and early 1980s in reaction to the oil price hikes of those years—which were, incidentally, precipitated not by oil shortages but by international political convulsions, revolutions and wars. But it died down once the price of oil fell back to pre-crises levels.
As recent geopolitical convulsions in the Middle East (especially the U.S. war on Iraq, and the resultant booming speculation in oil markets) have triggered a new round of oil price hikes, Peak Oil theory has once again become fashionable. The theory is being promoted not only by war profiteers and proponents of an unbridled domestic oil exploration and extraction, especially in Alaska, but also by some apparently antiwar liberals such as Michael T. Klare and James H. Kunstler.[3]
Peak oil theory is based on a number of assumptions and omissions that make it less than reliable. To begin with, it discounts or disregards the fact that energy-saving technologies have drastically improved (and will continue to further improve) the efficiency of oil consumption. Evidence shows that, for example, “over a period of five years (1994-99), U.S. GDP expanded over 20 percent while oil usage rose by only nine percent. Before the 1973 oil shock, the ratio was about one to one.”[4]
Second, Peak Oil theory pays scant attention to the drastically enabling new technologies that have made (and will continue to make) possible discovery and extraction of oil reserves that were inaccessible only a short time ago. One of the results of the more efficient means of research and development has been a far higher success rate in finding new oil fields. The success rate has risen in twenty years from less than 70 percent to over 80 percent. Computers have helped to reduce the number of dry holes. Horizontal drilling has boosted extraction. Another important development has been deep-water offshore drilling, which the new technologies now permit. Good examples are the North Sea, the Gulf of Mexico, and more recently, the promising offshore oil fields of West Africa.[5]
Third, Peak Oil theory also pays short shrift to what is sometimes called non-conventional oil. These include Canada’s giant reserves of extra-heavy bitumen that can be processed to produce conventional oil. Although this was originally considered cost inefficient, experts working in this area now claim that they have brought down the cost from over $20 a barrel to $8 per barrel. Similar developments are taking place in Venezuela. It is thanks to developments like these that since 1970, world oil reserves have more than doubled, despite the extraction of hundreds of millions of barrels.[6]
Fourth, Peak Oil thesis pays insufficient attention to energy sources other than oil. These include solar, wind, non-food bio-fuel, and nuclear energies. They also include natural gas. Gas is now about 25 percent of energy demand worldwide. It is estimated that by 2050 it will be the main source of energy in the world. A number of American, European, and Japanese firms have and are investing heavily in developing fuel cells for cars and other vehicles that would significantly reduce gasoline consumption.[7]
Fifth, proponents of Peak Oil tend to exaggerate the impact of the increased oil demand coming from China and India on both the amount and the price of oil in global markets. The alleged disparity between supply and demand is said to be due to the rapidly growing demand coming from China and India. But that rapid growth in demand is largely offset by a number of counterbalancing factors. These include slower growth in U.S. demand due to its slower economic growth, efficient energy utilization in industrially advanced countries, and increases in oil production by OPEC, Russia, and other oil producing countries.
Finally, and perhaps more importantly, claims of “peaked and dwindling” oil are refuted by the available facts and figures on global oil supply. Statistical evidence shows that there is absolutely no supply-demand imbalance in global oil markets. Contrary to the claims of the proponents of Peak Oil and champions of war and militarism, the current oil price shocks are a direct consequence of the destabilizing wars and geopolitical insecurity in the Middle East, not oil shortages. These include not only the raging wars in Iraq and Afghanistan, but also the threat of a looming war against Iran. The record of soaring oil prices shows that anytime there is a renewed U.S. military threat against Iran, fuel prices move up several notches.
The war also contributes to the escalation of fuel prices in indirect ways—for example, by plunging the U.S. ever deeper into debt and depreciating the dollar, or by creating favorable grounds for speculation. As oil is priced largely in U.S. dollars, oil exporting countries ask for more dollars per barrel of oil as the dollar loses value. Perhaps more importantly, an atmosphere of war and geopolitical instability in global oil markets serves as an auspicious ground for hoarding and speculation in commodity markets, especially oil, which is heavily contributing to the recently soaring oil prices.
As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. . . . Since the advent of oil futures trading and the two major London and New York oil futures contracts, control of oil prices has left OPEC and gone to Wall Street. It is a classic case of the ‘tail that wags the dog.’[8]
Wall Street financial giants that created the Third World debt crisis in the late 1970s and early 1980s, the tech bubble in the 1990s, and the housing bubble in the 2000s are now hard at work creating the oil bubble. By purchasing large numbers of futures contracts, and thereby pushing up futures prices to even higher levels than current prices, speculators have provided a financial incentive for oil companies to buy even more oil and place it in storage. A refiner will purchase extra oil today, even if it costs $115 per barrel, if the futures price is even higher.[9]
This has led to a steady rise in crude oil inventories over the last two years, “resulting in US crude oil inventories that are now higher than at any time in the previous eight years. The large influx of speculative investment into oil futures has led to a situation where we have both high supplies of crude oil and high crude oil prices. . . . In fact, during this period global supplies have exceeded demand, according to the US Department of Energy.”[10]
The fact that the skyrocketing oil prices of late have been accompanied by a surplus in global oil markets was also brought to the attention of President George W. Bush by Saudi officials when he asked them during a recent trip to the kingdom to increase production in order to stem the rising prices. Saudi officials reminded the President that “there is plenty of oil on the market. Iran has put some 30 million barrels of oil that it can’t sell into floating storage. ‘If we produced more oil, it wouldn’t find buyers,’ says the Saudi source. It wouldn’t affect the price at all.”[11]
And why producing more oil “wouldn’t affect the price at all”? Well, because what is driving the soaring oil prices is not shortage but speculation: “with so much investment money sloshing around in the commodities markets, the Saudis calculate they have no hope of controlling short-term price fluctuations. They blame the recent price run-ups on speculation and fear of shortages [not real shortages], factors they say are beyond their control.”[12]
War for Cheap Oil?
The widely-shared view that the U.S. desire for access to abundant and cheap oil lurks behind the Bush administration’s drive to war in the Middle East rests on the implicit but dubious assumption that access to energy resources requires direct control of oil fields and/or oil producing countries. There are at least three problems with this postulation.
First, if control of or influence over oil producing countries in the Middle East is a requirement for access to cheap oil, the United States already enjoys significant influence over some of the major oil producers in the region—Saudi Arabia, Kuwait, and a number of other smaller producers. Why, then, would the U.S. want to bring about war and political turmoil in the region that might undermine that long and firmly-established influence?
Let us assume for a moment that the neoconservative militarists are sincere in their alleged desire to bring about democratic rule and representational government in the Middle East. Let us further assume that they succeed in realizing this purported objective. Would, then, the thus-emerging democratic governments, representing the wishes of the majority of their citizens, be as accommodating to U.S. economic and geopolitical objectives, including its oil needs, as are its currently friendly rulers in the region? Most probably not.
Secondly, and more importantly, access to oil no longer requires control of oil fields or oil producers—as was the case in times past. For more than a century, that is, from the early days of oil extraction in the United States in the 1870s until the mid-1970s, the price of oil was determined administratively, that is, by independent producers operating in different parts of the world without having to compete with each other. Under those circumstances, colonial or imperial wars of conquest and occupation were crucial to the control of oil (and other) resources.
Beginning with the 1950s, however, that pattern of local, non-competitive price determination began to gradually change in favor of regional and/or international markets. By the mid 1970s, an internationally competitive oil market emerged that effectively ended the century-old pattern of local, administrative pricing. Today, oil prices (like most other commodity prices) are determined largely by the forces of supply and demand in competitive global energy markets; and any country or company can have as much oil as they wish if they pay the going market (or spot) price.[13]
To the extent that competitive oil markets and/or prices are occasionally manipulated, such subversions of competitive market forces are often brought about not so much by OPEC or other oil producing countries as by manipulative speculations of financial giants in New York and London. As was discussed earlier, gigantic Wall Street financial institutions have accomplished this feat through “innovative” financial instruments such as establishment of energy hedge funds and speculative oil futures markets in New York and London.[14]
It is true that collective supply decisions of oil producing countries can, and sometimes does, affect the competitively determined market price. But a number of important issues need to be considered here.
To begin with, although such supply manipulations obviously affect or influence market-determined prices, they do not determine those prices. In other words, competitive international oil markets determine its price with or without oil producers’ supply manipulations. Such supply managements are, however, designed not to create volatility in energy markets, or chronic oil price hikes. Instead, they are designed to stabilize global oil prices because oil exporting countries prefer stability, predictability and long-term planning for their economic development and industrialization projects. Here is how Cyrus Bina and Minh Vo describe this relationship:
As a result, we conclude that the global oil market is the prime mover [i.e., prime determinant of oil price] and OPEC indeed follows its trajectory accordingly and consistently. . . . When market price (both spot and futures) is falling, OPEC decreases its output; when market price is rising, OPEC attempts to increase its output; and when market price is steady, OPEC keeps its output unchanged. . . . And, this is a kind of oil market we have experienced after the dust settled following the crisis of de-cartelization and globalization of oil industry in the 1970s.[15]
Producers’ policy to sometimes curtail or limit the supply of oil, the so-called “limited flow” policy, is designed to raise the actual trading price above the market-determined price in order to keep high-cost U.S. producers in business while leaving low-cost Middle East producers with an above average, or “super,” profit. While for low-cost producers this limited flow policy is largely a matter of making more or less profits, for high-cost U.S. producers it is a matter of survival, of being able to stay in or go out of business—an important but rarely mentioned or acknowledged fact.
A hypothetical numerical example might be helpful here. Suppose that the market-determined, or free-flow, price of oil is $30 per barrel. Further, suppose this price entails an average rate of profit of 10 percent, or $3 per barrel. The word “average” in this context refers to average conditions of production, that is, producers who produce under average conditions of production in terms of productivity and cost of production. This means that producers who produce under better-than-average conditions, that is, low-cost, high productivity producers, will make a profit higher than $3 per barrel while high-cost, low efficiency producers will end up making less than $3 per barrel. This also means that some of the high-cost producers may end up going out of business altogether. Now, if the limited flow policy raises the actual trading price to $35 per barrel, it will raise the profits of all producers accordingly, thereby also keeping in business some high-cost producers that might otherwise have gone out of business.
Furthermore, supply manipulation (in pursuit of price manipulation) is not limited to the oil industry. In today’s economic environment of giant corporations and big businesses, many of the major industries try, and often succeed in controlling supply in order to control price. Take, for example, the automobile industry. Theoretically, automobile producers could flood the market with a huge supply of cars. But that would not be good business as it would lower prices and profits. So, they control supply, just as do oil producers, in order to manipulate price. During the past several decades, the price of automobiles, in real terms, has been going up every year, at least to the tune of inflation. During this period, the industry (and the economy in general) has enjoyed a many-fold increase in labor productivity. Increased labor productivity is supposed to translate into lower costs and, therefore, lower prices. Yet, that has not materialized in the case of this industry—as it has in the case of, for example, pocket calculators or computers.
Another example of price control through supply manipulation is the case of U.S. grain producers. The so-called “set aside” policy that pays farmers not to cultivate part of their land in order to curtail supply and prop up price is not different—nay, it is worse— than OPEC’s policy of supply and/or price manipulation.
It is also necessary to keep in mind that OPEC’s desire to sometimes limit the supply of oil in order to shore up its price is limited by a number of factors. For one thing, the share, and hence the influence, of Middle Eastern oil producers as a percentage of world oil production has steadily declined over time, from almost 40 percent when OPEC was established to about 30 percent today.[16] For another, OPEC members are not unmindful of the fact that inordinately high oil prices can hurt their own long-term interests as this might prompt oil importers to economize on oil consumption and search for alternative sources of energy, thereby limiting producers’ export markets.
OPEC members also know that inordinately high oil prices could precipitate economic recessions in oil importing countries that would, once again, lower demand for their oil. In addition, high oil prices tend to raise the cost of oil producers’ imports of manufactured products as high energy costs are bound to affect production costs of those manufactured products.
War for Expensive Oil?
Now let us consider the widely-shared view that attributes the Bush administration’s drive to war to the influence of big oil companies in pursuit of higher oil prices and profits. As noted, this is obviously the opposite of the “war for cheap oil” argument, as it claims that Big Oil tends to instigate war and political tension in the Middle East in order to cause an oil price hike and increase its profits. Like the “war for cheap oil” theory, this claim is not supported by facts. Although the claim has an element of a prima facie reasonableness, that apparently facile credibility rests more on precedent and perception than reality. Part of the perception is due to the exaggerated notion that both President Bush and Vice President Cheney were “oil men” before coming to the White House. But the fact is that George W. Bush was never more than an unsuccessful petty oil prospector and Dick Cheney headed a company, the notorious Halliburton, that sold (and still sells) services to oil companies and the Pentagon.
The larger part of the perception, however, stems from the fact that oil companies do benefit from oil price hikes that result from war and political turbulence in the Middle East. Such benefits are, however, largely incidental. Surely, American oil companies would welcome the spoils of the war (that result from oil price hikes) in Iraq or anywhere else in the world. From the largely incidental oil price hikes that follow war and political convulsion, some observers automatically conclude that, therefore, Big Oil must have been behind the war.[17] But there is no evidence that, at least in the case of the current invasion of Iraq, oil companies pushed for or supported the war.
On the contrary, there is strong evidence that, in fact, oil companies did not welcome the war because they prefer stability and predictability to periodic oil spikes that follow war and political convulsion: “Looking back over the last 20 years, there is plenty of evidence showing the industry’s push for stability and cooperation with Middle Eastern countries and leaders, and the U.S. government’s drive for hegemony works against the oil industry.”[18] As Thierry Desmarest, Chairman and Chief Executive Officer of France’s giant oil company, TotalFinaElf, put it, “A few months of cash generation is not a big deal. Stable, not volatile, prices and a $25 price (per barrel) would be convenient for everyone.”[19]
It is true that for a long time, from the beginning of Middle Eastern oil exploration and discovery in the early twentieth century until the mid-1970s, colonial and/or imperial powers controlled oil either directly or through control of oil producing countries—at times, even by military force. But that pattern of colonial or imperialist exploitation of global markets and resources has changed now. Most of the current theories of imperialism and hegemony that continue invoking that old pattern of Big Oil behavior tend to suffer from an ahistorical perspective. Today, as discussed earlier, even physically occupying and controlling another country’s oil fields will not necessarily be beneficial to oil interests. Not only will military adventures place the operations of current energy projects at jeopardy, but they will also make the future plans precarious and unpredictable. Big Oil interests, of course, know this; and that’s why they did not countenance the war on Iraq: “The big oil companies were not enthusiastic about the Iraqi war,” says Fareed Mohamedi of PFC Energy, an energy consultancy firm based in Washington D.C. that advises petroleum firms. “Corporations like Exxon-Mobil and Chevron-Texaco want stability, and this is not what Bush is providing in Iraq and the Gulf region,” adds Mohamedi.[20]
Big Oil interests also know that not only is war no longer the way to gain access to oil, it is in fact an obstacle to gaining that access. Exclusion of U.S. oil companies from vast oil resources in countries such as Russia, Iran, Venezuela, and a number of central Asian countries due to militaristic U.S. foreign policy is a clear testament to this fact. Many of these countries (including, yes, Iran) would be glad to have major U.S. oil companies invest, explore and extract oil from their rich reserves. Needless to say that U.S. oil companies would be delighted to have access to those oil resources. But U.S. champions of war and militarism have successfully torpedoed such opportunities through their unilateral wars of aggression and their penchant for a Cold War-like international atmosphere.
When Vladimir Putin first became president of Russia he was willing to allow American energy companies to continue with the one-sided contracts they had drawn up during Boris Yeltsin’s presidency. Putin built a seemingly trusting relationship with George Bush who looked into Putin’s soul and liked what he saw. The two leaders grew even closer in the aftermath of the 9/11 attacks on World Trade Centre and the Pentagon—when Russia provided “help for America’s invasion of Afghanistan.” Soon after this generous cooperation, however, “Bush repudiated the anti-ballistic missile treaty in the belief that America could develop the technology for winning a nuclear war. This posed a huge strategic threat to Russia.”[21]
Describing the heavy-handed, imperial U.S. policy toward Russia, Stephen F. Cohen writes: “The real US policy has been very different—a relentless, winner-take-all exploitation of Russia’s post-1991 weakness. Accompanied by broken American promises, condescending lectures and demands for unilateral concessions, it has been even more aggressive and uncompromising than was Washington’s approach to Soviet Communist Russia.”[22]
Bush’s withdrawal from the ABM treaty not merely posed an existential threat to Russia but was almost a betrayal of the trust that Putin had put in him. This led to Putin’s disenchantment with America. “Eventually he seems to have decided that every time America transgressed against Russian interests he would retaliate by stopping another American company from exploiting Russian resources.”[23]
During the past few decades, major oil companies have consistently opposed U.S. policies and military threats against countries like Iran, Iraq, and Libya. They have, indeed, time and again, lobbied U.S. foreign policy makers for the establishment of peaceful relations and diplomatic rapprochement with those countries. The Iran-Libya Sanction Act of 1996 (ILSA) is a strong testament to the fact that oil companies nowadays view wars, economic sanctions, and international political tensions as harmful to their long-term business interests and, accordingly, strive for peace, not war, in international relations.
On March 15, 1995 President Clinton issued Executive Order 12957 which banned all U.S. contributions to the development of Iran’s petroleum resources, a crushing blow to the oil industry, especially to the Conoco oil company that had just signed a $1 billion contract to develop fields in Iran. The deal marked a strong indication that Iran was willing to improve its relationship with the United States, only to have President Clinton effectively nullify it. Two months later, sighting “an extraordinary threat to the national security, foreign policy and economy of the U.S.,” President Clinton issued another order, 1259, that expanded the sanctions to become a total trade and investment embargo against Iran. Then a year later came ILSA which extended the sanctions imposed on Iran to Libya as well.
It is no secret that the major force behind the Iran-Libya Sanction Act was the America Israel Public Affairs Committee (AIPAC), the main Zionist lobby in Washington. The success of AIPAC in passing ILSA through both the Congress and the White House over the opposition of the major U.S. oil companies is testament to the fact that, in the context of U.S. policy in the Middle East, even the influence of the oil industry pales vis-à-vis the influence of the Zionist lobby.[24]
ILSA was originally to be imposed on both U.S. and foreign companies. However, in the end it was the U.S. companies that suffered the most due to waivers that were given to European companies after pressure from the European Union. In 1996 the EU pursued its distaste of ILSA by lodging complaints with the World Trade Organization (WTO) against the U.S. and through adopting “blocking legislation” that would prevent EU companies from complying with ILSA. Meanwhile, the contract that Iran had originally signed with Conoco was awarded to TotalFinaElf of France for $760 million; the deal also left the door open for Total to sign an additional contract with Iran for $2 billion in 1997 with their partners Gazprom and Petronas.
In May of 1997 major U.S. oil companies such as Conoco, Exxon, Atlantic Richfield, and Occidental Petroleum joined other (non-military) U.S. companies to create an anti-sanction coalition. Earlier that same year Conoco’s Chief Executive Archie Dunham publicly took a stance against unilateral U.S. sanctions by stating that “U.S. companies, not rogue regimes, are the ones that suffer when the United States imposes economic sanctions.” Texaco officials have also argued that the U.S. can be more effective in bringing about change in other countries by allowing U.S. companies to do business with those countries instead of imposing economic sanctions that tend to be counterproductive.
Alas, Washington’s perverse, misguided and ineffectual policy of economic sanctions for political purposes—often in compliance with the wishes of some powerful special interests—continues unabated. “Even with the increased pro-trade lobbying efforts of the oil industry and groups like USAEngage, whose membership ranges from farmers and small business owners to Wall Street executives and oilmen, the lack of support from Washington and the Bush administration could not allow them [major oil companies and other non-military transnational companies] to overtake or counteract the already rolling momentum of AIPAC’s influence on Middle East policy or the renewal of ISLA.”[25]
Despite the fact that oil companies nowadays view war and political turmoil in the Middle East as detrimental to their long-term interests and, therefore, do not support policies that are conducive to war and militarism, and despite the fact that war is no longer the way to gain access to oil, the widespread perception that every U.S. military engagement in the region, including the current invasion of Iraq, is prompted by oil considerations continues. The question is why?
Behind the Myth of War for Oil
The widely-shared but erroneous view that recent U.S. wars of choice are driven by oil concerns is partly due to precedence: the fact that for a long time military force was key to colonial or imperialist control and exploitation of foreign markets and resources, including oil. It is also partly due to perception: the exaggerated notion that both President Bush and Vice President Cheney were “oil men” before coming to the White House. But, as noted earlier, George W. Bush was never more than an ineffective minor oil prospector and Dick Cheney was never really an oil man; he headed the notorious Halliburton company that sold (and still sells) services to oil companies and the Pentagon.
But the major reason for the persistence of this pervasive myth seems to stem from certain deliberate efforts that are designed to perpetuate the legend in order to camouflage some real economic and geopolitical special interests that drive U.S. military adventures in the Middle East. There is evidence that both the military-industrial complex and hard-line Zionist proponents of “greater Israel” disingenuously use oil (as an issue of national interest) in order to disguise their own nefarious special interests and objectives: justification of continued expansion of military spending, extension of sales markets for military hardware, and recasting the geopolitical map of the Middle East in favor of Israel.
There is also evidence that for every dollar’s worth of oil imported from the Persian Gulf region the Pentagon takes five dollars out of the Federal budget to “secure” the flow of that oil! This is a clear indication that the claim that the U.S. military presence in the Middle East is due to oil consideration is a fraud .[26]
While anecdotal, an example of how partisans of war and militarism use oil as a pretext to cover up the real forces behind war and militarism can be instructive. In the early stages of the invasion of Iraq, when the anti-occupation resistance in Iraq had not yet taken shape and the invasion seemed to be proceeding smoothly, two of the leading champions of the invasion, Secretary of Defense Donald Rumsfeld and his deputy Paul Wolfowitz, often boasting of the apparent or pre-mature success of the invasion at those early stages, gave frequent news conferences and press reports. During one of those press reports (at the end of an address to delegates at an Asian security summit in Singapore in early June 2003), Wolfowitz was asked why North Korea was being treated differently from Iraq, where hardly any weapons of mass destruction had been found. Wolfowitz’s response was: “Let’s look at it simply. The most important difference between North Korea and Iraq is that economically, we just had no choice in Iraq. The country swims on a sea of oil.”[27]
Many opponents of the war jumped on this statement, so to speak, as corroboration of what they had been saying or suspecting all along: that the war on Iraq was prompted by oil interests. Yet, there is strong evidence—some of which presented in the preceding pages—that for the last several decades oil interests have not favored war and turbulence in the Middle East, including the current invasion of Iraq. Nor is war any longer the way to gain access to oil. Major oil companies, along with many other non-military transnational corporations, have lobbied both the Clinton and Bush administrations in support of changing the aggressive, militaristic U.S. policy toward countries like Iran, Iraq and Libya in favor of establishing normal, non-confrontational trade and diplomatic relations. Such efforts at normalization of trade and diplomatic relations, however, have failed time and again precisely because Wolfowitz and his cohorts, working through AIPAC and other war-mongering think tanks such as the American Enterprise Institute (AEI), Project for the New American Century (PNAC), and Jewish Institute for National Security Affairs (JINSA) oppose them.
These think tanks, in collaboration with a whole host of similar militaristic lobbying entities like Center for Security Affairs (CSA) and National Institute for Public Policy (NIPP), working largely as institutional façades to serve the defacto alliance of the military-industrial complex and the pro-Israel lobby, have repeatedly thwarted efforts at peace and reconciliation in the Middle East—often over the objections and frustrations of major U.S. oil companies. It is a well established fact that Wolfowitz has been a devoted champion of these jingoistic think tanks and their aggressive unilateral policies in the Middle East. In light of his professional record and political loyalties, his claim that he championed the war on Iraq because of oil considerations can be characterized only as demagogic: it contradicts his political record and defies the policies he has been advocating for the last several decades; it is designed to divert attention from the main forces behind the war, the armaments lobby and the pro-Israel lobby.
These powerful interests are careful not to draw attention to the fact that they are the prime instigators of war and militarism in the Middle East. Therefore, they tend to deliberately perpetuate the popular perception that oil is the driving force behind the war in the region. They even do not mind having their aggressive foreign policies labeled as imperialistic as long as imperialism implies some vague or general connotations of hegemony and domination, that is, as long as it thus camouflages the real, special interests behind the war and political turbulence in the Middle East.
The oil and other non-military transnational corporations’ aversion to war and military adventures in the Middle East stem, of course, from the logical behavior of global or transnational capital in the era of integrated world markets, which tends to be loath to war and international political convulsions. Considering the fact that both importers and exporters of oil prefer peace and stability to war and militarism, why would, then, the flow of oil be in jeopardy if the powerful beneficiaries of war and political tension in the Middle East stopped their aggressive policies in the region?
Partisans of war in the Middle East tend to portray U.S. military operations in the region as reactions to terrorism and political turbulence in order to “safeguard the interests of the United States and its allies.” Yet, a close scrutiny of action-reaction or cause-effect relationship between U.S. military adventures and socio-political turbulence in the region reveals that perhaps the causality is the other way around. That is, social upheavals and political convulsions in the Middle East are more likely to be the result, not the cause, of U.S. foreign policy in the region, especially its one-sided, prejudicial Israeli-Palestinian policy. The U.S. policy of war and militarism in the region seems to resemble the behavior of a corrupt cop, or a mafia godfather, who would instigate fights and frictions in the neighborhood or community in order to, then, portray his parasitic role as necessary for the safety and security of the community and, in the process, fill out his deep pockets.
No matter how crucial oil is to the world economy, the fact remains that it is, after all, a commodity. As such, international trade in oil is as important to its importers as it is to its exporters. There is absolutely no reason that, in a world free of the influence of the beneficiaries of war and militarism and their powerful lobbies (the armaments and the pro-Israel lobbies), the flow of oil could not be guaranteed by international trade conventions and commercial treaties.
Ismael Hossein-zadeh, author of the recently published The Political Economy of U.S. Militarism (Palgrave-Macmillan 2007), teaches economics at Drake University, Des Moines, Iowa.
References
[1] Ron Andreas, reporter/researcher, e-mail correspondence with the author.
[2] Ibid.
[3] Michael T. Klare, Resource Wars: The New Landscape of Global Conflict (New York: Holt paperbacks 2002); James Howard Kunstler, The Long Emergency: Surviving the Converging Catastrophes of the Twenty-first Century (Grove/Atlantic, 2005).
[4] Eliyahu Kanovsky, “Oil: Who’s Really Over a Barrel?” Middle East Quarterly (Spring 2003).
[5] Ibid.
[6] The Wall Street Journal (17 May 2001); cited in Eliyahu Kantovsky, Ibid.
[7] The Wall Street Journal (10 March 1998); cited in Eliyahu Kantovsky, Ibid.
[8] F. William Engdahl, “Perhaps 60% of Today’s Oil Price Is Pure Speculation,” financialsense.com (2 May 2008)
[9] Ibid.
[10] Ibid.
[11] Stanley Reed, “Help from the House of Saud: Why the leading oil producer wants to cool off the market,” Business Week (29 May 2008)
[12] Ibid.
[13] Cyrus Bina and Minh Vo, “OPEC in the Epoch of Globalization: An Event Study of Global Oil Prices,” Global Economy Journal, Vol. 7, Issue 1 (2007); for a discussion of the theory and history of oil price determination see also, Cyrus Bina, “The Rhetoric of Oil and the Dilemma of War and American Hegemony,” Arab Studies Quarterly 15, no. 3 (Summer 1993); also Cyrus Bina, “Limits of OPEC Pricing: OPEC Profits and the Nature of Global Oil Accumulation,” OPEC Review 14, no. 1 (Spring 1990).
[14] F. William Engdahl, “Perhaps 60% of Today’s Oil Price Is Pure Speculation,” financialsense.com (2 May 2008),
[15] Cyrus Bina and Minh Vo, “OPEC in the Epoch of Globalization: An Event Study of Global Oil Prices,” Global Economy Journal, Vol. 7, Issue 1 (2007).
[16] Gary S. Becker, “Why War with Iraq Is Not about Oil,” Business Week (17 March 2003): 30.
[17] Johnathan Nitzan and Shimshon Bichler. The Global Political Economy of Israel (London and Sterling, Virginia: Pluto Press, 2002).
[18] Melinda K. Ruby, “Is Oil the Driving Force to War?” unpublished Senior thesis, Dept. of Economics and Finance, Drake University, Des Moines, Iowa (spring 2004), 10.
[19] As quoted in Ruby, Ibid., P. 13.
[20] As cited by Roger Burbach, “Bush Ideologues vs. Big Oil: The Iraq Game Gets Even Stranger,” CounterPunch.
[21] Israel Shamir, The Writings of Israel Shamir, Contributor 45
[22] Stephen F. Cohen “The New American Cold War,” The Nation (10 July 2006); as quoted in Shamir, Ibid.
[23] Shamir, Ibid.
[24] Ruby, “Is Oil the Driving Force to War?” pp. 14-15; see also Herman Franssen and Elaine Morton, “A Review of U.S. Unilateral Sanctions Against Iran,” Middle East Economic Survey 45, no. 34 (26 August 2002), pp. D1-D5 (D section contains op eds. as opposed to staff-written articles).
[25] Ruby, “Is Oil the Driving Force to War?” pp. 16-17; see also David Ivanovich, “Conoco’s Chief Blasts Sanctions,” Houston Chronicle (12 February 1997).
[27] The statement was widely reported by many news papers and other media outlets. See, for example, The Guardian (4 June 2003)
http://www.counterpunch.org/zadeh07092008.html
December 3, 2009
Posted by aletho |
Deception, Ethnic Cleansing, Racism, Zionism, Full Spectrum Dominance, Illegal Occupation, Militarism, Science and Pseudo-Science, War Crimes | China, Middle East, OPEC, Peak Oil, Russia |
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A top Chinese diplomat said over the weekend that other nations had failed to take account of “reasonable” revision proposals suggested by Russia. Moscow has also defended its UN veto, saying Western powers had refused to reach a consensus. “The authors of the draft Syria resolution, unfortunately, did not want to undertake an extra effort and come to a consensus,” Deputy Foreign Minister Gennady Gatilov wrote on Twitter.
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