Thursday, November 27, 2008

The Election, Economy, War, and Peace


The Election


The word that immediately rolled off of every tongue after the presidential election was "historic." And rightly so. A Black family in the White House is truly a momentous event.


There were some surprises. One was that the election was not over after the Democratic convention. By usual indicators, the opposition party should have had a landslide victory during a severe economic crisis, after eight years of disastrous policies on all fronts including the worst record on job growth of any post-war president and a rare decline in median wealth, an incumbent so unpopular that his own party had to disavow him, and a dramatic collapse in US standing in world opinion. The Democrats did win, barely. If the financial crisis had been slightly delayed, they might not have.


A good question is why the margin of victory for the opposition party was so small, given the circumstances. One possibility is that neither party reflected public opinion at a time when 80% think the country is going in the wrong direction and that the government is run by "a few big interests looking out for themselves," not for the people, and a stunning 94% object that government does not attend to public opinion. As many studies show, both parties are well to the right of the population on many major issues, domestic and international.


It could be argued that no party speaking for the public would be viable in a society that is business-run to an unusual extent. Evidence for that is substantial. At a very general level, evidence is provided by the predictive success of political economist Thomas Ferguson's "investment theory" of politics, which holds that policies tend to reflect the wishes of the powerful blocs that invest every four years to control the state. More specific illustrations are numerous. To mention just one, for 60 years the US has failed to ratify the core principle of international labor law, which guarantees freedom of association. Legal analysts call it "the untouchable treaty in American politics," and observe that there has never even been any debate about the matter. And many have noted Washington's dismissal of conventions of the International Labor Organization as contrasted with the intense dedication to enforcement of monopoly pricing rights for corporations ("intellectual property rights"). There is much to explore here, but this is not the place.


The two candidates in the Democratic primary were a woman and an African-American. That too was historic. It would have been unimaginable forty years ago. The fact that the country has become civilized enough to accept this outcome is a considerable tribute to the activism of the 1960s and its aftermath.


In some ways the election followed familiar patterns. The McCain campaign was honest enough to announce clearly that the election wouldn't be about issues. Sarah Palin's hairdresser received twice the salary of McCain's foreign policy adviser, the Financial Times reported, probably an accurate reflection of significance for the campaign. Obama's message of "hope" and "change" offered a blank slate on which supporters could write their wishes. One could search websites for position papers, but correlation of these to policies is hardly spectacular, and in any event, what enters into voters' choices is what the campaign places front and center, as party managers know well.


The Obama campaign greatly impressed the public relations industry, which named Obama "Advertising Age's marketer of the year for 2008," easily beating out Apple. The industry's prime task is to ensure that uninformed consumers make irrational choices, thus undermining market theories. And it recognizes the benefits of undermining democracy the same way.


The Center for Responsive Politics reports that once again elections were bought: "The best-funded candidates won nine out of 10 contests, and all but a few members of Congress will be returning to Washington." Before the conventions, the viable candidates with most funding from financial institutions were Obama and McCain, with 36% each. Preliminary results indicate that by the end, Obama's campaign contributions, by industry, were concentrated among Law Firms (including lobbyists) and financial institutions. The investment theory of politics suggests some conclusions about the guiding policies of the new administration.


The power of financial institutions reflects the increasing shift of the economy from production to finance since the liberalization of finance in the 1970s, a root cause of the current economic malaise: the financial crisis, recession in the real economy, and the miserable performance of the economy for the large majority, whose real wages stagnated for 30 years, while benefits declined. The steward of this impressive record, Alan Greenspan, attributed his success to "growing worker insecurity," which led to "atypical restraint on compensation increases" - and corresponding increases into the pockets of those who matter. His failure even to perceive the dramatic housing bubble, following the collapse of the earlier tech bubble that he oversaw, was the immediate cause of the current financial crisis, as he ruefully conceded.


Reactions to the election from across the spectrum commonly adopted the "soaring rhetoric" that was the hallmark of the Obama campaign. Veteran correspondent John Hughes wrote that "America has just shown the world an extraordinary example of democracy at work," while to British historian-journalist Tristram Hunt, the election showed that America is a land "where miracles happen," such as "the glorious epic of Barack Obama" (leftist French journalist Jean Daniel). "In no other country in the world is such an election possible," said Catherine Durandin of the Institute for International and Strategic Relations in Paris. Many others were no less rapturous.


The rhetoric has some justification if we keep to the West, but elsewhere matters are different. Consider the world's largest democracy, India. The chief minister of Uttar Pradesh, which is larger than all but a few countries of the world and is notorious for horrifying treatment of women, is not only a woman, but a Dalit ("untouchable"), at the lowest rung of India's disgraceful caste system.


Turning to the Western hemisphere, consider its two poorest countries: Haiti and Bolivia. In Haiti's first democratic election in 1990, grass-roots movements organized in the slums and hills, and though without resources, elected their own candidate, the populist priest Jean-Bertrand Aristide. The results astonished observers who expected an easy victory for the candidate of the elite and the US, a former World Bank official.


True, the victory for democracy was soon overturned by a military coup, followed by years of terror and suffering to the present, with crucial participation of the two traditional torturers of Haiti, France and the US (contrary to self-serving illusions). But the victory itself was a far more "extraordinary example of democracy at work" than the miracle of 2008.


The same is true of the 2005 election in Bolivia. The indigenous majority, the most oppressed population in the hemisphere (those who survived), elected a candidate from their own ranks, a poor peasant, Evo Morales. The electoral victory was not based on soaring rhetoric about hope and change, or body language and fluttering of eyelashes, but on crucial issues, very well known to the voters: control over resources, cultural rights, and so on. Furthermore, the election went far beyond pushing a lever or even efforts to get out the vote. It was a stage in long and intense popular struggles in the face of severe repression, which had won major victories, such as defeating the efforts to deprive poor people of water through privatization.


These popular movements did not simply take instructions from party leaders. Rather, they formulated the policies that their candidates were chosen to implement. That is quite different from the Western model of democracy, as we see clearly in the reactions to Obama's victory.


In the liberal Boston Globe, the headline of the lead story observed that Obama's "grass-roots strategy leaves few debts to interest groups": labor unions, women, minorities, or other "traditional Democratic constituencies." That is only partially right, because massive funding by concentrated sectors of capital is ignored. But leaving that detail aside, the report is correct in saying that Obama's hands are not tied, because his only debt is to "a grass-roots army of millions" - who took instructions, but contributed essentially nothing to formulating his program.


At the other end of the doctrinal spectrum, a headline in the Wall Street Journal reads "Grass-Roots Army Is Still at the Ready" - namely, ready to follow instructions to "push his agenda," whatever it may be.


Obama's organizers regard the network they constructed "as a mass movement with unprecedented potential to influence voters," the Los Angeles Times reported. The movement, organized around the "Obama brand" can pressure Congress to "hew to the Obama agenda." But they are not to develop ideas and programs and call on their representatives to implement them. These would be among the "old ways of doing politics" from which the new "idealists" are "breaking free."


It is instructive to compare this picture to the workings of a functioning democracy such as Bolivia. The popular movements of the third world do not conform to the favored Western doctrine that the "function" of the "ignorant and meddlesome outsiders" - the population -- is to be "spectators of action" but not "participants" (Walter Lippmann, articulating a standard progressive view).


Perhaps there might even be some substance to fashionable slogans about "clash of civilizations."

In earlier periods of American history, the public refused to keep to its assigned "function." Popular activism has repeatedly been the force that led to substantial gains for freedom and justice. The authentic hope of the Obama campaign is that the "grass roots army" organized to take instructions from the leader might "break free" and return to "old ways of doing politics," by direct participation in action.


Latin America


In Bolivia, as in Haiti, efforts to promote democracy, social justice, and cultural rights, and to bring about desperately needed structural and institutional changes are, naturally, bitterly opposed by the traditional rulers, the Europeanized mostly white elite in the Eastern provinces, the site of most of the natural resources currently desired by the West. Also naturally, their quasi-secessionist movement is supported by Washington, which once again scarcely conceals its distaste for democracy when it does not conform to strategic and economic interests. The generalization is a staple of serious scholarship, but does not make its way to commentary about the revered "freedom agenda."


To punish Bolivians for showing "the world an extraordinary example of democracy at work," the Bush administration cancelled trade preferences, threatening tens of thousands of jobs, on the pretext that Bolivia was not cooperating with US counter-narcotic efforts. In the real world, the UN estimates that Bolivia's coca crop increased 5 percent in 2007, as compared with a 26 percent increase in Colombia, the terror state that is Washington's closest regional ally and the recipient of enormous military aid. AP reports that "Cocaine seizures by Bolivian police working with DEA agents had also increased dramatically during the Morales administration."


"Drug wars" have regularly been used as a pretext for repression, violence, and state crimes, at home as well.


After Morales's victory in a recall referendum in August 2008, with a sharp increase in support over his 2005 success, rightist opposition turned violent, leading to assassination of many peasants supporting the government. After the massacre, a summit meeting of UNASUR, the newly-formed Union of South American Republics, was convened in Santiago Chile. The summit issued a strong statement of support for the elected Morales government, read by Chilean President Michelle Bachelet. The statement declared "their full and firm support for the constitutional government of President Evo Morales, whose mandate was ratified by a big majority" -- referring to his overwhelming victory in the referendum a month earlier. Morales thanked UNASUR for its support, observing that "For the first time in South America's history, the countries of our region are deciding how to resolve our problems, without the presence of the United States."


A matter of no slight significance, not reported in the US.


The Administration


Turning to the future, what can we realistically expect of an Obama administration? We have two sources of information: actions and rhetoric.


The most important actions to date are selection of staff. The first selection was for vice-President: Joe Biden, one of the strongest supporters of the Iraq invasion among Senate Democrats, a long-time Washington insider, who consistently votes with his fellow Democrats but not always, as when he supported a measure to make it harder for individuals to erase debt by declaring bankruptcy.


The first post-election appointment was for the crucial position of chief of staff: Rahm Emanuel, one of the strongest supporters of the Iraq invasion among House Democrats and like Biden, a long-term Washington insider. Emanuel is also one of the biggest recipients of Wall Street campaign contributions, the Center for Responsive Politics reports. He "was the top House recipient in the 2008 election cycle of contributions from hedge funds, private equity firms and the larger securities/investment industry."


Since being elected to Congress in 2002, he "has received more money from individuals and PACs in the securities and investment business than any other industry"; these are also among Obama's top donors. His task is to oversee Obama's approach to the worst financial crisis since the 1930s, for which his and Obama's funders share ample responsibility.


In an interview with an editor of the Wall Street Journal, Emanuel was asked what the Obama administration would do about "the Democratic congressional leadership, which is brimming with left-wing barons who have their own agenda," such as slashing defense spending (in accord with the will of the majority of the population) and "angling for steep energy taxes to combat global warming," not to speak of the outright lunatics in Congress who toy with slavery reparations and even sympathize with Europeans who want to indict Bush administration war criminals for war crimes. "Barack Obama can stand up to them," Emanuel assured the editor. The administration will be "pragmatic," fending off left extremists.


Obama's transition team is headed by John Podesta, Clinton's chief of staff. The leading figures in his economic team are Robert Rubin and Lawrence Summers, both enthusiasts for the deregulation that was a major factor in the current financial crisis. As Treasury Secretary, Rubin worked hard to abolish the Glass-Steagall act, which had separated commercial banks from financial institutions that incur high risks. Economist Tim Canova comments that Rubin had "a personal interest in the demise of Glass-Steagall." Soon after leaving his position as Treasury Secretary, he became "chair of Citigroup, a financial-services conglomerate that was facing the possibility of having to sell off its insurance underwriting subsidiary... the Clinton administration never brought charges against him for his obvious violations of the Ethics in Government Act."


Rubin was replaced as Treasury Secretary by Summers, who presided over legislation barring federal regulation of derivatives, the "weapons of mass destruction" (Warren Buffett) that helped plunge financial markets to disaster. He ranks as "one of the main villains in the current economic crisis," according to Dean Baker, one of the few economists to have warned accurately of the impending crisis. Placing financial policy in the hands of Rubin and Summers is "a bit like turning to Osama Bin Laden for aid in the war on terrorism," Baker adds.


The business press reviewed the records of Obama's Transition Economic Advisory Board, which met on November 7 to determine how to deal with the financial crisis. In Bloomberg News, Jonathan Weil concluded that "Many of them should be getting subpoenas as material witnesses right about now, not places in Obama's inner circle." About half "have held fiduciary positions at companies that, to one degree or another, either fried their financial statements, helped send the world into an economic tailspin, or both." Is it really plausible that "they won't mistake the nation's needs for their own corporate interests?" He also pointed out that chief of staff Emanuel "was a director at Freddie Mac in 2000 and 2001 while it was committing accounting fraud."


Those are the actions, at the time of writing. The rhetoric is "change" and "hope."


Health Care


The primary concern for the administration will be to arrest the financial crisis and the simultaneous recession in the real economy. But there is also a monster in the closet: the notoriously inefficient privatized health care system, which threatens to overwhelm the federal budget if current tendencies persist. A majority of the public has long favored a national health care system, which should be far less expensive and more effective, comparative evidence indicates (along with many studies). As recently as 2004, any government intervention in the health care system was described in the press as "politically impossible" and "lacking political support" - meaning: opposed by the insurance industry, pharmaceutical corporations, and others who count. In 2008, however, first Edwards, then Obama and Clinton, advanced proposals that approach what the public has long preferred. These ideas now have "political support." What has changed? Not public opinion, which remains much as before. But by 2008, major sectors of power, primarily manufacturing industry, had come to recognize that they are being severely damaged by the privatized health care system. Hence the public will is coming to have "political support." There is a long way to go, but the shift tells us something about dysfunctional democracy.


International Relations


Internationally, there is not much of substance on the largely blank slate. What there is gives little reason to expect much a change from Bush's second term, which stepped back from the radical ultranationalism and aggressive posture of the first term, also discarding some of the extreme hawks and opponents of democracy (in action, that is, not soothing words), like Rumsfeld and Wolfowitz.


Israel-Palestine


The immediate issues have to do mostly with the Middle East. On Israel-Palestine, rumors are circulating that Obama might depart from the US rejectionism that has blocked a political settlement for over 30 years, with rare exceptions, notably for a few days in January 2001 before promising negotiations were called off prematurely by Israel. The record, however, provides no basis for taking the rumors seriously. I have reviewed Obama's formal positions elsewhere (Perilous Power), and will put the matter aside here.


After the election, Israeli president Shimon Peres informed the press that on his July trip to Israel, Obama had told him that he was "very impressed" with the Arab League peace proposal, calling for full normalization of relations with Israel along with Israeli withdrawal from the occupied territories - basically, the long-standing international consensus that the US-Israel have unilaterally blocked (and that Peres has never accepted - in fact, in his last days as Prime Minister in 1996 he held that a Palestinian state can never come into existence). That might suggest a significant change of heart, except that the right-wing Israeli leader Binyamin Netanyahu said that on the same trip, Obama had told him that he was "very impressed" with Netanyahu's plan, which calls for indefinite Israeli control of the occupied territories.


The paradox is plausibly resolved by Israeli political analyst Aluf Ben, who points out that Obama's "main goal was not to screw up or ire anyone. Presumably he was polite, and told his hosts their proposals were `very interesting' - they leave satisfied and he hasn't promised a thing." Understandable, but it leaves us with nothing except his fervent professions of love for Israel and dismissal of Palestinian concerns.


Iraq


On Iraq, Obama has frequently been praised for his "principled opposition" to the war. In reality, as he has made clear, his opposition has been entirely unprincipled throughout. The war, he said, is a "strategic blunder." When Kremlin critics of the invasion of Afghanistan called it a strategic blunder, we did not say that they were taking a principled stand.


By the time of writing, the government of Iraq seems close to accepting a Status of Forces Agreement (SOFA) with Washington on the US military presence in Iraq - with reservations, according to Prime Minister Maliki, who said that this is the best Iraq could get and it was at least "a strong beginning." The talks dragged on, the Washington Post reports, because Iraq insisted on "some major concessions, including the establishment of the 2011 withdrawal date instead of vaguer language favored by the Bush administration [and] also rejected long-term U.S. military bases on its soil." Iraqi leaders "consider the firm deadline for withdrawal to be a negotiating victory," Reuters reports: Washington "long opposed setting any timetable for its troops to withdraw, but relented in recent months," unable to overcome Iraqi resistance.


Throughout the negotiations, the press regularly dismissed the obstinate stance of the Maliki government as regrettable pandering to public opinion. US-run polls continue to report that a large majority of Iraqis oppose any US military presence, and believe that US forces make the situation worse, including the "surge." That judgment is supported, among others, by Middle East specialist and security analyst Steven Simon, who writes in Foreign Affairs that the Petraeus counterinsurgency strategy is "stoking the three forces that have traditionally threatened the stability of Middle Eastern states: tribalism, warlordism, and sectarianism. States that have failed to control these forces have ultimately become ungovernable, and this is the fate for which the surge is preparing Iraq. A strategy intended to reduce casualties in the short term will ineluctably weaken the prospects for Iraq's cohesion over the long run." It may lead to "a strong, centralized state ruled by a military junta that would resemble the Baathist regime Washington overthrew in 2003," or "something very much like the imperial protectorates in the Middle East of the first half of the twentieth century" in which the "club of patrons" in the capital would ‘dole out goods to tribes through favored conduits." In the Petraeus system, "the U.S. military is performing the role of the patrons -- creating an unhealthy dependency and driving a dangerous wedge between the tribes and the state," undermining prospects for a "stable, unitary Iraq."


The latest Iraqi success culminates a long process of resistance to demands of the US invaders. Washington fought tooth and nail to prevent elections, but was finally forced to back down in the face of popular demands for democracy, symbolized by the Ayatollah Sistani. The Bush administration then managed to install their own choice as Prime Minister, and sought to control the government in various ways, meanwhile also building huge military bases around the country and an "embassy" that is a virtual city within Baghdad - all funded by congressional Democrats. If the invaders do live up to the SOFA that they have been compelled to accept, it would constitute a significant triumph of nonviolent resistance. Insurgents can be killed, but mass nonviolent resistance is much harder to quell.


Within the political class and the media it is reflexively assumed that Washington has the right to demand terms for the SOFA. No such right was accorded to Russian invaders of Afghanistan, or indeed to anyone except the US and its clients. For others, we rightly adopt the principle that invaders have no rights, only responsibilities, including the responsibility to attend to the will of the victims, and to pay massive reparations for their crimes. In this case, the crimes include strong support for Saddam Hussein through his worst atrocities on Reagan's watch, then on to Saddam's massacre of Shiites under the eyes of the US military after the first Gulf War; the Clinton sanctions that were termed "genocidal" by the distinguished international diplomats who administered them and resigned in protest, and that also helped Saddam escape the fate of other gangsters whom the US and Britain supported to the very end of their bloody rule; and the war and its hideous aftermath. No such thoughts can be voiced in polite society.


The Iraqi government spokesman said that the tentative SOFA "matches the vision of U.S. President-elect Barack Obama." Obama's vision was in fact left somewhat vague, but presumably he would go along in some fashion with the demands of the Iraqi government. If so, that would require modification of US plans to ensure control over Iraq's enormous oil resources while reinforcing its dominance over the world's major energy producing region.


Afghanistan, Pakistan...


Obama's announced "vision" was to shift forces from Iraq to Afghanistan. That stand evoked a lesson from the editors of the Washington Post: "While the United States has an interest in preventing the resurgence of the Afghan Taliban, the country's strategic importance pales beside that of Iraq, which lies at the geopolitical center of the Middle East and contains some of the world's largest oil reserves." Increasingly, as Washington has been compelled to accede to Iraqi demands, tales about "democracy promotion" and other self-congratulatory fables have been shelved in favor of recognition of what had been obvious throughout to all but the most doctrinaire ideologists: that the US would not have invaded if Iraq's exports were asparagus and tomatoes and the world's major energy resources were in the South Pacific.


The NATO command is also coming to recognize reality publicly. In June 2007, NATO Secretary-General Jaap de Hoop Scheffer informed a meeting of NATO members that "NATO troops have to guard pipelines that transport oil and gas that is directed for the West," and more generally to protect sea routes used by tankers and other "crucial infrastructure" of the energy system. That is the true meaning of the fabled "responsibility to protect." Presumably the task includes the projected $7.6-billion TAPI pipeline that would deliver natural gas from Turkmenistan to Pakistan and India, running through Afghan's Kandahar province, where Canadian troops are deployed. The goal is "to block a competing pipeline that would bring gas to Pakistan and India from Iran" and to "diminish Russia's dominance of Central Asian energy exports," the Toronto Globe and Mail reported, plausibly outlining some of the contours of the new "Great Game."


Obama strongly endorsed the then-secret Bush administration policy of attacking suspected al-Qaeda leaders in countries that Washington has not (yet) invaded, disclosed by the New York Times shortly after the election. The doctrine was illustrated again on October 26, when US forces based in Iraq raided Syria, killing 8 civilians, allegedly to capture an al-Qaeda leader. Washington did not notify Iraqi Prime Minister Maliki or President Talabani, both of whom have relatively amicable relations with Syria, which has accepted 1.5 million Iraqi refugees and is bitterly opposed to al-Qaeda. Syria protested, claiming, credibly, that if notified they would have eagerly apprehended this enemy. According to Asia Times, Iraqi leaders were furious, and hardened their stance in the SOFA negotiations, insisting on provisions to bar the use of Iraqi territory to attack neighbors.


The Syria raid elicited a harsh reaction in the Arab world. In pro-government newspapers, the Bush administration was denounced for lengthening its "loathsome legacy" (Lebanon), while Syria was urged to "march forward in your reconciliatory path" and America to "keep going backwards with your language of hatred, arrogance and the murder of innocents" (Kuwait). For the region generally, it was another illustration of what the government-controlled Saudi press condemned as "not diplomacy in search of peace, but madness in search of war."


Obama was silent. So were other Democrats. Political scientist Stephen Zunes contacted the offices of every Democrat on the House and Senate Foreign Relations Committees, but was unable to find any critical word on the US raid on Syria from occupied Iraq.


Presumably, Obama also accepts the more expansive Bush doctrine that the US not only has the right to invade countries as it chooses (unless it is a "blunder," too costly to us), but also to attack others that Washington claims are supporting resistance to its aggression. In particular, Obama has, it seems, not criticized the raids by Predator drones that have killed many civilians in Pakistan.


These raids of course have consequences: people have the odd characteristic of objecting to slaughter of family members and friends. Right now there is a vicious mini-war being waged in the tribal area of Bajaur in Pakistan, adjacent to Afghanistan. BBC describes widespread destruction from intense combat, reporting further that "Many in Bajaur trace the roots of the uprising to a suspected US missile strike on an Islamic seminary, or madrassa, in November 2006, which killed around 80 people." The attack on the school, killing 80-85 people, was reported in the mainstream Pakistani press by the highly respected dissident physicist Pervez Hoodbhoy, but ignored in the US as insignificant. Events often look different at the other end of the club.


Hoodbhoy observed that the usual outcome of such attacks "has been flattened houses, dead and maimed children, and a growing local population that seeks revenge against Pakistan and the US." Bajaur today may be an illustration of the familiar pattern.


On November 3, General Petraeus, the newly appointed head of the US Central Command that covers the Middle East region, had his first meeting with Pakistani President Asif Ali Zardari, army chief General Ashfaq Parvez Kayani, and other high officials. Their primary concern was US missile attacks on Pakistani territory, which had increased sharply in previous weeks. "Continuing drone attacks on our territory, which result in loss of precious lives and property, are counterproductive and difficult to explain by a democratically elected government," Zardari informed Petraeus. His government, he said, is "under pressure to react more aggressively" to the strikes. These could lead to "a backlash against the US," which is already deeply unpopular in Pakistan.


Petraeus said that he had heard the message, and "we would have to take [Pakistani opinions] on board" when attacking the country. A practical necessity, no doubt, when over 80% of the supplies for the US-NATO war in Afghanistan pass through Pakistan.


Pakistan developed nuclear weapons, outside the Non-Proliferation Treaty (NPT), thanks in no small measure to Ronald Reagan, who pretended not to see what his ally was doing. This was one element of Reagan's "unstinting support" for the "ruthless and vindictive" dictator Zia ul-Haq, whose rule had "the most long-lasting and damaging effect on Pakistani society, one still prevalent today," the highly respected analyst Ahmed Rashid observes. With Reagan's firm backing, Zia moved to impose "an ideological Islamic state upon the population." These are the immediate roots of many of "today's problems - the militancy of the religious parties, the mushrooming of madrassas and extremist groups, the spread of drug and Kalashnikov culture, and the increase in sectarian violence."


The Reaganites also "built up the [Inter-Services Intelligence Directorate, ISI] into a formidable intelligence agency that ran the political process inside Pakistan while promoting Islamic insurgencies in Kashmir and Central Asia," Rashid continues. "This global jihad launched by Zia and Reagan was to sow the seeds of al Qaeda and turn Pakistan into the world center of jihadism for the next two decades." Meanwhile Reagan's immediate successors left Afghanistan in the hands of the most vicious jihadis, later abandoning it to warlord rule under Rumsfeld's direction. The fearsome ISI continues to play both sides of the street, supporting the resurgent Taliban and simultaneously acceding to some US demands.


The US and Pakistan are reported to have reached "tacit agreement in September [2008] on a don't-ask-don't-tell policy that allows unmanned Predator aircraft to attack suspected terrorist targets" in Pakistan, according to unidentified senior officials in both countries. "The officials described the deal as one in which the U.S. government refuses to publicly acknowledge the attacks while Pakistan's government continues to complain noisily about the politically sensitive strikes."


Once again problems are caused by the "ignorant and meddlesome outsiders" who dislike being bombed by an increasingly hated enemy from the other side of the world.


The day before this report on the "tacit agreement" appeared, a suicide bombing in the conflicted tribal areas killed eight Pakistani soldiers, retaliation for an attack by a US Predator drone that killed 20 people, including two Taliban leaders. The Pakistani parliament called for dialogue with the Taliban. Echoing the resolution, Pakistani foreign Minister Shah Mehmood Qureshi said "There is an increasing realization that the use of force alone cannot yield the desired results."


Afghan President Hamid Karzai's first message to president-elect Obama was much like that delivered to General Petraeus by Pakistani leaders: "end US airstrikes that risk civilian casualties." His message was sent shortly after coalition troops bombed a wedding party in Kandahar province, reportedly killing 40 people. There is no indication that his opinion was "taken on board."


The British command has warned that there is no military solution to the conflict in Afghanistan and that there will have to be negotiations with the Taliban, risking a rift with the US, the Financial Times reports. Correspondent Jason Burke, who has long experience in the region, reports that "the Taliban have been engaged in secret talks about ending the conflict in Afghanistan in a wide-ranging 'peace process' sponsored by Saudi Arabia and supported by Britain."


Some Afghan peace activists have reservations about this approach, preferring a solution without foreign interference. A growing network of activists is calling for negotiations and reconciliation with the Taliban in a National Peace Jirga, a grand assembly of Afghans, formed in May 2008. At a meeting in support of the Jirga, 3,000 Afghan political and intellectuals, mainly Pashtuns, the largest ethnic group, criticized "the international military campaign against Islamic militants in Afghanistan and called for dialogue to end the fighting," AFP reported.


The interim chairman of the National Peace Jirga, Bakhtar Aminzai, "told the opening gathering that the current conflict could not be resolved by military means and that only talks could bring a solution. He called on the government to step up its negotiations with the Taliban and Hizb-i-Islami groups." The latter is the party of the extremist radical Islamist warlord Gulbuddin Hekmatyar, a Reagan favorite responsible for many terrible atrocities, now reported to provide core parliamentary support for the Karzai government and to be pressing it towards a form of re-Talibanization.


Aminzai said further that "We need to pressure the Afghan government and the international community to find a solution without using guns." A spokeswoman added that "We are against Western policy in Afghanistan. They should bury their guns in a grave and focus on diplomacy and economic development." A leader of Awakened Youth of Afghanistan, a prominent antiwar group, says that we must end "Afghanicide -- the killing of Afghanistan." In a joint declaration with German peace organizations, the National Peace Jirga claimed to represent "a wide majority of Afghan people who are tired of war," calling for an end to escalation and initiation of a peace process.


The deputy director of the umbrella organization of NGOs in the country says that of roughly 1,400 registered NGOs, nearly 1,100 are purely Afghan operations: women's groups, youth groups and others, many of them advocates of the Peace Jirga.


Though polling in war-torn Afghanistan is a difficult process, there are some suggestive results. A Canadian-run poll found that Afghans favor the presence of Canadian and other foreign troops, the result that made the headlines in Canada. Other findings suggest some qualifications. Only 20% "think the Taliban will prevail once foreign troops leave." Three-fourths support negotiations between the Karzai government and the Taliban, and more than half favor a coalition government. The great majority therefore strongly disagree with the US-NATO focus on further militarization of the conflict, and appear to believe that peace is possible with a turn towards peaceful means. Though the question was not asked, it is reasonable to surmise that the foreign presence is favored for aid and reconstruction.


A study of Taliban foot soldiers carried out by the Toronto Globe & Mail, though not a scientific survey as they point out, nevertheless yields considerable insight. All were Afghan Pashtuns, from the Kandahar area. They described themselves as Mujahadeen, following the ancient tradition of driving out foreign invaders. Almost a third reported that at least one family member had died in aerial bombings in recent years. Many said that they were fighting to defend Afghan villagers from air strikes by foreign troops. Few claimed to be fighting a global Jihad, or had allegiance to Taliban leader Mullah Omar. Most saw themselves as fighting for principles - an Islamic government -- not a leader. Again, the results suggest possibilities for a negotiated peaceful settlement, without foreign interference.


A valuable perspective on such prospects is provided by Sir Rodric Braithwaite, a specialist on Afghanistan who was UK ambassador to Moscow during the crucial 1988-92 period when the Russians withdrew (and the USSR collapsed), then becoming chair of the British Joint Intelligence Committee. On a recent visit, Braithwaite spoke to Afghan journalists, former Mujahideen, professionals, people working for the US-based "coalition" - in general, to "natural supporters for its claims to bring peace and reconstruction." In the Financial Times, he reports that they were "contemptuous of President Hamid Karzai," regarding him as another one of the puppets installed by foreign force. Their favorite was "Mohammad Najibullah, the last communist president, who attempted to reconcile the nation within an Islamic state, and was butchered by the Taliban in 1996: DVDs of his speeches are being sold on the streets. Things were, they said, better under the Soviets. Kabul was secure, women were employed, the Soviets built factories, roads, schools and hospitals, Russian children played safely in the streets. The Russian soldiers fought bravely on the ground like real warriors, instead of killing women and children from the air. Even the Taliban were not so bad: they were good Muslims, kept order, and respected women in their own way. These myths may not reflect historical reality, but they do measure a deep disillusionment with the `coalition' and its policies."


Specialists on the region urge that US strategy should shift from more troops and attacks in Pakistan to a "diplomatic grand bargain -- forging compromise with insurgents while addressing an array of regional rivalries and insecurities" (Barnett Rubin and Ahmed Rashid in Foreign Affairs, Nov.-Dec. 2008). They warn that the current military focus "and the attendant terrorism" might lead to the collapse of nuclear-armed Pakistan, with grim consequences. They urge the incoming US administration "to put an end to the increasingly destructive dynamics of the Great Game in the region" through negotiations that recognize the interests of the concerned parties within Afghanistan as well as Pakistan and Iran, but also India, China and Russia, who "have reservations about a NATO base within their spheres of influence" and concerns about the threats "posed by the United States and NATO" as well as by al-Qaeda and the Taliban. The immediate goal should be "Lowering the level of violence in the region and moving the global community toward genuine agreement on the long-term goals," thus allowing Afghans to confront their internal problems peacefully. The incoming US president must put an end to "Washington's keenness for `victory' as the solution to all problems, and the United States' reluctance to involve competitors, opponents, or enemies in diplomacy."


It appears that there are feasible alternatives to escalation of the cycle of violence, but there is little hint of it in the electoral campaign or political commentary. Afghanistan and Pakistan do not appear among foreign policy issues on the Obama campaign's website.


Iran


Iran, in contrast, figures prominently -- though not of course as compared with effusive support for Israel; Palestinians remain unmentioned, apart from a vague reference to a two-state settlement of some unspecified kind. For Iran, Obama supports tough direct diplomacy "without preconditions" in order "to pressure Iran directly to change their troubling behavior," namely pursuing a nuclear program and supporting terrorism (presumably referring to support for Hamas and Hezbollah). If Iran abandons its troubling behavior, the US might move towards normal diplomatic and economic relations. "If Iran continues its troubling behavior, we will step up our economic pressure and political isolation." And as Obama informed the Israeli Lobby (AIPAC), "I will do everything in my power to prevent Iran from obtaining a nuclear weapon" - up to nuclear war, if he meant what he said.


Furthermore Obama will strengthen the NPT "so that countries like North Korea and Iran that break the rules will automatically face strong international sanctions." There is no mention of the conclusion of US intelligence with "high confidence" that Iran has not had a weapons program for 5 years, unlike US allies Israel, Pakistan, India, which maintain extensive nuclear weapons programs in violation of the NPT with direct US support, all unmentioned here as well.


The final mention of Iran is in the context of Obama's strong support for Israel's "Right to Self Defense" and its "right to protect its citizens." This commitment is demonstrated by Obama's co-sponsorship of "a Senate resolution against Iran and Syria's involvement in the war, and insisting that Israel should not be pressured into a ceasefire that did not deal with the threat of Hezbollah missiles." The reference is to Israel's US-backed invasion of Lebanon in 2006, with pretexts that are hardly credible in light of Israel's regular practices. This invasion, Israel's fifth, killed over 1000 Lebanese and once again destroyed much of southern Lebanon as well as parts of Beirut.


This is the sole mention of Lebanon among foreign policy issues on Obama's website. Evidently, Lebanon has no right of self defense. In fact who could possibly have a right of self defense against the US or its clients?


Nor does Iran have such rights. Among specialists, even rational hawks, it is well understood that if Iran is pursuing a weapons program, it is for deterrence. In the conservative National Interest, former CIA weapons inspector David Kay speculates that Iran might be moving towards "nuclear weapons capability," with the "strategic goal" of countering a US threat that "is real in Teheran's eyes," for good reasons that he reviews. He notes further that "Perhaps the biggest agitator of all in this is the United States, with its abbreviated historical memory and diplomatic ADD." Wayne White, formerly deputy director for the Near East and South Asia in State Department intelligence, dismisses the possibility that Supreme Leader Khamenei and the clerical elite, who hold power in Iran, would throw away the "vast amounts of money" and "huge economic empires" they have created for themselves "in some quixotic attack against Israel with a nuclear weapon," if they had one. The probability of that is virtually undetectable, he points out.


White agrees that Iran might seek weapons capability (which is not the same as weapons) for deterrence. He goes on to suggest Iran might also recall that Saddam Hussein had no nuclear weapons program when Israel bombed its Osiraq reactor in 1981, and that the attack led him to initiate a program using nuclear materials it had on hand as a result of the bombing. At the time, White was Iraq analyst for State Department intelligence, with access to a rich body of evidence. His testimony adds internal US intelligence confirmation to the very credible evidence available at once, later strengthened by reports of Iraqi defectors, that the Israeli bombing did not terminate, but rather initiated, Saddam's pursuit of nuclear weapons. US or Israeli bombing of Iranian facilities, White and other specialists observe, might have the same effect. Violence consistently elicits more violence in response.


These matters are well understood by informed hardliners. The leading neoconservative expert on Iran, Reuel Marc Gerecht, formerly in the CIA Middle East division, wrote in 2000 that:


"Tehran certainly wants nuclear weapons; and its reasoning is not illogical. Iran was gassed into surrender in the first Persian Gulf War; Pakistan, Iran's ever more radicalized Sunni neighbor to the southeast, has nuclear weapons; Saddam Hussein, with his Scuds and his weapons-of-mass-destruction ambitions, is next door; Saudi Arabia, Iran's most ardent and reviled religious rival, has long-range missiles; Russia, historically one of Iran's most feared neighbors, is once again trying to reassert its dominion in the neighboring Caucasus; and Israel could, of course blow the Islamic Republic to bits. Having been vanquished by a technologically superior Iraq at a cost of at least a half-million men, Iran knows very well the consequences of having insufficient deterrence. And the Iranians possess the essential factor to make deterrence work: sanity. Tehran or Isfahan in ashes would destroy the Persian soul, about which even the most hard-line cleric cares deeply. As long as the Iranians believe that either the U.S. or Israel or somebody else in the region might retaliate with nuclear weapons, they won't do something stupid."


Gerecht also understands very well the real "security problem" posed by Iranian nuclear weapons, should it acquire them:


"A nuclear-armed Islamic Republic would of course check, if not checkmate, the United States' maneuvering room in the Persian Gulf. We would no doubt think several times about responding to Iranian terrorism or military action if Tehran had the bomb and a missile to deliver it. During the lead-up to the second Gulf War, ruling clerical circles in Tehran and Qom were abuzz with the debate about nuclear weapons. The mullahs...agreed: if Saddam Hussein had had nuclear weapons, the Americans would not have challenged him. For the "left" and the "right," this weaponry is the ultimate guarantee of Iran's defense, its revolution, and its independence as a regional great power."


With appropriate translations for the doctrinal term "Iranian terrorism," Gerecht's concerns capture realistically the threat posed by an Iran with a deterrent capacity (Iranian military action is quite a remote contingency).


While as usual ignored as irrelevant to policy formation, American public opinion is close to that of serious analysts and also to world opinion. Large majorities oppose threats against Iran, thus rejecting the Bush-Obama position that the US must be an outlaw state, violating the UN Charter, which bars the threat of force. The public also joins the majority of the world's states in endorsing Iran's right, as a signer of the NPT, to enrich uranium for nuclear energy (the position endorsed also by Cheney, Rumsfeld, Wolfowitz, Kissinger and others when Iran was ruled by the tyrant imposed by US-UK subversion). Most important, the public favors establishment of a nuclear-weapons-free zone in the Middle East, which would mitigate and perhaps eliminate this highly threatening issue.


Popular Influence


These observations suggest an interesting thought experiment. What would be the content of the "Obama brand" if the public were to become "participants" rather than mere "spectators in action"? It is an experiment well worth undertaking, and there is good reason to suppose that the results might point the way to a saner and more decent world.

Wednesday, November 26, 2008

Making the World's Poor Pay: The Economic Crisis and the Global South



By: Adam Hanieh

The current global economic crisis has all the earmarks of an epoch-defining event. Mainstream economists – not usually known for their exaggerated language – now openly employ phrases like 'systemic meltdown' and 'peering into the abyss.' On October 29, for example, Martin Wolf, one of the top financial commentators of the Financial Times, warned that the crisis portends “mass bankruptcy,” “soaring unemployment” and a “catastrophe” that threatens “the legitimacy of the open market economy itself... the danger remains huge and time is short.”

There is little doubt that this crisis is already having a devastating impact on heavily-indebted American households. But one of the striking characteristics of analysis to date – by both the left and the mainstream media – is the almost exclusive focus on the wealthy countries of North America, Europe and East Asia. From foreclosures in California to the bankruptcy of Iceland, the impact of financial collapse is rarely examined beyond the advanced capitalist core.

The pattern of capitalist crisis over the last fifty years should alert us to the dangers of this approach. Throughout its history, capitalism has functioned through geographical displacement of crisis – attempting to offload the worst impacts onto those outside the core. This article presents a short survey of what this crisis might mean for the Global South.

World trade drops

This crisis hits a world economy that – for the first time in history – is truly global. Of course exports and the control of raw materials have always been important to capitalism. But up until the 1970s most capitalist production was organized nationally. Throughout the 1980s and 1990s both production and consumption began to be organized at the international scale. Today, all markets are dominated by a handful of large companies operating internationally through interconnected chains of production, sub-contracting and marketing. Almost every product we consume has involved the labour of thousands of people scattered across the globe – from the production of raw material inputs, research and development (R&D), assembly, transport, marketing, and financing. At one level this interconnectedness of production expresses the fact that human beings have become one social organism. At the same time, it continually runs up against a system organized for the pursuit of individual, private profit.

This interconnectedness has taken a very particular form over the last couple of decades. The world market has been structured around the consumption of the American (and, to a lesser extent, European) consumer. Goods produced in low-wage production zones such as China and India – using raw materials mostly sourced from other countries in the South – are exported to the U.S. where they ended up in the ever expanding homes of an overly-indebted consumer. Control of this global chain of production and consumption rests in the hands of large U.S., European and Japanese conglomerates.

This structure helped to fracture and roll-back national development projects across the globe. Coupled with the debt crisis of the 1980s, export-oriented models of development were imposed by the International Monetary Fund and other financial institutions on most countries in the South. Many of the elites of these countries bought into this development model as they gained ownership stakes in newly privatized companies and access to markets in the North.

The ever-expanding consumption of the U.S. market was predicated on a massive rise in indebtedness. U.S. consumers were encouraged to take on vast levels of debt (through credit cards, mortgages, 'zero-down' financing, etc) in order to maintain the consumption levels that underpinned global demand. The dollars that enabled this growth in debt came from financial instruments that were purchased by Asian central banks and others around the world. These institutions lent dollars back to the U.S. where they were channeled to consumers through banks and other mechanisms.

The U.S. real estate market was just one of the financial bubbles that permitted this treadmill of increasing indebtedness to continue. People could continually refinance their mortgages as real estate prices went up. But with the collapse of this bubble global world demand is suddenly drying up. Because of the interconnectedness of world trade, this will have a very severe impact on every country across the globe, particularly in the South.

One measure of this is shown by a relatively obscure economic indicator, the Baltic Dry Index (BDI). The BDI measures the cost of long-distance shipping for commodities such as coal, iron ore and steel. From June – November 2008, the BDI fell by 92%, with rental rates for large cargo ships dropping from $234,000 a day to $7,340. This massive drop reflects two factors: the reduction in world demand for raw materials and other commodities, and the inability of shippers to have their payments guaranteed by banks because of the credit crisis.

Falling commodity prices also demonstrate this drop-off in world trade. Copper prices, for example, have fallen 23 per cent in the past two months. Chinese consumption of the metal, critical to much industrial production, has fallen by more than half this year. ArcelorMittal, the world's largest steelmaker, stated on November 5 that its global output would decline by more than 30 percent. The World Bank (which has consistently underestimated the severity of the current downturn) is now predicting global trade volumes to shrink for the first time since 1982.

Social dislocation

This drop in world trade will have a particularly devastating impact on those countries that have adopted 'export-oriented' models of development. This model was heavily promoted by the World Bank, the International Monetary Fund (IMF) and most economists over the last couple of decades. As global demand shrinks, countries reliant on exports will be faced with collapse of their core industries and potential mass unemployment. This will place further pressure on wages as new labour reserves augment already large levels of unemployment.

Standard and Chartered estimate, for example, that Chinese exports could tumble to “zero or even negative growth” in 2009. JP Morgan Chase is predicting that Chinese exports will fall 5.7 percent for every one percent drop in global economic growth. This is not just a matter of getting by on smaller levels of still positive growth. China needs to create 17 million jobs a year in order to deal with the large numbers of farmers moving from the countryside to urban areas. This means that the country must maintain high rates of growth. Even if growth drops from 11-12% annually to 8% the country faces potentially huge social dislocation. Already, workers in China are protesting in the millions as their factories close and owners abscond with unpaid wages.

A collapse in world trade is not the only potentially devastating threat this crisis presents to the global periphery. Like the 1997 Asian Crisis, the rapid withdrawal of foreign funds from stock markets and other investments in the South could cause the meltdown of currencies and the collapse of industries already reeling from slowdowns in trade. A quick survey of a few countries demonstrates the deadly mix of capital outflows, high inflation and drops in export earnings:

  • In Pakistan, foreign-currency reserves have dropped more than 74 percent in the past year to about $4.3-billion (U.S.). The country is teetering on the edge of total collapse and urgently requires $6-billion in order to pay for imports and service its existing debt. The dire situation of foreign outflows led the German foreign minister to state on 28 October that the “world has just six days to save Pakistan” (at the time of writing it looks like Pakistan will get this money in the form of loans from the IMF and/or countries of the Gulf Cooperation Council).

  • Sri Lanka has lost nearly 25% of its foreign reserves since the beginning of August as foreign investors repatriate their dollar holdings from the country. Nearly 50 percent of Sri Lanka's textile and garments exports (accounting for some 43 percent of total foreign exchange earnings) went to the U.S. in 2007, while another 45 percent went to the EU. These exports will likely be decimated by a generalized collapse in demand. The weakening of the Sri Lankan rupee over the last few years has contributed to a 20% increase in inflation, with high food prices hitting the poorest most heavily.

  • India has seen its foreign exchange reserves drop by 17% since March 2008. Over $51-billion (U.S.) left India during the third week of October, the largest fall in eight years. The Indian textile industry, which makes up the second largest component of the country's labour force after agriculture, exports 70% of its product to U.S. and European markets. It is expected that textile and garment orders will decline by at least 25% over winter and mass lay-offs have already begun. On October 29, the Association of Chambers of Commerce and Industries predicted that companies in seven key industries (steel, cement, finance, construction, real estate, aviation, and information technology) would need to cut 25% of their workforce. This at a time when the country struggles with an immense gap between rich and poor. The wealth of the richest 53 people in India is equivalent to 31 percent of the country's GDP, yet according to the World Bank 42 percent of the population lives below the official poverty line of $1.25 a day.

These patterns are repeated across the globe. Countries including Mexico, Turkey, Indonesia, Brazil, Argentina, South Korea as well as the poorer countries of Eastern and Southern Europe are faced with collapsing growth rates, capital flight, and declines in the value of their currency. In many cases, these problems have been exacerbated due to a proliferation of low-interest loans taken by individuals and companies that were denominated in foreign currency (such as Swiss Francs, Euros, and Dollars). These loans initially offered a better rate of interest than the domestic currency, but, as local currencies have dropped in value, the amount of money required to be repaid has increased dramatically. Business Week estimates that borrowers in so-called 'emerging markets' owe some $4.7-trillion (U.S.) in foreign-denominated debt, up 38% over the past two years. This is the reassertion of a debt crisis from the 1980s that never really went away, but only partially subsided.

The IMF returns

This unfolding social crisis has returned the IMF to center stage. Typically, the IMF lends to those countries facing potential collapse and, in return, demands the fulfillment of stringent economic conditions. The scale of borrowing is already immense: Iceland ($2.4-billion), Ukraine ($16.5-billion), and Hungary ($15.7-billion) have been extended loans with Pakistan, Serbia, Belarus, and Turkey likely candidates in the near future.

The conditions that come with this latest round of IMF lending have been particularly opaque. The policies that Ukraine is expected to pass, for example, are not yet known despite the fact the country has essentially agreed to take a $16.5-billion loan from the IMF. Hungary has agreed to cuts in welfare spending, a freeze in salaries and canceling bonuses for public sector workers yet the final details have not been made public. Iceland was required to raise interest rates to 18% with the economy predicted to contract by 10% and inflation reaching 20%.

We can certainly expect that the conditions attached to loans in the poorer countries in the Global South will be much more stringent than those imposed on these European countries. There is little doubt that these countries will face massive job losses, intense pressure to privatize public resources, and slashing of state spending on welfare, education and health in the name of 'balanced budgets.' Whether these attacks on the social fabric are successful, however, will ultimately depend on the level of resistance they face.

Authoritarian state

On 11 October, a meeting of progressive economists in Caracas, Venezuela, issued a statement warning that the dynamic of this crisis “encourages new rounds of capital concentration and, if the people do not firmly oppose this, it is becoming perilously likely that restructuring will occur simply to save privileged sectors.” This is an important point to understand. Capitalist crisis doesn't automatically lead to the end of capitalism. Without effective resistance and struggle, the crisis will eventually be resolved at the expense of working people – particularly those in the South.

This could be one of the most serious crises that capitalism has faced in living memory. But we should not be fooled into thinking that the system will somehow be reformed or its contradictions solved through peaceful and orderly means. The most likely immediate outcome is a hardened, more authoritarian state that seeks to restore profitability through ratcheting up repression and forcing people to accept the loss of jobs, housing and any kind of social support. In the South, this will inevitably mean more war and military repression.

If this is not prevented then the system will utilize this crisis to restructure and continue business as usual. This is why resistance – both at home and abroad – will be the single most important determinant to how this eventually plays out. In Latin America, for example, attempts to restrict capital flight, place key economic sectors under popular control, and establish alternative currency and trade arrangements are important initiatives that point to the necessity of solutions beyond capitalism. In the Middle East, popular resistance to the political and economic control of the region has undoubtedly checked the extension of U.S. power.

Any displacement of crisis onto the South means playing different groups of people against one another. For this reason, the ideological corollary of war and military repression abroad is likely an increasingly virulent racism in the North – directed at immigrants, people of color and indigenous populations. This means that for activists in North America the question of global solidarity and resistance to racism must be placed as a central priority of any effective fightback. Any attempt to turn inwards, or dismiss international solidarity as less important in this phase will be disastrous for all working people – across the globe. •

Adam Hanieh can be contacted at hanieh08@gmail.com. This essay is also published on Left Turn.