Thinking the unthinkable

So, everything was possible after all. Governments could take radical action in the financial sector. The constraints of the European stability pact could be forgotten. Central banks could kowtow to governments and stimulate the economy. Tax havens could be blacklisted. Everything was possible because the banks had to be rescued.

For 30 years, any suggestion that the liberal order might be amended to improve the living conditions of ordinary people, for example, met with the same stock responses: the Berlin wall has gone, didn’t you notice?; that’s all ancient history; globalisation is the order of the day now; the coffers are empty; the markets won’t stand it.

And for 30 years, “reform” went ahead – in reverse. This was the conservative revolution, handing over increasingly substantial and lucrative swathes of national assets to the money men, privatising public services and transforming them into cash machines to “create added value” for shareholders. This was liberalisation, with cuts in wages and social security, forcing tens of millions of people to borrow in order to maintain their purchasing power, and “invest” with brokers and insurance agents in order to cover the cost of education, healthcare and pensions.

Falling wages and social security cutbacks naturally led to financial excesses. Creating risks encouraged people to take steps to protect themselves. Speculation boomed, fuelled by the ideology of market forces, and housing became a prime target for investment. Attitudes changed, people became more selfish, more calculating, less public-spirited. The 2008 crash is not just a technical hitch that can be put right by “learning lessons” or “putting a stop to abuses”. The whole system has broken down.

The would-be repair men are already at work, hoping to restore it, plaster over the cracks, give it a fresh coat of paint, all ready to commit yet another offence against society. The wiseacres who now pretend to be disgusted with the reckless results of liberalism are the very ones who provided all the incentives – budgetary, regulatory, fiscal and ideological – for the ensuing spending spree. They should feel disqualified, but they know an army of politicians and journalists are eager to do a whitewash job.

So we have Gordon Brown, whose first act as Chancellor of the Exchequer was to “liberate” the Bank of England, José Manuel Barroso, president of a European Commission obsessed with “competition”, and Nicolas Sarkozy, who invented the “fiscal shield”, introduced Sunday working and privatised the post office: all, it seems, busy “rebuilding capitalism”.

Their effrontery marks a strange hiatus. What has happened to the left? As for the official left, it just wants to turn the page as quickly as possible on a “crisis” for which it is jointly responsible. This is the left that went along with liberalisation, Democratic president Bill Clinton deregulating the financial sector, François Mitterrand ending index-linked wages, Lionel Jospin and Dominique Strauss-Kahn privatising public services, Gerhard Schröder axing unemployment benefit.
So be it. But what about the other left? Will it be content, at a time like this, to dust off its most unambitious projects, the serviceable but terribly timid plans for the Tobin tax, an increase in 
the minimum wage, a “new Bretton Woods Agreement”, wind farms? In the Keynesian era, the liberal right thought the unthinkable and took advantage of a major crisis to impose it. Friedrich Hayek, intellectual godfather of the movement that spawned Ronald Reagan and Margaret Thatcher, stated the case in 1949: “The main lesson which the true liberal must learn from the success of 
the socialists is that it was their courage to be 
Utopian which… is daily making possible what only 
recently seemed utterly remote.”

So will someone now call free trade into question, free trade which is the very heart of the system (1)? “Utopian”? But everything is possible when it comes to banks

Ref: Le Monde

IMF sounds ‘meltdown’ warning

The International Monetary Fund has said that the world’s financial system is near meltdown.

The warning came hours before European leaders began a meeting in the French capital to tackle the deepening financial crisis.

“Intensifying solvency concerns about a number of the largest US-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown,” Dominique Strauss-Kahn, the IMF chief, said on Sunday.

Spreading crisis

Strauss-Kahn expressed hope that government actions would prove powerful enough to persuade banks to resume lending and bring an end to a spreading credit crunch.


How the financial bubble burst

Q&A: The US financial meltdown

Reacting to the financial crisis

Russian markets feel the chill

“In the coming days … what I expect is that the reaction by the different institutions will be positive enough to unfreeze the different markets and to restore the necessary funding,” he said.

Earlier, Australia announced that it would guarantee all bank deposits for three years and guarantee wholesale funding to Australian banks in an attempt to combat the credit crisis.

Australia would make $2.6bn available for mortgage-backed securities to help maintain liquidity for non-bank lenders, Kevin Rudd, the prime minister, said.

Amid the financial turmoil, markets in the Middle East continued to spiral downward on Sunday, the first day of the business week for most countries in the region.

The IMF said it backed a plan by the G7 most industrialised nations to try to stabilise markets and urged “exceptional vigilance, co-ordination and readiness to take bold action” to contain a firestorm that pushed global stocks to five-year lows on Friday.

Beyond talk

Christine Lagarde, France’s economy minister, said that the gathering would go beyond talking about remedies to “put meat, muscles on the bones of that skeleton and to develop, follow up and execute upon it”.

The US appealed for patience but the IMF said time was short after the G7 nations – which include the US, Britain, France, Germany, Italy, Japan and Canada – failed to agree on concrete measures to end the crisis at a meeting on Friday.

George Bush, the US president, met G7 economic chiefs and officials from the IMF and World Bank and said top industrial nations would work together to solve the crisis.

“I’m confident that the world’s major economies can overcome the challenges we face,” he said.

Ref: Al Jazeera

The End of Neo-liberalism?

NEW YORK – The world has not been kind to neo-liberalism, that grab-bag of ideas based on the fundamentalist notion that markets are self-correcting, allocate resources efficiently, and serve the public interest well. It was this market fundamentalism that underlay Thatcherism, Reaganomics, and the so-called “Washington Consensus” in favor of privatization, liberalization, and independent central banks focusing single-mindedly on inflation.

For a quarter-century, there has been a contest among developing countries, and the losers are clear: countries that pursued neo-liberal policies not only lost the growth sweepstakes; when they did grow, the benefits accrued disproportionately to those at the top.

Though neo-liberals do not want to admit it, their ideology also failed another test. No one can claim that financial markets did a stellar job in allocating resources in the late 1990’s, with 97% of investments in fiber optics taking years to see any light. But at least that mistake had an unintended benefit: as costs of communication were driven down, India and China became more integrated into the global economy.

But it is hard to see such benefits to the massive misallocation of resources to housing. The newly constructed homes built for families that could not afford them get trashed and gutted as millions of families are forced out of their homes, in some communities, government has finally stepped in – to remove the remains. In others, the blight spreads. So even those who have been model citizens, borrowing prudently and maintaining their homes, now find that markets have driven down the value of their homes beyond their worst nightmares.

To be sure, there were some short-term benefits from the excess investment in real estate: some Americans (perhaps only for a few months) enjoyed the pleasures of home ownership and living in a bigger home than they otherwise would have. But at what a cost to themselves and the world economy! Millions will lose their life savings as they lose their homes. And the housing foreclosures have precipitated a global slowdown. There is an increasing consensus on the prognosis: this downturn will be prolonged and widespread.

Nor did markets prepare us well for soaring oil and food prices. Of course, neither sector is an example of free-market economics, but that is partly the point: free-market rhetoric has been used selectively – embraced when it serves special interests and discarded when it does not.

Perhaps one of the few virtues of George W. Bush’s administration is that the gap between rhetoric and reality is narrower than it was under Ronald Reagan. For all Reagan’s free-trade rhetoric, he freely imposed trade restrictions, including the notorious “voluntary” export restraints on automobiles.

Bush’s policies have been worse, but the extent to which he has openly served America’s military-industrial complex has been more naked. The only time that the Bush administration turned green was when it came to ethanol subsidies, whose environmental benefits are dubious. Distortions in the energy market (especially through the tax system) continue, and if Bush could have gotten away with it, matters would have been worse.

This mixture of free-market rhetoric and government intervention has worked particularly badly for developing countries. They were told to stop intervening in agriculture, thereby exposing their farmers to devastating competition from the United States and Europe. Their farmers might have been able to compete with American and European farmers, but they could not compete with US and European Union subsidies. Not surprisingly, investments in agriculture in developing countries faded, and a food gap widened.

Those who promulgated this mistaken advice do not have to worry about carrying malpractice insurance. The costs will be borne by those in developing countries, especially the poor. This year will see a large rise in poverty, especially if we measure it correctly.

Simply put, in a world of plenty, millions in the developing world still cannot afford the minimum nutritional requirements. In many countries, increases in food and energy prices will have a particularly devastating effect on the poor, because these items constitute a larger share of their expenditures.

The anger around the world is palpable. Speculators, not surprisingly, have borne more than a little of the wrath. The speculators argue: we are not the cause of the problem; we are simply engaged in “price discovery” – in other words, discovering – a little late to do much about the problem this year – that there is scarcity.

But that answer is disingenuous. Expectations of rising and volatile prices encourage hundreds of millions of farmers to take precautions. They might make more money if they hoard a little of their grain today and sell it later; and if they do not, they won’t be able to afford it if next year’s crop is smaller than hoped. A little grain taken off the market by hundreds of millions of farmers around the world adds up.

Defenders of market fundamentalism want to shift the blame from market failure to government failure. One senior Chinese official was quoted as saying that the problem was that the US government should have done more to help low-income Americans with their housing. I agree. But that does not change the facts: US banks mismanaged risk on a colossal scale, with global consequences, while those running these institutions have walked away with billions of dollars in compensation.

Today, there is a mismatch between social and private returns. Unless they are closely aligned, the market system cannot work well.

Neo-liberal market fundamentalism was always a political doctrine serving certain interests. It was never supported by economic theory. Nor, it should now be clear, is it supported by historical experience. Learning this lesson may be the silver lining in the cloud now hanging over the global economy.

Ref: Project syndicate by Joseph E. Stiglitz

The Shock Doctrine – Q&A From the Seattle Talk

Q&A part of talk by Naomi Klein author of “The Shock Doctrine: The Rise of Disaster Capitalism” given Sept. 27, 2007 at Town Hall Seattle.

Don´t miss this!!!!!! the milton-friedman-choir-the-corporation

A Warning to Africa: The New U.S. Imperial Grand Strategy

Imperialism is constant for capitalism. But it passes through various phases as the system evolves. At present the world is experiencing a new age of imperialism marked by a U.S. grand strategy of global domination. One indication of how things have changed is that the U.S. military is now truly global in its operations with permanent bases on every continent, including Africa, where a new scramble for control is taking place focused on oil.

Elite opinion in the United States in the decade immediately following the collapse of the Soviet Union often decried the absence of a U.S. grand strategy comparable to what George Kennan labeled “containment,” under the mantle of which the United States intervened throughout the Cold War years. The key question, as posed in November 2000 by national-security analyst Richard Haass, was that of determining how the United States should utilize its current “surplus of power” to reshape the world. Haass’s answer, which doubtless contributed to his being hired immediately after as director of policy planning for Colin Powell’s State Department in the new Bush administration, was to promote an “Imperial America” strategy aimed at securing U.S. global dominance for decades to come. Only months before, a similar, if even more nakedly militaristic, grand strategy had been presented by the Project for the New American Century, in a report authored by future top Bush-administration figures Donald Rumsfeld, Paul Wolfowitz, and Lewis Libby, among others.^1

This new imperial grand strategy became a reality, following the attacks of September 11, 2001, in the U.S. invasions of Afghanistan and Iraq—and was soon officially enshrined in the White House’s /National Security Strategy statement of 2002. Summing up the new imperial thrust in Harvard Magazine, Stephen Peter Rosen, director of the Olin Institute for Strategic Studies at Harvard and a founding member of the Project for the New American Century, wrote:

A political unit that has overwhelming superiority in military power, and uses that power to influence the internal behavior of other states, is called an empire. Because the United States does not seek to control territory or govern the overseas citizens of the empire, we are an indirect empire, to be sure, but an empire nonetheless. If this is correct, our goal is not combating a rival, but maintaining our imperial position, and maintaining imperial order. Planning for imperial wars is different from planning for conventional international wars….Imperial wars to restore order are not so constrained [by deterrence considerations]. The maximum amount of force can and should be used as quickly as possible for psychological impact—to demonstrate that the empire cannot be challenged with impunity….[I]mperial strategy focuses on preventing the emergence of powerful, hostile challengers to the empire: by war if necessary, but by imperial assimilation if possible.2

Commenting in late 2002 in Foreign Policy, John Lewis Gaddis, professor of military and naval history at Yale, stated that the goal of the impending war on Iraq was one of inflicting an “Agincourt on the banks of the Euphrates.” This would be a demonstration of power so great that, as in Henry V’s famous fifteenth-century victory in France, the geopolitical landscape would be changed for decades to come. What was ultimately at issue, according to Gaddis, was “the management of the international system by a single hegemon”—the United States. This securing of hegemony over the entire world by the United States by means of preemptive actions was, he contended, nothing less than “a new grand strategy of transformation.”3

The Nature of Grand Strategy Since the time of Clausewitz, tactics has been designated in military circles as “the art of using troops in battle”; strategy as “the art of using battles to win the war.”^4 In contrast, the idea of “grand strategy” as classically promoted by military strategists and historians, such as Edward Meade Earle and B. H. Liddell Hart, refers to the integration of the war-making potential of a state with its larger political-economic ends. As historian Paul Kennedy observed in Grand Strategies in War and Peace (1991): “a true grand strategy” is “concerned with peace as much as (perhaps even more than) with war….about the evolution or integration of policies that should operate for decades, or even for centuries.”^5

Grand strategies are geopolitical in orientation, geared to domination of whole geographical regions—including strategic resources such as minerals and waterways, economic assets, populations, and vital military positions. The most successful grand strategies of the past are seen as those of long-standing empires, which have been able to maintain their power over large geographical expanses for extended periods of time. Hence, historians of grand strategy commonly focus on the nineteenth-century British Empire (Pax Britannica) and even the ancient Roman Empire (Pax Romana).

For the United States today what is at stake is no longer control of a mere portion of the globe, but a truly global Pax Americana. Although some commentators have seen the latest U.S. imperial thrust as the work of a small cabal of neoconservatives within the Bush administration, the reality is one of broad concurrence within the U.S. power structure on the necessity of expanding the U.S. empire. One recent collection, including contributions by administration critics, is entitled The Obligation of Empire: United States’ Grand Strategy for a New Century.^6

Ivo. H. Daadler (senior fellow at the Brookings Institution and former foreign policy advisor to Howard Dean) and James M. Lindsay (vice president of the Council on Foreign Relations, previously employed by Clinton’s National Security Council) argue in their book America Unbound that the United States has long had a “secret empire,” disguised by multilateralism. The Bush White House’s unilateral policy of building “empire on American power alone” has changed things only to the extent that it has stripped away the empire’s hidden character and reduced its overall force by relying less on vassal states. According to Daadler and Lindsay, the United States is now under the command of “hegemonist” thinkers who want to ensure that the United States dominates the entire globe, both in its own national self-interest and in order to reshape the world in tune with “democratic imperialism.” But such an aggressive posture, they point out, is not outside the historic range of U.S. policy. A unilateralist imperial thrust can be traced back to Theodore Roosevelt and was present from the beginning of the Cold War era in the Truman and Eisenhower administrations. Still, Daadler and Lindsay hold out the possibility of a more cooperative strategy, with the other great powers falling in behind the United States, as a superior approach to running an empire.^7

Such cooperative imperialism, however, becomes more difficult to achieve once the hegemon’s power begins to wane. Not only is the United States suffering increased economic competition, but with the demise of the Soviet Union the NATO alliance has weakened: Washington’s European vassals do not always follow its lead, even though they are unable to challenge it directly. The temptation facing a waning hegemonic power still armed and dangerous—caught in such circumstances is to attempt to rebuild and even expand its power by acting unilaterally and monopolizing the spoils.

The War for the ‘New American Century Capitalism is a system that is worldwide in its economic scope but divided politically into competing states that develop economically at different rates. The contradiction of uneven capitalist development was classically expressed by Lenin in 1916 in Imperialism, the Highest Stage of Capitalism:

There can be no other conceivable basis under capitalism for the division of spheres of influence, of interests, of colonies, etc., than a calculation of the strength of the participants in the division, their general economic, financial, military strength, etc. And the strength of these participants in the division does not change to an equal degree, for under capitalism the development of different undertakings, trusts, branches of industry, or countries cannot be even. Half a century ago, Germany was a miserable, insignificant country, as far as its capitalist strength was concerned, compared with the strength of England at that time. Japan was similarly insignificant compared with Russia. Is it “conceivable” that in ten or twenty years’ time the relative strength of the imperialist powers will have remained unchanged? Absolutely inconceivable.8

It is now widely acknowledged that the world is undergoing a global economic transformation. Not only is the growth rate of the world economy as a whole slowing, but the relative economic strength of the United States is continuing to weaken. In 1950 the United States accounted for about half of world GDP, falling to a little over a fifth by 2003. Likewise it accounted for almost half of the world’s stock of global foreign direct investment in 1960, compared to a little over 20 percent at the beginning of this century. According to projections of Goldman Sachs, China could overtake the United States as the world’s largest economy by 2039.^9

This growing threat to U.S. power is fueling Washington’s obsession with laying the groundwork for a “New American Century.” Its current interventionism is aimed at taking advantage of its present short-term economic and military primacy to secure strategic assets that will provide long-term guarantees of global supremacy. The goal is to extend U.S. power directly while depriving potential competitors of those vital strategic assets that might allow them eventually to challenge it globally or even within particular regions.

The National Security Strategy of the United States of 2002 gave notice that “Our forces will be strong enough to dissuade potential adversaries from pursuing a military build-up in hopes of surpassing, or equaling, the power of the United States.” But grand strategy extends beyond mere military power. Economic advantages vis-à-vis potential rivals are the real coin of intercapitalist competition. Hence, U.S. grand strategy integrates military power with the struggle to control capital, trade, the value of the dollar, and strategic raw materials.

Perhaps the clearest ordering of U.S. strategic objectives has been provided by Robert J. Art, professor of international relations at Brandeis and a research associate of the Olin Institute, in A Grand Strategy for America. “A grand strategy,” he writes, “tells a nation’s leaders what goals they should aim for and how best they can use their country’s military power to attain these goals.” In conceptualizing such a grand strategy for the Untied States, Art presents six “overarching national interests” in order of importance:

First, prevent an attack on the American homeland

Second, prevent great-power Eurasian wars and, if possible, the intense security competitions that make them more likely

Third, preserve access to a reasonably priced and secure supply of oil

Fourth, preserve an open international economic order

Fifth, foster the spread of democracy and respect for human rights abroad, and prevent genocide or mass murder in civil wars

Sixth, protect the global environment, especially from the adverse effects of global warming and severe climate change.

After national defense proper, i.e., defense of “the homeland” against external attack, the next three highest strategic priorities are thus: (1) the traditional geopolitical goal of hegemony over the Eurasian heartland seen as the key to world power, (2) securing control over world oil supplies, and (3) promoting global-capitalist economic relations.

In order to meet these objectives, Art contends, Washington should “maintain forward-based forces” in Europe and East Asia (the two rimlands of Eurasia with great power concentrations) and in the Persian Gulf (containing the bulk of world oil reserves). “Eurasia is home to most of the world’s people, most of its proven oil reserves, and most of its military powers, as well as a large share of its economic growth.” It is therefore crucial that the U.S. imperial grand strategy be aimed at strengthening its hegemony in this region, beginning with the key oil regions of South-Central Asia.^10

With the wars on and occupations of Afghanistan and Iraq still unresolved, Washington has been stepping-up its threats of a “preemptive” attack on these states’ more powerful neighbor, Iran. The main justification offered for this is Iran’s uranium-enrichment program, which could eventually allow it to develop nuclear weapons capabilities. Yet, there are other reasons that the United States is interested in Iran. Like Iraq before it, Iran is a leading oil power, now with the second largest proven oil reserves behind Saudi Arabia and ahead of Iraq. Control of Iran is thus crucial to Washington’s goal of dominating the Persian Gulf and its oil.

Iran’s geopolitical importance, moreover, stretches far beyond the Middle East. It is a key prize (as in the case also of Afghanistan) in the New Great Game for control of all of South-Central Asia, including the Caspian Sea Basin with its enormous fossil fuel reserves. U.S. strategic planners are obsessed with fears of an Asian energy-security grid, in which Russia, China, Iran, and the Central Asian countries (possibly also including Japan) would come together economically and in an energy accord to break the U.S. and Western stranglehold on the world oil and gas market—creating the basis for a general shift of world power to the East. At present China, the world’s fastest growing economy, lacks energy security even as its demand for fossil fuels is rapidly mounting. It is attempting to solve this partly through greater access to the energy resources of Iran and the Central Asian states. Recent U.S. attempts to establish a stronger alliance with India, with Washington bolstering India’s status as a nuclear power, are clearly part of this New Great Game for control of South-Central Asia—reminiscent of the nineteenth-century Great Game between Britain and Russia for control of this part of Asia.^11

The New Scramble for Africa If there is a New Great Game afoot in Asia there is also a “New Scramble for Africa” on the part of the great powers.^12 The National Security Strategy of the United States of 2002 declared that “combating global terror” and ensuring U.S. energy security required that the United States increase its commitments to Africa and called upon “coalitions of the willing” to generate regional security arrangements on that continent. Soon after the U.S. European Command, based in Stuttgart, Germany—in charge of U.S. military operations in Sub-Saharan Africa—increased its activities in West Africa, centering on those states with substantial oil production andor reserves in or around the Gulf of Guinea (stretching roughly from the Ivory Coast to Angola). The U.S. military’s European Command now devotes 70 percent of its time to African affairs, up from almost nothing as recently as 2003.^13

As pointed out by Richard Haass, now president of the Council on Foreign Relations, in his foreword to the 2005 council report entitled More Than Humanitarianism: A Strategic U.S. Approach Toward Africa: “By the end of the decade sub-Saharan Africa is likely to become as important as a source of U.S. energy imports as the Middle East.”^14 West Africa has some 60 billion barrels of proven oil reserves. Its oil is the low sulfur, sweet crude prized by the U.S. economy. U.S. agencies and think tanks project that one in every five new barrels of oil entering the global economy in the latter half of this decade will come from the Gulf of Guinea, raising its share of U.S. oil imports from 15 to over 20 percent by 2010, and 25 percent by 2015. Nigeria already supplies the United States with 10 percent of its imported oil. Angola provides 4 percent of U.S. oil imports, which could double by the end of the decade. The discovery of new reserves and the expansion of oil production are turning other states in the region into major oil exporters, including Equatorial Guinea, São Tomé and Principe, Gabon, Cameroon, and Chad. Mauritania is scheduled to emerge as an oil exporter by 2007. Sudan, bordering the Red Sea in the east and Chad to the west, is an important oil producer.

At present the main, permanent U.S. military base in Africa is the one established in 2002 in Djibouti in the Horn of Africa, giving the United States strategic control of the maritime zone through which a quarter of the world’s oil production passes. The Djibouti base is also in close proximity to the Sudanese oil pipeline. (The French military has long had a major presence in Djibouti and also has an air base at Abeche, Chad on the Sudanese border.) The Djibouti base allows the United States to dominate the eastern end of the broad oil swath cutting across Africa that it now considers vital to its strategic interests—a vast strip running southwest from the 994-mile Higleig-Port Sudan oil pipeline in the east to the 640-mile Chad-Cameroon pipeline and the Gulf of Guinea in the West. A new U.S. forward-operating location in Uganda gives the United States the potential of dominating southern Sudan, where most of that country’s oil is to be found.

In West Africa, the U.S. military’s European Command has now established forward-operating locations in Senegal, Mali, Ghana, and Gabon—as well as Namibia, bordering Angola on the south—involving the upgrading of airfields, the pre-positioning of critical supplies and fuel, and access agreements for swift deployment of U.S. troops.^15 In 2003 it launched a counterterrorism program in West Africa, and in March 2004 U.S. Special Forces were directly involved in a military operation with Sahel countries against the Salafist Group for Preaching and Combat—on Washington’s list of terrorist organizations. The U.S. European Command is developing a coastal security system in the Gulf of Guinea called the Gulf of Guinea Guard. It has also been planning the construction of a U.S. naval base in São Tomé and Principe, which the European Command has intimated could rival the U.S. naval base at Diego Garcia in the Indian Ocean. The Pentagon is thus moving aggressively to establish a military presence in the Gulf of Guinea that will allow it to control the western part of the broad trans-Africa oil strip and the vital oil reserves now being discovered there. Operation Flintlock, a start-up U.S. military exercise in West Africa in 2005, incorporated 1,000 U.S. Special Forces. The U.S. European Command will be conducting exercises for its new rapid-reaction force for the Gulf of Guinea this summer.

Here the flag is following trade: the major U.S. and Western oil corporations are all scrambling for West African oil and demanding security. The U.S. military’s European Command, the Wall Street Journal reported in its April 25th issue, is also working with the U.S. Chamber of Commerce to expand the role of U.S. corporations in Africa as part of an “integrated U.S. response.” In this economic scramble for Africa’s petroleum resources the old colonial powers, Britain and France, are in competition with the United States. Militarily, however, they are working closely with the United States to secure Western imperial control of the region.

The U.S. military buildup in Africa is frequently justified as necessary both to fight terrorism and to counter growing instability in the oil region of Sub-Saharan Africa. Since 2003 Sudan has been torn by civil war and ethnic conflict focused on its southwestern Darfur region (where much of the country’s oil is located), resulting in innumerable human rights violations and mass killings by government-linked militia forces against the population of the region. Attempted coups recently occurred in the new petrostates of São Tomé and Principe (2003) and Equatorial Guinea (2004). Chad, which is run by a brutally oppressive regime shielded by a security and intelligence apparatus backed by the United States, also experienced an attempted coup in 2004. A successful coup took place in Mauritania in 2005 against U.S.-supported strongman Ely Ould Mohamed Taya. Angola’s three-decade-long civil war—instigated and fueled by the United States, which together with South Africa organized the terrorist army under Jonas Savimbi’s UNITA—lasted until the ceasefire following Savimbi’s death in 2002. Nigeria, the regional hegemon, is rife with corruption, revolts, and organized oil theft, with considerable portions of oil production in the Niger Delta region being siphoned off—up to 300,000 barrels a day in early 2004.^16 The rise of armed insurgency in the Niger Delta and the potential of conflict between the Islamic north and non-Islamic south of the country are major U.S. concerns.

Hence there are incessant calls and no lack of seeming justifications for U.S. “humanitarian interventions” in Africa. The Council on Foreign Relations report More than Humanitarianism insists that “the United States and its allies must be ready to take appropriate action” in Darfur in Sudan “including sanctions and, if necessary, military intervention, if the Security Council is blocked from doing so.” Meanwhile the notion that the U.S. military might before long need to intervene in Nigeria is being widely floated among pundits and in policy circles. Atlantic Monthly correspondent Jeffrey Taylor wrote in April 2006 that Nigeria has become “the largest failed state on earth,” and that a further destabilization of that state, or its takeover by radical Islamic forces, would endanger “the abundant oil reserves that America has vowed to protect. Should that day come, it would herald a military intervention far more massive than the Iraqi campaign.”^17

Still, U.S. grand strategists are clear that the real issues are not the African states themselves and the welfare of their populations but oil and China’s growing presence in Africa. As the Wall Street Journal noted in “Africa Emerges as a Strategic Battlefield,” “China has made Africa a front line in its pursuit of more global influence, tripling trade with the continent to some $37 billion over the last five years and locking up energy assets, closing trade deals with regimes like Sudan’s and educating Africa’s future elites at Chinese universities and military schools.” In More than Humanitarianism, the Council on Foreign Relations likewise depicts the leading threat as coming from China: “China has altered the strategic context in Africa. All across Africa today, China is acquiring control of natural resource assets, outbidding Western contractors on major infrastructure projects, and providing soft loans and other incentives to bolster its competitive advantage.”^18 China imports more than a quarter of its oil from Africa, primarily Angola, Sudan, and Congo. It is Sudan’s largest foreign investor. It has provided heavy subsidies to Nigeria to increase its influence and has been selling fighter jets there. Most threatening from the standpoint of U.S. grand strategists is China’s $2 billion low-interest loan to Angola in 2004, which has allowed Angola to withstand IMF demands to reshape its economy and society along neoliberal lines.

For the Council on Foreign Relations, all of this adds up to nothing less than a threat to Western imperialist control of Africa. Given China’s role, the council report says, “the United States and Europe cannot consider Africa their chasse gardé [private hunting ground], as the French once saw francophone Africa. The rules are changing as China seeks not only to gain access to resources, but also to control resource production and distribution, perhaps positioning itself for priority access as these resources become scarcer.” The council report on Africa is so concerned with combating China through the expansion of U.S. military operations in the region, that none other than Chester Crocker, former assistant secretary of state for African affairs in the Reagan administration, charges it with sounding “wistfully nostalgic for an era when the United States or the West was the only major influence and could pursue its…objectives with a free hand.”^19

What is certain is that the U.S empire is being enlarged to encompass parts of Africa in the rapacious search for oil. The results could be devastating for Africa’s peoples. Like the old scramble for Africa this new one is a struggle among great powers for resources and plunder—not for the development of Africa or the welfare of its population.

A Grand Strategy of Enlargement Despite the rapidly evolving strategic context and the shift to a more naked imperialism in recent years, there is a consistency in U.S. imperial grand strategy, which derives from the broad agreement at the very top of the U.S. power structure that the United States should seek “global supremacy,” as President Jimmy Carter’s former National Security Advisor, Zbigniew Brzezinski put it.^20

The Council on Foreign Relations’ 2006 report on More Than Humanitarianism, which supports the enlargement of U.S. grand strategy to take in Africa, was cochaired by Anthony Lake, National Security Advisor to Clinton from 1993–1997 and Christine Todd Whitman, former head of the Environmental Protection Agency under Bush. As Clinton’s National Security Advisor, Lake played a leading role in defining the U.S. grand strategy in the Clinton administration. In a speech entitled “From Containment to Enlargement,” delivered to the School of Advanced International Studies at Johns Hopkins University on September 21, 2003, he declared that with the collapse of the Soviet Union the United States was the world’s “dominant power…we have the world’s strongest military, its largest economy and its most dynamic, multiethnic society….We contained a global threat to market democracies; now we should seek to enlarge, their reach. The successor to a doctrine of containment must be a strategy of enlargement.” Translated this meant an expansion of the sphere of world capitalism under the U.S. military-strategic umbrella. The chief enemies of this new world order were characterized by Lake as the “backlash states,” especially Iraq and Iran. Lake’s insistence, in the early Clinton era, on a grand “strategy of enlargement” for the United States is being realized today in the enlargement of the U.S. military role not only in Central Asia and the Middle East, but also in Africa.^21

U.S. imperial grand strategy is less a product of policies generated in Washington by this or that wing of the ruling class, than an inevitable result of the power position that U.S. capitalism finds itself in at the commencement of the twenty-first century. U.S. economic strength (along with that of its closest allies) has been ebbing fairly steadily. The great powers are not likely to stand in the same relation to each other economically two decades hence. At the same time U.S. world military power has increased relatively with the demise of the Soviet Union. The United States now accounts for about half of all of the world’s military spending—a proportion two or more times its share of world output.

The goal of the new U.S. imperial grand strategy is to use this unprecedented military strength to preempt emerging historical forces by creating a sphere of full-spectrum dominance so vast, now encompassing every continent, that no potential rivals will be able to challenge the United States decades down the line. This is a war against the peoples of the periphery of the capitalist world and for the expansion of world capitalism, particularly U.S. capitalism. But it is also a war to secure a “New American Century” in which third world nations are viewed as “strategic assets” within a larger global geopolitical struggle

The lessons of history are clear: attempts to gain world dominance by military means, though inevitable under capitalism, are destined to fail and can only lead to new and greater wars. It is the responsibility of those committed to world peace to resist the new U.S. imperial grand strategy by calling into question imperialism and its economic taproot: capitalism itself.

Ref: Global Research Articles by John Bellamy Foster

African Debt, War and Imperialism are Linked – Why Bono and Geldof Got It Wrong

At the beginning of this month, the leaders of the eight most powerful nations met in Gleneagles, Scotland, to decide on the critical issues that will impact the lives of the six billion other people on this planet, and the planet itself. Much critical analysis of these failed meetings was overshadowed or replaced by coverage of the London bombings. Ironically, even though the host of the hour, Tony Blair, was attempting to recast himself as the savior of Africa, a move seemingly light years away, or certainly several continents away from Iraq, both the London bombings and the G8 meetings are inseparable from the war on Iraq.

Previously, I have written about the connections of the attacks in London and the attacks on Fallujah. This article will recount my experiences in Scotland, protesting the dictatorial nature and issues of the G8 meetings, and offer an analysis of the Blair government’s public relations campaign surrounding the meetings, a campaign aided and abetted by the Bush regime, British NGOs, and quite unfortunately, Bob Geldolf and Bono. I conclude that facilitating the fusion of the anti-war movement with the global justice movement is an absolutely critical task for those of us working toward the eradication of poverty, war, and imperialism. One practical and immediate tactic is to mobilize the biggest demonstration possible on September 24 in Washington, DC the site of both a national anti-war rally and march, and meetings of the International Monetary Fund and World Bank.

Co-opting of a Movement: The Make Poverty History Demonstration

The largest mobilization ever amassed in Scottish history occurred the Monday before the G8 leaders met in Gleneagles. Over 300,000 demonstrators packed the streets of the picturesque town of Edinburgh with quite a large part of the crowd being unable to march the route, after having waited up to three hours in line, because of the enormity of the demonstration’s turnout.

The theme of the march, which was also the name of the NGO that temporarily formed to organize it, was “Make Poverty History.” The most influential player of Make Poverty History (MPH) was Oxfam, a centrist NGO with close allegiance to the British government, in particular with British Chancellor Gordon Brown’s office. Working closely with the Commission for Africa, which is chaired by Bob Geldolf and run by Blair, Brown, and Britain’s overseas aid minister Hilary Benn, the official MPH campaign ignorantly fell into supporting the neo-liberal agenda of the G8 leaders.

Although the commitment toward ending the debt and fighting African poverty is genuine from the NGOs and rock stars, the assumptions and recommendations manufactured by the Commission for Africa would prove disastrous for Africa’s workers, peasants, and the urban poor. These include the assumption that the impact of Western maneuvers on Africa has been largely benign. There is a complete absence of criticism of the ongoing Western military interventions of the last half century, and the colonial exploits and brutality forced upon the peoples of African nations. The other damaging assumption of the Commission revolves around the premise that free trade and privatization are somehow the key to liberation for Africans. The International Monetary Fund is viewed as being able to “play an invaluable role” in clearing the way for “private sector investors.” Private profit making is seen as the panacea to poverty: “Successful growth will be led by the private sector.” The commission concludes that only by ridding themselves of barriers to free trade and exporting to the rest of the world can Africans work their way out of poverty.

In contrast to this whitewashing and sidestepping, the organizers of the G8 Alternatives and the Stop the War coalition won political battles and arguments, some lasting a year long, to lawfully protest at the fence surrounding the G8 meetings in Gleneagles, secure housing for protesters, and organize a counter-summit in Edinburgh. Importantly, the message of “Fight Poverty, Not War” was stamped throughout the huge Make Poverty History demonstration critically inserting the obvious and necessary linkage between war and poverty a linkage many in Blair’s government were trying to ignore. Thus, although Make Poverty History organizers were not confident enough or willing to draw out the connection, the British anti-war movement succeeded in proving that the hundreds of thousands marching against poverty were also marching against war and the system that creates both.

Poverty in Africa: the Real Story

Blair and Brown’s simplistic rhetoric of relieving Africa’s debt instead masks the reality that there are massive and continuous flows of wealth out of Africa into the pockets of Western capitalists capitalists who are inextricably bound to the system that impoverishes millions, while the bankers and investors profiteer from the militarized budget. The Commission for Africa’s agenda and the drive for free trade actually ties the mass of Africans into an exploitative neo-liberal system that has been bleeding them dry for decades.

A professor of development studies at the London School of Economics, Gavin Capps has researched the numbers behind the debt. In an article titled “Redesigning the Debt Trap,” he explains the dangerous web that the debt, structural adjustment programs, and capital flight creates in Africa. He cites Africa Action, a U.S.-based NGO, reporting in 2001 that the ratios of foreign debt to the continent’s gross national product increased from 51% in 1982 to 100% in 1992. Africa’s debt grew to four times its export income in the early 1990s. Its debt burden is twice that of any other region in the world, it carries 11% of the developing countries’ debt, with only 5% of its income. The gross national product in Africa is $308 per capita, while its debt stands at $355 per capita.

The money spent paying back the debt and the interest on the debt expanded from an average of $1.7 billion from 1970-1979 to $14.6 billion from 1997-1999. Africa received a total of $540 billion in loans, paid back $550 billion, and still retained a debt of $295 billion between 1970 and 2002. In 1990 African countries paid out $60 billion more than they received in new loans, and by 1997, this increased to about 162 British pounds. In 2001, sub-Saharan Africa borrowed $11.4 billion, and paid back $14.5 billion.

This catastrophe is played out in the social service and health sectors. Shrinking African national budgets are being spent in greater proportions to repaying Western creditors at the expense of welfare or productive domestic investment. During the 1980s debt service repayments averaged 16% of African government expenditure compared to 12% on education and 4% on health. A decade later, the situation remains appalling, as interest payments are prioritized over human needs. In 1999 the Zambian government was pressured to spend $14 million more in debt service than on its collapsing health care system, in the face of the AIDS pandemic reaching new heights. Also in 1999, 33% of Angola’s gross domestic product was spent on debt repayments, as compared to 4.9% of gross national product on education and 1.4% on health. In the whole of sub-Saharan Africa in 2001, debt repayment amounted to 3.8% of GDP, as opposed to 2.4% spent on health care.

In tandem with the debt repayment crisis, capital flight and structural adjustment programs tighten the fatal stranglehold on the African continent. Capital flight, the transfer of locally owned capital to the advanced economies, amounted to $187 billion during 1970 and 1996 in 30 sub-Saharan African countries. This flight of capital was inextricably bound with the accumulation of debt, as roughly 80 cents on every dollar borrowed by these countries flowed out as capital flight the same year. When interest is added, the stock of capital flight of those 30 countries equals $274 billion, or 145% of the total debt owed by that group of countries in 1996.

Corrupt leaders skimmed from the top of these profits. But simply attributing capital flight to the greed of African politicians hides more than it reveals. The great powers, the leaders of the G8, propped up African dictators like Mobutu Seso Seko, of Zaire, now the Democratic Republic of Congo, in order to guarantee Western strategic interests during the Cold War. (Mobutu was installed in mineral-rich Zaire after the CIA-backed assassination of popular radical nationalist leader Patrice Lumumba.) Breaking the pathologyzing myth of corrupt black African leaders, apartheid South Africa enabled an average of 7% of annual gross domestic product to leave as capital flight between 1970 and 1988, a flight whose destination was into the coffers of major Anglo corporations. Such a move defied local capital controls and broke the international sanctions regime on apartheid. Thus, the private “white” capitalists of South Africa and white European business leaders were also in lockstep support of capital flight.

The International Monetary Fund (IMF) and the World Bank consolidated their hold over Africa directly because of the debt crisis. They continue to ensure commercial banks are repaid by lending African states more money to service their private debts. And these U.S.-led institutions act as debt collection agencies for the Western powers, in addition to the IMF’s insistence on even harsher repayment terms of the multilateral loans it makes. The charters of the IMF and World Bank specifically forbid debts that they hold to be rescheduled or written off, and most of these debts are charged at market rates. This is one of the main reasons why Africa’s total debt has continued to grow while an even greater volume of its resources has flowed out of the continent.

The G8, Hypocrisy, and the Right to Protest

The logic of the G8’s debt relief schemes is not an act of philanthropy, but a necessary maneuver in order to maintain the debt repayments to the private banks. First, only the poorest and most heavily indebted countries would be allowed to qualify; secondly, all participants would have to adopt structural adjustment programs; and lastly, on no account would other debtors be offered any debt relief, and those that were could never have their debts written off. The retention of a large and costly debt after such “relief” is entirely legitimate within this scheme, as the stated aim is to reduce the debt of the world’s poorest states to “sustainable levels.” Calculations after structural adjustment programs are imposed do not take into account the level of poverty in a country, only its ability to pay. Thus, on average, debt repayment of the poorest countries will only be cut by a third. Practically speaking, this means that after debt reduction, Mozambique, which had been paying about $120 billion a year in interest on the principal, will continue to spend $70 billion a year. Tanzania’s debt reduction will only be about 10%. In Cameroon and Zambia, where one in five children do not live to the age of five and whose parents earn less than 60 cents a day, will be left with a debt of $5 billion.

Moreover, the debt relief pledged is only just that: pledged. The people of Southeast Asia who were devastated by tsunami destruction earlier this year received only 10% of the money the wealthy governments of the world pledged, governments which were shamed into pledging a respectable amount after their citizens’ gave more generously than the governments themselves.

It is for these reasons, for the G8’s insistence that profits come before people’s lives, that protesters swarmed the streets of Edinburgh, and then met at the gates of the posh hotel at an exclusive secluded golf course in Gleneagles. Meanwhile, calling George Bush a “sincere and passionate man,” resting his head lovingly on Tony Blair’s shoulder while posing for the media cameras, Bob Geldolf joined Bono’s tradition of delegitimizing the protesters and pandering to elite leaders, in particular two of the eight men who created the poverty in the first place.

Geldolf and Bono’s actions not only dismissed the much more complicated and deeper critiques made by the protesters, but also implicitly condoned the hypocritical decisions of the corporate and government elites made during that week alone. The Scottish government punished members of Parliament who spoke out in favor of protecting protesters’ rights to peacefully dissent in Gleneagles. For an entire month, these MPs were banned from government buildings and their salaries as well as the salaries of their staff were taken away. While Bono and Geldolf spoke from on high about saving the Africans, the rock stars took no action to pressure the UK government to let across the African protesters who were being denied entry into the country and denied participation in the events at which they had been invited to speak.

On a much more crude level, police rampantly lied the day of the Gleneagles mobilization, broadcasting over the mass media that the protest was cancelled, stopping dozens of buses and telling protesters the demonstration was cancelled and to turn back, stopping British MP George Galloway’s car five times and searching it, and spreading general fear among townspeople that the protesters were violent, lawless, and ignorant. None of these intimidations worked, as the ordinary people of Gleneagles waved, hung peace banners, and smilingly took photos of our buses as they passed through the streets. Despite the sometimes literal roadblocks erected by the Scottish government, over 15,000 protesters succeeded in reaching the fence at Gleneagles, demanding an end to poverty, war, and the crippling economic injustice spawned by the eight men toasting themselves inside.

Live 8 Concerts: Did Bob Geldolf’s Music Change the World?

Besides completely whitewashing the real story behind Africa’s debt burden and the continuous misery their policies impose on the rest of the world, Blair and Brown and the rest of the G8 leaders hoped to use the Make Poverty History events as a smokescreen for the crisis occurring in Iraq. Unfortunately, Bono and Geldolf wholeheartedly supported this move. Because of their facile and naïve view of the political situation, Bono and Geldolf helped to take the heat off Bush and Blair at their weakest point the Iraq war, which is strategically situated as the first in a long series of dominos set up by and for both Western administrations. If this domino falls, pressured by the global anti-war movement, then the long line of imperialist drives, including the debilitating imposed debt on Africa, has a much greater chance of falling, of being cancelled. Instead, with foolhardy optimism in a system and its pushers who have literally created the misery, the millionaire rock stars persist in criticizing protesters through name-calling and displays of ignorance about protesters’ understanding of the situation as if ordinary people simply could not grasp the real story behind the debt.

Ironically bolstered by the strength of the global anti-war movement’s ability to draw out millions in the streets, Geldolf organized Make Poverty History concerts all over the world and called for people to march in Edinburgh. As opposed to providing the real justice that South African activist Trevor Ngwane and others called for, however, Geldolf instead used his impressive soapbox to call for patronizing charity, and a more than polite request to the G8 leaders to “play nice.” In the same vein, Geldolf also intentionally refused most African artists to play on his stages, saying they wouldn’t draw crowds. Thus, he paternalistically reduced the people of Africa to uncultured children who need to be pitied, not empowered. He also privileged the minuscule numbers of the powerful ruling class into the position of being willing and able to change the world not the masses of ordinary people everywhere.

To make matters worse, Geldolf emailed an edict to each of the Live 8 performers, forbidding them from mentioning the Iraq War or saying anything that would “embarrass” Blair. As with the Make Poverty History demonstration, this was a case of the millions of participants being more progressive than the organizers of the event.

It was also a perfect exemplification of class unconsciousness. From the stage, the wealthiest man on the planet, Bill Gates, along with the likes of Sir Paul McCartney and Sir Bob Geldolf, positioned themselves as experts on Third World debt and poverty. Millionaires like Madonna, before performing, asked the crowd if they were ready for a revolution. And perhaps the most egregious moment came when Chris Martin of the pop band Coldplay, commented that the Live 8 concerts were the most important events ever organized in human history.

This select assortment of examples demonstrates a severe disconnect with the reality of social movements and how true change and economic justice has been developed and won by the masses of ordinary people throughout time not doled out philanthropically by millionaire and billionaire entertainers. It is through grassroots movements for civil rights, women’s equality, environmental protection, lesbian and gay rights, the rights and dignity of workers, and today’s anti-war movement that will continue to turn the tide and create the safe and fulfilling world in which the non-millionaires have a right to live and thrive.

DROP THE DEBT, NOT BOMBS: Why the September IMF and World Bank Protests are Critical

National anti-war coalitions such as United for Peace and Justice ( and ANSWER are planning mass mobilizations on September 24-26 in Washington, DC. It is crucial for all of us to both amass the largest numbers possible for the demonstration on September 24, as well as take serious note of the World Bank and IMF meetings occurring at the same time. Creative protest events are being organized by groups like Mobilization for Global Justice and 50 Years is Enough. With Iraq War architect Paul Wolfowitz heading the World Bank, the linkages between the anti-war and global justive movements are painfully clear.

Seattle was indeed a fork in the road. The September 11, 2001, attacks were a major setback for the U.S. global justice movement, from which it has not yet fully recovered. But like the reinvigoration of the anti-war movement after the demoralizing 2004 presidential elections, ordinary people’s anger and desire to change the situation will prevail. It is my contention that the educational and political groundwork laid by the global justice movement since Seattle has undergirded the anti-war movement of today. It is why people are more quickly and deeply making the connections of global war, imperialism, and poverty than they did during the Vietnam anti-war movement.

Recently there has been much debate about unity in the streets. Time and efforts are clearly better spent at joining the immediate demand of Bringing the Troops Home and Ending the War in Iraq, with the long-term demand of empowering the people of the planet to decide on the way our economy will benefit all of us, as opposed to the handful of elite bankers, investors, and CEOs who now run the IMF and World Bank. The anti-war movement should continue to hammer away at the Achilles’ heel of the Bush and Blair administrations: the occupation and war on Iraq, and merge with the global justice movement at this fortuitously timed series of events in September in Washington, DC. With the adoption of the critiques of imperialism from the global justice movement, today’s anti-war movement will strengthen even more so, and ensure its survival through the people’s struggle to create another world.

Ref: Global Research, by Virginia Rodino

Virginia Rodino is co-Director of Democracy Rising and an administrative steering committee member of United for Peace and Justice. She would like to thank Chris Harman, editor of the International Socialist Journal, and Gavin Capps for information provided in this article. Her opinions are her own. Comments can be posted on her blogspot at