Sanctions and the U.S. Dollar

Sanctions & the Dollar: A Fall From Grace?
Dispatches From The Edge
Aug. 26, 2014

The recent round of sanctions aimed at Moscow over the crisis in the Ukraine could backfire on Washington by accelerating a move away from the dollar as the world’s reserve currency. While in the short run American actions against Russia’s oil and gas industry will inflict economic pain on Moscow, in the long run the U.S. may lose some of its control over international finance.

Proposals to move away from using the dollar as the international currency reserve are by no means new. Back in 2009, the Shanghai Cooperation Organization (SCO) proposed doing exactly that. SCO members are Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. Afghanistan Iran, India, Pakistan and Mongolia have SCO observer status, and the organization has close ties with Turkey and the Association of Southeast Asian Nations.

Ever since the 1944 Britton Wood Agreement, the world’s finances have been dominated by the U.S. dollar, the International Monetary Fund (IMF), and the World Bank. But, according to economist Jeffrey Sachs, that world is vanishing and the dollar cannot continue to hold the high ground, because “the role of the United States in the global economy is diminishing.”

While it may be diminishing, the U.S. and its European allies still control the levers of international finance. For example, the U.S.’ slice of the global GDP is 19.2 percent, and its share of IMF voting rights is 16.8 percent. In contrast, China, with 16.1 percent of the global GDP, has only 3.8 percent voting rights in the IMF. The presidency of the organization is reserved for a European.

In 2010, the World Bank “reformed” its voting rights to increase low and middle-income countries from 34.67 percent to 38.38 percent, although even this modest adjustment has been sidelined because the U.S. Senate refuses to accept it. The wealthier countries still control more than 60 percent of the vote. The presidency of the Bank normally goes to an American.

In early August of this year, the BRICS countries—Brazil, China, India, Russia and South Africa—launched a series of initiatives aimed at altering the current structure of international finance. Besides pushing to dethrone the dollar as the world’s reserve currency, the organization created a development bank and a Contingent Reserve Arrangement (CRA). The former would allow countries to by-pass the IMF and the World Bank, with their tightfisted austerity fixation, and the latter would give countries emergency access to foreign currency.

The development bank will start off with $50 billion in the kitty, but that will soon double. The BRICS will also be able to draw on $100 billion from the CRA. While by international standards those are modest sums—the IMF has close to $800 billion in its coffers—the BRICS bank and CRA has just five members, while the IMF serves hundreds of countries. Eventually the BRICS observer members may be able to tap into those funds.

Last month’s sanctions went straight for Russia’s jugular vein: the development of its massive oil and gas reserves and Moscow’s construction of the South Stream pipeline. When completed, South Stream will supply Europe with 15 percent of its natural gas and generate over $20 billion in annual profits. Indeed, there is suspicion among some Europeans that the real goal of the sanctions is to derail South Stream and replace it with U.S. shale-based American oil and gas.

Sanctions can do enormous damage.

The United Nations estimates that the sanctions against Iraq were responsible for the deaths of some 500,000 Iraqi children from 1991 to 1998.

The sanctions aimed at Iran’s oil and gas industry have cut deeply into government revenues—80 percent of the country’s foreign reserves are generated by hydrocarbons—resulting in widespread inflation, unemployment and a serious national health crisis. While humanitarian goods are not embargoed, their cost has put medical care beyond the reach of many Iranians.

Associated Press reporter Nasser Karimi wrote last year that some medicine and medical equipment costs have risen 200 percent: “radiology film up 240 percent; helium for MRIs up 667 percent; filters for kidney dialysis up 325 percent.” The cost of chemotherapy has almost tripled.

Iran’s exclusion from the Society for World Wide Banking (SWIFT) makes it impossible to transfer funds electronically. That, in turn, makes buying the raw materials to manufacture generic medicines expensive and difficult.

The recent crash of an Iranian passenger plane that killed 39 people was, in part, the result of sanctions. Because Iran cannot purchase spare parts for its Boeing and Airbus planes, it is forced to use alternatives, like the trouble-prone Ukrainian-made A-140 aircraft that went down Aug. 10. Another A-140 crashed in 2002, killing 46 passengers.

In short, opposing the U.S. and its allies can be dangerous to one’s health.

There is growing opposition to the widespread use of sanctions, as well as to the ability to isolate countries from international finance by excluding them from things like SWIFT. Coupled with this is a suspicion that the U.S. uses its currency to support its economy at the expense of others.

After the 2007-08 economic meltdown, the U.S. lowered its interest rates and increased its money supply, thus making its exports cheaper and other countries imports more expensive. Developing countries have blamed these policies for artificially driving up the value of their currencies and, thus, damaging other countries economies. Brazilian Finance Minister Guido Mantega calls it waging “currency war.”

With the U.S. now pushing higher interest rates and throttling back on buying foreign bonds, many developing countries fear that international capital will flow back to the U.S., leaving countries like Brazil high and dry.

But as long as the world’s reserve currency isin dollars, the U.S. will be able to manipulate global finance and block countries like Iran from any transactions using dollars. But that may be coming to an end. With China set to replace the U.S. as the world’s largest economy, it is only a matter of time before the renminbi—or some agreed upon international method of exchange—replaces the dollar.

China is already moving toward bypassing New York as the world’s financial center, instead routing finances through Hong Kong and London. “There can be little doubt from these actions that China is preparing for the demise of the dollar, at least as the world’s reserve currency,” says Alastair Macleod of GoldMoney, a leading dealer in precious metals.

A number of countries are already dealing in other currencies. Australian mining companies have recently shifted to using China’s reniminbi. How dumping the dollar will affect the U.S. is not clear, and predictions range from minor to catastrophic. What will almost certainly happen is that the U.S. will lose some of its clout in international finance, making it easier for developing countries to move away from the American economic model: wide-open markets, fiscal austerity, and hostility to any government role in the economy.

Diminishing the role of the dollar may make it harder to apply sanctions as well, particularly in those areas where Washington’s policies are increasingly alienated from much of the world, as in Iran, Cuba, and Russia. The European Union (EU) has sanctioned Russia over Ukraine, but not to the extent that the U.S. has. The EU’s trade with Russia is a major part of the Europe’s economy, while Russian trade with the U.S. is minor. And the BRICS—who represent almost a quarter of the world’s GNP and 40 percent of its population—did not join those sanctions.

Addressing the BRICS delegates in Fortaleza, Brazil, Russian President Vladimir Putin said that “together we should think about a system of measures that would help prevent the harassment of countries that do not agree with some foreign policy decision made the by the U.S. and their allies.”

In the long run, the EU may come to regret that it went along with Washington. German industry has taken a big hit—trade with Russia fell 20 percent from January through May—and Russia’s ban on EU agricultural products has badly hurt Poland, Lithuania, Germany, Denmark, Latvia, Finland and the Netherlands. Indeed, European Bank President, Mario Draghi, warned that the current EU recovery is extremely fragile and that sanctions could push it back into recession.

The Germans are especially worried that Russia will turn to Asia, permanently cutting Berlin out of Moscow’s economic sphere.

There are enormous changes ahead as a result of climate change and population growth. While there has been a reduction in the number of people living in extreme poverty—making less than $1.25 a day—almost all that reduction was in China. Things have actually gotten worse in parts of Asia and Africa. By 2050 the world’s population will grow to nine billion, and 85 percent of that growth will be in developing nations, the very countries that most need help to confront the consequences of that future.

Unless the institutions of international finance are wrested from the control of a few wealthy nations, and unless there are checks on the ability of the U.S. and its allies to devastate a country’s economy over a disagreement on foreign policy, those figures bode for some serious trouble ahead.

Conn Hallinan can be read at dispatchesfromtheedgeblog.wordpress.com and middleempireseries.wordpress.com

—30—

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Parsing the East Asian Powder Keg

China & The U.S.: The Past’s Dead Hand

Dispatches From The Edge

July 22, 2014

 

 

A major cause of current tensions in the East and South China seas are two documents that most Americans have either forgotten about or don’t know exist. But both are fueling a potential confrontation among the world’s three most powerful economies that is far more unstable and dangerous than most people assume.

 

Consider what has happened over the past six months:

 

  • In February, U.S. Secretary of State John Kerry assured Japan that the Americans would defend Japan in case of a military confrontation between Tokyo and Beijing. That same month, U.S. Chief of Naval Operations Admiral Jonathan Greenert said the Philippines could count on American support if there were a clash with China in the South China Sea.
  • In early May, the Japanese Self-Defense Forces practiced “retaking” islands of the Amami Group near Okinawa in a not-so-subtle challenge to China over the ownership of the Diaoyu/Senkaku Islands in the East China Sea. That same week, U.S. and Philippine forces held joint war games, while President Barack Obama promised “ironclad” support against “aggressive” neighbors seeking to alter “changing the status quo” in Asia.
  • In mid-May, China challenged Japanese ownership of Okinawa, stating it did “not belong to Japan,” challenging Tokyo, and indirectly calling in to question the presence of huge U.S. bases on the island.
  • At the end of May, Japanese Prime Minister Shinzo Abe pledged Tokyo would support the Philippines, Vietnam, and other members of the Association of Southeast Asian Nations (ASEAN) in their disputes with Beijing over islands and shoals in the South China Seas.
  • On July 1, the Abe government “re-interpreted” Article 9 of its peace constitution to allow Japan to use military force in support of its allies. U.S. allies in the region supported the move. The Philippines agreed to allow the U.S. military use of the former American base at Subic Bay.

 

American naval vessels have accused the Chinese Navy of playing chicken off China’s coast. Chinese ships are blockading Philippine ships near a number of disputed shoals and reefs. Vietnam claims China rammed some of its ships. Japan scrambled a record number of fighter planes to intercept supposed incursions by Chinese and Russian aircraft. U.S. Senator John McCain called China “a rising threat,” and the Pentagon’s Frank Kandell told the House Armed Forces Committee that U.S. military superiority in the Pacific was “not assured.”

 

In short, “tense” doesn’t quite describe the situation in Asia these days, more like “scary.”

 

A major source of that friction are two documents, the 1951 “San Francisco Treaty” that ended World War II in Asia, and a little known doctrine called the AirSea Battle plan.

 

According to research by Kimie Hara, the Director of East Asian Studies at Renison University College and the author of numerous books on the Cold War in Asia, today’s tensions were purposely built into the 1951 Treaty. “Close examination of the Allies’ documents, particularly those of the United States (which was primarily responsible for drafting the peace treaty), reveals that some, if not all, of these problems were intentionally created or left unresolved to protect U.S. strategic interests.”

 

Hara say the U.S. wanted to create “strategic ambiguity” and “manageable instability” that would allow the U.S. to continue a major military presence in the region. She specifically points to disagreements over the Kurile/Northern Territories Islands, the Dokdo/Takeshima islands, the Senkaku/Diaoyu islands, the Spratley/Nansha and Paracel/Xisha islands, the divided Korea, and the Taiwan Straits. All of these—plus a few others—have led to tensions or confrontations among Japan, China, Russia, the Philippines, Vietnam, South and North Korea, Malaysia and Brunei.

 

Neither China nor Korea was invited to the Treaty talks, and while the USSR was present, it was not a signatory.

 

Sometimes the U.S. directly sabotaged efforts to resolve issues among Asian nations. In 1954, Japan and the Soviet Union restored diplomatic relations and were on the verge of cutting a deal over the Kurlies/Northern Territory islands, essentially splitting the difference: Japan would take two islands, the USSR another two.

 

However, Washington was worried that a peace treaty between Tokyo and Moscow would eventually lead to diplomatic ties between Japan and communist China, and that would have exerted, says Hara, “considerable pressure on the United States to vacate Okinawa, whose importance had significantly increased as a result of the Americas’ Cold War strategy in Asia.” Okinawa was a major base for the U.S. during the Korean War.

 

So Washington torpedoed the deal, telling Tokyo that if it did not demand all four islands, the U.S. would not return Okinawa to Japan. The U.S. knew the Soviets would reject the Japanese demand, which would scuttle efforts to reduce tensions between the two nations. There is still no peace treaty between Russia and Japan.

 

AirSea Battle (ASB) has been official U.S. military doctrine in Asia since 2010, and what it calls for is chilling: the military defeat—WW II style—of China. Not even during the height of the Cold War did the U.S. and it allies envision defeating the Soviet Union, seeking to rather “contain” it.

 

In the 1990s, China began building a military that could defend its coastal waters. Called “denial of access,” it includes a variety of anti-ship and ballistic missiles, stealth submarines, cyber warfare and space surveillance. China’s turn from its traditional reliance on land forces to “denial of access” was given a major push in 1996 when the Clinton administration deployed two aircraft carrier battle groups in the Taiwan Straits during a period of tension between China and Taiwan. Beijing could do nothing about it, and the Chinese military was deeply embarrassed.

 

ASB is designed to neutralize “denial of access” by “blinding” Chinese radar and surveillance capabilities, destroying missile sites and command centers, and, according to Amitai Etzioni of Washington University—author of books on U.S. foreign policy and a former Senior Advisor to the White House under Jimmy Carter—allowing U.S. military forces to “enter contested zones and conclude the conflict by bringing to bear the full force of their material military advantage.”

 

A land invasion of China?

 

The potential dangers involved in such an undertaking are sobering. Since ASB includes strikes deep into Chinese territory, Beijing might assume such attacks were directed at China’s nuclear weapons arsenal. The general rule with nukes is “use them or lose them.” According to Etzioni, the Center for Strategic and International Studies concludes that, “China is likely to respond to what is effectively a major attack on its mainland with all the military means at its disposal—including its stockpile of nuclear arms.”

 

While Pentagon officials claim that ASB is not aimed at any particular country, China is the only power in Asia capable of “access denial” to the U.S. military. Etzioni quotes one “senior Naval official” as saying “AirSea Battle is all about convincing the Chinese that we will win this competition.”

 

The Chinese are fully aware of ASB, which does much to explain their recent assertiveness in the East China Sea. The Diaoyu/Senkakus are part of the “first island chain” through which Chinese submarines and surface craft must pass in order to exit Chinese coastal waters. If Japan controls those islands it can detect—and with anti-ship missiles destroy—anyone going from China to the Pacific.

 

The South China Sea disputes also find their roots in the San Francisco Treaty. China has a good case that Japan’s claim to the Diaoyu/Senkakus violates the 1945 Potsdam Agreement. Potsdam was supposed to dismantle Japan’s empire, including territories that it had seized during its years of expansion. The Diaoyu/Senkakus were absorbed by Japan following the1894-5 Sino-Japanese War, so China has a solid ownership argument.

 

However, it can make no such case for the Spratleys, Parcels or reefs and shoals of the South China Sea. It may be that defense considerations are driving some of those disputes—most of China’s energy supplies transit the region—but oil, gas and fishing rights would seem to loom larger. In any case, China appears to be in violation of the 1982 UN Convention on the Law of the Sea that guarantees countries a 200 nautical mile “exclusive economic zone.” China, using a 19th century “nine dash line” map claims “indisputable sovereignty” over 3.5 million sq. kilometers of the South China Sea, a sea that borders six nations and through which one third of the world’s shipping passes.

 

While China’s forceful behavior in the East China Sea is somewhat understandable, throwing its weight around in the South China Sea has given the U.S. an opportunity to exploit the situation. Because of tensions between China the Philippines, the U.S. military was invited back into the islands. And China’s unilateral actions in the Paracels has some Vietnamese talking about a military relationship with Washington.

 

All sides need to take a step back.

 

China should adhere to a 2002 ASEAN code of conduct to consult and negotiate its disputes with Vietnam and the Philippines, and to bring the issue of the Diaoyu/Senkaku before the International Court.

 

The U.S. should back off its blank check support for the rightwing Abe government. Tokyo started this fight in 2010 by first arresting a Chinese fisherman—thus violating an agreement not to apply domestic trespassing laws to fishing violations—and then unilaterally declaring sovereignty over the Diaoyu/Senkakus in 2012, a violation of a 1972 agreement with China to leave that issue up to negotiations.

 

Washington sould also reverse its expensive expansion of military forces in Asia—the so-called “Asia pivot”—and reconsider the folly of the AirSea Battle doctrine. According to Raoul Heinrich of Australian University, ASB “will greatly increase the range of circumstances for maritime brinkmanship and dangerous naval incidents.” Establishing military “hot lines” between the major powers in the region would also be helpful.

 

The current tensions are exactly what the San Francisco Treaty was designed to do: divide and conquer. But with the potential dangers of escalation embedded in the doctrine of AirSea Battle, local tensions are threatening international order.

 

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Day of the Vulture in Argentina

Day of the Vulture in Argentina

Truthdig

July 24, 2014

By Conn Hallinan

It is no surprise that right-wing Republican and hedge fund billionaire Paul Singer should be trying to wring hundreds of millions of dollars out of Argentina for a debt that Buenos Aires doesn’t really owe him. He screwed tens of millions of dollars out of poverty-stricken Peru and the Republic of Congo using the same financial sleight of hand. What may surprise people, however, is that key leaders in the administration of former President Bill Clinton are helping him do it.

 

To read the full article go to: http://www.truthdig.com/report/item/day_of_the_vulture_over_argentina_20140724

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Iraq: War and Remembrance

Iraq: War & Remembrance

Dispatches From The Edge

June 28, 2014

 

“So far as Syria is concerned, it is France and not Turkey that is the enemy”

T. E. Lawrence, February 1915

 

It was a curious comment by the oddball, but unarguably brilliant, British agent and scholar, Thomas Edward Lawrence. The time was World War I, and England and France were locked in a death match with the Triple Alliance, of which Turkey was a prominent member. But it was none-the-less true, and no less now than then. In the Middle East, to paraphrase William Faulkner, history is not the past, it’s the present.

 

In his 1915 letter, Lawrence was describing French machinations over Syria, but he could just as well have been commenting on England’s designs in the region, what allied leaders in World War I came to call “The Great Loot”—the imperial vivisection of the Middle East.

 

As Iraq tumbles into a yet another civil war, it is important to remember how all this came about, and why adding yet more warfare to the current crisis will perpetuate exactly what the “Great Loot” set out to do: divide and conquer an entire region of the world.

 

There is a scorecard here, filled with names, but they are not just George W. Bush, Dick Cheney, Donald Rumsfeld and Condoleezza Rice—though the latter helped mightily to fuel the latest explosion—but names most people have never heard of, like Sir Tatton Benvenuto Mark Sykes, 6th Baronet of Sledmore and Francois Georges-Picot. In 1915, these two mid-level diplomats created a secret plan to divvy up the Middle East. Almost a century later that imperial map not only defines the region and most of the players, but continues to spin out tragedy after tragedy, like some grotesque, historical Groundhog Day.

 

In 1915, the imperial powers’ major goal in the Middle East was to smother any expression of Arab nationalism and prevent any unified resistance to the designs of Paris and London. France wanted Greater Syria, Britain control of the land bridges to India. The competition was so intense, that while hundreds of thousands of French and British troops were dying on the Western Front, both countries secret services were blackguarding one another from Samara to Medina, maneuvering for position for when the Ottoman Empire finally collapsed.

 

The Sykes-Picot Agreement was the compromise aimed at ending the internecine warfare. France would get Greater Syria (which it would divide to create Lebanon), plus zones of influence in northern Iraq. Britain would get the rest of Iraq, Jordan and establish the Palestine Mandate. All of this, however, had to be kept secret from the locals lest they find out that they were replacing Turkish overlords with French and British colonialism.

 

The Arabs thought they were fighting for independence, but London and Paris had other designs. Instead of the lands between the Tigris and Euphrates rivers and access to the Mediterranean the Arabs had been promised, they would get the sun-blasted deserts of Arabia, and the rule of monarchs, who were easy to buy or bully.

 

However, to run such a vast enterprise through the use of direct force was beyond the power of even London and Paris. So both empires transplanted their strategies of using religion, sect, tribe and ethnicity, which had worked so well in Indochina, India, Ireland and Africa, to divide and conquer, adding to it a dash of chaos.

 

There are new players in the Middle East since Sykes and Picot drew up their agreement. Washington and Israel were latecomers, but eventually replaced both imperial powers as the major military forces in the region.

 

The enemy of the “Great Loot” was secular nationalism, and the U.S., France, and Britain have been trying to overthrow or isolate secular regimes in Iraq, Syria, Egypt and Libya since they first appeared. The rationale for the hostility is that secular regimes were run by dictators—many were—but questionably no worse than the Wahabi fanatics in Saudi Arabia, or the monsters the Gulf monarchies have nurtured in Syria and northern Iraq.

 

Why is Syria a dictatorship and Saudi Arabia is not? This past February, the Kingdom passed a law equating dissent, the exposure of corruption, or demands for reform with “terrorism” including “offending the nation’s reputation or its position.”

 

The list of names on the ledger of those who nurture terrorism in the Middle East is long. Yes, it certainly includes the Bush administration, which smashed up one of the most developed countries in the region, dismantled the Iraqi state, and stoked the division between Sunni and Shiites. But also the Clinton administration, whose brutal sanctions impoverished Iraq. And further back, during the First Gulf war, George H. Bush pounded southern Iraq with toxic depleted uranium, inflicting a massive cancer epidemic on places like Basra. It was Jimmy Carter and the CIA who backed Saddam Hussein’s rise to power, because the Ba’athist dictator was particularly efficient at torturing and killing trade unionists and members of the Iraqi left.

 

Not to mention members of the Gulf Cooperation Council—Kuwait, Saudi Arabia, Oman, the United Arab Emirates, Qatar, Bahrain, Morocco and Jordan— who fund the Islamic insurgency in Syria. Some of those countries may decry the excesses of the Islamic State of Syria and the Levant (ISIL), but it was they who nursed the pinion that impelled the steel.

 

Turkish Prime Minister Recep Tayyip Erdogan is also on that list. It is through Turkey’s borders that most fighters and supplies pass into Syria. So is the Obama administration, which farmed the insurgency out to Qatar and Saudi Arabia and is now horrified by the creatures that Wahabist feudal monarchies produced.

 

And don’t forget T.E. Lawrence’s French.

 

Paris has never forgiven the Syrians for tossing them out in 1961, nor for Damascus’s role in the 1975-91 Lebanese civil war that dethroned the French-favored Christian minority who had dominated the country since its formation in 1941.

 

The French have been enthusiastic supporters of the insurgency in the Syrian civil war and, along with the British, successfully lobbied the European Union to drop its ban on supplying the rebels with military hardware. Paris has also earned favor from Saudi Arabia by trying to derail efforts to find a solution to the conflict over Iran’s nuclear program. France is a member of the P5+1—France, the U.S., Russia, Britain, China and Germany—involved in talks with Teheran.

 

The Gulf Council praised France’s attempted sabotage, and Paris promptly landed a $6 billion contract to upgrade Saudi Arabia’s air defense system. It is negotiating to sell $8 billion in fighter-bombers to the Emirates and almost $10 billion worth to Qatar.

 

Saudi Arabia recently donated $3 billion in aid to the Lebanese Army on the condition that it is used to buy French weapons and ammunition. It is a somewhat ironic gift, since the major foe of the Lebanese Army has been Saudi-supported Wahabists in the country’s northern city of Tripoli.

 

Apparently French President Francois Hollande met with the foreign ministers of Jordan and Emirates last September to discuss a plan for Pakistan to train a 50,000-man Sunni army to overthrow the Syrian government and defeat al-Qaida-affiliated jihadist groups.

 

Members of that army may already be on their way to Europe, much as the mujahedeen from Afghanistan did a generation ago. According to western intelligence services, more than 3,000 European Union citizens have gone to fight in Syria, ten times the number who went to fight the Soviets in Afghanistan. The gunman who killed four people May 24 at the Jewish Museum in Brussels was a veteran jihadist from the Syrian civil war.

 

For now, the Gulf monarchies see themselves as pulling the strings, but they have virtually no control over what they have wrought. Those Wahabi fanatics in Syria and northern Iraq may do what Osama bin-Laden did and target the corruption of the monarchies next.

 

The Gulf countries are rich but fragile. Youth unemployment in Saudi Arabia is between 30 and 40 percent, and half the country’s 28 million are under 25 years of age. In other Gulf nations a tiny strata of superrich rule over a huge and exploited foreign work force. When the monarchies begin to unravel, the current chaos will look like the Pax Romana.

 

But chaos has always been an ally of imperialism. If things fall apart and mayhem rules, governments and bankers in Paris, Zurich or New York have not been overly bothered. “The agenda has always been about imposing division and chaos on the Arab world,” wrote long-time peace activist Tom Hayden. “In 1992, Bernard Lewis, a major Middle East expert, write that if the central power is sufficiently weakened, there is no real civil society to hold the polity together, no real sense of common identity…the state then disintegrates into a chaos of squabbling, feuding, fighting sects, tribes, regions and parties.”

 

Military intervention by the U.S. and its allies will accelerate the divisions in the Middle East. If the White House is serious about stemming the chaos, it should stop fueling the Syrian civil war, lean on the Gulf Monarchies to end their sectarian jihad against Shiites, pressure the Israelis to settle with the Palestinians, and end the campaign to isolate Iran.

 

And tell the French to butt out.

 

 

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Europe: The Sky’s Not Falling

Europe: The Sky’s Not Falling

Foreign Policy In Focus

June 6, 2014

 

 

Now that the dust has settled from the recent elections for the European Parliament it is time to take a deep breath and see what really happened. No, Britain is not about to toss its immigrant population into the sea. No, France’s Marine Le Pen is not about to march on the Elysee Palace. And, as repulsive as the thugs of Hungary’s Jobbik Party and Greece’s New Dawn are, it was the continent’s left to whom the laurels went in last month’s poll.

 

Parties that targeted unemployment, austerity and the growing wealth gap in Europe did well, and the dramatic breakthrough of right wing racist and xenophobic parties in France, Britain, and Denmark had less to do with a neo-Nazi surge than with the inability or unwillingness of the opposition in those countries to offer a viable alternative to a half decade of economic misery. Indeed, if there was a message in the May 25 EU elections, it was that those who trumpeted austerity as the panacea for economic crisis were punished.

 

Hence Britain’s Conservative/Liberal Democrat coalition took a drubbing, France’s ruling Socialists were blitzed, and German Chancellor Andrea Merkel’s lost eight seats, while her Social Democratic opponents picked up four.

 

Among the 28 European Union (EU) member countries, 751 seats in the parliament were up for election.

 

In contrast, where there was a clear choice between economic democracy, on one hand, and “let’s blame it on the immigrants and Roma,” on the other—as in Greece, Spain, Portugal, Ireland, and most of Central and Eastern Europe—voters went left. As Srecko Horvat, Croatian philosopher and author of “What Does Europe Want?,” commented in the wake of the election, “The European left is back in the game.”

 

“Earthquake” was the metaphor most used in describing the triumphs of Marine Le Pen’s National Front (NF) in France, the United Kingdom Independence Party (UKIP) in Britain, and Denmark’s Danish People’s Party. But, if there was a result that shifted the foundations of Europe, it was the victory of Greece’s Syriza Party and the “out of nowhere” appearance of Podemos—“we can”—in Spain.

 

Syriza emerged from the wreckage inflicted on the Greek economy by the so-called “Troika”—the International Monetary Fund, the European Central Bank, and the European Commission. For the price of a bailout—most of it siphoned off by big European banks—the Greek government instituted massive layoffs, huge cuts in pensions, health care, and education, and privatized government-owned property. The jobless rate rocketed to 28 percent—over 50% for young people—and millions of Greeks were impoverished. While Greece’s creditors did well, the austerity did nothing to turn the depressed economy around.

 

Syriza took 26.5 percent of the vote May 25 to become the biggest party in Greece. That figure translated into a general election would net the party 130 seats in the 300 seat Greek parliament. In contrast, the two governing parties that oversaw the austerity program lost over 10 percentage points between them.

 

Much of the media focused on the neo-Nazi New Dawn Party, which won 9.4 percent of the vote—a 2.4 percent jump over their 2012 showing. New Dawn will send three representatives to the European Parliament, where the Greek left will swamp their representatives.

 

Another rightwing Greek party, the Popular Orthodox Rally lost voters.

 

While Syriza focused on the Greek domestic crisis, it also consciously attached itself to other left anti-austerity movements throughout the continent. “What happened in Greece is not a success story but a social tragedy that shouldn’t be repeated anywhere in Europe,” Syriza’s leader Alexis Tsipras said during a debate among candidates for the post of European Commission president.

 

That “anywhere in Europe” resonated in other countries entrapped in the Troika austerity formula or struggling to emerge from stagnant economies and long-tern unemployment. Beside Greece, the most conspicuous example was Podemos in Spain.

 

Podemos came out of the massive anti-austerity rallies that paralyzed Madrid and other Spanish cities in 2011, and which impelled similar demonstrations in Europe and the U.S., including the Occupy Wall Street movement. Podemos, says its leader Pablo Iglesias, is “citizens doing politics. If the citizens don’t get involved in politics others will. And that opens the door to their robbing you of democracy, your rights, and your wallet.”

 

The Spanish party consciously modeled itself on Syriza, not only in program, but also in its grassroots, bottoms-up organizing tactics. While Podemos has only been in existence four months, it took 8 percent of the vote nationwide and 11 percent in Madrid. Added to the success of left parties in Catalonia, Valencia, and the Basque Region, plus the votes for the Spanish Green Party and the Socialist Party, Spain’s ruling rightwing Popular Party is suddenly a decidedly minority organization.

 

That pattern was repeated in several other countries.

 

In Ireland the two parties that oversaw the austerity program—Fine Gael and Labour—dropped 16.5% and 12.5% respectively from the 2011 general election, while left and independent parties, like Sinn Fein, the Socialist Party and People Before Profits cornered 45% percent of the vote. The anti-austerity Portuguese Socialist Party defeated the center-right coalition that has overseen the Troika’s recipe for Lisbon, and the Portuguese Communist Party took 12.7 percent of the vote.

 

Italy saw the leftist Democratic Party emerge as the number one political force in the country with 40 percent of the vote, while Beppo Grillo’s angry and iconoclastic, but program-light, Five Star Movement took a beating, coming in at 21.2 percent. Former Prime Minister Silvio Berlusconi’s rightwing Forza Italia took third at 16.8 percent. A Syriza look alike, “L’Aitra Europa” (the “Other Europe”), garnered a respectable 4 percent and three seats in the European Parliament after only a few months campaigning. In contrast, the much older and established racist Northern League lost four seats and took an anemic 6.2 percent of the vote.

 

In Slovenia the United Left won 5.9 percent of the vote, which in a general election would have given the party six seats in parliament.

 

The extreme right Party for Freedom in the Netherlands lost two seats, and the rightwing Finns Party dropped from the 19 percent it scored in 2011 to 13 percent.

 

Not that it was all sweetness and light.

 

Hungary’s neo-Nazi Jobbik took 14.7 percent of the vote, but that was an almost 6 percent drop from what the Party received in last month’s general elections. Poland’s reactionary Congress of the New Right jumped from 1 percent in the 2011 general elections to 7 percent, and Lithuania’s conservative Order and Justice Party scored 14.3%. The anti-immigrant New Flemish Alliance won in Belgium, and Austria’s Freedom Party came in third, with 19.7 percent of the vote. However, right wing parties like Ataka in Bulgaria, the Greater Romanian Party, and the Slovak National Party all lost voters.

 

The right won parliamentary seats in 10 out of the 28 EU countries, and increased their representation in six of those countries, but also lost seats in seven other countries.

 

The triumphs of the NF in France and the UKID are certainly worrisome. Both ran virulent, anti-immigrant campaigns, and the NF has long been associated with anti-Semitism and anti-Roma ideology. It would be a mistake, however, to assume everyone who voted for both parties share their penchant for ethnic hatred. Some of that support was indeed racist, but the parties also tapped into voter anger over the economic policies of the EU that have kept both countries locked into near recession conditions.

 

The “traditional” left—the Socialist Party in France and the Labour Party in the UK—have gone along with some of the troika’s austerity measures, and have also been sotto voce about immigrant bashing. The absence of a serious left critique of EU policies in both countries let many people surrender to their dark side and buy the fable that immigrants have swamped the job market and plundered social services. Especially since many of the rightist parties opportunistically adopted anti-austerity planks.

 

In Denmark, for instance, the center-right Venstre Party campaigned on denying welfare benefits to immigrants, hardly a platform to contrast itself with the far-right Danish People’s Party.

 

Politically the continent has rejected the troika’s strategy, much as Latin America did in 2000. “We are opposed to everlasting austerity as a means for fiscal rebalancing on both pragmatic and ideological grounds,” says Syriza’s Tsipras. “The subjugation of democratic process to the markets was the reason why we have the crisis today…we predicted from the onset…that austerity-based policies would backfire.”

 

The trick now will be to pull the various left forces together to hammer out an alternative. Podemos’ Iglesias has declared that the Spanish party intended to work “with other parties from Southern Europe to say that we don’t want to be a colony of Germany and the troika.”

 

Syriza has already proposed a European summit modeled on the 1953 London Debt Agreement that canceled 50 percent of Germany’s World War II debt and spread out payments on the rest over 30 years.

 

As for the so-called “earthquake” on the right: the neo-Nazis and immigrant bashers will make a lot of noise, but they offer nothing but hate as an economic solution. The left has a better one, and they are back.

 

—30—

 

 

 

 

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Marching On Moscow

 

Dispatches From The Edge

Conn Hallinan

May 27, 2014

 

British Field Marshall Bernard Montgomery had three laws of war:

One, never march on Moscow;

Two, never get in a land war in Asia;

Three, never march on Moscow.

So why are the U.S., the European Union (EU), and NATO on the road to the Russian capital? And exactly what are they hoping to accomplish?

 

Like all battlefields on the Eastern front, this one is complicated.

 

For beginners, there are multiple armies marching eastward, and they are not exactly on the same page. In military parlance that is called divided command, and it generally ends in debacle. In addition, a lot of their weapons are of doubtful quality and might even end up backfiring. And lastly, like all great crisis, there is a sticker price on this one that is liable to give even fire breathers pause.

 

There are actual armies involved. NATO has deployed troops, aircraft and naval forces in the region, and the Russians have parked 40,000 troops on Ukraine’s eastern border. But with the exception of the horrendous deaths of over 40 demonstrators in Odessa, the crisis has been a remarkably calm affair. The Russians took over the Crimea virtually without a shot, and while there is a worrisome increase of violent incidents in the south and east, they are hardly up to the French and German invasions in 1812 and 1941, respectively.

 

Which doesn’t mean things couldn’t turn dangerous, a reason why it is important to know the agendas of the players involved.

 

For the Russians this is about national interest and security, and the broken promises and missed opportunities when Germany was reunified in 1990. At the time, the Western powers promised they would not drive NATO eastward. Instead, they vacuumed up members of the old Soviet Warsaw Pact and recruited former Soviet republics into a military alliance that was specifically created to confront Russia.

 

All talk of Putin recreating the old Soviet Empire is just silliness, which there is a lot of out there these days. A perfect example was the New York Times’ embarrassingly thin story about Putin’s personal wealth that rested on the fact he wore expensive watches.

 

There is some silliness on the Russian side as well. Yes, the overthrow of Ukraine President Viktor Yanukovych was a coup—what else do you call an armed uprising that causes an elected president to flee? —but it wasn’t just ex-Nazis and fascists. There was genuine mass anger at the corruption of the Yanukovych government.

 

At the same time, two of the groups that spearheaded the coup—and who currently control seven ministries in the Western Ukraine government—celebrate those who fought with Waffen SS divisions during World War II. The Germans killed some 25 million Russians during that war, so if they are a bit cranky about people who hold celebrations honoring the vilest divisions of an evil army, one can hardly fault them.

 

The Americans and the Europeans have long had their eye on Ukraine, though their interests are not identical because their economic relations are different.

 

Russia supplies the EU with 30 percent of its energy needs; for countries like Finland and Slovakia, that reaches 100 percent. U.S. trade with Russia was a modest $26 billion in 2012, while for the EU that figure reached $370 billion. More than that, several large European energy giants, including BP, Austria’s OMV, ENI, Royal Dutch Shell, and Norway’s Statoil, are heavily invested in Russian gas and oil. If oil and gas are combined, Russia is the largest energy exporter in the world.

 

For Europe, Russia is also a growing consumer market of 144 million people, where retail spending has grown 20 percent a year between 2000 and 2012. . Any attempt to ratchet up sanctions will have to confront the fact that isolating Russia is not in the interests of some very powerful business interests in Europe—and even a few in the U.S., like Chevron, ConocoPhillips and ExxonMobil.

 

Russia is the world’s eighth largest economy, and one that is well integrated into the world’s economy, particularly in Asia through the Shanghai Cooperation Council. The Council includes not only Russia and China, but also most of Central Asia’s countries, with observer status from Iran, Pakistan and India

 

The emerging BRICS countries—Brazil, India, China and South Africa (Russia makes up the “R”)—did not support the recent UN resolution condemning Moscow’s annexation of the Crimea and would certainly not join any sanctions regime. The Russians and Chinese inked a 30-year, $400 billion gas deal, and bilateral trade between the two countries is set to reach $100 billion by 2015 and $200 billion by 2020. Russia and Iran are reportedly negotiating a $10 billion energy deal as well.

 

So far, sanctions have targeted individuals, although Washington and the EU have threatened to up the ante and ban Russia from using the Swift system of international banking. That would make transferring money very difficult. It has certainly crippled Iran’s finances. But Swift, as Gideon Rachman of the Financial Times points out, is a double-edged sword. “Cutting Russia out of Swift would cause chaos in Moscow in the short term,” but in the long term “it might hasten the day when Russia, and more significantly, China, establish alternative systems for moving money between international banks.” According to Rachman, China and Russia have already discussed such a system.

 

The EU’s army is all for rhetorical condemnation of Russia, but when it comes to increasing sanctions, its command is divided. Those countries with significant investments in Russia—Italy, Germany, Spain, Austria and Greece— oppose cranking up the sanctions. German Chancellor Andrea Merkel must juggle her desire to support the U.S. with polls showing that the average German really doesn’t want to march east: been there, done that. The Swedes and the Poles are fire-breathers, but their stance is as much about trying to offset German power in the EU as for any concern over Ukrainians.

 

In short the EU looks like one of those combined armies of Austrian-Hungarians, Russians, and Prussians that Napoleon made his reputation beating up on.

 

For the Americans this is about expanding NATO and opening up a market of 46 million people in the heart of Eastern Europe. The key to that is getting the 28 members of the alliance to finally pull their own. The U.S. currently foots 75 percent of NATO’s bills, and is caught between a shrinking military budget at home and a strategy of expanding the U.S.’s military presence in Asia, the so-called “pivot.”

 

NATO members are supposed to spend 2 percent of their GDP on the military, but very few countries—Britain, Estonia and Greece—actually clear that bar. Nor is there any groundswell to do so in European economies still plagued with low growth and high unemployment. Yes, yes, get the Russkies, but not at our expense.

 

“Sanctions will not help anybody, they would not just hurt Russia, but also Germany and Europe as a whole,” says Rainer Seele, chair of Wintershell, and energy company owned by the German chemical giant BASF.

 

However, NATO is pushing hard. U.S. General and NATO commander Gen. Phillip Breedlove recently called for beefing up NATO forces on the Russian border. But for all the talk about a new Russian threat, NATO is not going to war over Ukraine, anymore than it did over Georgia in 2008. A few neo-conservatives and hawks, like U.S. Senator John McCain, might make noises about intervention, but it will be a very lonely venture if they try.

 

In the end the solution is diplomatic. It has to take into account Russia’s legitimate security interests and recognize that Ukraine is neither Russian nor Western European, but a country divided, dependent on both. The simplest way to deal with that is through a system of federal states. It is the height of hypocrisy for the U.S. to oppose such a power arrangement when its own system is based on the same formula (as are many other countries in Europe, including Germany).

 

Polls show that Ukrainians in the East and South do not trust the Kiev government, but they also show that a solid majority wants a united country. That could shift if the Kiev government decides to use force. Once bodies start piling up, negotiations and compromise tend to vanish, and the possibility of civil war becomes real.

 

Moscow made a proposal last summer that the EU, Russia, and the U.S. should jointly develop a plan to save the Ukrainian economy. The EU and the U.S. dismissed that proposal, and the current crisis is a direct result of that rejection. The parties need to return to that plan,

 

In spite of the tensions, events in Ukraine are trending toward a political resolution and the May 25 presidential elections may produce a candidate willing to compromise. The Russians are re-deploying those 40,000 troops, and Russian Foreign Minister Sergei Lavrov made it clear that “We want Ukraine to be whole within its current borders, but whole with full respect for the regions.” Translation: no NATO.

 

The dangers are many here: that the Kiev government tries to settle the conflict by force of arms; that NATO does something seriously provocative; that the Russians lose their cool. As Carl von Clausewitz once noted: “Against stupidity, no amount of planning will prevail.”

 

But the ducks are lining up. The sanctions will not force Russia to compromise its security and may end up harming the EU and the U.S. The commanders of the armies facing Moscow are divided on measures and means. Neither side in the Ukraine is capable of defeating the other. It is time to stop the bombast and cut a deal, particularly since Washington will need Moscow’s help in Iran, Syria, and Afghanistan.

 

Oh, and marching on Moscow? Really? Monty wasn’t the quickest calf in the pasture but he had that one figured out as a bad idea.

 

 

 

—30—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Carl Bloice: 1939-2014. Good Night Sweet Poet

Obit for Carl Bloice

Dispatches From The Edge

Conn Hallinan

April 20, 2014

 

 

“One is responsible to life: It is the small beacon in that terrifying darkness from which we come and to which we shall return. One must negotiate this passage as nobly as possible, for the sake of those who are coming after us.”

James Baldwin

“The Fire Next Time”

 

Carl Bloice, Foreign Policy In Focus columnist and blogger, and long-time African-American journalist, negotiated that journey with power and grace. Right up to the moment when he lost his long battle with cancer, he was contributing to the website Portside and struggling to complete a column on the Middle East. He died in San Francisco April 12 at age 75.

 

He was a journalist his whole life, although he began his love of words as a poet. Born Jan. 28, 1939 in Riverside, Ca., he grew up in South Central Los Angeles at a time when racism and discrimination were as ubiquitous there as palm trees and beaches. He was one of those people who could not bear the humiliation of silence in the face of injustice and that simple—if occasionally difficult—philosophy was at the center of who he was. Civil rights, free speech, the war in Southeast Asia (and later Central America, Yugoslavia, Afghanistan, and Iraq), women’s rights, homophobia, and the environmental crisis: wherever the dispossessed were voiceless, Carl Bloice spoke for them.

 

He was also my friend, for 44 years my colleague and co-conspirator, and the person who taught me how to write and think. I say this because this is less an obituary about an accomplished African-American journalist than a friend’s funerary oration, something we Irish think is important.

Carl sold me on James Baldwin—and many other essayists, thinkers, novelists and poets—by convincing me that words mattered. He was utterly certain that a well-written piece of prose could tumble a government, shame the mighty, or shelter the powerless.

 

He was a member of the Communist Party much of his life, finally leaving over that organization’s resistance to internal democracy and it’s reluctance to embrace women’s and gay rights, and the defense of the environment.

 

In 1962 Carl was one of the first northern journalists to cover the southern civil rights movement, and he was staying at the A.G. Gaston Motel in Birmingham, Al. when the Ku Klux Klan tried to murder Rev. Martin Luther King Jr. with a bomb. It blew Carl out of his bed.

 

He recognized Watergate for what it was months before the mainstream press caught on to the profound corruption at the heart of the scandal and covered it for two years. He reported from Moscow, Central Asia, North Korea, Mongolia, Eastern Europe and the Middle East. He was on the editorial board of the Black Commentator and wrote columns for FPIF on Israel, Libya, Argentina, Afghanistan, Cuba, and the growing and disturbing U.S. military presence in Africa.

 

He was also a very funny man who loved to eat, drink and gossip. Indeed, the two of us decided that we had stumbled into a profession that gave us the perfect cover to engage in our favorite past time. Yes, yes, we talked politics—mainly foreign policy—but if the antics of the Kardashian clan slipped into the conversation, well, that was okay.

 

We dearly enjoyed spotting linguistic slights of hand. In the April 19 edition of the New York Times a reporter was going on about German-Russian tensions over Ukraine, and how Berlin is more comfortable with diplomacy—specifically the upcoming Ukraine-Russia-U.S.-European Union talks in Geneva—as opposed to some of the Cold War-type rhetoric that has been flying around:

 

She wrote, “…diplomacy at last had a chance. Germany was back on familiar terrain—represented in Geneva, notably not by its own diplomat but by Catherine Ashton, the foreign policy chief of the 28-nation European Union, a partnership often gently mocked in Washington, but hallowed in Berlin as the real, if cumbersome, governing body of Europe.”

 

I love those words “gently mocked.”

 

They made me recall a conversation this past February between U.S. Assistant Secretary of State for European and Eurasian Affairs, Victoria Nuland, and the American Ambassador to Ukraine, Geoffrey Pyatt. The two were plotting how to overthrow the elected government of President Viktor Yanukovych and install their handpicked guy in Kiev, and Nuland said, “Fuck the EU.”

 

Who knew the Times considered “fuck” gentle mocking?

 

Two weeks ago I would have phoned Carl and we’d have had a good laugh, but today there is no one to pick up the phone. The hardest thing about death is the silence it brings into our lives.

 

Carl believed that words could empower the majority of humanity to reclaim their world from the 1 percent. In this he was much like his fellow poet, Percy Shelley, who penned these words of outrage in the aftermath of the 1819 Peterloo Massacre when cavalry charged into a Manchester crowd that was demanding democracy, killing 15 and wounding hundreds:

 

“Rise like Lions after slumber

In unvanquishable number—

Shake your chains to earth like dew

Which in sleep had fallen on you—

Ye are many—they are few”

 

Good night sweet poet. This harp shall ever praise thee.

 

—Conn Hallinan

 

 

 

 

 

 

 

 

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