Dangerous Seas: China and The U.S.

Dangerous Seas: China & The U.S.

Dispatches From The Edge

Aug. 16, 2016

 

A combination of recent events underpinned by long-running historical strains reaching back more than 60 years has turned the western Pacific into one of the most hazardous spots on the globe. The tension between China and the U.S. “is one of the most striking and dangerous themes in international politics,” says The Financial Times’ longtime commentator and China hand, Gideon Rachman.

 

In just the past five months, warships from both countries—including Washington’s closest ally in the region, Japan—have done everything but ram one another. And, as Beijing continues to build bases on scattered islands in the South China Sea, the U.S. is deploying long-range nuclear capable strategic bombers in Australia and Guam.

 

At times the rhetoric from both sides is chilling. When Washington sent two aircraft carrier battle groups into the area, Chinese defense ministry spokesman Yang Yujun cautioned the Americans to “be careful.” While one U.S. admiral suggested drawing “the line” at the Spratly Islands close to the Philippines, an editorial in the Chinese Communist Party’s Global Times warned that U.S. actions “raised the risk of physical confrontation with China.” The newspaper went on to warn that “if the United States’ bottom line is that China has to halt its activities, then a U.S.-China war is inevitable in the South China Sea.”

 

Earlier this month China’s Defense Minister Chang Wanquan said Beijing should prepare for a “people’s war at sea.”

 

Add to this the appointment of an extreme right-wing nationalist as Japan’s defense minister and the decision to deploy anti-ballistic missile interceptors in South Korea and the term “volatile region” is a major understatement.

 

Some of these tensions go back to the 1951 Treaty of San Francisco that officially ended WW II in Asia. That document, according to Canadian researcher Kimie Hara, was drawn up to be deliberately ambiguous about the ownership of a scatter of islands and reefs in the East and South China seas. That ambiguity set up tensions in the region that Washington could then exploit to keep potential rivals off balance.

 

The current standoff between China and Japan over the Senkakus/Diaoyu islands—the Japanese use the former name, the Chinese the latter—is a direct outcome of the Treaty. While Washington has no official position on which country owns the tiny uninhabited archipelago, it is committed to defend Japan in case of any military conflict with China. On Aug. 2 the Japanese Defense Ministry accused China of engaging in “dangerous acts that could cause unintended consequences.”

 

Tokyo’s new defense minister, Tomomi Inada, is a regular visitor to the Yasukuni shrine that honors Japan’s war criminals, and she is a critic of the post-war Tokyo war crimes trials. She also has called for re-examining the 1937 Nanjing massacre that saw Japanese troops murder as many as 300,000 Chinese. Her appointment by Prime Minister Shinzo Abe seems almost calculated to anger Beijing.

 

Abe is also pushing hard to overturn a part of the Japanese constitution that bars Tokyo from using its military forces for anything but defending itself. Japan has one of the largest and most sophisticated navies in the world.

 

Over the past several weeks, Chinese Coast Guard vessels and fishing boats have challenged Japan’s territorial claims on the islands, and Chinese and Japanese warplanes have been playing chicken. In one particularly worrisome incident, a Japanese fighter locked its combat radar on a Chinese fighter-bomber.

 

Behind the bellicose behavior on the China and U.S. sides is underlying insecurity, a dangerous condition when two nuclear-armed powers are at loggerheads.

 

From Beijing’s perspective, Washington is trying to “contain” China by ringing it with American allies, much as the U.S. did to the Soviet Union during the Cold War. Given recent moves in the region, it is hard to argue with Beijing’s conclusion.

 

After a 20-year absence, the U.S. military is back in the Philippines. Washington is deploying anti-missile systems in South Korea and Japan and deepening its military relations with Australia, Vietnam, Indonesia and India. The Obama administration’s “Asia pivot” has shifted the bulk of U.S. armed forces from the Atlantic and the Middle East to Asia. Washington’s Air Sea Battle strategy—just renamed “Joint Concept for Access and Maneuver in the Global Commons”—envisions neutralizing China’s ability to defend its home waters.

 

China is in the process of modernizing much of its military, in large part because Beijing was spooked by two American operations. First, the Chinese were stunned by how quickly the U.S. military annihilated the Iraqi army in the first Gulf War, with virtually no casualties on the American side. Then there was having to back down in 1996, when the Clinton administration deployed two aircraft carrier battle groups in the Taiwan Straits during a period of sharp tension between Beijing and Taipei.

 

In spite of all its upgrades, however, China’s military is a long ways from being able to challenge the U.S. The Chinese navy has one small aircraft carrier, the U.S. has 10 enormous ones, plus a nuclear arsenal vastly bigger than Beijing’s modest force. China’s last war was its disastrous 1979 invasion of Vietnam, and the general U.S. view of the Chinese military is that it is a paper dragon.

 

That thinking is paralleled in Japan, which is worrisome. Japan’s aggressive nationalist government is more likely to initiate something with China than is the U.S. For instance, the crisis over the Senkaku/Diaoyus was started by Japan. First, Tokyo violated an agreement with Beijing by arresting some Chinese fishermen and then unilaterally annexed the islands. The Japanese military has always had an over-inflated opinion of itself and traditionally underestimated Chinese capabilities.

 

In short, the U.S. and Japan are not intimidated by China’s New Model Army, nor do they see it as a serious threat. That is dangerous thinking if it leads to the conclusion that China will always back down when a confrontation turns ugly. Belligerence and illusion are perilous companions in the current tense atmosphere.

 

 

The scheduled deployment of the U.S. Theater High Altitude Area Defense (THAAD) anti-missile systems has convinced Beijing that the U.S. is attempting to neutralize China’s nuclear missile force, a not irrational conclusion. While anti-missile systems are billed as “defensive,” they can just as easily be considered part of the U.S.’s basic “counterforce” strategy. The latter calls for a first strike on an opponent’s missiles, backstopped by an anti-ballistic missile system that would destroy any enemy missiles the first strike missed.

 

China is pledged not to use nuclear weapons first, but, given the growing ring of U.S. bases and deployment of anti-missile systems, that may change. China is considering moving to a “launch on warning” strategy, which would greatly increase the possibility of an accidental nuclear war.

 

The AirSea Battle strategy calls for conventional missile strikes aimed at knocking out command centers and radar facilities deep into Chinese territory. But given the U.S.’s “counterforce” strategy, Chinese commanders might assume those conventional missiles are nuclear tipped and aimed at decapitating China’s nuclear deterrent.

 

According to Amitai Etzioni of Washington University, a former senior advisor to President Jimmy Carter, “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.”

 

A report by the Union of Concerned Scientists concluded that if China moves to “launch on warning,” such a change “would dramatically increase the risk of a nuclear exchange by accident—a dangerous shift that the U.S. could help to avert.”

 

President Obama is said to be considering adopting a “no first use” pledge, but he has come up against stiff opposition from his military and the Republicans. “I would be concerned about such a policy,” says U.S. Air Force Secretary Deborah Lee James. “Having a certain degree of ambiguity is not necessarily a bad thing.”

 

But given the possibility of accidents—or panic by military commanders—“ambiguity” increases the risk that someone could misinterpret an action. Once a nuclear exchange begins it may be impossible to stop, particularly knowing that the U.S. “counterforce” strategy targets an opponent’s missiles. “Use them, or lose them” is an old saying among nuclear warriors.

 

In any case, the standard response to an anti-missile system is to build more launchers and warheads, something the world does not need more of.

 

While China has legitimate security concerns, the way it has pursued them has won it few friends in the region. Beijing has bullied Vietnam in the Paracel islands, pushed the Philippines around in the Spratly islands, and pretty much alienated everyone in the region except its close allies in North Korea, Laos and Cambodia. China’s claims—its so-called “nine dash line”—covers most the South China Sea, an area through which some $5 trillion in trades passes each year. It is also an area rich in minerals and fishing resources.

 

China’s ham-fisted approach has given the U.S. an opportunity to inject itself into the dispute as a “defender” of small countries with their own claims on reefs, islands and shoals. The U.S. has stepped up air and sea patrols in the region, which at times has seen Chinese and American and Japanese warships bow to bow and their warplanes wing tip to wing tip.

 

The recent decision by the Permanent Court of Arbitration at The Hague that China has no exclusive claim on the South China Sea has temporarily increased tensions, although it has the potential to resolve some of the ongoing disputes without continuing the current saber rattling.

 

China is a signatory to the 1982 Law of the Sea Treaty, as are other countries bordering the South China Sea (the U.S. Senate refuses to ratify the Treaty). China has never tried to interfere with the huge volume of commerce that traverses the region, a trade that, in any case, greatly benefits the Chinese. Beijing’s major concern is defense of its long coastline.

 

If the countries in the region would rely on the Law of the Sea to resolve disputes, it would probably work out well for everyone concerned. The Chinese would have to back off from their “nine dash line” claims in the South China Sea, but they would likely end up in control of the Senkakus/Diaoyu islands in the East China Sea.

 

But to cool the current tensions Washington would also have to ratchet down its military buildup in Asia. That will be difficult for the Americans to accept. Since the end of WW II, the U.S. has been the big dog on the block in the western Pacific, but that is coming to an end. According to the International Monetary Fund, China surpassed the U.S. economy in 2014 to become the world’s largest. Of the four largest economies on the globe, three are in Asia: China, Japan and India.

 

Simple demographics are shifting the balance of economic and political power from Europe and the U.S. to Asia. By 2015, more than 66 percent of the world’s population will reside in Asia. In contrast, the U.S. makes up 5 percent and the European Union 7 percent. By 2050, the world’s “pin code” will be 1125: one billion people in Europe, one billion in the Americas, two billion in Africa, and five billion in Asia. Even the CIA predicts, “The era of American ascendancy in international politics that began in 1945—is fast winding down.”

 

The U.S. can resist that inevitability, but only by relying on its overwhelming military power and constructing an alliance system reminiscent of the Cold War. That should give pause to all concerned. The world was fortunate to emerge from that dark period without a nuclear war, but relying on luck is a dangerous strategy.

 

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The Big Boom: Nukes and NATO

The Big Boom: Nukes And NATO

Dispatches From The Edge

July 18, 2016

 

“Today, the danger of some sort of a nuclear catastrophe is greater than it was during the Cold War and most people are blissfully unaware of this danger.”

-William J. Perry

U.S. Sec. Of Defense (1994-97)

 

Perry has been an inside player in the business of nuclear weapons for over 60 years and his book, “My Journey at the Nuclear Brink,” is a sober read. It is also a powerful counterpoint to the North Atlantic Treaty Organization’s (NATO) current European strategy that envisions nuclear weapons as a deterrent to war: “Their [nuclear weapons] role is to prevent major war, not to wage wars,” argues the Alliance’s magazine, NATO Review.

 

But, as Perry points out, it is only by chance that the world has avoided a nuclear war—sometimes by nothing more than dumb luck—and, rather than enhancing our security, nukes “now endanger it.”

 

The 1962 Cuban missile crisis is generally represented as a dangerous standoff resolved by sober diplomacy. In fact, it was a single man—Russian submarine commander Vasili Arkhipov—who countermanded orders to launch a nuclear torpedo at an American destroyer that could have set off a full-scale nuclear exchange between the USSR and the U.S.

 

There were numerous other incidents that brought the world to the brink. On a quiet morning in November 1979, a NORAD computer reported a full-scale Russian sneak attack with land and sea-based missiles, which led to scrambling U.S. bombers and alerting U.S. missile silos to prepare to launch. There was no attack, just an errant test tape.

 

Lest anyone think the Nov. 9 incident was an anomaly, a little more than six months later NORAD computers announced that Soviet submarines had launched 220 missiles at the U.S.—this time the cause was a defective chip that cost 49 cents—again resulting in scrambling interceptors and putting the silos on alert.

 

But don’t these examples prove that accidental nuclear war is unlikely? That conclusion is a dangerous illusion, argues Perry, because the price of being mistaken is so high and because the world is a more dangerous place than it was in 1980.

 

It is 71 years since atomic bombs destroyed Hiroshima and Nagasaki, and humanity’s memory of those events has dimmed. But even were the entire world to read John Hersey’s Hiroshima, it would have little idea of what we face today.

 

The bombs that obliterated those cities were tiny by today’s standards, and comparing “Fat Man” and “Little Boy”—the incongruous names of the weapons that leveled both cities—to modern weapons stretches any analogy beyond the breaking point. If the Hiroshima bomb represented approximately 27 freight cars filled with TNT, a one-megaton warhead would require a train 300 miles long.

 

Each Russian RS-20V Voevoda intercontinental ballistic missile (ICBM) packs 10 megatons.

 

What has made today’s world more dangerous, however, is not just advances in the destructive power of nuclear weapons, but a series of actions by the last three U.S. administrations.

 

First was the decision by President Bill Clinton to abrogate a 1990 agreement with the Soviet Union not to push NATO further east after the reunification of Germany or to recruit former members of the defunct Warsaw Pact.

 

NATO has also reneged on a 1997 pledge not to install “permanent” and “significant” military forces in former Warsaw Pact countries. This month NATO decided to deploy four battalions on, or near, the Russian border, arguing that since the units will be rotated they are not “permanent” and are not large enough to be “significant.” It is a linguistic slight of hand that does not amuse Moscow.

 

Second was the 1999 U.S.-NATO intervention in the Yugoslav civil war and the forcible dismemberment of Serbia. It is somewhat ironic that Russia is currently accused of using force to “redraw borders in Europe” by annexing the Crimea, which is exactly what NATO did to create Kosovo. The U.S. subsequently built Camp Bond Steel, Washington’s largest base in the Balkans.

 

Third was President George W, Bush’s unilateral withdrawal from the Anti-Ballistic Missile Treaty and the decision by the Obama administration to deploy anti-missile systems in Romania and Poland, as well as Japan and South Korea.

 

Last is the decision by the White House to spend upwards of $1 trillion upgrading its nuclear weapons arsenal, which includes building bombs with smaller yields, a move that many critics argue blurs the line between conventional and nuclear weapons.

 

The Yugoslav War and NATO’s move east convinced Moscow that the Alliance was surrounding Russia with potential adversaries, and the deployment of anti-missile systems (ABM)—supposedly aimed at Iran’s non-existent nuclear weapons—was seen as a threat to the Russian’s nuclear missile force.

 

One immediate effect of ABMs was to chill the possibility of further cuts in the number of nuclear weapons. When Obama proposed another round of warhead reductions, the Russians turned it down cold, citing the anti-missile systems as the reason. “How can we take seriously this idea about cuts in strategic nuclear potential while the United States is developing its capabilities to intercept Russian missiles?” asked Deputy Prime Minister Dmitry Rogozin.

 

When the U.S. helped engineer the 2014 coup against the pro-Russian government in Ukraine, it ignited the current crisis that has led to several dangerous incidents between Russian and NATO forces—at last count, according to the European Leadership Network, more than 60. Several large war games were also held on Moscow’s borders. Former Soviet president Mikhail Gorbachev went so far as to accuse NATO of “preparations for switching from a cold war to a hot war.”

 

In response, the Russians have also held war games involving up to 80,000 troops.

 

It is unlikely that NATO intends to attack Russia, but the power differential between the U.S. and Russia is so great—a “colossal asymmetry,” Dmitri Trenin, head of the Carnegie Moscow Center, told the Financial Times—that the Russians have abandoned their “no first use” of nuclear weapons pledge.

 

It the lack of clear lines that make the current situation so fraught with danger. While the Russians have said they would consider using small, tactical nukes if “the very existence of the state” was threatened by an attack, NATO is being deliberately opaque about its possible tripwires. According to NATO Review, nuclear “exercises should involve not only nuclear weapons states…but other non-nuclear allies,” and “to put the burden of the doubt on potential adversaries, exercises should not point at any specific nuclear thresholds.”

 

In short, keep the Russians guessing. The immediate problem with such a strategy is: what if Moscow guesses wrong?

 

That won’t be hard to do. The U.S. is developing a long-range cruise missile—as are the Russians—that can be armed with conventional or nuclear warheads. But how will an adversary know which is which? And given the old rule in nuclear warfare—use ‘em, or lose ‘em—uncertainty is the last thing one wants to engender in a nuclear-armed foe.

 

Indeed, the idea of no “specific nuclear thresholds” is one of the most extraordinarily dangerous and destabilizing concepts to come along since the invention of nuclear weapons.

 

There is no evidence that Russia contemplates an attack on the Baltic states or countries like Poland, and, given the enormous power of the U.S., such an undertaking would court national suicide.

 

Moscow’s “aggression” against Georgia and Ukraine was provoked. Georgia attacked Russia, not vice versa, and the Ukraine coup torpedoed a peace deal negotiated by the European Union, the U.S., and Russia. Imagine Washington’s view of a Moscow-supported coup in Mexico, followed by an influx of Russian weapons and trainers.

 

In a memorandum to the recent NATO meetings in Warsaw, the Veteran Intelligence Professionals for Sanity argued “There is not one scintilla of evidence of any Russian plan to annex Crimea before the coup in Kiev and coup leaders began talking about joining NATO. If senior NATO leaders continue to be unable or unwilling to distinguish between cause and effect, increasing tension is inevitable with potentially disastrous results.”

 

The organization of former intelligence analysts also sharply condemned the NATO war games. “We shake our heads in disbelief when we see Western leaders seemingly oblivious to what it means to the Russians to witness exercises on a scale not seen since Hitler’s army launched ‘Unternehumen Barbarossa’ 75 years ago, leaving 25 million Soviet citizens dead.”

 

While the NATO meetings in Warsaw agreed to continue economic sanctions aimed at Russia for another six months and to station four battalions of troops in Poland and the Baltic states— separate U.S. forces will be deployed in Bulgaria and Poland —there was an undercurrent of dissent. Greek Prime Minister Alexis Tsipras called for deescalating the tensions with Russia and for considering Russian President Vladimir Putin a partner not an enemy.

 

Greece was not alone. German Foreign Minister Frank-Walter Steinmeler called NATO maneuvers on the Russian border “warmongering” and “saber rattling.” French President Francois Hollande said Putin should be considered a “partner,” not a “threat,” and France tried to reduce the number of troops being deployed in the Baltic and Poland. Italy has been increasingly critical of the sanctions.

 

Rather than recognizing the growing discomfort of a number of NATO allies and that beefing up forces on Russia’s borders might be destabilizing, U.S. Sec. of State John Kerry recently inked defense agreements with Georgia and Ukraine.

 

After disappearing from the radar for several decades, nukes are back, and the decision to modernize the U.S. arsenal will almost certainly kick off a nuclear arms race with Russia and China. Russia is already replacing its current ICBM force with the more powerful and long range “Sarmat” ICBM, and China is loading its ICBM with multiple warheads.

 

Add to this volatile mixture military maneuvers and a deliberately opaque policy in regards to the use of nuclear weapons, and it is no wonder that Perry thinks that the chances of some catastrophe is a growing possibility.

 

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Brexit and Spain: Europe On The Edge

The Brexit & Spain: Europe On The Edge?

Dispatches From The Edge

July 5, 2016

 

On the surface, the June 23 Brexit and the June 26 Spanish elections don’t look comparable. After a nasty campaign filled with racism and Islamophobia, the British—or rather, the English and the Welsh—took a leap into darkness and voted to leave the European Union (EU). Spanish voters, on the other hand, rejected change and backed a rightwing party that embodies the policies of the Brussels-based trade organization.

 

But deep down the fault lines in both countries converge.

 

For the first time since Margaret Thatcher and Ronald Reagan rolled out a variety of free market capitalism and globalization that captured much of the world in the 1980s, that model is under siege. The economic strategy of regressive taxes, widespread privatization and deregulation has generated enormous wealth for the few, but growing impoverishment for the many. The top 1 percent now owns more than 50 percent of the world’s wealth.

 

The British election may have focused on immigration and the fear of “the other”—Turks, Syrians, Greeks, Poles, etc—but this xenophobia stems from the anger and despair of people who have been marginalized or left behind by the globalization of the labor force that has systematically hollowed out small communities and destroyed decent paying jobs and benefits.

 

“Great Britain’s citizens haven’t been losing control of their fate to the EU,” wrote Richard Eskow of the Campaign for America’s Future, “They’ve have been losing it because their own country’s leaders—as well as those of most Western democracies—are increasingly in thrall to corporate and financial interests.”

 

While most of the mainstream media reported the Spanish election as a “victory” for acting Prime Minister Mariano Rajoy’s Popular Party (PP) and defeat for the left, it was more a reshuffle than a major turn to the right, and, if Rajoy manages to cobble together a government, it is likely to be fragile and short lived.

 

It was a dark night for pollsters in both countries. British polls predicted a narrow defeat for the Brexit, and Spanish polls projected a major breakthrough for Spain’s left, in particular Unidos Podemos (UP), a new alliance between Podemos and the Communist/Green party, Izquierda Unida.

 

Instead, the Brexit passed easily and the UP lost 1 million votes from the last election, ending up with the same number of seats they had in the old parliament. In contrast, the Popular Party added 14 seats, although it fell well short of a majority.

 

A major reason for the Spanish outcome was the Brexit, which roiled markets all over the world, but had a particularly dramatic effect on Spain. The Ibex share index plunged more than 12 percent and blue-chip stocks took a pounding, losing about $70 billion dollars. It was, according to Spain’s largest business newspaper, “The worst session ever.” Rajoy—as well as the Socialist Party (SP)—flooded the media with scare talk about stability, and it partly worked.

 

The Popular Party poached eight of its 14 new seats from the center-right Ciudadanos Party and probably convinced some UP voters to shift to the mainstream SP.

 

But Rajoy’s claim that “We won the election. We demand the right to govern” is a reach. The PP has 137 seats, and it needs 176 seats to reach a majority in the 350-seat parliament. The Prime Minister says he plans to join with Ciudadanos, but because the latter lost seats in the election such an alliance would put the PP seven votes short. An offer for a “grand alliance” with the SP doesn’t seem to be going anywhere. “We are not going to support Rajoy’s investiture or abstain,” said Socialist Party spokesman Antonio Hernando. An abstention would allow the PP to form a government.

 

Which doesn’t mean Rajoy can’t form a government. There are some independent deputies from the Basque country and the Canary Islands who might put Rajoy over the top, but it would be the first coalition government in Spain and a fragile one at that.

 

Part of that fragility is a scandal over an email between Rajoy and Jean-Claude Juncker, head of the European Commission, that was leaked to the media. The Commission is part of the “troika” with the International Monetary Fund and the European Central Bank that largely decides economic policy in the EU.

 

During the election Rajoy promised to cut taxes and moderate the troika-imposed austerity measures that have driven Spain’s national unemployment rate to 22 percent, and a catastrophic 45 percent among young people. But in a confidential email to Juncker, the Prime Minister pledged that, “In the second half of 2016, once there is a new government, we will be ready to take further measures to meet deficit goals.”

 

In short, Rajoy lied to the voters. If the PP had won an absolute majority that might not be a problem, but a coalition government is another matter. Would Ciudadanos and the independents be willing to associate themselves with such deceit and take the risk that the electorate would not punish them, given that such a government is not likely to last four years?

 

Unidos Podemos supporters were deeply disappointed in the outcome, although the UP took the bulk of the youth vote and triumphed in Catalonia, Spain’s wealthiest province, and the Basque country. What impact UP’s poor showing will have on divisions within the alliance is not clear, but predictions of the organization’s demise are premature. “We represent the future,” party leader Pablo Iglesia said after the vote.

 

There is a possible path to power for the left, although it leads through the Socialist Party. The SP dropped from 90 seats to 85 for its worst showing in history, but if it joins with the UP it would control 156 seats. If such a coalition includes the Catalans that would bring it to 173 seats, and the alliance could probably pick up some independents to make a majority. This is exactly what the left, agreeing to shelve their differences for the time being, did in Portugal after the last election.

 

The problem is that the SP refuses to break bread with the Catalans because separatists dominate the province’s delegation and the Socialist Party opposes letting Catalonia hold a referendum on independence. Podemos also opposes Catalan separatism, but it supports the right of the Catalans to vote on the issue.

 

Rajoy may construct a government, but it will be one that supports the dead-end austerity policies that have encumbered most of the EU’s members with low or flat growth rates, high unemployment and widening economic inequality. Support for the EU is at an all time low, even in the organization’s core members, France and Germany.

 

The crisis generated by the free market model is hardly restricted to Europe. Much of Donald Trump’s support comes from the same disaffected cohort that drove the Brexit, and, while “The Donald” is down in the polls, so were the Brexit and the Spanish Popular Party.

 

The next few years will be filled with opportunity, as well as danger. Anti-austerity forces in Spain, Italy, Greece, Portugal and Ireland are organizing and beginning to coordinate resistance to the “troika”. But so, too, are parties on the right: France’s National Front, Hungary’s Jobbik, Greece’s Golden Dawn, Britain’s United Kingdom Independence Party, Austria’s Freedom Party, Denmark’s People’s Party and Sweden’s Democratic Party.

 

Instead of reconsidering the policies that have spread so much misery through the continent, European elites were quick to blame “stupid” and “racist” voters for the Brexit. “We are witnessing the implosion of the postwar cultural and economic order that has dominated the Euro-American zone for more than six decades,” writes Andrew O’Helir of Salon. “Closing our eyes and hoping that it will go away is not likely to be successful.”

 

A majority of Britain said “enough,” and while the Spanish right scared voters into backing away from a major course change, those voters will soon discover that what is in store for them is yet more austerity.

 

“We need to end austerity to end this disaffection and this existential crisis of the European project,” said a UP statement following the election. “We need to democratize decision making, guarantee social rights and respect human rights.”

 

The European Union is now officially a house divided. It is not clear how long it can endure.”

 

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The Brexit: A Very British Affair

Brexit Vote: A Very British Affair

Dispatches From The edge

June 24, 2016

 

In the end, the Brexit—the vote on whether the United Kingdom should remain in the European Union (EU) or be the first in the 29-member trade group to bail out—was a close fought matter, but for all the sturm und drang about a pivotal moment for the EU, the June 23 referendum that saw the Brexit pass was a very British affair.

 

While the European Union is clearly in a crisis—countries weighed down with unpayable debt, economies virtually dead in the water, double digit unemployment, and a rising chorus of opposition to the austerity policies of the EU authorities in Brussels—those were not the issues that brought the British people to the polls.

 

Indeed, the whole affair started as an entirely homegrown matter, an internal split in the ruling Conservative Party. Back in 2013, Conservative Prime Minister David Cameron cut a deal with the euro skeptic part of his party that if they would close ranks until after the 2015 general election, he would hold a referendum on the EU.

 

At the time, Cameron was also looking over his shoulder at the rise of the extreme right wing, racist United Kingdom Independence Party (UKIP), which had begun using anti-immigrant issues to poach Conservatives. It is likely that Cameron never really intended to follow through on the 2013 pledge, but once he let slip the dogs of war he had little control over the havoc that followed.

 

When the Conservatives defeated the Labour Party last year, the “out” faction demanded their due, and what emerged was a deeply disturbing campaign that focused on race, religion and “sovereignty,” the latter a code-word for a particularly nasty brand of nationalism that is on the rise all over Europe.

 

Brexiters conjured up hordes of Turks pouring into Britain, even though Turkey is not a EU member—or likely to become one. In any case, the UK is not part of the Schengen countries, those members of the EU that allow visa less travel.

 

“Vote Leave” ran posters depicting crowds of Syrians and endless ads on Turkish birthrates. “None of this needs decoding,” wrote Philip Stephens of the Financial Times, “The dog whistle has made way for the Klaxon. EU membership talks with Turkey, we are to understand, will soon see Britain overrun by millions of (Muslim) Turks—most of them thugs or welfare scroungers.”

 

Last year Britain did process some 330,000 immigrants, but the overwhelming majority of them hailed from Spain, Poland, the Baltic countries, and Greece. The UK has accepted very few Syrian refugees and Turks, certainly not enough to “overrun” the place.

 

The openly racist and xenophobic character of the “Leave” campaign put the UK left in a difficult spot. While the left, including the Labour Party, has profound differences with current policies and structures of the EU, these are not over immigration and religion. How to express those critiques without bedding down with the likes of UKIP or the euro skeptic Conservatives was a tricky business.

 

Labour Party head Jeremy Corbyn chose to endorse the “remain” campaign, but also to point out that the EU is an undemocratic organization whose financial policies have spread poverty and unemployment throughout the continent. However, because the trade groups have a progressive stance on climate change, equal pay, work hours, vacations, and maternity leave, Corbyn argued—if somewhat tepidly—that all in all, it was best to stay in and try to reform the organization.

 

Part of the “leave” vote sprang from one of Britain’s most pernicious ideologies—nostalgia. Run through a few verses of “Rule Britannia” and a considerable portion of older Britains go misty eyed with the mythology of Trafalgar, Waterloo, and Omdurman. Polls indicate that support for the EU among people over 60 was just 33 percent. It was only 10 percent more among Conservative Party members of all ages.

 

In contrast, young Britains, Labour Party members, the Scots and Northern Irish supported remaining, though in the end they were not enough. The fallout? There will almost certainly be another referendum for Scottish independence. Will Northern Ireland do the same?

 

Is this the beginning of end for the EU? It is hard to imagine how the organization can continue as it is since the second largest economy in the trade group has debarked. But the European Union’s troubles have only just begun, and a far more important measure of the future of the organization will come when Spanish voters go to the polls June 26.

 

In that election the austerity policies of the “troika”—the European Central Bank, the International Monetary Fund, and the European Commission—will be directly confronted by a spanking new left formation, Unidos Podemos (United We Can). UP comes out of an alliance of Izquierda Unida (United Left) and Podemos. It is currently running number #2 in the polls and nipping at the heels of the ruling rightwing Popular Party.

 

The UP calls for rolling back the austerity policies of the troika, a public works program to create 300,000 jobs, and economic stimulation to tackle Spain’s horrendous unemployment problem. Joblessness is over 22 percent nationwide and 48.5 percent among young Spaniards.

 

A recent manifesto by more than 200 leading Spanish economists charges that the austerity policies of the EU have created an “economic crisis” that “has had devastating consequences for our country, as well as the euro zone as a whole” and “unnecessarily prolonged the recession across the continent and generated deep social fractures by increasing economic and social inequalities.”

 

The euro zone is the 19 members of the EU that use the common currency, the euro.

 

UP plans to link up with similar minded forces in Greece, Portugal, Italy and Ireland to demand that Brussels adopt fiscal stimulation as a strategy against the economic malaise plaguing most of the EU.

 

United Left leader and Communist Alberto Garzon, probably the most popular politician in the country, says “Brussels has to understand that if they continue to apply austerity politics in Spain our social emergency will get worse, which only helps the rise of fascism—as we have already seen in Austria and other EU countries.”

 

The Brexit vote was a British affair (and promises to be a messy one). The Spanish election is a continental affair that will have reverberations worldwide.

 

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Spanish Elections: EU Watershed?

The Spanish Challenge

Dispatches From The Edge

June 8, 2016

 

For the past quarter of a century there have been few watershed moments in Spanish political history. Like a well-choreographed pas de deux, the center-left Socialist Workers Party (PSOE) and right-wing Popular Party (PP) have taken turns governing the country.

 

But the 2015 election changed all that. Upstart parties on the right and left crashed the ball, punished the two major parties, and forced another round of voting on June 26 that could be a turning point in a growing campaign to roll back austerity policies that have spread poverty and unemployment throughout the continent.

 

Last December’s vote saw the ruling PP drop 63 seats and lose its majority. But voters chastised the Socialists as well, with the party losing 20 seats. Many of the seats that formerly went to the two major parties shifted to the left-wing Podemos Party and, to a lesser degree, the rightist Ciudadanos Party. In the current parliament, the PP controls 123 seats, the Socialists 90, Podemos 69, and Ciudadanos 40. Regional parties of Basques, Catalans and Canary Island independents hold 28 seats. The parliament has 350 seats and a ruling majority is 176.

 

The new election was forced when none of the parties could form a working majority. The PP and Ciudadanos are on the same page politically, but together fall short of a majority. The Socialists, Podemos and the regional parties—most of which are leftist to one extent or another—could have formed a government, but the Socialist Party refuses to have anything to do with Catalan separatists.

 

While polls indicate that Spaniards are likely to vote pretty much the same way they did in December, a new kid on the block has altered the electoral terrain and raised the pressure on the center-left Socialists to make a choice: follow the lead of Portugal, where the Socialist Party formed a united front with the Left Bloc and the Communist/Green alliance, or imitate the Social Democrats in Germany and join a “grand coalition” and make common cause with the right?

 

The “new kid” is “Unidos Podemos” (“United We Can”), a coalition of Podemos and the United Left (UL). No one expects the new alliance to win a majority, but most analysts predict, that under Spain’s quirky election system the coalition could increase its representation by 25 percent, or somewhere between 15 to 20 seats. That would vault the new formation past the PSOE, making United Podemos (UP) the second largest bloc in the parliament. The PP is still number one and on track to slightly increase the 29 percent they received in the last election.

 

Spain’s election geography is heavily weighted toward rural areas, where the PP and Socialist Party are strong. While it takes 128,000 votes to elect someone in Madrid, it only takes 38,000 in some areas of the countryside. The rules also favor regional depth over broad support. In December, the UL won almost a million votes but only got two representatives. Other parties averaged one seat for every 60,000 votes.

 

United Podemos has internal tensions, but both parties have put these aside for the moment. For instance, Podemos supports continued membership in NATO, while United Left opposes the military alliance. The UL is also opposed to the current structure of the European Union and calls for a “refounding” of the organization.

 

What both agree on is ending Spain’s punishing austerity regime and confronting the country’s staggering unemployment. The national jobless rate is 21 percent, with a catastrophic 45.5 percent for youth 25 and under. The education system is in a state of collapse, and there is a national housing crisis. In the face of those conditions, the UP has decided to shelve disagreements over NATO and the EU and make common cause.

 

This is almost exactly what the left did in Portugal, where disagreements on NATO and the EU were sidelined in favor of freezing privatizations, rolling back tax increases, increasing the minimum wage and augmenting funding for education and medical care. There is no question that differences will eventually surface, but the Portuguese left has decided that when the house is burning down saving the inhabitants takes precedent. Whether the Spanish Socialist Party will take that step is an open question.

 

In some ways the divisions of the left in Spain are narrower than they are in the Portuguese alliance: part of the UP—specifically Podemos—backs NATO membership and the EU. But the PSOE’s opposition to Catalan independence is a major roadblock to an alliance with the UP. Podemos also believes Catalonia should remain part of Spain, but it supports the right of the Catalans to hold a referendum on the issue.

 

The Socialist Party’s hostility to Catalan independence allies it with the PP and Ciudadanos. The latter was formed to oppose Catalan independence, and the PP has led a mean-spirited campaign against Barcelona. When Catalans banned bull fighting, Madrid made bull fighting a “national cultural heritage” to thwart the ban. When Catalans flew their nationalist “Estelada” flag at the Copa Del Rey soccer match finals in Madrid, the government tried to block it. A court stopped the authorities from banning the flag, and Barcelona defeated Madrid in the match.

 

PP leader and acting Prime Minister, Mariano Rajoy, is pressing the Socialists to join a grand coalition that, so far, the latter has resisted. But the PSOE is deeply split. Some in the Party would rather bed down with the right than break bread with Podemos United. Others are afraid that, if the Socialist Party enters a grand alliance with the Popular Party, the Socialists will end up suffering the consequences. Center-left parties that join with center-right parties tend to do badly come election time.

 

The Greek Socialist Party was decimated by the left-wing Syriza Party after the former went into a grand coalition with the right. The Liberal Party’s alliance with the Conservative Party in England turned out to be a disaster. The Liberal Party barely exists today. And the German Social Democrat’s grand coalition with Chancellor Angela Merkel’s Christian Democratic Union has seen the once mighty Socialists slip below 20 percent in the polls. In Spain the mantel of “the left” would clearly shift to the UP alliance, something that many in the Socialist Party deeply fear.

 

There are profound differences among the European left, making unity difficult. The Socialist parties in Portugal and Spain, for instance, support paying off their countries debts to European banks and the International Monetary Fund (IMF). The Portuguese Socialist Party’s alliance partners, as well as the Spanish United Left, think the debt is unpayable and, in any case, unfair because most of the debt is the result of the 2008 economic crisis brought on by the irresponsible speculation of private banks. Speculators may have lost the money, but the taxpayers are picking up the tab.

 

There is a potential path out of the current situation, but it will have to overcome powerful interests and a deeply flawed economic system.

 

Those “interests” are the debt holders, ranging from governments to the European Central bank and the IMF.

 

The flaw is built into the eurozone, which is made up of the 19 countries in the 28-member European Union that use the common currency, the euro. As economist Thomas Piketty puts it, the eurozone has “a single currency with 19 different public debts, 19 interests rates upon which the financial markets are completely free to speculate, 19 corporate tax rates in unbridled competition with one another, without a common social safety net or shared educational standard—this cannot possibly work, and never will.”

 

Piketty argues the eurozone’s rigidity on debt and its strategy for solving it—austerity and yet more austerity—has “throttled” a recovery, particularly in Greece, Spain, Portugal, and Ireland. Even where countries economies are finally growing—Spain and Ireland—their debts are actually higher than when they instituted austerity regimes. And the “growth” is not due to the EU’s economic strategy, but rather to cheap oil and the declining value of the euro.

 

Piketty proposes a conference on debt, similar to the one that saved postwar Germany. Syriza has long called for such a gathering. Such a conference could cut debt burdens, lower interest rates and spread out repayments.

 

However, the eurozone would also have to be democratized. The current European parliament includes non-eurozone members and is largely powerless. Decisions are largely made by the unelected Troika—the IMF, the European Central Bank, and the European Commission. One thing that could be done immediately would be to institute a common corporate tax rate, which could be used to finance infrastructure improvements and education.

 

Germany is unlikely to support such an approach, but Germany only represents 25 percent of the EU’s population and GDP, while France, Italy and Spain combined account for 50 percent. Add in Ireland, Portugal and Greece, and Germany and its allies are a distinct minority.

 

Italy is openly advocating debt reductions and loosening of the eurozone’s rules, and France has already raised the issue of a more democratic and transparent EU political structure along the lines of what Piketty is proposing.

 

Can it be done? It won’t be easy, but Germany is increasingly isolated, and countries in the southern tier of the eurozone are desperate for relief from the endless rounds of austerity. They are also no longer convinced that such a strategy will lower their debt burdens and stimulate their economies. In fact, most the debt is unpayable no matter how much austerity is applied.

 

There are some wild cards in the upcoming election. Both the PP and PSOE have been tarred with the corruption bush, and two former Socialist governors of Andalusia have just been charged with illegal payments to supporters. Turnout will likely be lower than in the December election, but the left’s effective grassroots organizations may offset that.

 

The Spanish elections arrive at a critical time for the European Union, and a Madrid government that resists the increasingly discredited economic strategy of the troika could shift the balance in the direction imagined by Piketty.

 

That, however, will depend on whether the Socialist Party decides to join with the left or go into a grand coalition with the right.

 

A failure by the left to unite will open the door for Europe’s resurgent far right, whose xenophobia and racism have gained ground all over the continent.The only way to effectively counter the far right is to democratize the European Union and pursue economic policies that will provide jobs and raise living standards. Only the left can deliver such a program.

 

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A Very Brazilian Coup

 

A Very Brazilian Coup

Dispatches From the Edge

May 26, 2016

 

On one level, the impeachment of Brazilian President Dilma Rousseff seems like vintage commedia dell’arte: the Lower House speaker who brought the charges, Eduardo Cunha, had to step down because he has $16 million stashed in secret Swiss and U.S. bank accounts. The man who replaced Cunha, Waldir Maranhao, is implicated in corruption around the huge state-owned oil company, Petroblas. The former vice-president and now president, Michel Temer, has been convicted of election fraud, and has also been caught up in the Petroblas investigation. And the president of the Senate, Renan Calheiros, has also been implicated in the oil company scandal and is dodging tax evasion charges. In fact, over half the legislature is currently under investigation for corruption of some kind.

 

But there is nothing comedic about what the fall of Rousseff and her Workers Party will mean for the 35 million Brazilians who have been lifted out of poverty over the past decade, and for the 40 million newly minted members of the middle class one-fifth of Brazil’s 200 million people.

 

While it was the current downturn in the world’s seventh largest economy that helped light the impeachment fuse, the crisis is rooted in the nature of Brazil’s elites, its deeply flawed political institutions, and the not so dead hand of its 1964-1985 military dictatorship.

 

Given that the charges against Rousseff do not involve personal corruption, or even constitute a crime—if juggling books before an election were illegal, virtually every politician on the planet would end up in the docket—it is hard to see the impeachment as anything other than a political coup. Even the conservative Economist, long a critic of Rousseff, writes “in the absence of proof of criminality, impeachment is unwarranted” and “looks like a pretext for ousting an unpopular president.”

 

That suspicion is reinforced by the actions of the new President. Temer represents the center-right Brazilian Social Democratic Party (PSDB) that until recently was in alliance with Rousseff’s Workers Party. As soon as Rousseff was impeached by the Senate and suspended from office for 180 days, Temer made a sharp turn to the right on the economy, appointing a cabinet of ministers straight out of Brazils’ dark years of dictatorship: all white, all male, and with the key portfolios in the hands of Brazil’s historic elites. This is in a country where just short of 51 percent of Brazilians describe themselves as black or mixed.

Seven of those ministers have been implicated in the Petroblas scandal.

 

 

The President announced a program to “reform” labor laws and pensions, code words for anti-union legislation and pension cuts. His new Finance Minister, Henrique Meirelles, a former central bank head who once headed BankBoston in the U.S., announced that, while programs for the poor “which don’t cost the budget that much” would be maintained—like the highly popular and successful Bolsa Familia that raised tens of millions out of poverty through small cash grants— other Worker Party initiatives would go under the knife.

 

The new government is already pushing legislation that would roll back laws protecting the environment and indigenous people, and has appointed ministers with terrible track records in both areas.

 

One of the largest soybean farmers in Brazil, Blairo Maggi, was appointed Agriculture minister. Maggi has overseen the destruction of vast areas of the Amazon to make way for soybean crops. Temer’s initial appointment for Science minister was an evangelical Protestant minister who doesn’t believe in evolution. Temer also folded the culture ministry into the ministry of education, sparking sit-ins and demonstrations by artists, filmmakers and musicians.

 

Brazil has long been a country with sharp divisions between wealth and poverty, and its elites have a history of using violence and intimidation. Brazil’s northeast is dominated by oligarchs who backed the 1964 military coup and manipulated the post-dictatorship constitution.

 

Political power is heavily weighted toward rural areas dominated by powerful agricultural interests. The three poorest regions of the country, accounting for only two fifths of the population, control three quarters of the seats in the Senate.

 

As historian Perry Anderson puts it, the political system was designed “to neutralize the possibility that democracy might lead to the formation of any popular will that could threaten the enormities of Brazilian inequality.”

 

Brazil’s legislature is splintered into 35 different parties, many of them without a political philosophy. The legislature is elected on the basis of proportional representation, but with an added twist: an “open list” system in which voters can choose any candidate, many of them standing on the same ticket. The key to winning elections in Brazil, then, is name recognition, and the key to that is lots and lots of money. Most of that money comes from Brazil’s elites and the oligarchs in the country’s northeast.

 

Because of the plethora of parties, forming a government is tricky. What normally happens is that one of the larger parties ropes in several smaller parties by giving them ministries. Not only does this encourage corruption—each party knows it needs to raise lots of money for elections—but results in political incoherence.

 

When the Workers Party was elected in 2002 it was unwilling to dilute its programs by bringing ideological opponents into a cabinet, yet the Workers Party needed partners. The solution was cash payouts to legislators, a scheme titled “mensalao” (“monthly payoffs”) that was uncovered in 2005. Once the payoffs were revealed, the Workers party had little choice but to fall back on the old system of handing out ministries in exchange for votes. That is how Temer and the PMBD entered the scene.

 

With the reputation of Silva and the Workers Party dented by the payoff scheme, the right saw an opportunity to rid themselves of the left, but Silva’s popularity and the success of programs aimed at alleviating poverty made the Workers Party pretty much unassailable at the ballot box. Silva won another landslide election in 2006, and Rousseff was elected twice in 2010 and 2014. In short, the elites could not win elections.

 

But they could still pull off a very Brazilian coup. First, they hammered at the fact that some Workers Party leaders had been involved in corruption and others implicated in the Petroblas bribery scheme. Rousseff headed up Petroblas before being elected President. While she has never been linked to any of the corruption, it did happen on her watch.

 

Petroblas is rated the fourth largest company in the world, and it is building tankers, off shore platforms and refineries. That expansion has opened opportunities for graft, and the level of bribery involved could exceed $3 billion. Nine construction companies are implicated in the scandal, as well as more than 50 politicians, legislators and state governors, including the PMDB and the Workers Party.

 

Rousseff’s biggest mistake was to run on an anti-austerity platform in 2014 and then reversing course after she was elected, putting the brakes on spending. The economy was already troubled and austerity made it worse. The 2005 bribery scheme lost the Workers Party some of the middle class, and the 2014 austerity alienated some of the Party’s working class support.

 

But it was most likely Rousseff’s decision to green light the Petroblas corruption investigation that spurred her enemies to strike before the probe pulls down scores of political leaders and wealthy construction owners. One of Temer’s ministers was recently caught on tape plotting how to use the impeachment to derail the investigation.

 

Certainly the campaign aimed at Rousseff was well orchestrated. Brazil’s media—dominated by a few elite families—led the charge. According to Reporters Without Borders, the role of the media was “partisan,” its anti-Rousseff agenda “barely veiled.” Judge Sergio Moro, who is a key figure in the Petroblas investigation, illegally leaked wiretap intercepts that put Silva and Rousseff in a bad light.

 

Given the makeup of the Brazilian Senate, it is likely Rousseff will be convicted and removed as President. It also appears that Temer will try to roll back many of the programs that successfully narrowed the gap between rich and poor.

 

Brazil’s economy is in trouble, shrinking 3.7 percent last year. Commodity prices are down worldwide, in large part because of the downturn of China’s economy. Iron ore dropped from $155 to $55 a ton, soya went from $18 to $8 a bushel, and oil from $140 to less than $40 a barrel.

 

Brazilian debt is rising, but it is still half that of Italy, and unemployment is low, at least by European standards. A return to the austerity policies that destroyed economies all across the southern cone during the 1980s and ‘90s would be a disaster. The worst thing one can do in a recession is curb spending, which stalls out economies and puts countries into a debt spiral.

 

The austerity policies of the European Union have kept all but a few European economies virtually dead in the water, and those that have shown some growth, like Spain, still post unacceptable unemployment rates. Spain currently has an overall national jobless rate of 21 percent, rising to almost 50 percent among youth. Brazil’s jobless rate is 10.9 percent.

 

For now, the Workers Party is on the ropes but hardly down and out. It has 500,000 members, and the new government will find it is very difficult to take things away from people now that they have gotten used to having them. Some 35 million people are unlikely to return to their previous poverty without a fight.

 

One of Temer’s first acts was putting up 100,000 billboards all over the country with the slogan: “Don’t speak of crisis; work!”, which sounds a lot like “shut up.” Brazilians are not noted for being quiet, particularly if the government instituting painful cuts is unelected.

 

The pressure for new elections is sure to grow, although the current government will do anything it can to avoid them. Sooner or later there will be a reckoning.

 

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The EU: A House Divided

European Union: A House Divided

Dispatches From The Edge

May 16, 2016

 

“Larger now than the Roman Empire of two thousand years ago, more opaque than the Byzantine, the European Union continues to baffle observers and participants alike.”

Perry Anderson

British historian

 

The European Union is one of the premier trade organizations on the planet, with a collective GDP that matches the world’s largest economies. But it is far more than a trade group. It is also a banker, a judicial system, a watchdog, a military alliance, and, increasingly, an enforcer of economic rules among its 28 members.

 

On the one hand it functions like a super state, on the other, a collection of squabbling competitors, with deep divisions between north and south. On June 23, the two-decade-old organization will be put to the test when Great Britain—its second largest economy—votes to stay in the EU or bail out.

 

The awkwardly named “Brexit” has stirred up a witches’ brew of xenophobia, racism and nationalism, but it has also served to sharpen a long standing debate among the European left over the nature of the organization, and whether it serves to unite a continent shattered by two world wars or functions as little more than a vehicle to spread a particular species of capitalism that has impoverished more people than it has lifted up.

 

The EU was originally sold as an effective way to compete with U.S. and Japanese commercial power (and later China) by integrating the economies of Western Europe into a common market. The 1957 Treaty of Rome established the European Economic Community (EEC), but that organization was plagued by currency instability.

 

Currency manipulation is a standard economic strategy, one the U.S. Treasury follows to this day. The idea is to boost exports by deflating one’s currency, thus making one’s products cheaper. In an organization like the EEC, however, where currencies were traded back and forth, that strategy caused chaos, particularly after the Americans decoupled the dollar from gold in 1971. The U.S. immediately began aggressively devaluing its currency and undercutting Germany.

 

To make a long history brief, Germany and France began pushing for a common currency, though for different reasons.

 

For Germany, fluctuating currency rates cut into that country’s export engine. For France, a common currency would give Paris some say over the EEC’s economic policies through the creation of a European Central Bank, policies that at the time were largely determined by Germany’s powerful economy.

 

Although Britain opted out of adopting the Euro, London rapidly became the financial center of the continent. In the end, 19 countries would adopt the Euro, creating the Eurozone. Eight others, including Denmark, Sweden and Poland kept their own currencies.

 

The common currency—established by the 1991 Maastricht Treaty and launched in 1999—effectively put the German Bundesbank in charge. Bonn agreed to the common currency, but only on the condition that everyone kept their budget deficits to 3 percent of national income and held their government debt level at 60 percent of GDP. Those figures matched Germany’s economy, but very few of the other states in the EU.

 

The Maastricht Treaty also transformed the EEC into the EU in 1993.

 

Deflating one’s currency as a tactic to increase exports and stimulate growth during a downturn was no longer an option, and the debt ratio was set so low that few economies could keep to its strictures. When the bottom fell out during the 2008 economic meltdown, EU states found out just what they had signed on for: draconian austerity measures, the widespread privatization of state owned enterprises—from water and electrical systems, to airports and harbors—and emigration. Millions of mainly young Portuguese, Irish, Greeks and Spaniards fled abroad.

 

The European Central Bank—with its cohorts, the International Monetary Fund and the European Commission, the so-called Troika—straitjacketed economies throughout the continent, turning countries like Greece, Spain, Portugal, and Ireland into basket cases, forcing them to borrow money to keep their banks afloat while instituting austerity regimes that led to massive unemployment, huge service cutbacks, and rising poverty rates.

 

The Troika had a neat trick: it shifted the debts incurred by private speculators on to the public, while the Germans spun up a fairy tale to explain the counter-example: the frugal frau.

 

“The Swabian housewife,” lectured German Chancellor Angela Merkel, “would have told us her worldly wisdom: In the long run you cannot live beyond your means.”

 

Except that the debts were not due to the Greeks, Irish, Spaniards, and Portuguese “living beyond their means.” They were just picking up the tab run up by the speculators. The vast majority of “bailouts” that followed the crash went directly into the vaults of French, British, German, and Austrian banks. On the day the Greek “bailout” was announced, French bank shares rose 24 percent.

 

In many ways, the EU resembles a military alliance on the march. Jan Zielonka, a professor of European politics at Oxford, calls the EU a “postmodern empire,” filling the vacuum created by the fall of the Soviet Union, using “checkbooks rather than swords as leverage.” During the Clinton administration, the EU—along with NATO—pushed eastward, creating what Zbigniew Brzezinski called “the Eurasian bridgehead for American power and the potential springboard for the democratic system’s expansion into Eurasia.”

 

The Obama administration strongly supports the UK remaining in the EU.

 

But the EU has very little to do with “democracy,” as the recent Greek crisis demonstrated. In a confrontation between the then newly elected Greek Finance Minister Yanis Varoufakis and German Finance Minister Wolfgang Schauble, the latter refused to negotiate over the austerity program that had cratered Greece’s economy. “I’m not discussing the program,” said Schauble, “This was accepted by the previous [Greek] government and we can’t possibly let an election change anything.”

 

In short, the Troika—an unelected body—makes all economic decisions and is unwilling to consider any other approach but that of the mythical Swabian housewife. It isn’t democracy moving east, but the Bundesbank, and a species of capitalism that is unmoved by unemployment, poverty and widespread misery

 

So is the Brexit a challenge to the growing might of capital and an implicit critique of the EU’s dearth of democracy? Nothing’s that simple.

 

First, the loudest critics of the EU are people one needs a very long spoon to sup with: Marine Le Pen’s racist National Front, Britain’s xenophobic United Kingdom Independence Party, Hungary’s thuggish Jobbik, Greece’s openly Nazi Golden Dawn, and Italy’s odious Northern League. Hatred of immigrants and Islamophobia are the glue that binds these parties, which are active and growing throughout the EU.

 

Indeed, some on the British left have suggested voting against a Brexit precisely because the most vocal opposition to the EU comes from the most reactionary elements in the UK. The British Conservative Party is deeply split on the issue, with its most rightwing and anti-immigrant members favoring getting out.

 

The left is also filled with crosscurrents. While some argue for getting out because they see the EU as an undemocratic vehicle for the expansion of international capital, others are critical, but advocate staying in. British Labour Party leader Jeremy Corbyn—hardly a friend to international capital— opposes the Brexit.

 

While Corbyn is deeply critical of the EU’s lack of “democratic accountability, “ and its push to “privatize public services,” he argues that there is a “strong socialist case” for staying in. Corbyn says the EU plays a positive role on climate change, and that exiting the EU would initiate a race to the bottom on issues like equal pay, work hours, vacations and maternity leave. The Scottish National Party, which is to the left of the Labour Party, also opposes a Brexit, and threatens to call for another independence referendum if it passes.

 

Left parties in Greece, Italy, Spain, Portugal, and Ireland are critical of the EU, but most do not advocate withdrawing. What they are demanding is a say over their economic decisions and relief from the rigid rules that favor economies like Germany, and bar many others from ever becoming debt free.

 

It is ironic that Germany—the country that refuses to even consider retiring some of the overwhelming debts that enchain countries like Greece—owes its current wealth to the 1951 London Conference that cut post-war Germany’s debt in half, lowered interest rates, and stretched out debt payments. The result was the “Wirtschaftwunder” [economic miracle] and the creation of an industrial juggernaut. Greece’s Syriza Party has long called for such a conference to deal with the EU countries mired in debt.

 

There is no secret why Germany, France and the European Banks oppose debt reduction, or “haircuts”: Between the three of them they hold almost $84 billion of Greece’s debt

 

The polls show the British electorate could go either way on a Brexit. What happens if they do leave is hardly clear, because it would be a first. The predictions range from doom and gloom to sunny days, and everything in between, although it is doubtful the EU would severely punish Europe’s second largest economy.

 

One model the left needs to look at in this battle is Portugal, where three left parties, who have long fought with each other, found common ground around reversing the austerity policies that have racked the country’s economy for four years. Portugal just recently received a barely favorable bond rating that gives the coalition government some breathing room. The economy is growing and unemployment down, but at 129 percent of GDP, Portugal’s debt burden is still the third highest in Europe.

 

Alone, Portugal is no match for power of the Troika, but Lisbon has allies in Spain, Greece, Ireland and increasingly, Italy. Support for the EU in Italy has gone from 73 percent in 2010 to 40 percent today. “Europe has taken the wrong road,” says Italian Prime Minister Matteo Renzi. “Austerity alone is not enough.”

 

Given the absence of a strong, continent-wide left, however, reversing the current economic rules of the EU may be a country-by-country battle.

 

It is already underway, and for all of the economic power of the EU, the organization is vulnerable to charges that Brussels has sidelined democracy.

 

If Brussels—read Germany—can be persuaded or forced to agree to debt reductions, to loosen the spending restrictions and start pump priming, Europe can do something about its horrendous unemployment rate and underperforming economies. If not, whether the British leave or not may be irrelevant: a house divided cannot stand for long.

 

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