Spain: Breaking Up Is Hard To Do

Spain: Breaking Up Is Hard To Do

Dispatches From the EdgeConn Hallinan

Aug. 22, 2017

 

When the Catalans goes to the polls Oct. 1, much more than independence for Spain’s restive province will be at stake. In many ways the vote will be a sounding board for Spain’s future, but it is also a test of whether the European Union—divided between north and south, east and west—can long endure.

 

In some ways, the referendum on Catalan independence is a very Spanish affair, with grievances that run all the way back to Catalonia’s loss of independence in the War of the Spanish Succession (1701-1714). But the Catalans lost more than their political freedom when the combined French and Spanish army took Barcelona, they lost much of their language and culture, particularly during the long and brutal dictatorship of Francisco Franco from 1939 to 1975.

 

The current independence crisis dates back to 2010, when, at the urging of the rightwing Popular Party, the Spanish Constitutional Court overturned an autonomy agreement that had been endorsed by the Spanish and Catalan parliaments. Since then, the Catalans have elected a pro-independence government and narrowly defeated an initiative in 2014 calling for the creation of a free republic. The Oct. 1 vote will re-visit that vote.

 

But the backdrop for the upcoming election has much of Europe looking attentively, in part because there are other restive independence movements in places like Scotland, Belgium and Italy, and in part because many of the economic policies of the EU will be on the line, especially austerity, regressive taxation, and privatization of public resources as a strategy for economic recovery.

 

When the economic meltdown of 2008 struck, there were few countries harder hit than Spain. At the time Spain had a healthy debt burden and a booming economy, but one mainly based on real estate speculation fed by German, Austrian, French, British and U.S. banks. Real estate prices ballooned 500 percent. Such balloons are bound to pop, and this one did in a most spectacular fashion, forcing Spain to swallow a bailout from the EU’s “troika”—the International Monetary Fund, the European Commission, and the European Bank.

 

The price of the bailout—the bulk of which went to pay off the banks whose speculation had fed the bubble in the first place—was a troika-enforced policy of massive austerity, huge tax hikes, and what one commentator called “sado-monetarism.” The results were catastrophic. The economy tanked, unemployment rose to 27 percent—over 50 percent for youth—and some 400,000 people were forced to emigrate.

 

While the austerity bred widespread misery, it also jump-started the Left Podemos Party, now the third largest in the Spanish parliament and currently running neck and neck with the Spanish Socialist party. Podemos-allied mayors control most of Spain’s largest cities, including Madrid, Valencia, and Barcelona.

 

In the 2015 election the ruling Popular Party lost its majority and currently rules as a minority party, allied with the conservative Catalan Ciudadanos Party and the main Basque party.

 

Needless to say, the PP’s control of Spain is fragile.

 

Starting in 2014 the Spanish economy began to grow, unemployment came down, and Spain seemed on its way back to economic health. Or at least that is the story the Popular Party and the EU is peddling.

 

The economy is the fastest growing in the EU, averaging around 3 percent a year. Next year projections are that it will grow 2.5 percent. Unemployment has dropped from 28 percent—50 percent for youth—to just over 17 percent.

 

But youth unemployment is at 37 percent, the second highest in Europe, and wages have still not caught up to where they were before the 2008 crisis. Spain is adding some 60,000 jobs a year, but many of them are temporary and without the same benefits as full time workers.

 

This temp worker strategy is continent-wide. Of the 5.2 million jobs created between 2013 and 2016, some 2.1 million were temporary.

 

The “recovery” is partly due to “labor reforms” that make it easier to layoff workers and replace full-time workers with “temps.” The shift has been from full-time workers protected by labor agreements to insecure temps with few protections. While that might make products cheaper and, thus, more attractive, it impoverishes the work force.

 

The strategy has become so widespread that economists have borrowed a term from physics to describe it: hysteresis.

 

Hysteresis describes a phenomenon where force permanently distorts what it is applied to.

 

“When unemployment is high for a long period of time, the shape of the labour market alters,” says Financial Times economist Claire Jones. “Would-be workers lose their skills, or find that technology or other economic forces make them obsolete. When the recovery comes, they are unable to join in. longer-term, or structural levels of unemployment set in and economy’s potential diminishes.”

 

In short, hysteresis produces an army of under and unemployed workers, whose living standards decline and who are economically marginalized. It also creates a vicious cycle that eventually dampens an economy. If governments are not spending—and under the strictures of the troika that is a given—and if consumers don’t have money, growth will eventually come to a halt, or at least become so anemic that it will be unable to absorb the influx of a younger generation.

 

Those marginalized communities and sectors of the economy are fertile ground for rightists who use xenophobia and racism to whip up anti-immigrant sentiment, as recent elections in Europe and the U.S. have demonstrated.

 

The vote by Britain to withdraw from the EU was put down to racism, but ,while anti-immigrant sentiment did play a role in the Brexit, that argument is a vast oversimplification of what happened. Much of the Brexit vote was not so much xenophobic as a repudiation of the major political parties that abandoned whole sectors of the country.

This particularly included the policies instituted by former Prime Minister Tony Blair and the “New Labour Party” that jettisoned its ties with the trade union movement and bought into the neo-liberal policies of free trade and globalization.

 

However, many of those Brexit voters turned around a few months later and backed the Labour Party and Jeremy Corbin’s left agenda. Given an opportunity to vote for ending the long reign of austerity, and for free university tuition, improved health services, and re-nationalizing transportation, they voted Labour, xenophobia be dammed.

 

Because the Spanish Popular Party claims that the current economic recovery is the direct result of its austerity and labor policies, other EU players are paying attention to the Catalan vote. If the vote goes badly for Catalan independence—and polls are currently showing it will be defeated 42 percent to 48 percent—the PP will claim a victory, not only over Catalan separatism, but also for the Party’s economic recovery strategy.

 

The French are certainly paying attention. Newly elected President Emmanuel Macron is preparing a similar program of cutbacks and labor “reforms” that he intends to ram through by executive decree, bypassing the French parliament.

 

A victory for the PP is also in the interests of the troika as proof that its recovery formula works, even though the track record of austerity as a cure has few success stories, and even those are questionable. For instance, low energy prices and a weak euro have more to do with the Spanish recovery than cutbacks in social services and the evisceration of labor codes.

 

The Popular Party should be riding high these days, but in fact its poll numbers are declining. It is still the largest party in Spain, but that translates into only 31 percent of the voters. Between them, the Spanish Socialist Party and the leftist Podemos Party garner just short of 40 percent.

 

Part of the PP’s woes stem from the fact that many Spaniards recognize there is something sour about the recent “recovery,” but there are also the corruption charges leveled at the PP, charges that have even ensnared Mariano Rajoy. The Prime Minister was recently forced to testify in a bribery and fraud case against some leading members of his Party.

 

While the Socialists have also been tarred with the corruption brush, the current case has riveted the public’s attention because some of it reads like a script from the Sopranos. The key defendant is Francisco Correa, who likes to be called Don Vito, Marlon Brando’s character in The Godfather. Two of his associates are known as The Moustache and The Pearl. Correa and 10 others have already been sentenced to prison for fraud and bribery, but Correa is also on trial for setting up a slush fund. Rajoy testified in that trial, although so far the Prime Minister is not accused of any wrongdoing.

 

A survey by the CIS Institute found that almost 50 percent of Spanish voters are deeply concerned with corruption, and that sentiment is dragging the Popular Party down.

 

The left and center-left parties are split on the Catalan question. Both oppose separatism, but they come at it very differently. Podemos is urging a “no” vote Oct. 1, but it supports the right of the Catalans to have their initiative. That position, along with Podemos’s progressive political program, has made it the number one party in Catalonia.

 

The Socialists have traditionally opposed Catalan separatism, and even the right of the Catalans to vote on the issue. But that position has softened since a major upheaval in the party that began last year when the Socialist’s right wing pulled off a coup and drove the Party’s left wing out of power. But the Socialist right-wingers made a major mistake by voting to allow Rajoy to form a minority government and continue the austerity policies. That move was too much for the Party’s rank and file, who threw out the right this past May and reinstated the Socialist’s left wing.

 

The Socialists’ willingness to consider allowing the initiative is partly a matter of simple math. The Party’s opposition to Catalan independence has resulted in it being virtually annihilated in the province, and no Socialist Party has ever come to power in Spain without winning Catalonia.

 

Whatever happens Oct. 1, Spain is not going to be the same country it has been since the restoration of democracy in 1977. The old two-party domination of the government is over, and there is general recognition that there has to be some shift on the Catalan question. Even Rajoy—who has hinted that he might consider using the military to block the Oct. 1 vote, or ruling the province from Madrid—has offered to give Barcelona the same deal the Basque province have. That would include collecting taxes, something Catalans now don’t have the right to do.

 

There is no little irony in Rajoy’s offer. When the Catalans made that same offer in 2012, Rajoy and the Popular Party wouldn’t even discuss the proposal. It is a measure of how the issue has evolved that Rajoy is now making the same offer as the Catalans did a half decade ago.

 

Polls—weak reeds to lean on these days—show the initiative going down to defeat, but the situation is fluid. Rajoy’s recent proposal and the softening of the Socialist Party’s position might convince the majority of Catalans that some kind of deal can be cut. Young Catalans favor independence, but older Catalans are uncomfortable with what will be a leap into darkness.

 

On the other hand, if Rajoy comes down hard it will likely bolster the “no” vote.

 

The European Union is in a crisis of its own making. By blocking its members from pursuing different strategies for confronting economic trouble and, instead, insisting on one-size-fits-all strictures, the trade group has set loose centrifugal forces that now threaten to tear the organization apart.

 

The eastern members of the EU have charted a course that throttles democracy in the name of stability. The southern members of the bloc are struggling to emerge from austerity regimes that have inflicted widespread, possibly permanent, damage to their economies. Even members with powerful economies, like Germany and France, are trying to keep the lid on the desire of their people for a better standard of living.

 

The Catalan vote reflects many of these crosscurrents, and is likely to be felt far beyond the borders of Iberia.

 

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The Tortured Politics behind the Persian Gulf Crisis

Middle East Chaos

Dispatches From The Edge

June 14, 2017

 

 

The splintering of the powerful Gulf Cooperation Council (GCC) into warring camps—with Qatar, supported by Turkey and Iran, on one side, and Saudi Arabia, Bahrain and the United Arab Emirates (UAE), supported by Egypt, on the other—has less to do with disagreements over foreign policy and religion than with internal political and economic developments in the Middle East. The ostensible rationale the GCC gave on June 4 for breaking relations with Qatar and placing the tiny country under a blockade is that Doha is aiding “terrorist’ organizations. The real reasons are considerably more complex, particularly among the major players.

 

Middle East journalist Patrick Cockburn once described the Syrian civil war as a three-dimensional chess game with five players and no rules. In the case of the Qatar crisis, the players have doubled and abandoned the symmetry of the chessboard for “Go,” Mahjong, and Bridge.

 

Tensions among members of the GCC are longstanding. In the case of Qatar, they date back to 1995, when the father of the current ruler, Emir Tamin Al Thani, shoved his own father out of power. According Simon Henderson to of the Washington Institute for Near East Policy, Saudi Arabia and the UAE “regarded the family coup as a dangerous precedent to Gulf ruling families” and tried to organize a counter coup. The coup was exposed, however, and called off.

 

Riyadh is demanding that Qatar sever relations with Iran—an improbable outcome given that the two countries share a natural gas field in the Persian Gulf—and end Doha’s cozy ties to the Muslim Brotherhood. Indeed, if there is any entity in the Middle East that the Saudis hate—and fear—more than Iran, it is the Brotherhood. Riyadh was instrumental in the 2013 overthrow of the Brotherhood government in Egypt and has allied itself with the Israelis to marginalize Hamas, the Palestinian version of the Brotherhood that dominates Gaza.

 

But fault lines in the GCC do not run only between Saudi Arabia, the UAE and Qatar. Oman, at the Gulf’s mouth, has always marched to its own drummer, maintaining close ties with Saudi Arabia’s regional nemesis, Iran, and refusing to go along with Riyadh’s war against the Houthi in Yemen. Kuwait has also balked at Saudi dominance of the GCC, has refused to join the blockade against Doha, and is trying to play mediator in the current crisis.

 

The siege of Qatar was launched shortly after Donald Trump’s visit to Saudi Arabia, when the Saudi’s put on a show for the U.S. President that was over the top even by the monarchy’s standards. Wooed with massive billboards and garish sword dances, Trump soaked up the Saudi’s view of the Middle East, attacked Iran as a supporter of terrorism and apparently green-lighted the blockade of Qatar. He even tried to take credit for it.

 

Saudi Arabia, backed by Bahrain, Egypt, and the UAE, along with a cast of minor players, made 13 demands on Doha that it could only meet by abandoning its sovereignty. They range from the impossible—end all contacts with Iran—to the improbable—close the Turkish base—to the unlikely—dismantle the popular and lucrative media giant, Al Jazeera. The “terrorists” Doha is accused of supporting are the Brotherhood, which the Saudi’s and the Egyptians consider a terrorist organization, an opinion not shared by the U.S. or the European Union.

 

On the surface this is about Sunni Saudi Arabia vs. Shiite Iran, but while religious differences do play an important role in recruiting and motivating some of the players, this is not a battle over a schism in Islam. Most importantly, it is not about “terrorism,” since many of the countries involved are up to their elbows in supporting extremist organizations. Indeed, Saudi Arabia’s reactionary Wahhabi interpretation of Islam is the root ideology for groups like the Islamic State (IS) and al-Qaeda, and all the parties are backing a variety of extremists in Syria and Libya’s civil wars.

 

The attack on Qatar is part of Saudi Arabia’s aggressive new foreign policy that is being led by Crown Prince and Defense Minister Mohammad bin Salman. Since being declared “monarch-in-waiting” by King Salman Al Saud, Mohammed has launched a disastrous war in Yemen that has killed more than 10,000 civilians, sparked a country-wide cholera epidemic, and drains at least $700 million a month from Saudi Arabia’s treasury. Given the depressed price for oil and a growing population—70 percent of which is under 30 and much of it unemployed—it is not a cost the monarchy can continue to sustain, especially with the Saudi economy falling into recession.

 

Underlying the Saudi’s new-found aggression is fear. First, fear that the kind of Islamic governance modeled by the Muslim Brotherhood poses a threat to the absolutism of the Gulf monarchs. Fear that Iran’s nuclear pact with the U.S., the EU and the UN is allowing Tehran to break out of its economic isolation and turn itself into a rival power center in the Middle East. And fear that anything but a united front by the GCC—led by Riyadh—will encourage the House of Saud’s internal and external critics.

 

So far, the attempt to blockade Qatar has been more an annoyance than a serious threat to Doha. Turkey and Iran are pouring supplies into Qatar, and the Turks are deploying up to 1,000 troops at a base near the capital. There are also some 10,000 U.S. troops at Qatar’s Al Udeid Airfield, Washington’s largest base in the Middle East and one central to the war on the Islamic State in Syria and Iraq. Any invasion aimed at overthrowing the Qatar regime risks a clash with Turkey and the U.S.

 

While Egypt is part of the anti-Qatari alliance—the Egyptians are angry at Doha for not supporting Cairo’s side in the Libyan civil war, and the Egyptian regime also hates the Brotherhood—it is hardly an enthusiastic ally. Saudi Arabia keeps Egypt’s economy afloat, and so long as the Riyadh keeps writing checks, Cairo is on board. But Egypt is keeping the Yemen war at arm’s length—it flat out refused to contribute troops and is not comfortable with Saudi Arabia’s version of Islam. Cairo is currently in a nasty fight with its own Wahhabist-inspired extremists. Egypt also maintains diplomatic relations with Iran.

 

Besides the UAE, the other Saud allies don’t count for much in this fight. Sudan will send troops—if Riyadh pays for them—but not very many. Bahrain is on board, but only because the Saudi and UAE armies are sitting on local Shiite opposition. Yemen and Libya are part of the anti-Qatar alliance, but both are essentially failed states. And while the Maldives is a nice place to vacation, it doesn’t have a lot of weight to throw around.

 

On the other hand, long-time Saudi ally Pakistan has made it clear it is not part of this blockade, nor will it break with Qatar or downgrade relations with Iran. When Riyadh asked for Pakistan troops in Yemen, the national parliament voted unanimously to have nothing to do with Riyadh’s jihad on the poorest country in the Middle East.

 

The largely Muslim nations of Malaysia and Indonesia are also maintaining relations with Qatar, and Saudi ally Morocco offered to send food to Doha. In brief, it is not clear who is more isolated here.

 

While President Trump supports the Saudis, his Defense Department and State Department are working to resolve the crisis. U.S. Sec. of State Rex Tillerson just finished a trip to the Gulf in an effort to end the blockade, and the U.S. Senate Foreign Relations Committee is threatening to hold up arms sales to Riyadh unless the dispute is resolved. The latter is no minor threat. Saudi Arabia would have serious difficulties carrying out the war in Yemen without U.S. weaponry.

 

And the reverse of the coin?

 

Doha’s allies have a variety of agendas, not all of which mesh.

 

Iran has correct, but hardly warm, relations with Qatar. Both countries need to cooperate to exploit the South Pars gas field, and Tehran appreciated that Doha was always a reluctant member of the anti-Iran coalition, telling the U.S. it could not use Qatari bases to attack Iran.

 

Iran is certainly interested in anything that divides the GCC. The Iranians would also like Qatar to invest in upgrading Iran’s energy industry and maybe cutting them in on the $177 billion in construction projects that Doha is lining up in preparation for hosting the 2022 World Cup Games. Also, some 30,000 Iranians live in Qatar.

 

Figuring out Turkey these days can reduce one to reading tea leaves.

 

On one hand, Ankara’s support for Qatar seems obvious. Qatar backs the Brotherhood, and Turkish President Recep Tayyip Erdogan’s Justice and Development Party is a Turkish variety of the Brotherhood, albeit one focused more on power than ideology. Erdogan was a strong supporter of the Egyptian Brotherhood and relations between Cairo and Ankara went into the deep freeze when Egypt’s military overthrew the Islamist organization.

 

Qatar is also an important source of finances for Ankara, whose fragile economy needs every bit of help it can get. Turkey’s large construction industry would like to land some of the multi-billion construction contracts the World Cup games will generate. Turkish construction projects in Qatar already amount to $13.7 billion.

 

On the other hand, Turkey is also trying to woo Saudi Arabia and other Gulf monarchies for their investments. Erdogan even joined in the GCC’s attacks on Iran last spring, accusing Tehran of “Persian nationalist expansion,” a comment that distressed Turkey’s business community. As the sanctions on Iran ease, Turkish firms see that country’s big, well-educated population as a potential gold mine.

 

The Turkish President has since turned down the anti-Iran rhetoric, and Ankara and Tehran have been consulting over the Qatar crisis. The first supportive phone call Erdogan took during the attempted coup last year was from Qatar’s emir, and the prickly Turkish President has not forgotten that some other GCC members were silent for several days. Erdogan recently suggested that the UAE had a hand in the coup.

 

Is this personal for Turkey’s president? No, but Erdogan is the Middle East leader who most resembles Donald Trump: he shoots from the hip and holds grudges. The difference is that he is far smarter and better informed than the U.S. President and knows when to cut his losses.

 

His apology to the Russians after shooting down one of their fighter-bombers is a case in point. Erdogan first threatened Moscow with war, but eventually trotted off to St. Petersburg, hat in hand, to make nice with Russian President Vladimir Putin. And after hinting that the Americans were behind the 2016 coup, he recently met with Tillerson in Istanbul to smooth things out. Turkey recognizes that it will need Moscow and Washington to settle the war in Syria.

 

The Russians have been carefully neutral, consulted with Turkey and Iran, and have called on all parties to peacefully resolve their differences.

 

There is not likely to be a quick end to the Qatar crisis, because Saudi Arabia keeps doubling down on one disastrous foreign policy decision after another, including breaking up the Arab world’s only viable economic bloc. But there are developments in the region that may eventually force Riyadh to back off.

 

The Syrian War looks like it is headed for a solution, although the outcome is anything but certain. The Yemen War has reached crisis proportions—the UN describes it as the number one human emergency on the globe—and pressure is growing for the U.S. and Britain to wind down their support for the Saudi alliance. And Iran is slowly but steadily reclaiming its role as a leading force in the Middle East and Central Asia.

 

There is much that could go wrong. There could be a disastrous war with Iran, currently being pushed by Saudi Arabia, Israel and neo-conservatives in the U.S. and Russia, the U.S. and Turkey could fall out over Syria. The Middle East is an easy place to get into trouble. But if there are dangers, so too are there possibilities, and from those spring hope.

 

 

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Europe: The Danger From The Center

Europe: The Danger of the Center

Foreign Policy In Focus

June 13, 2017

 

The good news out of Europe is that Marine Le Pen’s neo-Nazi National Front took a beating in the May 7 French presidential election. The bad news is that the program of the winner, Emmanuel Macron, might put Le Pen back in the running six years from now.

 

Macron pledges to cut 120,000 public jobs, reduce spending by 60 billion Euros, jettison the 35-hour workweek, raise the retirement age, weaken unions’ negotiating strength and cut corporate taxes. It is a program that is unlikely to revive the morbid French economy, but it will certainly worsen the plight of jobless youth and seniors and hand the National Front ammunition for the 2022 election.

 

Europe is enmeshed in an economic crisis brought on by the structure of the European Union (EU), on one hand, and the nature of capitalism, on the other. That convergence has derailed economies throughout the 27-member trade group, impoverished tens of millions, and helped conjure up racist, rightwing movements that are not likely to be deterred by a few election losses.

 

Obscuring the roots of this crisis is the myth that debt is the result of spendthrift behavior, the economic sluggishness a consequence of high taxes, and rigid labor rules that handcuff businesses and inhibit growth. German Chancellor Angela Merkel is fond of saying that countries should behave like a “frugal Swabian house frau.”

 

Is Merkel’s observation bases on a myth or is it allegory? While an allegory is the “figurative treatment of one subject under the guise of another,” a myth is “an unproven or false collective belief that is used to justify a social institution.” The difference may seem pedantic, however, it is anything but, and, because myths are particularly hard to dislodge once they become widespread, it is essential to unpack exactly how the EU got itself in trouble.

 

Part of the problem is capitalism itself, an economic system that generates both enormous productive capacity and economic chaos.

 

Capitalism is afflicted by two kinds of crisis, cyclical and structural. The cyclical ones—recessions—tend to occur pretty much every 10 ten years. The U.S. and Europe went through recessions in the early 1980s, early 1990s, and the first years of 2000. They are painful and unpleasant but generally over in about 18 months.

 

Every 40 or 50 years, however, there is a structural crisis like the 1929 crash and the ensuing Great Depression.

 

When a structural crisis hits, capitalism re-organizes itself. In the 1930s, the solution was to create a re-distributive capitalism that used the power of the state to prime the economic pump and alleviate some of the chaos that accompanies such re-organizations. Unemployment insurance and Social Security took some of the edge off the pain, public works absorbed some of the jobless, and unions got the right to organize and strike.

 

Capitalism went through another structural crisis at the end of the 1970s, and it is the fallout from that one that currently plagues the EU—and the U.S. Using the 1979-81 recession as a screen, taxes on corporations and the wealthy were slashed, business and finance de-regulated, public institutions privatized, and unions assaulted. Capitalism also went global.

 

Globalism did spur enormous growth, but with a deep flaw. With unions weakened—in part by direct attack, in part by the enormous pool of cheap labor now available in the developing world—wages either stagnated or fell in Europe and the U.S., and the gap between rich and poor widened. A 2015 study by Oxfam found that 1 percent of humanity now controls over half the world’s wealth, and the top 20 percent owns 94.5 percent. In short, 80 percent of the world gets by on 5.5 percent of the world’s wealth.

 

This is not just a problem for the developing and under developed world. Germany has the biggest economy in the EU, and the fourth largest in the world. In 2000, Germany’s top 20 percent earned 3.5 percent more than the bottom 20 percent. Today that number has increased five times. For the bottom 10 percent, income has actually fallen. While earnings are up 6 percent, the cost of living has increased 24 percent. If that Swabian house frau was among that 10 percent, it didn’t make a whole lot of difference how frugal she was, she was broke.

 

Globalization generated instability by creating a crisis of accumulation. A few people had lots of money, but far too many had very little, certainly not enough to absorb the output of the global economy. Global capitalism was awash with cash, but where to use it? The answer was financial speculation—especially since many of the restraints and safety measures had been removed through deregulation.

 

For Europe, most of that speculation went into land. Land prices in Spain and Ireland rose 500 percent from 1999 to 2007. In the case of Ireland, it was almost unreal. Irish real estate loans went from 5 billion Euros in 1999 to 96.2 billion Euros in 2007, or more than half the Gross Domestic Product (GDP) of the Republic. Over the same period, European household debt increased on the average by 39 percent.

 

That this was a bubble was obvious and all bubbles pop sooner or later. This one exploded in the U.S. in late 2007 and quickly spread to Europe.

 

What is important to keep in mind is that the EU countries that got in trouble were hardly spendthrifts. Spain, Portugal, and Ireland all had modest debt ratios and budget surpluses at the time of the crisis.

 

The problem was not prodigal governments but a sudden hike in borrowing rates, which made it expensive to finance government operations. That was coupled with a decision to use taxpayer money to bail out banks that had gotten themselves in trouble speculating on real estate. Essentially, Portuguese, Spaniards, Greeks and Irish picked up the debts of banks they had never borrowed anything from.

 

Irish taxpayers shelled out 30 billion Euros to bailout the Irish-Anglo bank, a figure equivalent to the Republic’s tax revenues for an entire year. Since none of these countries had that kind of money on hand, they applied for “bailouts” from the International Monetary Fund, the European Central Bank, and the European Commission, the so-called “troika.” Some 89 percent of those bailouts went to banks. The day the Greek bailout was announced, French bank shares rose 24 percent.

 

It was not that EU countries were debt free, but in 2014, the Committee for a Citizen’s Audit on the Public Debt found that between 60 and 70 percent of those debts were due not to overspending, but instead tax cuts for corporations and the wealthy, and increases in interest rates. The latter favors creditors and speculators. The Committee found that most deficits were the result of “political decisions” that shift the wealth from one class to another.

 

In the long run, some of that debt will have to be forgiven because it is simply unpayable. The 1952 London Debt Convention that cut Germany’s post-war debt and ignited an economic revival could serve as a template.

 

Converging with this crisis of capitalism is the way the EU is structured, although the two are hardly independent of one another. Many of EU’s strictures were specifically designed to favor capital and finance and to marginalize the control that the Union’s 500 million members have over economic matters.

 

The first problem is that all economic decisions are made by the “troika,” an unelected body that answers to no one. There is a European Parliament, but it has little power or control over finance. The same is true for EU member governments. When former Greek Finance Minister Yanis Varoufakis told German Finance Minister Wolfgang Wolfgang Schauble that his left-wing Syriza Party was elected to resist the austerity policies of the EU, Schuable replied, “We cannot possibly let an election change anything.”

 

The second problem is that national governments have no control over the value of the Euro. Of the EU’s 27 members, 19 of them use the common currency and make up the Eurozone. Germany’s condition for giving up the Mark and adopting the Euro was that Eurozone members were required to keep budget deficits to no more than 3 percent of national income, and debt levels to no higher than 60 percent of GDP. While that formula works well for Germany’s powerful export model, it doesn’t for of a number of other Eurozone economies.

 

The Euro’s value is set by the European Central Bank, which means that members cannot devalue their currency, a common strategy for dealing with debt, and one near and dear to the U.S. Treasury. As long as it’s smooth sailing, this rule works, but when a financial crisis hits, the common currency and the debt restrictions can mean big trouble for the smaller, less export-centered economies. When the financial bubble popped in 2008, countries like Italy, Spain, Portugal and Ireland—and to a certain extent, France—saw their debts soar, with strategies for dealing with it hamstrung by the Eurozone rules.

 

And that is when the third problem with the Eurozone kicked in. While there is a common currency, there is no sharing of debt through tax receipts. In a single currency system like the U.S., powerful economies in California and New York pay for bills in places like Mississippi and Louisiana.

 

Some 44 percent of Louisiana’s state budget is paid for by the federal government, which collects taxes in wealthy states and doles out some of it to regions whose economies are either too small or inefficient to meet their budget needs. If you get into trouble in the Eurozone, you are on your own.

 

While the EU has been good for banks and countries like Germany and Austria, it hasn’t been so good for many other of its members. Applying austerity as a cure for debt doesn’t cure the problem, it just creates a spiral of more debt and yet more austerity. As Rana Foroohar, business columnist for the Financial Times put it, “No nation can grow when the consumer, the corporate sector, and the public sector stop spending.”

 

Because most the center-left parties bought into the austerity-as-a-cure-for-debt formula, they have been devastated at the polls. The Dutch Labor Party was crushed in the last election, the French Socialists got less than 7 percent of the vote, and the Spanish Socialists are barely keeping ahead of the much more left Podemos Party. The Italian Socialist Party has dropped over 15 points in the polls and is now running behind the rather bizarre Five Star Movement. The Greek Socialists are a footnote.

 

The lesson for the left would seem to be that moving to the center or the right is a prescription for electoral disaster,

 

Macron’s new centrist party, En Marche!, won, but mostly due to the anti-Le Pen vote. His program of austerity, restraints on unions, and corporate tax cuts is not popular with everyone, although En Marche! did well in the first round of voting for the legislature, and poll indicate he may get a majority. If he does not, he plans to push the measures through by decree.

 

It is unlikely that such a centrist program will do anything to reduce France’s unemployment rate—9.6 percent overall and 25 percent among youth age 18 to 29—or lift the economy. Labor “reform” and austerity do not jump start economies, and tax cuts have an equally dreary record. Indeed, as Foroohar points out, there is not a single example in the last 20 years where tax cuts for business or the wealthy stimulated an economy. Indeed, the economic surge in the 1990s happened while tax rates were on the rise.

 

If the economic situation worsens, or even stays the same, the right will be waiting to pounce with their easy answers to economic crisis: nationalism and racism.

 

The clock is ticking. Germany will hold elections in September, and it looks as if Italy will also go to the polls this fall. In Spain, the right-wing minority government is looking increasingly fragile and another election is a strong possibility.

 

Center-left parties are doing well in Portugal, where the Socialists have made common cause with two more leftist parties. In Britain the Labour Party’s sharp break with the Party’s centrism upended the Conservative Party, denied it a majority in Parliament. A recent YouGov poll found that a majority of Britains supported Labour’s left-wing platform over the Conservatives’ austerity program.

 

The Portuguese coalition is demonstrating that there are successful economic models out there to deal with debt and growth that don’t impoverish the many for the benefit of a few. The question is, can the left in Italy, Spain and Germany put together programs that tap into the seething unrest that globalism’s inequality has generated?

 

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Nuclear Breakthrough Endangers the World

Nuclear Breakthrough Endangers the World

Dispatches From The Edge

April 20, 2017

At a time of growing tensions between nuclear powers—Russia and NATO in Europe, and the U.S., North Korea and China in Asia—Washington has quietly upgraded its nuclear weapons arsenal to create, according to three leading American scientists, “exactly what one would expect to see, if a nuclear-armed state were planning to have the capacity to fight and win a nuclear war by disarming enemies with a surprise first strike.”

Writing in the Bulletin of Atomic Scientists, Hans Kristensen, director of the Nuclear Information Project of the American Federation of Scientists, Matthew McKinzie of the Natural Resources Defense Council, and physicist and ballistic missile expert Theodore Postol, conclude that “Under the veil of an otherwise-legitimate warhead life-extension program,” the U.S. military has vastly expanded the “killing power” of its warheads such that it can “now destroy all of Russia’s ICBM silos.”

The upgrade—part of the Obama administration’s $1 trillion modernization of America’s nuclear forces—allows Washington to destroy Russia’s land-based nuclear weapons, while still retaining 80 percent of the U.S.’s warheads in reserve. If Russia chose to retaliate, it would be reduced to ash.

Any discussion of nuclear war encounters several major problems. First, it is difficult to imagine or to grasp what it would mean in real life. We have only had one conflict involving nuclear weapons—the destruction of Hiroshima and Nagasaki in 1945—and the memory of those events has faded over the years. In any case, the two bombs that flattened the Japanese cities bear little resemblance to the killing power of modern nuclear weapons.

The Hiroshima bomb exploded with a force of 15 kilotons. The Nagasaki bomb was slightly more powerful at about 18 kt. Between them, they killed over 215,000 people. In contrast, the most common nuclear weapon in the U.S. arsenal today, the W76, has an explosive power of 100 kt. The next most common, the W88, packs a 475-kt punch.

Another problem is that most of the public thinks nuclear war is impossible because both sides would be destroyed. This is the idea behind the policy of Mutually Assured Destruction, aptly named “MAD.”

But MAD is not a U.S. military doctrine. A “first strike” attack has always been central to U.S. military planning, until recently, however, there was no guarantee that such an attack would so cripple an opponent that it would be unable—or unwilling, given the consequences of total annihilation— to retaliate.

The strategy behind a first strike—sometimes called a “counter force” attack—is not to destroy an opponent’s population centers, but to eliminate the other sides’ nuclear weapons, or at least most of them. Anti-missile systems would then intercept a weakened retaliatory strike.

The technical breakthrough that suddenly makes this a possibility is something called the “super-fuze”, which allows for a much more precise ignition of a warhead. If the aim is to blow up a city, such precision is superfluous, but taking out a reinforced missile silo requires a warhead to exert a force of at least 10,000 pounds per square inch on the target.

Up until the 2009 modernization program, the only way to do that was to use the much more powerful—but limited in numbers—W88 warhead. Fitted with the super-fuze, however, the smaller W76 can now do the job, freeing the W88 for other targets.

Traditionally, land-based missiles are more accurate than sea-based missiles, but the former are more vulnerable to a first-strike than the latter, because submarines are good at hiding. The new super-fuze does not increase the accuracy of Trident II submarine missiles, but it makes up for that with the precision of where the weapon detonates. “In the case of the 100-kt Trident II warhead,” write the three scientists, “the super-fuze triples the killing power of the nuclear force it is applied to.”

Before the super-fuze was deployed, only 20 percent of U.S. subs had the ability to destroy re-enforced missile silos. Today, all have that capacity.

Trident II missiles typically carry from four to five warheads, but can expand that up to eight. While the missile is capable of hosting as many as 12 warheads, that configuration would violate current nuclear treaties. U.S. submarines currently deploy about 890 warheads, of which 506 are W76s and 384 are W88s.

The land-based ICBMs are Minuteman III, each armed with three warheads—400 in total—ranging from 300 kt to 500 kt apiece. There are also air and sea-launched nuclear tipped missiles and bombs. The Tomahawk cruise missiles that recently struck Syria can be configured to carry a nuclear warhead.

The super-fuze also increases the possibility of an accidental nuclear conflict.

So far, the world has managed to avoid a nuclear war, although during the 1962 Cuban missile crisis it came distressingly close. There have also been several scary incidents when U.S. and Soviet forces went to full alert because of faulty radar images or a test tape that someone thought was real. While the military downplays these events, former Secretary of Defense William Perry argues that it is pure luck that we have avoided a nuclear exchange, and that the possibility of nuclear war is greater today than it was at the height of the Cold War.

In part, this is because of a technology gap between the U.S. and Russia.

In January 1995, Russian early warning radar on the Kola Peninsula picked up a rocket launch from a Norwegian island that looked as if it was targeting Russia. In fact, the rocket was headed toward the North Pole, but Russian radar tagged it as a Trident II missile coming in from the North Atlantic. The scenario was plausible. While some first strike attacks envision launching a massive number of missiles, others call for detonating a large warhead over a target at about 800 miles altitude. The massive pulse of electro-magnetic radiation that such an explosion generates would blind or cripple radar systems over a broad area. That would be followed with a first strike.

At the time, calmer heads prevailed,, and the Russians called off their alert, but for a few minutes the doomsday clock moved very close to midnight.

According to the Bulletin of Atomic Scientists, the 1995 crisis suggests that Russia does not have “a reliable and working global space-based satellite early warning system.” Instead, Moscow has focused on building ground-based systems that give the Russians less warning time than satellite-based ones do. What that means is that while the U.S. would have about 30 minutes warning time to investigate whether an attack was really taking place, the Russians would have 15 minutes or less.

That, according to the magazine, would likely mean that “Russian leadership would have little choice but to pre-delegate nuclear launch authority to lower levels of command,” hardly a situation that would be in the national security interests of either country.

Or, for that matter, the world.

A recent study found that a nuclear war between India and Pakistan using Hiroshima-sized weapons would generate a nuclear winter that would make it impossible to grow wheat in Russia and Canada and cut the Asian Monsoon’s rainfall by 10 percent. The result would be up to 100 million deaths by starvation. Imagine what the outcome would be if the weapons were the size used by Russia, China or the U.S.

For the Russians, the upgrading of U.S. sea-based missiles with the super-fuze would be an ominous development. By “shifting the capacity to submarines that can move to missile launch positions much closer to their targets than land-based missiles,” the three scientists conclude, “the U.S. military has achieved a significantly greater capacity to conduct a surprise first strike against Russian ICBM silos.”

The U.S. Ohio class submarine is armed with 24 Trident II missiles, carrying as many as 192 warheads. The missiles can be launched in less than a minute.

The Russians and Chinese have missile-firing submarines as well, but not as many and some are close to obsolete. The U.S. has also seeded the world’s oceans and seas with networks of sensors to keep track of those subs. In any case, would the Russians or Chinese retaliate if they knew that the U.S. still retained most of its nuclear strike force? Faced with a choice committing national suicide or holding their fire, they may well choose the former.

The other element in this modernization program that has Russia and China uneasy is the decision by the Obama administration to place anti-missile systems in Europe and Asia, and to deploy Aegis ship-based anti missile systems off the Pacific and Atlantic coasts. From Moscow’s perspective—and Beijing’s as well—those interceptors are there to absorb the few missiles that a first strike might miss.

In reality, anti-missile systems are pretty iffy. Once they migrate off the drawing boards, their lethal efficiency drops rather sharply. Indeed, most of them can’t hit the broad side of a barn. But that is not a chance the Chinese and the Russians can afford to take.

Speaking at the St. Petersburg International Forum in June 2016, Russian President Valdimir Putin charged that U.S. anti-missile systems in Poland and Rumania were not aimed at Iran, but Russia and China. “The Iranian threat does not exist, but missile defense systems continue to be positioned—a missile defense system is one element of the whole system of offensive military potential.”

The danger here is that arms agreements will begin to unravel if countries decide that they are suddenly vulnerable. For the Russians and the Chinese, the easiest solution to the American breakthrough is to build a lot more missiles and warheads, and treaties be dammed.

The new Russian cruise missile may indeed strain the Intermediate Nuclear Force Treaty, but it is also a natural response to what are, from Moscow’s view, alarming technological advances by the U.S. Had the Obama administration reversed the 2002 decision by George W. Bush’s administration to unilaterally withdraw from the Anti-Ballistic Missile Treaty, the new cruise might never have been deployed.

There are a number of immediate steps that the U.S. and the Russians could take to de-escalate the current tensions. First, taking nuclear weapons off their hair-trigger status, which would immediately reduce the possibility of accidental nuclear war. That could be followed by a pledge of “no first use” of nuclear weapons.

If this does not happen, it will almost certainly result in an accelerated nuclear arms race. “I don’t know how this is all going to end,” Putin told the St. Petersburg delegates. “What I do know is that we will need to defend ourselves.”

—30—

 

 

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Turkey’s Dangerous Moment

Turkey’s Dangerous Referendum

Dispatches From the Edge

April 5, 2017

 

At first glance, Turkey’s Recep Tayyip Erdogan’s drive to create an executive presidency with almost unlimited power through a nationwide referendum looks like a slam-dunk.

 

The man has not lost an election since 1994, and he has loaded the dice and stacked the deck for the April 15 vote. Using last summer’s failed coup as a shield, he has declared a state of emergency, fired 130,000 government employees, jailed 45,000 people—including opposition members of parliament—and closed down 176 media outlets. The opposition Republican People’s Party says it has been harassed by death threats from referendum supporters and arrests by the police.

 

He has deliberately picked fights with Germany, Austria and the Netherlands to help whip up a storm of nationalism, and he charges that his opponents are “acting in concert with terrorists.” Selahattin Demirtas, a Member of Parliament and co-chair of the Kurdish-dominated People’s Democratic Party, the third largest political formation in Turkey, is under arrest and faces 143 years in prison. Over 70 Kurdish mayors are behind bars.

 

So why is the man so nervous?

 

He has reason to be. The juggernaut that Erdogan and his Justice and Development Party (AKP) put together to dismantle Turkey’s current political system and replace it with a highly centralized executive that will have the power to dismiss parliament, control the judiciary and rule by decree has developed a bit of a wobble.

 

First, the nationalists—in particular the rightwing Nationalist Movement Party (MHP)—are deeply split. The leadership of the MHP supports a “yes” vote on the referendum, but as much as 65 percent of the rank and file are preparing to vote “no.”

 

Second, there is increasing concern over the economy, formerly the AKP’s strong suit. Erdogan won the 2002 election on a pledge to raise living standards—especially for small businesses and among Turks who live in the country’s interior—and he largely delivered on those promises. Under the AKP’s stewardship, the Turkish economy grew, but with a built-in flaw.

 

The 2000s were a period of rapid growth for emerging economies like China, Russia and Turkey. China did it by building a high-power manufacturing base and exporting its goods to the global market. Russia raised its economy through commodities sales, particularly oil and gas. Turkey’s huge spurt, however, was built around domestic consumption, in particular real estate and construction. Indeed, Turkey’s historical strength in manufacturing has languished.

 

Much of the construction boom was financed through foreign loans, and as long as investors were comfortable with the internal situation in Turkey—and money was cheap—real estate was Erdogan’s Anatolian tiger. But when the U.S. tightened up its monetary policies in 2013, those loans either dried up or got more expensive.

 

Turkey was not the only victim of U.S. tight money policies. Washington’s monetary shift also badly damaged the economies of Brazil, South Africa, India, and Indonesia. But the effect on Ankara has been to increase the debt burden and fuel a growing trade imbalance. Growth fell from 6.1 percent in 2015 to 1.5 percent in 2016.

 

The fall of the Turkish lira means imports cost more at a time when Turkey’s private sector has accrued a foreign exchange deficit of $210 billion. Consumer inflation will almost certainly reach 11 or 12 percent this year and the jobless rate is over 12 percent. Among young Turks, age 15-24, that figure is over 25 percent. Almost four million people are out of work and many Turks now spend 50 percent of their income on food, housing and rent.

 

To add to these woes, the credit agencies Moody’s, Standard and Poor, and Fitch recently designated Turkey’s status as “non-investment” and its economic outlook from “stable” to “negative.” Part of the downgrade was based on politics, not the economy. Fitch pointed out that if Erdogan’s referendum passed, it “would entrench a system in which checks and balances have been eroded.”

 

Businesses are generally not bothered by authoritarian regimes, but they are uncomfortable with instability and a cavalier approach to the rule of law. Erdogan’s erratic foreign policies and the government’s seizures of private businesses whose owners choose to oppose him do not create an atmosphere conducive to investor confidence.

 

There is growing nervousness about Erdogan’s internal and external policies. Turkey once had a policy of “no trouble with neighbors,” but Ankara is suddenly fighting with everyone. Erdogan strongly supported efforts to overthrow the Syrian government of Bashar al-Assad. He backed the Muslim Brotherhood in Egypt. He put troops in Northern Iraq aimed at keeping the Kurds down. He started a war with his own Kurds and bullies and intimidates any domestic opposition.

 

A case in point is the lucrative tourist industry that normally contributes about 5 percent of Turkey’s GNP. Turkey is the sixth most visited country in the world, but the industry was down 36 percent in 2016, a loss of $10 billion. Formerly, large numbers of tourists visited from Russia and Iran. But Erdogan alienated the Russians when he shot down one of their bombers in 2015 and angered Iran when he went to Saudi Arabia and denounced the Iranians for trying to spread their Shiite ideology and “Persian nationalism” throughout the Middle East. As a result, tourism from both countries largely dried up, hitting Istanbul and coastal cities like Antalya particularly hard.

 

Iranians and Russians are not the only nationalities looking elsewhere for fun and relaxation. Erdogan’s sturm und drang rhetoric directed at the European countries that refused to let him campaign for his referendum among their Turkish populations—“Nazis” and “fascists” were his favored epithets to describe Germany, the Netherlands, and Austria—has tourists from the West looking to vacation in Greece, Spain and Italy instead.

 

To label Erdogan’s foreign policy “schizophrenic” is an understatement.

 

On one hand, he has backed off from the demand that Syrian President Assad must go and is working with the Russians and Iranians—and Egyptians—to find a negotiated settlement to the horrendous civil war.

 

On the other, he is wooing Saudi Arabia, the major backer of al-Qaeda associated groups in Syria who have made it clear that they are not interested in negotiations or a political settlement. He is also clashing with Russia and the U.S. over those countries support for Kurdish forces battling the Islamic State and al-Qaeda.

 

In one rather bizarre example of schizoid foreign policy, Turkey sponsored a Mar. 14 meeting of 50 Syrian tribal leaders to form an “Army of the Jezeera and Euphrates Tribes” to fight Russia, Iran, Hezbollah, and the Kurdish Democratic Union Party in Syria. Beating up on the Kurds is standard Erdogan politics, but how he squares attacking Russia and Iran while professing to support a diplomatic solution to the Syrian civil war is not clear.

 

His political calculations keep backfiring. For instance, when Iran signed the nuclear agreement and sanctions were lifted, Turkish businesses were eager to ramp up trade with Teheran. Erdogan’s searing attack on Iran largely scotched that, however, and the Turkish president has very little to show for it. Erdogan calculated that embracing Saudi Arabia and the Gulf monarchies would more than offset alienating Iran, but that has not happened.

 

The United Arab Emirates, Saudi Arabia, Kuwait and Qatar have a combined overseas investment portfolio of $262 billion, but only $8.7 billion of that went to Turkey. Europe makes up the great bulk of foreign investments in Turkey, distantly followed by the U.S. and Russia.

 

In part this is because the Gulf monarchies have their own financial difficulties, given low oil prices and the grinding war they are fighting in Yemen. But one suspects that Saudi Arabia is wary of Erdogan’s AKP, which is closely tied to the Muslim Brotherhood. The Saudis consider the Brotherhood their main enemy after Iran, and they strongly supported the 2013 military coup against the Egyptian Brotherhood government. The recent thaw in relations between Turkey and Egypt has resulted in a chilling of ties between Riyadh and Cairo.

 

The Islamic State has recently targeted Turkey, in large part as blowback from the Syrian civil war. Ankara formerly turned a blind eye to the Islamic State’s supply lines into Syria because Erdogan wanted to overthrow the Assad government, and replace it with a Muslim Brotherhood friendly regime. Now that policy has backfired on Turkey, much as U.S. support for the Mujahedeen against the Soviet Union in Afghanistan led to the formation of al-Qaeda and the 2001 attacks on the World Trade Towers and the Pentagon.

 

The Kurds have also engaged in a bombing campaign, but that is a response to Erdogan’s attacks on Kurdish cities in southeastern Turkey.

 

It is not clear how widespread the “no” vote sentiment is, although it supposedly includes up to 100 AKP parliament members worried about concentrating too much power in the President’s hands. Pollsters say a significant number of voters are unwilling to say how they will vote. In the current atmosphere of intimidation, it could mean those “refuse to say’ will turn to “no.” Certainly Erdogan’s prediction of a 60 percent approval has gone a glimmering.

 

What happens if people do vote “no”? And would Erdogan accept any outcome that wasn’t “yes”?

 

One disturbing development is the formation of a paramilitary group called “Stay as Brothers, Turkey.” Organized by Orhan Uzuner, whose daughter is married to Erdogan’s son, Bital, the group claims up to 500 members. The opposition newspaper Cumhuriyet calls the group “Erdogan’s militia,” and some members of the National Movement Party say the “Brothers” are sponsoring weapons training and encouraging members to arm themselves. With the military firmly under control following last year’s attempted coup, even a small group like the “Brothers” could play a major role if Erdogan decides he is finished with the democratic process.

 

Certainly the President is in a bind. He needs foreign investments and tourism to get the economy back on track, but he is alienating one ally after another.

 

He could tighten Turkey’s monetary policies to staunch the outflow of capital, but that would slow the economy and increase unemployment. He could lower interest rates to stimulate the economy, but that would further weaken the lira.

 

His strategy at this point is to double down on getting a “yes” vote. If he fails, things could get dangerous.

—-30—

 

 

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Europe’s Elections and The Barbarians

Europe’s Elections

Dispatches From The Edge

Mar. 17, 2017

 

Going in to the recent elections in the Netherlands, the mainstream story seemed lifted from William Butler Yeats poem, The Second Coming: ”Things fall apart; the centre cannot hold—The best lack all conviction, while the worst are full of passionate intensity.” The Right was on the march, the Left at war with itself, the traditional parties adrift, and the barbarians were hammering at the gates of the European Union.

 

It’s a grand image, a sort of a politics as the “Game of Thrones,” but the reality is considerably more complex. There is, of course, some truth in the apocalyptic imagery: rightwing parties in the Netherlands, France, and Germany have grown. There are indeed some sharp divisions among left parties. And many Europeans are pretty unhappy with those that have inflicted them with austerity policies that have tanked living standards for all but a sliver of the elite.

 

But there are other narratives at work in Europe these days besides an HBO mega series about blood, war, and treachery.

 

The recent election in the Netherlands is a case in point. After holding a lead over all the other parties, Geert Wilders rightwing, racist Party for Freedom (PVV) faltered. In the end, his Islamophobes did not break the gates (but they did pick up five seats). Overall it was a victory for the center, but it was also a warning for those who advocate “staying the course” politics and, most pointedly the consequences of abandoning principles for power.

 

The Left Greens did quite well by taking on Wilders’ anti-Islam agenda and challenging Prime Minister Mark Rutte’s center-right Popular Party for Freedom and Democracy (VVD) on the economic front. In one national debate, Jesse Klaver, the Left Green’s dynamic leader, argued that janitors should be paid more and bankers less. The election, he said, is not about “Islam and Muslims,” but about “housing, income and health care.” The voters clearly bought it.

 

Rutte’s coalition partner, the left Labour Party, was crushed, losing 29 seats. For the past four years Labour has gone along with Rutte’s program of raising the retirement age and cutting back social spending, and voters punished them for shelving their progressive politics for a seat at the table.

 

The VVD also lost eight seats, which probably went to centrist parties like Democrats66, suggesting that Rutte’s “business as usual” is not what voters want either . VVD is still the number one party in the 150-seat parliament.

 

There were some lessons from the Dutch elections, though not the simplistic one that the “populist” barbarians lost to the “reasonable” center. What it mainly demonstrated is that voters are unhappy with the current situation, they are looking for answers, and parties on the left and center left should think carefully about joining governments that think it “reasonable” to impoverish their own people.

 

Next up in the election docket is France, where polls show Marine Le Pen’s neo-Nazi National Front leading the pack in a five-way race with traditional rightwing candidate Francois Fillon, centrist and former Socialist Party member Emmanuel Macron, Socialist Party candidate Benoit Hamon, and leftist Jean-Luc Melenchon. The first round, scheduled for April 23, will eliminate all but the two top vote getters. A final round will be held May 7.

 

With Melenchon and Hamon running at 11.5 percent and 13.5 percent respectively, thus splitting the left vote, the race appears to be between Fillon, Macron and Le Pen, with the latter polling slightly ahead of Macron and considerably better than Fillon.

 

If you are is attracted to the apocalypse analogy, France is probably your ticket.

 

Le Pen is running a campaign aimed against anyone who doesn’t look like Charlemagne or Joan of Arc, but her strong anti-EU positions play well with young people, in small towns, and among rural inhabitants. All three groups have been left behind by the EU’s globalism policies that have resulted in de-industrialization and growing economic inequality. Polls indicate she commands 39 percent of 18 to 24 year olds, compared with 21 percent for Macron and 21 percent for Fillon.

 

Fillon has been wounded by the revelation that he has been using public funds to pay family members some $850,000 for work they never did. But even before the scandal, his social conservatism played poorly to the young and workers are alienated by his economic strategy that harkens back to those of British Prime Minister Margret Thatcher, whom he greatly admires. His programs sound much like Donald Trump’s: cut jobless benefits and social services, lay off public workers, and give tax cuts to the wealthy.

 

Macron, an ex-Rothschild banker and former minister of economics under Hollande, is running neck and neck with Le Pen under the slogan “En Marche” (“On Our Way”), compelling critics on the left to ask “to what?” His platform is a mix of fiscal discipline and mild economic stimulation, and he is young, 39, telegenic, and a good speaker. But his policies are vague, and it is not clear there is a there, there.

 

Most polls indicate a Le Pen vs. Macron runoff, with Macon coming out on top, but that may be dangerous thinking. Macron’s support is soft. Only about 50 percent of those who say they intend to vote for him are “certain” of their vote. In comparison, 80 percent of Le Pen’s voters are “certain” they will vote for her.

 

There are, as well, some disturbing polling indications for the second round. According to the IFOP poll, some 38 percent of Fillon’s supporters say they will jump to Le Pen—two million voters—and 7 percent of Hamon voters and 11 percent of Melenchon backers would shift to Le Pen as well. What may be the most disturbing number, however, is that 45 percent of Melenchon voters say they will not vote if Macron is the candidate. Some 26 percent of Fillon’s voters and 21 percent of Hamon’s votes would similarly abstain.

 

Le Pen will need at least 15 million votes to win—the Front has never won more than six million nationally—but if turnout is low, Le Pen’s strongly motivated voters could put her into the Elysee Palace. In this way, France most resembles Britain prior to the Brixit vote.

 

If that comes to pass, Le Pen will push for a national referendum on the EU. There is no guarantee the French will vote to stay in the Union, and if they leave, that will be the huge trade organization’s death knell. The EU can get along without Britain, but it could not survive a Frexit.

 

Germany will hold national elections, Sept. 24, but the story there is very different than the one being played out in France. The government is currently a grand coalition between Chancellor Andrea Merkel’s conservative Christian Democratic Union (CDU), the Bavarian-based Christian Social Union (CSU), and the Social Democrats(SD). The alliance has been a disaster for the SD, which at one point saw its poll numbers slip below 20 percent.

 

But German politics has suddenly shifted. On Merkel’s left, the Social Democrats changed leaders and have broken with industrial policies that have driven down the wages of German workers in order to make the country an export juggernaut. On the Chancellor’s right, the racist, neo-Nazi Alternative for Germany (AfG) has drained CDU and CSU voters to support a ban on immigration and a withdrawal from the EU, although the Alternative is dropping in the polls.

 

The game changer has been the sudden popularity of former EU President, Martin Schultz, the new leader of the Social Democrats. The SD is now neck and neck with the CDU/CSU front, and some polls show Schultz actually defeating Merkel. In terms of personal popularity, Schultz is now running 16 points ahead of Merkel. While the Chancellor’s CDU/CSU alliance tops the polls at 34 percent, the Social Democrats are polling at 32 percent and climbing.

 

Schultz has made considerable headway critiquing declining living standards. Germany has large numbers of poorly paid workers, and almost 20 percent of workers age 25 to 34 are on insecure, short-term contracts. Unemployment benefits have also been cut back, even though Germany’s economy is the most robust in Europe and the country has a $310 billion surplus.

 

In any case, the days when Merkel could pull down 40 percent of the vote are gone. Even if her coalition comes in number one, it may not have enough seats to govern, even if its traditional allies, the Free Democrats, make it back into the Bundestag.

 

That creates the possibility of the first so-called “red-red-green” national government of the SD, the left Die Linke Party, and the Green Party. Die Linke and the Greens are both polling at around 8 percent. Such an alliance currently runs several major cities, including Berlin. It would not be an entirely comfortable united front: the SD and the Greens are pro-EU, while Die Linke is highly critical of the organization.

 

But there is a model out there that gives hope.

 

Portugal is currently run by a three-party center-left to left alliance. Those parties also disagree on things like the EU, the debt, and NATO membership, but for the time being they have decided that stimulating the economy and easing the burden of almost decade of austerity trumps the disagreements.

And then there are the Italians.

 

While Italy has not scheduled elections, the defeat of Democratic Party leader and then Prime Minister Matteo Renzi’s constitutional referendum almost guarantees a vote sometime in the next six months.

 

Italy has one of the more dysfunctional economies in the EU, with one of the Union’s highest debt ratios and several major banks in deep trouble. It is the EU’s third largest economy, but growth is anemic and unemployment stubbornly high, particularly among the young.

 

Renzi’s center-left Democratic Party (PD) still tops the polls, but only just, and it has fallen nearly 15 points in two years. Nipping at its heels is the somewhat bizarre Five Star Party run by comedian Beppe Grillo, whose politics are, well, odd. Five Star is strongly opposed to the EU, and allies itself with several rightwing parties in the European Parliament. It applauded the election of Donald Trump. On the other hand, it has a platform with many progressive planks, including economic stimulation, increased social services, a guaranteed income for poor Italians, and government transparency. It is also critical of NATO.

 

Five Star has recently taken a few poll hits, because the Party’s Mayor of Rome has done a poor job keeping the big, sprawling city running—in truth, the ancient Romans found it a daunting task—and is caught up in a financial scandal. Some Democratic Party leaders are also being investigated for corruption.

 

The only other major parties in the mix are former Prime Minister Silvio Burlusconi’s center-right Forza Italia, which is polling around 13 percent, and the racist., xenophobic Northern League at 11.5 percent. The latter, which is based the northern Po Valley, made a recent effort to broaden its base by taking its campaign to Naples in southern Italy. The result was a riot with protestors tossing rocks, bottles and Molotov cocktails at Northern League leader Matteo Salvini.

 

There are informal talks going on about uniting the parties. Burlusconi has worked with the Northern League in the past.

 

There are also a gaggle of smaller parties in the parliament, ranging from the Left Ecology/Greens to the Brothers of Italy, none registering over 5 percent. But since whoever comes out on top will need to form a coalition, even small parties will likely punch above their weight.

 

If Five Star does come in first and patches together a government, it will press for a referendum on the EU, and there is no guarantee that Italians—battered by the austerity policies of the big trade group—won’t decide to bail like the British did. An Italexit would probably be a fatal blow to the EU.

 

Predicting election outcomes are tricky these days, the Brexit and the election of Donald Trump being cases in point. The most volatile of upcoming ballots are in France and Italy. Germany’s will certainly be important, but, even if Merkel survives, the center-right will be much diminished and the left will be stronger. And that will have EU-wide implications.

 

The European left is divided, but not all divisions are unhealthy, and a robust debate is not a bad thing. None of the problems Europe faces are simple. Is the EU salvageable? What are the alternatives to austerity? How do you tackle growing inequality and the marginalization of whole sections of society? How do you avoid the debt trap facing many countries, blocked by the EU’s economic strictures from pursuing any strategy other than more austerity?

 

In a recent interview, Yanis Varoufakis, former Greek economic minister and one of the founders of the left organization DiEM25, proposed a “New Deal” for Europe, where in “All Europeans should enjoy in their home country the right to a job paying a living wage, decent housing, high-quality health care and education, and a clean environment.”

 

The “Deal” has five goals that Varoufakis argues can be accomplished under the EU’s current rules and without centering more power in Brussels at the expense of democracy and sovereignty. These would include:

  • “Large-scale” investment in green technology.
  • Guaranteed employment with a living wage
  • An EU-wide anti-poverty fund.
  • Universal basic income.
  • Anti-eviction protection.

 

None of those goals will be easy to achieve, but neither can Europe continue on its current path. The rightwing “populists” may lose an election, but they aren’t going away.

 

Almost 40 years ago, British Prime Minister Margaret Thatcher launched her neo-conservative assault on trade union rights, health care, education and social services with the slogan, “There is no other choice.” The world is still harvesting the bitter fruits of those years and the tides of hatred and anger they unleashed. It is what put Trump into the Oval Office and Le Pen within smelling distance of the French presidency.

 

But there is a choice, and it starts with the simple idea of the greatest good to the greatest number.

 

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Red Cloud, Crazy Horse and U.S. Foreign Policy

 

A Foreign Policy of Delusion

Dispatches From The Edge

Mar. 8, 2017

 

In trying to unravel the debates over U.S. foreign policy currently being fought out in the editorial pages of the New York Times, The Wall Street Journal, and the magazine Foreign Policy, one might consider starting in late December on a bitter cold ridge in northern Wyoming, where 81 men of the U.S. Army’s 18th Infantry Regiment were pursuing some Indians over a rocky ridge.

 

The year was 1866 and the U.S. was at war with the local tribes—Sioux, Cheyenne and Arapaho—in an attempt to open a trail into the Montana gold fields. The fighting was going badly for an army fresh from the battlefields of the Civil War. Oglala Sioux leader Red Cloud and his savvy lieutenant Crazy Horse did not fight like Robert E. Lee, but rather like General Vo Nguyen Giap a hundred years in the future: an ambush by attackers who quickly vanished, isolated posts overrun, supply wagons looted and burned.

 

The time and place was vastly different, but the men who designed the war against Native Americans would be comfortable with the rationale that currently impel U.S. foreign policy. In their view, the Army was not fighting for gold in 1866, but was embarked on a moral crusade to civilize the savages, to build a shining “city on a hill,” to be that “exceptional” nation that stands above all others. The fact that this holy war would kill hundreds of thousands of the continent’s original owners and sentence the survivors to grinding poverty was irrelevant.

 

Is that very much different than the way the butcher bills for the U.S. invasions of Afghanistan and Iraq, the overthrow of Libya’s government and the Syrian civil war is excused as unfortunate collateral damage in America’s campaign to spread freedom and democracy to the rest of the world?

 

“We came, we saw, he died,” bragged then U.S. Secretary of State Hillary Clinton about the murder of Libyan leader Muammar Gaddafi. Libya is now a failed state, wracked by civil war and a major jumping off place for refugees fleeing U.S. wars in Yemen, Somalia, Iraq and Afghanistan.

 

In his book “The True Flag: Theodore Roosevelt, Mark Twain, and the Birth of American Empire,” author and former New York Times reporter Stephen Kinzer traces the roots of this millennium view that America’s mission was to “regenerate the world.” That this crusade was many times accompanied by stupendous violence is a detail that left unexamined by the people who designed those campaigns.

 

Kinzer argues that this sense of exceptionalism was developed during the Spanish-American War (1898) that gave the U.S. colonies in Cuba, Puerto Rico, Hawaii, Guam and the Philippines. But, as John Dower demonstrates in his brilliant book on WW II in the Pacific, “War Without Mercy,” that sentiment originated in the campaigns against Native Americans. Indeed, some of the same soldiers who tracked down Apaches in the Southwest and massacred Sioux Ghost Dancers at Wounded Knee would go on to fight insurgents in the Philippines.

 

The language has shifted from the unvarnished imperial rhetoric of men like Roosevelt, Henry Cabot Lodge and Senator Albert Beveridge, who firmly believed in “the white man’s burden”—a line from a poem by Rudyard Kipling about the American conquest of the Philippines.

 

Today’s humanitarian interventionists have substituted the words “international” and “global” for “imperial,” though the recipients of “globalism” sometimes have difficulty discerning the difference. At the ideological core of exceptionalism is the idea that American, in the words of former U.S. Secretary of State Madeleine Albright—and repeated by presidential candidate Hillary Clinton—is the “one essential nation” whose duty it is to spread the gospel of free markets and democracy.

 

On the surface there appear to be sharp differences between what could call “establishment” foreign policy mavens like Zbigniew Brzezinski, Paul Wasserman, Jonathan Stevenson, and Robert Kagan, from the brick tossers like Stephen Bannon, Sebastian Gorka, and Stephen Miller. To a certain extent there are. Bannon, for instance, predicts a major land war in the Middle East and a war over the South China Sea. Next to those fulminations, liberal interventionists like Kagan, and even neoconservatives like Max Boot, seem reasoned. But the “old hands” and sober thinkers are, in many ways, just as deluded as the Trump bomb throwers.

 

A case in point is a recent article by the Brookings Institute’s Kagan entitled “Backing Into World War III,” in which he argues the U.S. must challenge Russia and China “before it is too late,” and that “accepting spheres of influence is a recipe for disaster.” Kagan has generally been lumped in with neo-cons like Boot, Paul Wolfowitz, Elliot Abrams, and Richard Perle—the latter three helped design the invasion of Iraq—but he calls himself a liberal interventionist and supported Hillary Clinton in the last election. Clinton is a leading interventionist, along with former UN representative Samantha Power and President Obama’s natural Security Advisor, Susan Rice.

 

Kagan posits, “China and Russia are classic revisionist powers. Although both have never enjoyed greater security from foreign powers than they do today—Russia from its traditional enemies to the west, China from its traditional enemy in the east—they are dissatisfied with the current global configuration of power. Both seek to restore hegemonic dominance they once enjoyed in their respective regions.”

 

Those “regions” include Central and Eastern Europe and Central Asia for Russia, and essentially everything west of the Hawaiian Islands for China.

 

For Kagan this is less about real estate than “The mere existence of democracies on their borders, the global free flow of information they cannot control, the dangerous connection between free market capitalism and political freedom—all pose a threat to rulers who depend on keeping restive forces in their own countries in check.”

 

There are times when one wonders what world people like Kagan live in.

 

As Anatol Lieven, foreign policy researcher, journalist and currently a professor at Georgetown University in Qatar, points out concerning Russia, “A child with a map can look at where the strategic border was in 1988 and where it is today, and work out which side has advanced in which direction.”

 

The 1999 Yugoslav War served as an excuse for President Bill Clinton to break a decade-old agreement with the then Soviet Union not to recruit former members of the Warsaw Pact into NATO. In the war’s aftermath, the western coalition signed up Bulgaria, the Czech Republic, Hungary, Poland and Romania. For the first time in modern history, Russia has a hostile military alliance on its borders, including American soldiers. Exactly how this gives Russia “greater security” from her enemies in the West is not clear.

 

Of course, in a way, Kagan has a dog in this fight. His wife, former Assistant Secretary of State for Europe and Eurasian Affairs, Victoria Nuland, helped organize the 2014 coup that overthrew Ukrainian President Victor Yanukovych. Prior to the coup, Nuland was caught on tape using a vulgar term to dismiss peace efforts by the European Union and discussing who would replace Yanukovych. Nuland also admitted that the U.S. had spent $5 billion trying to influence Ukraine’s political development.

 

As Lieven argues, “Russia’s intervention in Ukraine is about Ukraine, a country of supreme historical, ethnic, cultural, strategic, and economic importance to Russia. It implies nothing for the rest of Eastern Europe.”

 

Kagan gives no evidence of Russia’s designs on Central Asia, although one assumes he is talking about the Shanghai Cooperation Organization. Since that trade and security grouping includes China, India and Pakistan, as well as Kyrgyzstan, Tajikistan, Uzbekistan, and Kazakhstan—Iran has applied for membership—exactly how Russia would “dominate” those countries is not clear.

 

Kagan’s argument that “accommodation” with Russia only encourages further aggression is, according to Lieven, a “view based upon self-deception on the part of western elites who are interested in maintaining confrontation with Russia as a distraction from more important, painful problems at home, like migration, industrial decline and anger over globalization.”

 

As for “free market capitalism,” the fallout from the ravages that American style capital has wrought on its own people is one of the major reasons Donald Trump sits in the Oval Office.

 

According to Kagan, U.S. allies in Asia—he presents no evidence of this—are “wondering how reliable” the U.S. is given its “mostly rhetoric” pivot to Asia, its “inadequate” defense spending,” its “premature” and “unnecessary” withdrawal from Iraq, and its “accommodating agreement with Iran on its nuclear program.”

 

One wonders through what looking glass the Brookings Institute views the world. The U.S. has more than 400 military bases in Asia, has turned Guam into a fortress, deployed Marines and nuclear capable aircraft in Australia and sent six of its 10 aircraft carriers to the region. It spends more on defense than the rest of the world combined. The illegal invasion of Iraq was an unmitigated disaster, and Iran has given up its nuclear enrichment program and its stockpile of enhanced uranium.

 

But in a world of “alternative facts,” the only thing that counts is that the U.S. no longer dominates the world as it did in the decades after World War II. “Only the United States has the capacity and unique geographical advantages to provide global security and relative stability,” writes Kagan, “there is no stable balance of power in Europe or Asia without the United States.”

 

The fact that the “security” and “stability” that Kagan yearns for has generated dozens of war, a frightening nuclear arms race, growing economic inequality and decades of support for dictators and monarchs on five continents never seems to figure into the equation.

 

Where the politics of Trump fits into all this is by no means clear. If the President goes with Bannon’s paranoid hate of Islam—and given conspiracy theorist and Islamophobe Frank Gaffney has just been appointed special advisor to the President that is not a bad bet—then things will go sharply south in the Middle East. If he pushes China and follows Bannon’s prediction that there will be a war between the two powers, maybe its time to look at real estate in New Zealand, like a number of billionaires—40 percent of whom are Americans—are already doing.

 

But no matter which foreign policy current one talks about, the “indispensible nation” concept—born out of the Indian and Spanish-American wars “weighs like a nightmare on the brain of the living,” as Karl Marx wrote in the “18th Brumaire.

 

A century and a half ago on a snowy Wyoming ridge, a company of the 18th Infantry Regiment discovered that not everyone wanted that “shining city on a hill.” From out of a shallow creek bed and the surrounding cottonwoods and box elders, the people whose land the U.S. was in the process of stealing struck back. The battle of Lodge Pine Ridge did not last long, and none of the Regiment survived. It was a stunning blow in the only war against the U.S. that Native Americans won. Within less than two years the Army would admit defeat and retreat.

 

In the end the Indians were no match for the numbers, technology, and firepower of the U.S. Within a little more than three decades they were “civilized” into sterile, poverty-ridden reservations where the only “exceptionalism” they experience is the lowest life expectancy of any ethnic group in the United States.

 

The view that American institutions and its organization of capital is superior is a dangerous delusion and increasingly unacceptable—and unenforceable—in a multi-polar world. The tragedy is how widespread and deep these sentiments are. The world is not envious of that shining “city on a hill,” indeed, with Trump in the White House “aghast” would probably be a better sentiment than envy.

 

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Filed under Asia, Europe, Iraq, Middle East, Military, Policy, Syria