Category Archives: Europe

Greece: Whispers Of Battles Past

Greece: A Whisper of Battles Past

Dispatches From the Edge


March 5, 2015



The recent negotiations between Greece and the European Union (EU) bring to mind Themistocles, a man who knew when to retreat and when to fight. The year was 480 BC and Xerxes I—“the king with half the east at heel”—was marching on Greece with a massive army accompanied by an enormous fleet. Against the invasion stood a small Greek army, led by Leonidas of Sparta, and an equally outnumbered navy, commanded by the Athenian, Themistocles.


It didn’t look good for the Greeks in August 480 BC. The Persian army was at least 10 times the size of the Greek force, and Themistocles was outnumbered almost three to one. It didn’t look good for Syriza in 2015: not a single EU member supported the Greek call for easing the debt crisis and ending the punishing austerity regime that has shattered the country’s economy and impoverished many of its people.


The Greek army and Leonidas were destroyed at Thermopylae, but the wily Themistocles first bloodied the Persians at Artemisium, then retreated, buying time to lay a trap at Salamis. With a little deception and a wind at his back—always a plus when you are ramming other people’s ships—the Greeks annihilated the Persian fleet and defeated the invasion.


Can Greek Prime Minister Alexis Tsipras and his finance minister Yanis Varoufakis pull off a Salamis and best what looks like another unbeatable foe? It is too soon to tell, but the deal they cut in Brussels bears a resemblance to that long ago battle in the Straits of Artemisium: both sides took losses, but the Greeks bought themselves valuable time.


And as Varoufakis recently remarked, “Time is our most precious commodity.”


There are a couple of things to keep in mind about the Feb. 20 agreement approved by the 19 European finance ministers.


First, Syriza did not have a mandate from the electorate to play one of its most powerful cards: “give us a deal or we leave the Eurozone and maybe tank the Euro.”


Second, Greece had a gun to its head: a Feb. 28 deadline, after which its banks would have lost support from the European Central Bank (ECB), one of the “Troika” members that include the International Monetary Fund (IMF) and the European Commission. Without ECB support, Greek banks might have gone under, forcing Athens to default on the debt and force it to exit from the Eurozone.


In the long run the Greeks may decide to default or drop the Euro, but that is not a decision that a freshly elected government that relies on a coalition to stay in power can make in a few weeks.


Third, as attractive as it is to think of scrappy little Greece defeating the mighty Troika and the EU, let’s be serious. Greece represents about 2 percent of the EU’s GDP. Its foes would have made Xerxes’ tremble: Germany, France, Italy, Finland, and the Netherlands, and even the debt-strapped governments of Spain, Portugal, and Ireland.


Syriza’s critics charge that the Party folded in Brussels, getting little more than a few cosmetic word changes in the Memorandum of Understanding that the Troika forced on Greece back in 2010. But language, as economist James Galbraith points out, has power. In “Reading the Greek Deal Correctly,” the University of Texas professor argues that substituting words like “the current programme” with “Master Financial Assistance Facility Agreement” means the agreement is extended “but the commitments are to be reviewed.”


Analyzing the centerpiece of the agreement, Galbraith concludes that there is no “unwavering commitment to the exact terms and conditions” of the 2010 Memorandum. “So,” he writes, “No, the Troika cannot come to Athens and complain about the rehiring of cleaning ladies.”


Georgos Katroughalos, a Syrizan minister, called the Feb. 20 agreement a study in “constructive ambiguity” that “allows different readings. Our reading is that we are not applying the Memorandum program. We are applying our agenda.”


What Syriza accepted were those sections of the Memorandum that mirrored its own program: running down tax evaders—unpaid taxes are estimated at 76 billion Euros—ending corruption, targeting fuel and tobacco smuggling, modernizing public administration, and tackling the “humanitarian crisis” with programs for food stamps, free medical care, and electricity for the poor. There will also be a pilot program for a minimum income for those under the poverty line—Brazil has had much success with this—and mortgage relief.


Which is not to say there were no casualties.


Syriza backed away from its pledge to end privatizations, although it added a caveat that the sale of public property must actually bring in significant amounts of cash. To date, many privatizations have been inside deals at fire sales prices. The privatization part of the agreement could be a retreat, or a loophole to put the brakes on the process. People will just have to wait and see what Syriza does.


“Labor reform” is another area around where sparks are certain to fly. By “reform” the Troika means cutting back minimum wages, abolishing collective bargaining, increasing the retirement age, and laying off workers. In theory this is supposed to make Greek workers more “productive” and more like German workers. In fact, Greeks work longer hours than German workers, but Greece does not possess Germany’s modernized infrastructure, including computers, high-speed rail, and autobahns.


Much of the German “modernization” was paid for by the U.S. to serve as a bulwark against the Soviet Union and the Eastern bloc countries. The 1953 London Agreement that canceled much of Germany’s World War II debts and stretched out payments—Syriza is asking for something very similar— was not done out of kindness, but as a critical ingredient in the Cold War. Germany would be part of the “west wall” against the Russians.


Syriza has agreed to “phase in” raising the minimum wage but is vague about implementing the rest of the “reform” package. Again, this could be seen as capitulation or as a temporary retreat. The measure of that will be what the Greek government actually does.


Greece is facing some deadlines this summer, and there is pressure from the EU for yet another bailout deal. But if Athens gets its anti-corruption program up and running, throttles gas and tobacco smuggling, and successfully collects taxes, Greece will have cash on hand to fulfill some of its election promises to restore jobs and pensions, and fund health care. The agreement recognizes that Greece is facing a “humanitarian crisis,” wording that might give Syriza more space to maneuver.


Greece is not alone in this fight. While it received no support from other Eurozone countries, most of those countries have growing anti-austerity movements that back Syriza. The Greek party’s close ally in the European Parliament, Podemos, is now the second largest party in Spain. And while governments in Portugal and Ireland have demanded that Greece stick with its austerity program, those governments are under siege at home for their own austerity regimes.


Portuguese Prime Minister Pedro Passos Coelhois is one of Syriza’s sharpest critics, dismissing the Greek Party’s position as a “children’s fairytale,” but his center-right Social Democrats are running behind the Socialist Party (SP). While the Socialists negotiated the original austerity agreement with the Troika, they have since turned against it. Antonio Costa, the recently elected major of Lisbon and leader of the SP, says austerity has brought nothing to Portugal but poverty and unemployment. On Feb. 12 a multi-party group of 32 leading politicians, economists and scientists urged Coelho to end his “punitive” approach to Greece and instead declare “solidarity” with Athens.


Even the Germans are not all on the same page. While Finance Minister Wolfgang Schauble—sounding more like a Wehrmacht commander than a European politician— snarled that Syriza “would have a difficult time to explain the deal to their voters,” Vice Chancellor Sigmar Gabriel was far more conciliatory.


What about just dumping in the Euro and declaring bankruptcy? Argentina did that and its economy grew for several years straight. But Argentina still cannot borrow money without paying onerous interest rates, and the IMF’s blockade of international finances has hurt Buenos Aires. In any case, Argentina has a much bigger economy than Greece and close ties with other South American countries through the trade bloc, Mercosur. In short, it has far greater resources than Athens.


The Euro has not been good for Greece, or for most of Southern European members of the Eurozone. A common currency doesn’t work when some economies are big, industrial and strong, while others are smaller and, like Greece, rely on business like tourism. Indeed, Greece has lost some of its industrial base since joining the Eurozone. When the playing field is uneven, the big dogs take over, which is why Germany dominates the EU.


The consequences of withdrawing from the Euro are uncertain, and not something a newly elected government can responsibly take. In any case, the vast majority of Greeks have yet to have that conversation.


In the coming months it will be obvious whether the latest agreement was a defeat or a tactical maneuver by Syriza. If the new government is to successfully resist the Troika, however, it will need support, not only within Greece, but from Europe and beyond. As UK political activist and journalist Tom Walker put it, “This battle is a long way from over,” and “the future of austerity across Europe now rests on what happens in Greece. If we give up on them we are giving up on our own struggles too.”


In 480 BC the Spartans held the Persians for three days, and poems were written about their courage, but they all died. It was Themistocles, who knew when to retreat and when to fight, who saved Greece.































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Europe’s Debt: Lies and Myths

Europe’s Debt: Lies & Myths

Dispatches From The Edge

Feb. 23, 2015


“Debt, n. An ingenious substitute for the chain and whip of the slave driver”

Ambrose Bierce

Journalist & writer


“The history of an oppressed people is hidden in the lies and agreed myth of its conquerers”


Meridel Le Suer

Author & activist



Myths are dangerous precisely because they rely more on cultural memory and prejudice than facts, and behind the current crisis between Greece and the European Union (EU) lays a fable that bears little relationship to why Athens and a number of other countries in the 28-member organization find themselves in deep distress.


The tale is a variation of Aesop’s allegory of the industrious ant and the lazy, fun-loving grasshopper, with the “northern countries”—Germany, the Netherlands, Britain, Finland—playing the role of the ant, and Greece, Spain, Portugal, and Ireland the part of the grasshopper.


The ants are sober and virtuous—lead by the frugal Swanban house frau, German Chancellor Angela Merkel—the grasshoppers are spendthrift, corrupt lay-abouts who have spent themselves into trouble and now must pay the piper.


The problem is that this myth bears almost no relationship to the actual roots of the crisis or what the solutions might be. And it perpetuates a fable that the debt is the fault of individual countries rather than a serious crisis at the very heart of the EU.


First, a little myth busting.


The European debt crisis goes back to the end of the roaring ‘90s when the banks were flush with money and looking for ways to raise their bottom lines. One major strategy was to pour money into real estate, which had the effect of creating bubbles, particularly in Spain and Ireland. In the latter, from 1999 to 2007, bank loans for Irish real estate jumped 1,730 percent, from 5 million Euros to 96.2 million Euros, or more than half the GDP of the Republic. Housing prices increased 500 percent. “It was not the public sector but the private sector that went haywire in Ireland,” concludes Financial Times analyst Martin Wolf.


Spain, which had a budget surplus and a low debt ratio, went through much the same process, and saw an identical jump in housing prices: 500 percent.


In both countries there was corruption, but it wasn’t the penny ante variety of tax evasion or profit skimming. Politicians—eager for a piece of the action and generous “donations”—waved zoning rules, environmental regulations, and cut sweetheart tax deals. Hundreds of thousands of housing projects went up, many of them never to be occupied.


Then the American banking crisis hit in 2008, and the bottom fell out. Suddenly, the ants were in trouble. But not really, because the ants have a trick: they gamble and the grasshoppers pay.


The “trick,” as Joseph Stiglitz, Nobel Laureate in economics, points out, is that Europe (and the U.S.) have moved those debts “from the private sector to the public sector—a well-established pattern over the past half-century.”


Fintan O’Toole, author of “Ship of Fools: How Stupidity and Corruption sank the Celtic Tiger,” estimates that to save the Irish-Anglo Bank Irish taxpayers shelled out $30 billion Euros, a sum that was the equivalent of the Island’s entire tax revenues for 2009. The European Central Bank—which, along with the International Monetary Fund (IMF) and the European Commission, make up the “Troika”—strong-armed Ireland into adopting austerity measures that tanked the country’s economy, doubled the unemployment rate, increased consumer taxes, and forced many of the country’s young people to emigrate. Almost half of Ireland’s income tax now goes just to service the interest on its debts.


Poor Portugal. It had a solid economy and a low debt ratio, but currency speculators drove up interest rates on borrowing beyond what the government could afford, and the European Central Bank refused to intervene. The result was that Lisbon was forced to swallow a “bailout” that was laden with austerity measures that, in turn, torpedoed its economy.


In Greece’s case corruption was at the heart of the crisis, but not the popular version about armies of public workers and tax dodging oligarchs. There are rich tax dodgers aplenty in Greece, but Germany, Sweden, and many other European countries spend more of their GDP on services than does Athens. Greece spends 44.6 percent of its GDP on its citizens, less than the EU average and below Germany’s 46 percent and Sweden’s 55 percent.


And as for lazy: Greeks work 600 hours more a year than Germans.


According to economist Mark Blyth, author of “Austerity: The History of a Dangerous Idea,” Greek public spending through the 2000s is “really on track and quite average in comparison to everyone else’s,” and the so-called flood of “public sector jobs” consisted of “ 14,000 over two years.” All the talk of the profligate Greek government is “a lot of nonsense” and just “political cover for the fact that what we’ve done is bail out some of the richest people in European society and put the cost on some of the poorest.”


There was a “score” in Greece. However, it had nothing to do with free spending, but was a scheme dreamed up by Greek politicians, bankers, and the American finance corporation, Goldman Sachs.


Greece’s application for EU membership in 1999 was rejected because its budget deficit in relation to its GDP was over 3 percent, the cutoff line for joining. That’s where Goldman Sachs came in. For a fee rumored to be $200 million (some say three times that), the multinational giant essentially cooked the books to make Greece look like it cleared the bar. Then Greece’s political and economic establishment hid the scheme until the 2008 crash shattered the illusion.


It was the busy little ants, not the fiddling grasshoppers that brought on the European debt crisis.

American, German, French, and Dutch banks had to know that they were creating an unstable real estate bubble—a 500 percent jump in housing prices is the very definition of the beast—but kept right on lending because they were making out like bandits.


When the bubble popped and Europe went into recession, Greece was forced to apply for a “bailout” from the Troika. In exchange for 172 billon Euros, the Greek government instituted an austerity program that saw economic activity decline 25 percent, unemployment rise to 27 Percent (and over 50 percent for young Greeks). The cutbacks slashed pensions, wages, and social services, and drove 44 percent of the population into poverty.


Virtually all of the “bailout”—89 percent—went to the banks that gambled in the 1999 to 2007 real estate casino. What the Greek—as well as Spaniards, Portuguese, and Irish—got was misery.


There are other EU countries, including Italy and France that, while not in quite the same boat as the “distressed four,” are under pressure to bring down their debt ratios.


But what are those debts?


This past summer, the Committee for a Citizen’s Audit on the Public Debt issued a report on France, a country that is currently instituting austerity measures to bring its debt in line with the magic “3 percent” ratio. What the Committee concluded was that 60 percent of the French public debt was “illegitimate.”


More than 18 other countries, including Brazil, Portugal, Ecuador, Greece and Spain, have done the same “audit,”, and, in each case, found that increased public spending was not the cause of deficits. From 1978 to 2012, French public spending actually declined by two GDP points.


The main culprit in the debt crisis was a fall in tax revenues resulting from massive tax cuts for corporations and the wealthy. According to Razmig Keucheyan, sociologist and author of “The Left Hemisphere,” this “neoliberal mantra” that was supposed to increase investment and employment did the opposite.


According to the study, the second major reason was the increase in interest rates that benefits creditors and speculators. Had interests rates remained stable during the 1990s, debt would be significantly lower.


Keucheyan argues that tax reductions and interest rates are “political decisions” and that “public deficits do not grow naturally out of the normal course of social life. They are deliberately inflicted on society by the dominant classes to legitimize austerity policies that will allow the transfer of value from the working classes to the wealthy ones.”


The International Labor Organization recently found that wages have, indeed, stalled or declined throughout the EU over the past decade.


The audit movement calls for repudiating debt that results from “the service of private interests” as opposed to the “wellbeing of the people.” In 2008, Ecuador canceled 70 percent of its debt as “illegitimate.”


How this plays out in the current Greek-EU crisis is not clear. The Syriza government is not asking to cancel the debt—though it would certainly like a write down—but only that it be given time to let the economy grow. The recent four-month deal may give Athens some breathing room, but the ants are still demanding austerity and tensions are high.


What seems clear is that Germany and its allies are trying to force Syriza into accepting conditions that will undermine its support in Greece and demoralize anti-austerity movements in other countries.


The U.S. can play a role in this—President Obama has already called for easing the austerity policies—through its domination of the IMF. By itself Washington can outvote Germany, the Netherlands, and Finland, and could exert pressure on the two other Troika members to compromise. Will it? Hard to say, but the Americans are certainly a lot more nervous about Greece exiting the Eurozone than Germany.


But the key to a solution is exploding the myth.


That has already begun. Over the past few weeks, demonstrators in Greece, Spain, Italy, Germany, Portugal, Great Britain, Belgium and Austria have poured into the streets to support Syriza’s stand against the Troika. “The Left has to work together having as its common goal the elimination of predatory capitalism” says Maite Mola, vice-president of the European Left organization and member of the Portuguese parliament. “And the solution should be European.”


In the end, the grasshoppers might just turn Aesop’s fable upside down.







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Europe: Shaking The Temple

Europe: Shaking The Temple

Dispatches From The Edge

Conn Hallinan

Feb. 12, 2015


In the aftermath of last month’s Greek election that vaulted the left anti-austerity party Syriza into power, armies of supporters and detractors—from Barcelona to Berlin—are on the move. While Germany’s Finance Minister Wolfgang Schaueble was making it clear that Berlin would brook no change in the European Union’s (EU) debt strategy that has impoverished countries like Greece, Spain, Portugal, and Ireland, left organizations from all over Europe met in Barcelona to drew up a plan of battle.


As Schaueble was stonewalling Greek Finance Minister Yanis Varoufakis, the Party of the European Left (PEL), along with assorted Green parties, gathered for the “1st European South Forum” in Catalonia’s capital to sketch out a 10-point “Declaration of Barcelona” aimed at ending “austerity and inequality,” and promoting “democracy and solidarity.”


At first glance, the past two weeks look ominously like September 1914, with opposing forces digging in for a massive bloodletting.


On one hand the European Central Bank (ECB)—one of the “Troika” members, that includes the European Commission (EC) and the International Monetary Fund (IMF)—brusquely denied Greece the right to sell government bonds to raise money. Representatives of the Greek government also got little support from other leaders of EU member countries to reduce Athens’ unsustainable $360 billion debt. Britain’s Chancellor of the Exchequer, Gordon Osborne, grimly opined that “The standoff” between the Eurozone and Greece was “endangering the global economy.”


On the other hand, the Syriza government made it clear that Greece was finished with the austerity policies that crashed its economy, made more than a quarter of the population jobless, and shredded essential social services. And the Barcelona Declaration is a direct challenge to the economic formulas of the Troika and German Chancellor Angela Merkel: “Merkelism is not invincible. Austerity can stop. Europe can change,” reads the document,


Behind the trenches, however, the situation was far more complex than two sides bunkered down in a winner-take-all battle, and the politics around economic policy more fluid than one might initially conclude.


While Greece will certainly not go back to the failed formula of selling off state-owned enterprises, huge budget cuts, layoffs and onerous taxes, neither is it eager to exit the Eurozone. The latter is composed of 18 out of the 28 EU members that use a common currency, the euro.


For all the sturm und drang coming from Berlin and EU headquarters in Brussels, Syriza’s program is anything but radical, more social democratic than Bolshevik. And a growing number of economists and Europeans are concluding that taking a hard line on Greece might, in the end, endanger the entire EU endeavor.


As a strategy for getting out of debt, austerity has an almost unbroken track record of failure, starting with Latin American in the late 1980s. It has certainly been catastrophic for Greece and, to a lesser extent, Ireland, Portugal, and Spain, and virtually no European country has dodged its impact on employment and social services.


“Austerity” is not just about cutbacks and budget tightening. By increasing unemployment, and introducing “temporary” labor contracts, it severely weakens unions and the ability of workers to bargain for higher wages and improved benefits. Indeed, according to the International Labor Organization, since 2007 wages have either stalled or fallen in most EU countries.


Austerity also accelerates economic inequality. According to the Credit Suisse Research Institute, the top 1 percent now control 48.2 percent of the world’s wealth, and inequality in Europe is the highest it has been in a half century. More people are poorer than they were a decade ago, while a few are richer than ever. The latter will be reluctant to moderate the policies that have given them a half-decade of unalloyed profit making.


The Greek election was a shot across the bow for this strategy and a warning that, while wealth and political power may be related, they are not the same thing: Governments can be overturned.


But compromise on the Troika’s side will be difficult, in part because the austerity strategy has been so lucrative for the EU’s elites, in part because the intransigence of many EU leaders is driven by multiple devils.


There is the “why not us?” devil. The ruling parties in Ireland, Portugal and Spain are spooked, because if Syriza gets a deal on the Greek debt that doesn’t involve crucifying most its population, their own impoverished constituents are going to be asking some hard questions and demanding something similar.


Spain’s right-wing Popular Party is nervously looking over its shoulder at the growing strength of the anti-austerity Podemos party. It was no accident that the ELP chose Spain for its conference: Podemos is drawing 24 percent in national polls and is the only party in the country currently growing. It is now the second largest in Spain. With local and national elections coming up this year—the former in May, the latter in December—Spain’s two mainstream parties are running scared.


So, too, are the governments in Portugal and Ireland that went along with the austerity demands of the troika and now face expanding anti-austerity parties on their left.


Another devil is the right, although last May’s European parliamentary elections demonstrated that when the left clearly articulated an anti-austerity program, voters picked it over the right. What those elections also showed, however, is that when the center-left went along with austerity—as it did in Britain and France—the right made gains.


German Chancellor Andrea Merkel is apprehensive about losing votes to the right-wing, anti-EU Alternate Party for Germany. British Prime Minister David Cameron is trying to fend off the rightist United Kingdom Independence Party, and French President Francois Hollande is running behind Marine Le Pen of the anti-immigrant, anti-Semitic National Front Party.


There are strong right-wing parties in Denmark, Finland and the Netherlands, although, in the latter two, their poll numbers fell in the European parliamentary elections.


What those last May elections suggest is that any effort to co-opt the right’s politics or base by moving in its direction does little more than feed the beast. Greece’s experiences are instructive. The neo-Nazi Golden Dawn Party is also anti-austerity, but Syriza trounced them in last month’s election. At the same time, Syriza’s warning that austerity fuels the politics of the right is almost certainly true. In an economic crisis there are always those who turn to the dark side and its simplistic explanations for their condition: immigrants, Roma, Jews, and “slackers.”


While the European right is worrisome, it has generally lost head-on battles with the left, because the right has little to offer besides the politics of racism and xenophobia.


And Europe needs answers. The Greek crisis is a crisis of the entire EU. To one extent or other, every country—even Germany, the EU’s engine—is characterized by falling or anemic wage growth, increasing economic inequality, spreading deflation, and an overall decline in living standards. It is this general malaise that the Barcelona Declaration is taking aim at.


Pierre Laurent, head of the French Communist Party and president of the ELP, told the Barcelona forum that “2015 is a decisive year, the year of change,” and that Syriza’s victory will “have a huge impact throughout Europe because for the first time since the crisis, it will force all European governments to discuss and alternative to austerity.”


The Declaration proposes a program for relieving unemployment, creating sustainable development, expanding credit, resisting “racism and xenophobia,” and a European debt conference along the lines of the 1953 London Debt Agreement that relieved Germany of half its post-World War II debts.


How the Greek debt crisis will play out over the next few months is not clear.


The troika may take a hard line, in which case Greece may be forced to leave the Eurozone, a move that Berlin claims would have little impact. Other analysts are not so certain.


“The predominant German view” that a Greek exit would be a “minor shock for the Eurozone and a non-event for the global economy” says Financial Times analyst Wolfgang Munchau, “could not be more wrong.”


Faced with a possible meltdown of the European Union or the Eurozone and a growing insurgency on its left, the Troika may blink and give the Greeks part of what they want: a reduction in the interest rate on the debt—maybe even a write-down on some of it—and an extension of the payment schedule. What they will not get—because the Greek electorate has made it clear they will not accept—is more austerity.


That is the contagion—sometimes called the “Greek virus””—that is already spreading to Spain, Portugal and Ireland and which is likely to jump to Italy, France and Central Europe.


The Greeks have shaken the pillars of the temple. Inside the mighty tremble.



































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The Greek Earthquake

The Greek Earthquake

Dispatches From The Edge

Jan. 28, 2014


Almost before the votes were counted in the recent Greek elections, battle lines were being drawn all over Europe. While Alexis Tsipras, the newly elected Prime Minister from Greece’s victorious Syriza Party, was telling voters, “Greece is leaving behind catastrophic austerity, fear and autocratic government,” Jens Weidmann, president of the German Bundesbank, was warning the new government not to “make promises it cannot keep and the country cannot afford.”


On Feb. 12 those two points of view will collide when European Union (EU) heads of state gather in Brussels. Whether the storm blowing out of Southern Europe proves an irresistible force, or the European Council an immovable object, is not clear, but whatever the outcome, the continent is not likely to be the same after that meeting.


The Jan 25 victory of Greece’s leftwing Syriza Party was, on one hand, a beacon for indebted countries like Spain, Portugal, Italy and Ireland. On the other, it is a gauntlet for Germany, the Netherlands, Finland, and the “troika”—the European Central bank, the European Commission, and the International Monetary Fund (IMF)—the designers and enforcers of loans and austerity policies that have inflicted a catastrophic economic and social crisis on tens of millions of Europeans.


The troika’s policies were billed as “bailouts” for countries mired in debt—one largely caused by the 2008 financial speculation bubble over which indebted countries had little control—and as a way to restart economic growth. In return for the loans, the EU and the troika demanded massive cutbacks in social services, huge layoffs, privatization of pubic resources, and higher taxes.


However, the “bailouts” did not go toward stimulating economies, but rather to repay creditors, mostly large European banks. Out of the $266 billion loaned to Greece, 89 percent went to investors. After five years under the troika formula, Greece was the most indebted country in Europe. Gross national product dropped 26 percent, unemployment topped 27 percent (and over 50 percent for young people), and one-third of the population lost their health care coverage.


Given a chance to finally vote on the austerity strategy, Greeks overwhelmingly rejected the parties that went along with the troika and elected Syriza.


Now it gets tricky, starting with the internal situation within Greece.


Because Syriza fell two seats short of controlling the Greek parliament, it has gone into coalition with the small, right wing Independent Greeks party. While initially it seems an odd choice—the Pan-Hellenic Socialist Movement (PASOK) and the Greek Communist Party also have deputies, and Syriza is only two seats short of a majority—Greek politics are, if nothing else, complex.


The Independent Greek party—a split from the former ruling conservative New Democracy Party—is an odd duck by any measure. It has a streak of racism and xenophobia, and its leader, Panos Kammenos, believes that jet contrails are chemicals used to control people’s minds. But it is staunchly anti-austerity and will not likely waver in the face of the troika or German Chancellor Andrea Merkel.


What would seem like a more compatible alliance with PASOK, however, is precluded by that fact that the Socialists supported the austerity package. There is a new party, To Potami, but it has yet to publish its program, and it is unclear exactly what it stands for. As for the Communists, the Party’s leadership says they have no intention of working with the “false hope” of Syriza.


As convoluted as Greek politics are, the main obstacle for Syriza will come from other EU members and the Troika.


Finnish Prime Minister Alex Stubb made it clear “that we would say a resounding ‘no’ to forgive loans.” Merkel’s chief of staff, Peter Altmaier, says, “We have pursued a policy which works in many European countries, and we will stick to in the future.” IMF head Christine Lagarde chimed in that “there are rules that must be met in the euro zone,” and that “we cannot make special exceptions for specific countries.”


But Tsipras will, to paraphrase the poet Swinburne, not go entirely naked into Brussels, but “trailing clouds of glory.” Besides the solid support in Greece, a number of other countries and movements will be in the Belgian capital as well.


Syriza is closely aligned in Spain with Podemos, now polling ahead of the ruling conservative People’s Party. “2015 will be the year of change in Spain and Europe,” tweeted Podemos leader Pablo Iglesias in the aftermath of the election, “let’s go Alexis, let’s go!” Unemployment in Spain is 24 percent, and over 50 percent for young people.


Gerry Adams of Sinn Fein—now the third largest party in the Irish Republic—hailed the vote as opening “up the real prospect of democratic change, not just for the people of Greece, but for citizens right across the EU.” Unemployment in Ireland is 10.7 percent, and tens of thousands of jobless young people have been forced to emigrate.


The German Social Democrats are generally supportive of the troika, but the Green Party hailed the Syriza victory and Die Linke Party members marched with signs reading, “We start with Greece. We change Europe.”


Italian Prime Minister Matteo Renzi—who has his own issues with the EU’s rigid approach to debt—hailed the Greek elections, and top aide Sandro Gozi said that Rome was ready to work with Syriza. The jobless rate in Italy is 13.4 percent, but 40 percent among youth.


The French Communist Party hailed the Greek elections as “Good news for the French people,” and Jean-Luc Melenchon of the Parti de Gauche called for a left-wing alliance similar to Syriza. French President Francois Hollande made a careful statement about “growth and stability,” but the Socialist leader is trying to quell a revolt by the left flank of his own party over austerity, and Paris is closer to Rome than it is to Berlin on the debt issue.


While the conservative government of Portugal was largely silent, Left Bloc Member of Parliament Marisa Matias told a rally, “A victory for Syriza is a victory for all of Europe.”


In short, there are a number of currents in the EU and a growing recognition even among supporters of the troika that prevailing approach to debt is not sustainable.


One should have no illusions that Syriza will easily sweep the policies of austerity aside, but there is a palpable feeling on the continent that a tide is turning. It did not start with the Greek elections, but with last May’s European Parliament elections, where anti-austerity parties made solid gains. While some right-wing parties that opportunistically donned a populist mantle also increased their vote, they could not do so where they were challenged by left anti-austerity parties. For instance, the right did well in Denmark, France, and Britain, but largely because there were no anti-austerity voices on the left in those races. Elsewhere the left generally defeated their rightist opponents.


If Syriza is to survive, however, it must deliver, and that will be a tall order given the power of its opponents.


At home, the Party will have to take on Greece’s wealthy tax-dodging oligarchs if it hopes to extend democracy and start refilling the coffers drained by the troika’s policies. It will also need to get a short-term cash infusion to meet its immediate obligations, but without giving in to yet more austerity demands by the troika.


For all the talk about Syriza being “extreme”—it stands for Coalition of the Radical Left— its program, as Greek journalist Kia Mistilis points, is “classic ‘70s social democracy”: an enhanced safety net, debt moratorium, minimum wage raise, and economic stimulus.


Syriza is pushing for a European conference modeled on the 1953 London Debt Agreement that pulled Germany out of debt after World War II and launched the “wirtschaftswunder,”or economic miracle that created modern Germany. The Agreement waved more than 50 percent of Germany’s debt, stretched out payments over 50 years, and made repayment of loans dependent on the country running a trade surplus.


The centerpiece of Syriza’s Thessaloniki program is its “four pillars of national reconstruction,” which include “confronting the humanitarian crisis,” “restarting the economy and promoting tax justice,” “regaining employment,” and “transforming the political system to deepen democracy.”


Each of the “pillars” is spelled out in detail, including costs, income and savings, and, while it is certainly a major break with the EU’s current model, it is hardly the October Revolution.


The troika’s austerity model has been quite efficient at smashing trade unions, selling off public resources at fire sale prices, lowering wages and starving social services. As a statement by the International Union of Food Workers argues, “Austerity is not the produce of a deficient grasp of macroeconomics or a failure of ‘social dialogue,’ it is a conscious blueprint for expanding corporate power.”


Under an austerity regime, the elites do quite well, and they are not likely to yield without a fight.


But Syriza is poised to give them one, and “the little party that could” is hardly alone. Plus a number of important elections are looming in Estonia, Finland, and Spain that will give anti-austerity forces more opportunities to challenge the policies of Merkel and the troika.


The spectre haunting Europe may not be the one that Karl Marx envisioned, but it is putting a scare into the halls of the rich and powerful.









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Dispatch Awards 2014

Dispatch Awards 2014

Dispatches From The Edge

Jan. 1, 2015



Each year Dispatches From the Edge gives awards to individuals, companies and governments that make following the news a daily adventure. Here are the winners for 2014.


The Pandora’s Box Award to Israel and the U.S. for launching the world’s first cyber war and creating a monster in the process. In 2010 both countries secretly released the Stuxnet virus to disable Iran’s nuclear energy program, in the process crashing thousands of Teheran’s centrifuges.


According to a report by the security company Cylance, “Stuxnet was an eye-opening event for the Iranian authorities, exposing them to the world of physical destruction via electronic means. Retaliation for Stuxnet began almost immediately.”


The Financial Times now reports that “Iranian hackers have penetrated dozens of international organizations, including six top-tier oil and gas companies, six international airports, seven airlines, a blue-chip U.S. defense contractor, 10 prestigious universities, and the government computer systems of several Gulf states.”


An Iranian hacker program dubbed “Cleaver” has, according to Cylance, “extracted highly sensitive materials” from governments and key companies in Canada, China, France, Israel, Kuwait, Saudi Arabia, Britain, China, Germany, India, Mexico, Pakistan, South Korea, Turkey, and the United Arab Emirates.


What ye sow, so shall ye reap.


The Golden Scold Award to Germany and Chancellor Andrea Merkel for lecturing the Greeks on profligate spending and forcing Athens to swallow crippling austerity measures, while at the same time bribing Greek military officials to spend billions of dollars on useless weapons.


According to the Greek newspaper Kathimerini, arms dealers—mostly German, but also French, Swedish, and Russian—handed out close to $3 billion in bribes to secure $68 billion in weapons contracts over the next decade. One arms dealer dropped off a suitcase with over $800,000 in it at the Greek Arms Ministry.


Athens spent $2.3 billion to buy 170 German Leopard II tanks, which are largely useless for fighting in Greek terrain. In any case, the tanks were sent without any ammunition (although this past August The Greek Defense Ministry coughed up $69.9 million to buy ammunition from the German company Rheinmetall)


The Greeks also paid more than $4 billion to purchase German submarines that are still in dry dock, and, from all accounts, are very noisy. It is not good to be noisy in the silent service. According to Der Spiegel, the German company that makes the U-214 shelled out over $2 million in bribes to land the contract.


In the meantime, the austerity policies forced on Greece by the “troika” of international lenders—the International Monetary Fund, European Central Bank, and the European Union—has impoverished millions of people and driven the unemployment rate to over 20 percent (50 percent for those under 25). Since 2008, Greek infant mortality has risen 21 percent and child mortality is up 43 percent. Suicides are up 45 percent.


In exchange for the military spending, the Greeks got submarines that sit on the land, tanks they can’t use, and lectures from Merkel about saving money.


The Misplaced Priorities Award goes the Indian government for spending $33 million on a nearly 600-foot bronze statue of Indian independence leader Vallabhbhai Patel, while, according to the UN, 213 million Indians are undernourished—the most for any country in the world and constituting one out of every four hungry people on the planet. Some 48 percent of children under five are below weight, and India and Nigeria account for almost one-third of deaths among children under five. Inequality in earnings is worse in India than in any other emerging economy in the world. Life expectancy is actually better in Bangladesh and Pakistan.


Independent investigative journalist P. Sainath, who has covered rural India for decades, writes that “A total of 2,960,438 farmers have committed suicide since 1995.” In virtually every case the cause was debt to moneylenders and landlords.


Dispatches suggests Indian government leaders design a program to aid farmers, feed the poor, and take a moment to read Percy Shelley’s poem “Ozmandias.”


The Shoot-In-The-Foot Award to the Obama administration for ending the purchase of Russian-made RD-180 rocket engines as part of U.S. sanctions leveled at Moscow over the crisis in the Ukraine. The RD-180—a cheap, reliable workhorse engine that has lifted U.S. Atlas III and Atlas V rockets into space since 1997—will cost $1.5 billion and six years to replace. A new engine means that launch vehicles will also need to be re-designed and satellite programs delayed. In the end, that could cost $5 billion.


In retaliation for the RD-180 ban, Russia will no longer lend its Soyuz rockets to supply the international space station. Asked how astronauts will get to the station, Russian Deputy Prime Minister Dmitry Rogozin suggested they “use a trampoline.”


The European Space Agency (ESA) will also take a hit. Besides losing the Soyuz taxi service to the space station, the ESA will lose access to the RD-180 engine as well, and will have to accelerate its troubled Ariane VI rocket program to replace the Agency’s Ariane V. The “VI” has been criticized as too big, too inflexible, and much too expensive—$4. 2 billion.


Russia announced it would shift monies it spends on the International space station to joint space projects with China.



The Dog Ate My Homework Award to the British Foreign Office for “accidently destroying” documents which would have shown that London was deeply—and illegally—involved in the U.S. CIA’s rendition program. Renditions moved terror suspects to countries that allowed torture, or kept the suspects in secret “black bases” where the CIA carried out its own torture program.


Britain allowed over 1,600 CIA flights in and out of the country and permitted suspects to be held at the British-controlled island of Diego Garcia in the Indian Ocean. Complicity with the rendition program is a violation of British domestic laws against kidnapping, arbitrary detention, and the right to a fair trial. It also violates international laws against torture.


“It’s looking worse and worse for the UK government on Diego Garcia,” says Cori Crider, director of the human rights organization Reprieve. “They need to come clean about how, when, and where this evidence was lost.”


Foreign Office Minister Mark Simmons says the records were lost due to “water damage.”


The Mouse That Roared Award to the Marshall Islands for hauling the nuclear armed powers—the U.S., China, Russia, France, Britain, Pakistan, India, Israel and North Korea—before the International Court of Justice at Hague for violating Article VI of the Nuclear Non-Proliferation Treaty. Article VI calls for the “cessation of the nuclear arms race at an early date and nuclear disarmament.” India, Israel and Pakistan are not treaty members—North Korea withdrew—but its hard to argue with the Marshallese on the subject of nukes: in 1954 the U.S. vaporized Bikini Atoll with a 15-megaton hydrogen bomb and irradiated thousands of islanders.


Over a period of 12 years, the U.S. detonated some 67 nuclear warheads with an aggregate explosive power of 42.2 megatons in the Marshalls. The Hiroshima bomb was 15 kilotons. The Marshall Islands Nuclear Claims Tribunal found the U.S. liable for $2 billion in damages, but so far Washington has only paid out $150 million.


It wasn’t just Marshall Islanders who got zapped either. The Center for Investigative Reporting found that the U.S. Navy decommissioned some of the ships that had taken part in those tests at Treasure Island in San Francisco Bay. The Navy then buried the nuclear waste around the island, creating numerous “hot spots.” Some 2,000 low-income or homeless San Francisco residents—who live in subsidized housing on the island—were assured there was nothing to worry about, and then instructed not to let their children dig in front or back yards (“Look, Mom, this rock glows in the dark!”).


Nuclear contamination was also found at several other California bases, including Alameda Naval Air Station, Hunters Point Naval Shipyard, and McClellan Air Force Base near the state’s capital, Sacramento.


Radiation, the gift that keeps on giving.


Golden Lemon Award once again goes to Lockheed Martin for its $1.5 trillion F-35 stealth fighter-bomber—the most expensive weapon system in U.S. history—that can’t get its software to work, won’t fly in the rain, and burns up trying to get off the ground. In fact, foreign buyers are beginning to have second thoughts about buying the plane at all. Canada just tested the F-35 against the old U.S. F-18 Super Hornet, the Eurofighter Typhoon, and France’s Dassault Rafale and found the only difference was that the F-35 was much more expensive: between $116 million to $160 million per plane, vs., respectively, $60 million, $90 million, and $64 million apiece.


The U.S. was forced to cancel the F-35’s debut at the prestigious Farnborough International Air Show in Britain because a plane caught fire trying to take off from Eglin Air Force Base in Florida. The F-35 has since been restricted to lower speeds and three hours flying time, not enough to make the hop across the Atlantic.


Lockheed Martin and Austal USA also scored big in the Lemon category with their Littoral Combat Ships (LCS), the USS Freedom and the USS Independence. The $37 billion LCS program will build a fleet of shallow draft, high-speed warships that, according to a recent Pentagon study, won’t survive combat. The Defense Department’s Director of Operational Testing and Evaluation, Michael Gilmore, says Lockheed Martin’s USS Freedom and Austal’s USS Independence, are “not expected to be survivable in a hostile combat environment and are not intended to be employed in a manner that puts them in harm’s way.”


Translation: if they get in a fight, they’re toast.


But that might not be a problem because the LCSs high maintenance requirements means the ships can’t get to where the action is anyhow. The USS Freedom spent 58 percent of its time in Singapore port—more than twice the average for U.S. Navy ships—and the USS Independence spent most its time tied up in San Diego.


A Farewell to Fred Branfman, who died from Lou Gehrig’s disease at 72. Branfman helped expose the secret U.S. air war against Laos that killed tens of thousands of civilians and sowed that tiny country with millions of unexploded bombs, weapons that continue to inflict pain and death on Laotians today. The U.S. carried out 580,000 bombing missions over Laos, dropping almost a ton of bombs for every person in that country. Branfman help to found the Indochina Resource Center, which documented what he had seen in Laos as an aid worker. He later wrote “Voices From the Plain of Jars: Life Under an Air War.”


























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The Big Chill: Tensions in the Arctic

The Big Chill: Tensions In The Arctic

Dispatches From The Edge

Oct. 31, 2014


One hundred sixty eight years ago this past July, two British warships—HMS Erebus and HMS Terror—sailed north into Baffin Bay, bound on a mission to navigate the fabled Northwest Passage between the Atlantic and the Pacific oceans. It would be the last that the 19th century world would see of Sir John Franklin and his 128 crewmembers.


But the Arctic that swallowed the 1845 Franklin expedition is disappearing, its vast ice sheets thinning, its frozen straits thawing. And once again, ships are headed north, not on voyages of discovery—the northern passages across Canada and Russia are well known today—but to stake a claim in the globe’s last great race for resources and trade routes. How that contest plays out has much to do with the flawed legacies of World War II, which may go a long way toward determining whether the arctic will become a theater of cooperation or yet another dangerous friction point. In the words of former NATO commander, U.S. Admiral James G. Stavridis, an “icy slope toward a zone of competition, or worse, a zone of conflict.”


There is a great deal at stake.


The U.S. Geological Survey estimates that the Arctic holds 13 percent of the world’s oil reserves and 30 percent of its natural gas. There are also significant coal and iron ore deposits. As the ice retreats, new fishing zones are opening up, and, most importantly, shipping routes that trim thousands of miles off of voyages, saving enormous amounts of time and money. Expanding trade will stimulate shipbuilding, the opening of new ports, and economic growth, especially in East Asia.


Traffic in the Northern Sea Route across Russia—formerly known as the Northeast Passage and the easiest to traverse— is still modest but on the uptick. The route has seen an increase in shipping, from four vessels in 2010 to 71 in 2013, and, for the first time in history, a Liquid Natural Gas Tanker, the, made the trip. On a run from Hammerfest Ob River, Norway, to Tobata, Japan, the ship took only nine days to traverse the passage, cutting almost half the distance off the normal route through the Suez Canal.


Which is not to say that the Northern Sea Passage is a stroll in the garden. The Arctic may be retreating, but it is still a dangerous and stormy place, not far removed from the conditions that killed Franklin and his men. A lack of detailed maps is an ongoing problem, and most ships require the help of expensive icebreakers. But for the first time, specially reinforced tankers are making the run on their own.


Tensions in the region arise from two sources: squabbles among the border states—Norway, Russia, the U.S., Canada, Denmark (representing Greenland), Finland, Iceland, and Sweden—over who owns what, and efforts by non-polar countries—China, India, the European Union and Japan—that want access. The conflicts range from serious to somewhat silly. In the latter category was the 2007 planting of a small Russian flag on the sea-bed beneath the North Pole by private explorer Artur Chillingarov, a stunt that even the Moscow government dismissed as theatrics.


But the Russians do lay claim to a vast section of the North Pole, based on their interpretation of the 1982 Convention on the Law of the Seas that allows countries to claim ownership if an area is part of a country’s continental shelf. Moscow argues that the huge Lemonosov Ridge, which divides the Arctic Ocean into two basins and runs under the Pole, originates in Russia. Canada and Denmark also claim the ridge as well.


Canada’s organized an expedition this past summer to find out what really happened to Franklin and his two ships. The search was a success—one of the ships was found in Victoria Straits—but the goal was political not archaeological: Ottawa is using the find to lay claim to the Northwest Passage.


Copenhagen and Ottawa are at loggerheads over Hans Island, located between Ellesmere Island and Greenland. The occupation of the tiny rock by the Canadian military has generated a “Free Hans Island” campaign in Denmark.


The U.S. has been trying to stake out terrain as well, though it is constrained by the fact that Washington has not signed the Law of the Seas Convention. However, the U.S. has locked horns with Ottawa over the Beaufort Sea, and the Pentagon released its first “Arctic Strategy” study. The U.S. maintains 27,000 military personnel in the region, not including regular patrols by nuclear submarines.


The Russians and Canadians have ramped up their military presence in the region, and Norway carried out yearly military exercises—“Arctic Cold Response”—involving up to 16,000 troops, many of them NATO units.


But you don’t have to be next to the ice to want to be a player. China may be a thousand miles from the nearest ice floe, but as the second largest economy in the world, it has no intention of being left out in the cold. This past summer the Chinese icebreaker Snow Dragon made the Northern Sea Passage run, and Beijing has elbowed its way into being a Permanent Observer on the Arctic Council. The latter, formed in 1996, consists of the border states, plus the indigenous people that populate the vast frozen area. Japan and South Korea are also observers.


And herein lies the problem.


Tensions are currently high in East and South Asia because of issues deliberately left unresolved by the 1952 Treaty of San Francisco that ended WW II. As Canadian researcher Kimie Hara recently discovered, the U.S. designed the Treaty to have a certain amount of “manageable instability” built into it by leaving certain territorial issues unresolved. The tensions that those issues generate make it easier for the U.S. to maintain a robust military presence in the region. Thus, China and Japan are involved in a dangerous dispute over the uninhibited islands in the East China Sea—called the Diaoyu by China and the Senkaku by Japan—because the 1952 Treaty did not designate which country had sovereignty. If it came to a military confrontation, the U.S. is bound by treaty to support Japan.


Similar tensions exist between South Korea and Japan over the Dokdo/Takeshima islands, between Japan and Russia over the Northern Territories/Southern Kuriles islands, and between China, Vietnam, and Taiwan over the Spratly and Paracel islands. Brunei and Malaysa also have claims that overlap with China. Any ships traversing the East and South China seas on the way north will find themselves in the middle of several nasty territorial disputes.


In theory, the potential of the Arctic routes should pressure the various parties to reach an amicable resolution of their differences, but things are complicated these days.


Russia has indicated it would like to resolve the Northern Territories/Kuriles issue, and initial talks appeared to be making progress. But then in July, Tokyo joined Western sanctions against Russia over its annexation of the Crimea and the Ukraine crisis, and negotiations have gone into the freezer.


Moscow just signed off on a $400 billion oil and gas deal with Beijing and is looking to increase trade with China as a way to ease the impact of Western sanctions over the Ukraine crisis. At least for the present, China and Russia are allies and trade partners, and both would like to see a diminished role for the U.S. in Asia. That wish, of course, runs counter to Washington’s growing military footprint in the region, the so-called “Asia pivot.”


The tensions have even generated some good old-fashioned paranoia. When a Chinese tycoon tried to buy land in northern Norway, one local newspaper claimed it was a plot, calling the entrepreneur “a straw man for the Chinese Communist Party.”


The Arctic may be cold, but the politics surrounding it are pretty hot.


At the same time, the international tools to resolve such disputes currently exist. A starting place is the Law of the Seas Convention and a commitment to put international law over national interests. The Chinese have a good case for sovereignty over the Senkaku/Diaoyus, and Japan has solid grounds for reclaiming most of the Southern Kuriles. Korea would likely prevail in the Dokdo/Takeshima dispute, and China would have to back off some of its extravagant claims in the South China Sea.


For all the potential for conflict, there is a solid basis for cooperation in the Arctic. Russian and Norway have divided up the Barents Sea, and Russia, Norway, the U.S. and Britain are cooperating on nuclear waste problems in the Kola Peninsula and Arkhangelsk. There are common environmental issues. The Arctic is a delicate place, easy to damage, slow to heal.


As Aqqaluk Lynge, chair of the indigenous Inuit Circumpolar Council says, “We do not want a return to the Cold War.”










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Let A Thousand Poles Bloom

Shanghai Cooperation Organization

“Let A Thousand Poles Bloom”

Dispatches From The Edge

Sept. 29, 2014


At the very moment that the Americans and their allies are trying to squeeze Russia and Iran with a combination of economic sanctions and political isolation, alternative poles of power are emerging that soon may present a serious challenge to the U.S. dominated world that emerged from the end of the Cold War.


This past summer, the BRICS countries—Brazil, Russia, India, China and South Africa—created an alternative to the largely U.S. controlled World Bank and International Monetary Fund (IMF), and the Shanghai Cooperation Organization (SCO) added 1.6 billion people to its rolls.


The BRICS construction of a Contingent Reserve Arrangement will give its member’s emergency access to foreign currency, which might eventually dethrone the dollar as the world’s reserve currency. The creation of a development bank will make it possible to by-pass the IMF for loans, thus avoiding the organization’s onerous austerity requirements.


Less than a month after the BRICS’ declaration of independence from the current strictures of world finance, the SCO—China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan—approved India, Pakistan, Iran and Mongolia for membership in the organization. It was the single largest expansion of the economic cooperation and security-minded group in its history, and it could end up diluting the impact of sanctions currently plaguing Moscow over the Ukraine crisis and Teheran over its nuclear program.


The Shanghai Cooperation Organization began as the Shanghai Five in 1996, and five years later became the SCO. Even before the recent additions, SCO represented three-fifths of Eurasia and 25 percent of the world’s population.


A major focus of the SCO is security, although the countries involved have different agendas about what that exactly means.


Russia and China are determined to reduce U.S. and North Atlantic Treaty Organization (NATO) presence in Central Asia to what it was before the 2001 invasion of Afghanistan. The SCO has consistently rebuffed U.S. requests for observer status, and has pressured countries in the region to end U.S. basing rights. The U.S. was forced out of Karshi-Khanabad in Uzbekistan in 2006, and from Manas in Kyrgyzstan in 2014.


“At present, the SCO has started to counterbalance NATO’s role in Asia,” says Alexei Maslov, chair of the Department of Oriental Studies of the Higher School of Economics in Moscow, and the new members, he says, want in to safeguard their interests.


Given the current confrontation between NATO and Russia over the Ukraine, and tensions in the East China Sea between the U.S., Japan, and China, Moscow and Beijing may not agree on a number of issues—in 1969 they came to blows over a border dispute—but they are on the same page when it comes to limiting Washington’s influence in their respective backyards.


Chinese Defense Minister Gen. Chang Wanquan said last year “China is ready to work with Russia to…expand the scope of bilateral defense cooperation.” Last month Russia’s Chief of Staff Gen. Valery Gerasimov declared that, “Russia is ready to make joint efforts with China to lift the relationship to a new high.” China has been supportive of Russia in the Ukraine crisis.


For Iran, SCO membership may serve as a way to bypass sanctions currently pounding the Iranian economy. Russia and Iran signed a memorandum in August to exchange Russian energy technology and food for Iranian oil, a move that would violate U.S. sanctions. But Moscow—already weathering sanctions that have weakened its economy—may be figuring that there is little more the U.S. can do and still keep its European allies on board. Russian counter sanctions on the European Union (EU) have shoved a number of European countries back into recession, and the EU is worried that Russia will turn east and Europe will lose much of its Russian market share.


To a certain extent, that is already happening. When the 2,500-mile “Power of Siberia” pipeline is completed in 2018, it will supply China with about 15 percent of its natural gas, Russia’s Rosneft and China’s National Petroleum Corporation are jointly exploring oil and gas reserves in the arctic, and the Russians have also offered China a stake in the huge Vankor oil field in East Siberia. Since January 2014, some 30 percent of Russian oil exports have gone to Asia.


Teheran is reaching out to Beijing as well. Iran and China have negotiated a deal to trade Iran’s oil for China’s manufactured goods. Beijing is currently Iran’s number one customer for oil. In late September, two Chinese warships paid a first ever visit to Iran, and the two countries navies carried out joint anti-piracy and rescue maneuvers.


For India and Pakistan, energy is a major concern, and membership in the oil and gas rich SCO is a major plus. Whether that will lead to a reduction of tensions between New Delhi and Islamabad over Kashmir is less certain, but at least the two traditional enemies will be sitting down to talk about economic cooperation and regional security on a regular basis.


There are similar tensions between SCO members Uzbekistan and Kyrgyzstan over borders, and both countries, plus Tajikistan, have squabbled over water rights.


Most SCO members are concerned about security, particularly given the imminent departure of the U.S. and NATO from Afghanistan. That country might well descend into civil war, one that could have a destabilizing effect on its neighbors. Added to that is the U.S.-NATO-Gulf monarchy jihad against the Assad regime in Syria, a conflict that is raising yet another generation of mujahedeen that will some day reappear in their home countries—some of them SCO members—trained and primed for war.


From Aug. 24 -29, SCO members China, Russia, Kazakhstan, Kyrgyzstan, and Tajikistan took part in “Peace Mission 2014,” an anti-terrorist exercise to “subdue” a hypothetical Central Asia city that had become a center for terrorist activity. The drill involved aircraft, 7.000 troops, armored vehicles, and drones, and according to China’s Chief of Staff, Fang Fenghui, was aimed at the “three evil forces of terrorism, separatism, and extremism.”


The problem with General Fang’s definition of “terrorism” is that it can easily be applied to minorities or local groups with legitimate complaints about their treatment by SCO member governments.


China has come down hard on Turkic speaking Uyghurs in Xinjiang Province, who have been resisting marginalization by China’s dominant ethnic group, the Han. Uyghur scholar IIham Tohti was recently sentenced to life imprisonment for “separatist activity.”


Beijing has also suppressed demands for independence or more autonomy by Tibetans—who it also labels “separatists” –even though China has no more a claim over Tibet than Britain did to India or Ireland. All of them were swept up by empires at the point of a sword.


The BRICS and the SCO are the two largest independent international organizations to develop over the past decade, but there are others as well. In Latin America, Mercusur—Argentina, Brazil, Paraguay, Uruguay, and Venezuela—is the third largest trade grouping in the world. Associate members include Chile, Colombia, Bolivia, Ecuador, and Peru. Mexico and New Zealand have observer status. The newly minted Union of South American Nations (USAN) includes every country in South America, including Cuba, and has largely replaced the Cold War relic, the Organization of American States (OAS) that excluded Havana. While the U.S. and Canada are part of the OAS, they were not invited to join USAN.


What role these new organizations will play internationally is not clear. Certainly sanction regimens will be harder to maintain because the SCO and the BRICS create alternatives. South Africa, for instance, announced that it would begin buying Iran oil in the next few months, an important breach in the sanctions against Iran. But being in the same organization does not automatically translate into having the same politics on international questions.


The BRICS and the recent Israeli invasion of Gaza are a case in point. China called for negotiations. Russia was generally neutral (but friendly toward the Netanyahu government, in part because there are lots of Russians in Israel). India was silent—Israel is New Delhi’s number one source of arms. South Africa was critical of Israel, and Brazil withdrew its ambassador


In comparison, NATO was generally supportive of the Israeli actions, Turkey being the odd man out. There is more political uniformity among NATO countries than there is among SCO and BRICS nations, although there is growing opposition in the ranks of the European Union (EU) over Washington’s hard line approach on the Ukraine. The U.S. does $26 billion in trade with Russia, the EU $370 billion. Russia also supplies Europe with 30 percent of its natural gas, although that reaches 100 percent for countries like Finland. Most EU countries—the Baltic nations and Poland being the exceptions—see little percentage in a long, drawn out confrontation with Russia.


These independent poles are only starting to develop and it is hardly clear what their ultimate impact on international politics will be. But the days when the IMF, World Bank, and U.S. Treasury could essentially dictate international finances and intimidate or crush opponents with an avalanche of sanctions are drawing to a close.


The BRICS and the Shanghai Cooperation Organization are two nails in that coffin.








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