Trade versus democracy.

 

The debate on the European Union is largely framed in terms of immigration policy and outrage around vague legislation drawn up in Brussels and imposed on the rest of us. In actuality, the worst aspects of the EU project can't even be discussed - namely the free trade agreement to integrate European and American markets. It puts the welfare states of Europe directly in the firing line of corporate power. Here's an excerpt from my article at Souciant:

The most heavily-criticized part of TTIP is what is referred ISDS (Investor-State Dispute Settlement) which empowers companies to sue national governments when their profit-making is threatened by legislation. As its critics have argued, such a mechanism would specifically discourage regulatory practices, and guard against shifts towards progressive tax rates.  It would also further entrench the economic reforms of the last four decades, and raise international obstacles to any government looking to change course. The reason why it isn’t critically discussed in debates like that which took place between Clegg and Farage, is that TTIP is considered to be a fait accompli amongst Britain’s main political parties. Fiscal neoliberals, they all agree on the necessity of economic union with the United States. 

Tellingly, another side of this consensus is support for American-style health care privatization. The Health and Social Care act (2012) allows 70% of NHS contracts to be farmed out to private companies. TTIP will extend this, not just to British companies, which is bad enough, but to US companies seeking to enter the UK healthcare market. At the same time, the Cameron government has underfunded the NHS by increasing funding at 1%, while the costs of the health system rise at a much higher rate. Of course, the current coalition has spent £3 billion on a bureaucratic overhaul to ‘devolve’ power to the doctors.

Putin's Wager.

Since the invasion of Crimea, Putin’s popularity has soared. The results of the Crimean referendum were obviously welcomed in Russia. Putin gave a speech the next day, proclaiming that the languages of Russians, Ukrainians, and Crimean Tatars, would now be recognised. These events have been interpreted in the West as an illegitimate annexation. However, the Crimean peninsula has only been a part of Ukraine since 1954 when it was amalgamated into the state by Nikita Khrushchev as a gesture of goodwill. This didn’t really matter under Soviet rule, but the post-Soviet era has made Crimean independence a sore spot in the region.

Contrary to what the politicians in Washington and Westminster have said, the decision to seize Crimea must have been a well calculated move on the chessboard. It was not an order that Putin would have given at a whim. After all, the considerations to make are not insignificant by any measure.

Earlier this month, Paul Mason noted the potential of this crisis to sway the global economic order, which could have been Putin’s entire objective. As the US and EU have passed sanction after sanction against individuals in Russia and Crimea, we can certainly Mason’s point. He predicts that the Western response would amount to “the sudden end to toleration of the dodgy Russian money that has flooded into its finance, football and energy systems.”

We can’t have any illusions: oligarchic Russians and the nouveau riche have swarmed to European cities. It has long been the case that Western governments have been critical of Putin’s human rights record while their banks welcome the oligarchs that robbed Russia blind during the 1990’s. Putin knows this, the West knows this, and for him, it a source of continued bitterness.

Six years ago, there was a scandal in Britain after New Labour spin-master Peter Mandelson and then Conservative Shadow Chancellor George Osborne were caught on a yacht in Corfu. The vessel belonged to the oligarch Oleg Deripaska, an aluminium magnate, and one of the richest men in the world.

When the financial crisis put the squeeze on Russia in 2009, the country was subject to factory closures and much higher unemployment. One of the factory towns hit resorted to blocking off the nearest road in protest. The highway was vital to the Russian economy, and Putin had to personally go to the town to defuse the situation.

The factory was owned partly by Deripaska and in a televised meeting, Putin humiliated the oligarch, and scolded the board of directors, calling them all ‘cockroaches.’ This was before having them sign an agreement he had written up. That type of intervention is unimaginable in places like Britain. It made Putin very popular, and also put Western leaders on notice for their economic interactions with Russia, even if they can potentially make Putin rich as well.

Mason went on to claim that if Moscow was faced with economic sanctions, then there could very well be retaliation. So far, we have seen the EU pass sanctions against over thirty people: freezing their assets, imposing travel restrictions, and so on. The sanctions have been derided as ‘toothless,’ and it has been reported that Putin has made it clear to his inner circle that there will be no retaliation, though the Russian foreign ministry has said that they have the right to do so.

The situation is still dangerous, though. The possibility for an economic war has been opened up by the crisis in Ukraine. It may even be a more realistic prospect than outright military conflict.

Military action could trigger a wider recession. We saw some early indicators of this when the Russian stock market plummeted after Putin formally annexed the Crimean peninsula. We can rule out from the outset that the US and the EU would go that far. Former ambassador Christopher Meyer has stated that there was never any serious likelihood that that Western powers would take a military stand over the Russian seizure of Crimea.

The fact that the US and UK are both signatories of the 1994 Budapest Memorandum which guarantees the independence and sovereignty of Ukraine actually means very little. A partitioned Ukraine would still count as an independent country. As for NATO, it only has a duty to act if its member-states are threatened, which doesn’t include Ukraine.

Yet there are still signs of escalation. Although “smart sanctions” have been used until now, which target the private assets of individuals, the Obama Administration has listed metallurgy and energy sectors, as well as other industries, as possible targets for expanded sanctions. Britain and France seems more eager than Germany at the prospect of instituting such policy, but it could still occur. The interesting thing about financial warfare is that although tangible weaponry is less likely to be employed, its methods can be even more vicious.

If that happens, then Putin’s long-term reconciliation with China may play to his advantage. There is a reason we are seeing Sino-Russian unity on the UN Security Council. The Sino-Soviet split is now a thing of the past, and the Chinese Communist Party has found itself able to agree with Putin on many issues, such as opposition to US policy in Iraq and Syria.

Moreover, it is in the Chinese government’s interests to strategically disrupt Western policy. The CCP has resisted calls to open up its banks to US investment, while maintaining a trade advantage over the West. China may side with the Russian Federation if an economic war comes about from this, which Mason speculates could change globalization irrevocably if the US and EU are in one corner, and Russia and China are in the other.

All this occurs as part of a conflict in Ukraine that has been reduced to market competition. Whatever the grassroots beginnings of the protests, as political economist Aleksandr Buzgalin observes, the conflict in Ukraine is now essentially a struggle between competing sections of oligarchy.

The coalition of forces which seized power in Kiev in February have ultimately taken oligarchs on as cabinet ministers and anointed them to governorships. The revolt’s legitimacy was an attempt to overturn the oligarchic regime of Viktor Yanukovich, through the EU if necessary. Ultimately though, it’s not really about quality of life Ukrainians can enjoy: it is about who exactly gets to plunder the country, its labour, and its resources.

This financial warfare may go further still. Putin is an excellent politician, though. The moral offense we take at his cynicism is actually just further testament to his skill. He is ready to see this crisis through to the end.

Originally written for Souciant on March 26th 2014.

Crisis, Change and Progress.

"Only a crisis - actual or perceived - produces real change." - Milton Friedman

In the midst of the revolutionary contagion currently sweeping Africa and the Middle East, the Obama administration actively opposed calls for new elections in Haiti. This is consistent with the neoliberal understanding of 'progress' as the constant and rapid accumulation of capital without an end in sight - or as described by Hayek change for the sake of change. In accordance with this understanding of progress, people have to be coerced into accepting privatisation, deregulation and huge public spending cuts. This is in line with Hayek's influences from the radical Right, from where an authoritarian regime can be seen as justifiable along pragmatic lines, which was the reasoning Hayek used to defend Pinochet. The values of civil society, moral values and civic duties can disregarded in the pursuit of self-interest. Through the blind obedience to the artificial rules of the marketplace - e.g. price signals - 'progress' can be ensured. In the name of such 'progress' the Austrian economists called for us all to embrace inequality, and so it is being enforced in the developing world.

So naturally the US jumped on the opportunity, the earthquake last year, to further it's influence over Haiti. The unofficial branch of the US Treasury Department, formerly known as the IMF, did not waste any time to offer a loan of $100 million to Haiti with some very interesting stipulations that included: raise the price of electricity, refuse pay rises to all public sector workers (except those making minimum wage) and keep inflation low. The funds were needed in Haiti desperately and the stipulations were accepted for this reason. The Haitian people have had to put up with these new economic changes, let alone the earthquake and an outbreak of cholera, and the new American military base being built on the island. The repression in the developing world is partly to crush any signs of independence, but also to secure economic interests as the system requires 3% compound growth every year in order to perpetuate itself.

The neoliberal project is global in scale and not confined to the developing world. We see similar instances in the West, with the US and UK beginning to pursue austerity measures after the Crash of 2008. To further globalisation as led by the US there requires even greater repression in the developing world, countries like Haiti are a prime target. There are concerted efforts to crush the mass-demonstrations which have sprung up across the Middle East. As the people have risen up in Libya and Gaddafi reacted with horrifying ultra-violence, the West responded with sanctions (which left Libyan banks exempt) and has stepped up to a full blown intervention in the country. Meanwhile the GCC is active in exporting Libyan oil from the rebel-controlled east, as well as providing the rebels with arms whilst crushing rebellions in Bahrain and elsewhere. The recent crisis of capitalism and the ongoing military 'misadventures' in the Middle East demand repression and violence in order to reassert the dominant ideology. It was the Falklands war which did so for Britain in the 1980s.

In this context we can understand that the US has seized on the opportunity to build a military base in Haiti and suppress the activities of trade unions, it is partly to prevent any currents of independence from succeeding and to beat back the tide of independence in the region. In the long-term it is about making a grab for resources in Latin America. So it should not be surprise us that the Haitian election in 2010 were rigged to produce a government submissive to these objectives. The US have blocked Aristide from returning to the country and  have let "Baby Doc" Duvalier return instead. The Duvaliers who ruled Haiti for almost 30 years with black nationalist rhetoric and vicious repression of all opposition. The dictatorship kept the republic in a state of subservience to US penetration and racked up huge amounts of debt. In 1990 a truly free election produced a government led by Aristide, but the US did not approve of the radical theologian who had once won 67% of the vote.

Haiti is the first and only case of a slave society which liberated itself from the Europeans. The Haitian revolutionaries had humiliated the French, though not by the standards that the French had humiliated the Haitian people through slavery. The French retaliated with demands for $21 billion in "reparations" to the former slave-masters. The "reparations" were paid by accepting loans from European and American banks, which led to a huge accumulation of debt in the country. Any attempt made by the republic to free itself of foreign interference have been crushed, with the US formally occupying the country and propping up the Duvaliers. The revenge of the white man on the first republic of freed slaves is evident today, which is the reason that Haiti is considered a "failed state" and often described as "cursed" in the media. The murky history of interventions in Haiti by the US are commonly ignored, along with the real reparations owed to Haiti. Instead the media prefer to tell feel good stories about Haiti and humanitarian efforts by the West.

Elsewhere in the developing world we find the same practices. The reactionary regime headed by Pepe Lobo was installed in Honduras in 2010 by the military in a suspect election last year. It was the military which "resolved" the constitutional crisis of 2009 and exiled Manuel Zelaya, the democratically elected President of Honduras. Since then there have been infringements on the rights of Honduran citizens, which have gone as far as state-sanctioned rape and murder, used particularly against the opposition to the coup. Since he took office in January 2010, Lobo has initiated the process of smashing the teachers' unions and soon after seizing power, with the support of the US, $100 million was stolen from the teachers' pension fund leaving many on long waiting lists. Pepe Lobo signed an agreement with the IMF to secure a $200 million loan, the stipulations of which included a slashed education budget.

There were wage cuts for Honduran teachers by October 2010 and as the teachers began to resort to industrial action, the right to strike was suspended and the control of education has since been devolved to municipalities. The regime has been working to redirect funds from schools to the military and the police. This is a deliberate move to create the pre-conditions, a crisis of schooling, in order to privatise education later. A similar process destroyed the supply of drinkable water to the majority of Hondurans. Now a neighbourhood which cannot be provided with drinkable water at a profit it will not be provided at all. We have seen similar disasters of privatisation across the region. The response from the teachers have been further strikes and occupations across the country. Other sectors of society have also joined in the demonstrations against the government.

The Honduran government has declared that the strikes "illegal and has moved to repress the unions with ultra-violence that has killed and injured strikers. The repression of the strikes are imperative to the neoliberal project as the movement to defend education has become the backbone of resistance to the Lobo regime. The security apparatus of the state has ignored the laws which bar police and soldiers from entering university campuses, which was introduced to prevent the kind of 'disappearances' of student leaders seen in the 1980s. Students have resorted to hurling rocks at police officers trying to enter campuses. The media has become subject to an intense campaign by the state, with journalists sympathetic to the dissidents being threatened and even killed. In some cases entire media outlets have been shut down by the government.

All judges who opposed the coup have been fired and the regime has been keen to see that any teachers taking part in strikes are to be jailed for 'sedition' and denied bail after participating in a strike. The threat to fire all strikers on mass has led to strikes being called to a stop. The endemic corruption of the political class, a total disregard for human rights and civil liberties is nothing new to Latin America. In the 1980s over 200 people were 'disappeared' in Honduras by another US-backed regime. The return of Manuel Zelaya to Honduras, along with other exiles, should not be interpreted as a sign of the return of democracy to Honduras. It is the result of an agreement between Hugo Chavez, Pepe Lobo and Juan Manuel Santos. The regime that has killed around 100 dissidents and 40 leaders is still in place with the support of Washington. Let alone 8 homophobic murders and the killing of 11 journalists, with no sign of investigation from the police.


The teachers continue to protest against the effective privatisation of schools, suspension of hundreds of teachers and the theft of pensions. Some are now camped out in front of the National Congress on a hunger strike for more than 20 days in spite of harassment - which went as far as threats of rape - by the police and the military. Within hours that the agreement was signed by Lobo to secure the return of Manuel Zelaya to Honduras, the regime attacked a group of students who were protesting against the suspension of their teachers. The security forces used live rounds and tear gas against the students. But the resistance to the regime remains active and organised. Sadly the reactionary forces of the state are backed by the US and that would mean only a thorough overhaul of the regime would secure public services in Honduras. But it looks as though this could be the beginning of a repression on an international scale to defend further neoliberal reforms.