Category Archives: IMF

Africa, the Collateral Victim of a Distant Conflict

Amadou Sanogo (Mali), You Can Hide Your Gaze, but You Cannot Hide That of Others, 2019.

On 25 May 2022, Africa Day, Moussa Faki Mahamat – the chairperson of the African Union (AU) – commemorated the establishment of the Organisation for African Unity (OAU) in 1963, which was later reshaped as the AU in 2002, with a foreboding speech. Africa, he said, has become ‘the collateral victim of a distant conflict, that between Russia and Ukraine’. That conflict has upset ‘the fragile global geopolitical and geostrategic balance’, casting ‘a harsh light on the structural fragility of our economies’. Two new key fragilities have been exposed: a food crisis amplified by climate change and a health crisis accelerated by COVID-19.

A third long-running fragility is that most African states have little freedom to manage their budgets as debt burdens rise and repayment costs increase. ‘Public debt ratios are at their highest level in over two decades and many low-income countries are either in, or close to, debt distress’, said Abebe Aemro Selassie, the director of the African Department at the International Monetary Fund (IMF). The IMF’s Regional Economic Outlook report, released in April 2022, makes for grizzly reading, its headline clear: ‘A New Shock and Little Room to Manoeuvre’.

Jilali Gharbaoui (Morocco), Composition, 1967.

Debt hangs over the African continent like a wake of vultures. Most African countries have interest bills that are much higher than their national revenues, with budgets managed through austerity and driven by deep cuts in government employment as well as the education and health care sectors. Since just under two-thirds of the debt owed by these countries is denominated in foreign currencies, debt repayment is near impossible without further borrowing, resulting in a cycle of indebtedness with no permanent relief in sight. None of the schemes on the table, such as the G20’s Debt Service Suspension Initiative (DSSI) or its Common Framework for Debt Treatments, will provide the kind of debt forgiveness that is needed to breathe life into these economies.

In October 2020, the Jubilee Debt Campaign proposed two common sense measures to remove the debt overhang. The IMF owns significant quantities of gold amounting to 90.5 million ounces, worth $168.6 billion in total; by selling 6.7% of their gold holdings, they could raise more than enough to pay the $8.2 billion that makes up DSSI countries’ debt. The campaign also suggested that rich countries could draw billions of dollars towards this cancellation by issuing less than 9% of their IMF Special Drawing Rights allocation. Other ways to reduce the debt burden include cancelling debt payments to the World Bank and IMF, two multilateral institutions with a mandate to ensure the advancement of social development and not their own financial largess. However, the World Bank has not moved on this agenda – despite dramatic words from its president in August 2020 – and the IMF’s modest debt suspension from May 2020 to December 2021 will hardly make a difference. Along with these reasonable suggestions, bringing the nearly $40 trillion held in illicit tax havens into productive use could help African countries escape the spiralling debt trap.

Choukri Mesli (Algeria), Algeria in Flames, 1961.

‘We live in one of the poorest places on earth’, former President of Mali Amadou Toumani Touré told me just before the pandemic. Mali is part of the Sahel region of Africa, where 80% of the population lives on less than $2 a day. Poverty will only intensify as war, climate change, national debt, and population growth increase. At the 7th Summit of the leaders of the G5 Sahel (Group of Five for the Sahel) in February 2021, the heads of state called for a ‘deep restructuring of debt’, but the silence they received from the IMF was deafening. The G5 Sahel was initiated by France in 2014 as a political formation of the five Sahel countries – Burkina Faso, Chad, Mali, Mauritania, and Niger. Its real purpose was clarified in 2017 with the formation of its military alliance (the G5 Sahel Joint Force or FC-G5S), which provided cover for the French military presence in the Sahel. It could now be claimed that France did not really invade these countries, who maintain their formal sovereignty, but that it entered the Sahel to merely assist these countries in their fight against instability.

Part of the problem is the demands made on these states to increase their military spending against any increase in spending for human relief and development. The G5 Sahel countries spend between 17% and 30% of their entire budgets on their militaries. Three of the five Sahel countries have expanded their military spending astronomically over the past decade: Burkina Faso by 238%, Mali by 339%, and Niger by 288%. The arms trade is suffocating them. Western countries – led by France but egged on by the North Atlantic Treaty Organisation (NATO) – have pressured these states to treat every crisis as a security crisis. The entire discourse is about security as conversations about social development are relegated to the margins. Even for the United Nations, questions of development have become an afterthought to the focus on war.

Souleymane Ouologuem (Mali), The Foundation, 2014.

In the first two weeks of May 2022, the Malian military government ejected the French military and withdrew from G5 Sahel in the wake of deep resentment across Mali spurred by civilian casualties from French military attacks and the French government’s arrogant attitude towards the Malian government. Colonel Assimi Goïta, who leads the military junta, said that the agreement with the French ‘brought neither peace, nor security, nor reconciliation’ and that the junta aspires ‘to stop the flow of Malian blood’. France moved its military force from Mali next door to Niger.

No one denies the fact that the chaos in the Sahel region was deepened by the 2011 NATO war against Libya. Mali’s earlier challenges, including a decades-long Tuareg insurgency and conflicts between Fulani herders and Dogon farmers, were convulsed by the entry of arms and men from Libya and Algeria. Three jihadi groups, including al-Qaeda, appeared as if from nowhere and used older regional tensions to seize northern Mali in 2012 and declare the state of Azawad. French military intervention followed in January 2013.

Jean-David Nkot (Cameroon), #Life in Your Hands, 2020.

Travel through this region makes it clear that French – and US – interests in the Sahel are not merely about terrorism and violence. Two domestic concerns have led both foreign powers to build a massive military presence there, including the world’s largest drone base, which is operated by the US, in Agadez, Niger. The first concern is that this region is home to considerable natural resources, including yellowcake uranium in Niger. Two mines in Arlit (Niger) produce enough uranium to power one in three light bulbs in France, which is why French mining firms (such as Areva) operate in this garrison-like town. Secondly, these military operations are designed to deter the steady stream of migrants leaving areas such as West Africa and West Asia, going through the Sahel and Libya and making their way across the Mediterranean Sea to Europe. Along the Sahel, from Mauritania to Chad, Europe and the US have begun to build what amounts to a highly militarised border. Europe has moved its border from the northern edge of the Mediterranean Sea to the southern edge of the Sahara Desert, thereby compromising the sovereignty of North Africa.

Hawad (Niger), Untitled, 1997.

Military coups in Burkina Faso and Mali are a result of the failure of democratic governments to rein in French intervention. It was left to the military in Mali to both eject the French military and depart from its G5 Sahel political project. Conflicts in Mali, as former President Alpha Omar Konaré told me over a decade ago, are inflamed due to the suffocation of the country’s economy. The country is regularly left out of infrastructure support and debt relief initiatives by international development organisations. This landlocked state imports over 70% of its food, whose prices have skyrocketed in the past month. Mali faces harsh sanctions from the Economic Community of West African States (ECOWAS), which will only deepen the crisis and provoke greater conflict north of Mali’s capital, Bamako.

The conflict in Mali’s north affects the lives of the country’s Tuareg population, which is rich with many great poets and musicians. One of them, Souéloum Diagho, writes that ‘a person without memory is like a desert without water’ (‘un homme sans mémoire est comme un desert sans eau’). Memories of older forms of colonialism sharpen the way that many Africans view their treatment as ‘collateral victims’ (as the AU’s Mahamat described it) and their conviction that it is unacceptable.

The post Africa, the Collateral Victim of a Distant Conflict first appeared on Dissident Voice.

A Monetary Reset Where the Rich Don’t Own Everything (Part 1)

We have a serious debt problem, but solutions such as the World Economic Forum’s “Great Reset” are not the future we want. It’s time to think outside the box for some new solutions.

In ancient Mesopotamia, it was called a Jubilee. When debts at interest grew too high to be repaid, the slate was wiped clean. Debts were forgiven, the debtors’ prisons were opened, and the serfs returned to work their plots of land. This could be done because the king was the representative of the gods who were said to own the land, and thus was the creditor to whom the debts were owed. The same policy was advocated in the Book of Leviticus, though it is unclear to what extent this biblical Jubilee was implemented.

That sort of across-the-board debt forgiveness can’t be done today because most of the creditors are private lenders. Banks, landlords and pension fund investors would go bankrupt if their contractual rights to repayment were simply wiped out. But we do have a serious debt problem, and it is largely structural. Governments have delegated the power to create money to private banks, which create most of the circulating money supply as debt at interest. They create the principal but not the interest, so more money must be repaid than was created in the original loan. Debt thus grows faster than the money supply, as seen in the chart from WorkableEconomics.com below. Debt grows until it cannot be repaid, when the board is cleared by some form of market crash such as the 2008 financial crisis, typically widening the wealth gap on the way down.

Today the remedy for an unsustainable debt buildup is called a “reset.” Far short of a Jubilee, such resets are necessary every few decades. Acceptance of a currency is based on trust, and a “currency reset” changes the backing of the currency to restore that trust when it has failed. In the 20th century, major currency resets occurred in 1913, when the Federal Reserve was instituted following a major banking crisis; in 1933 following another catastrophic banking crisis, when the dollar was taken off the gold standard domestically and deposits were federally insured; in 1944, at the Bretton Woods Conference concluding World War II, when the US dollar backed by gold was made the reserve currency for global trade; and in 1974, when the US finalized a deal with the OPEC countries to sell their oil only in US dollars, effectively “backing” the dollar with oil after Richard Nixon took the dollar off the gold standard internationally in 1971. Central bank manipulations are also a form of reset, intended to restore faith in the currency or the banks; e.g., when Federal Reserve Chairman Paul Volcker raised the interest rate on fed funds to 20% in 1980, and when the Fed bailed out Wall Street banks following the Great Financial Crisis of 2008-09 with quantitative easing.

But quantitative easing did not fix the debt buildup, which today has again reached unsustainable levels. According to Truth in Accounting, as of March 2022 the US federal government has a cumulative debt burden of $133.38 trillion, including unfunded Social Security and Medicare promises; and some countries are in even worse shape. Former investment banker Leslie Manookian stated in grand jury testimony that European countries have 44 trillion euros in unfunded pensions, and there is no source of funds to meet these obligations. There is virtually no European bond market, due to negative interest rates. The only alternative is to default. The concern is that when people realize that the social security and pension systems they have paid into for their entire working lives are bankrupt, they will take to the streets and chaos will reign.

Hence the need for another reset. Private creditors, however, want a reset that leaves them in control. Today a new sort of reset is setting off alarm bells, one that goes far beyond restoring the stability of the currency. The “Great Reset” being driven forward by the World Economic Forum would lock the world into a form of technocratic feudalism.

The WEF is that elite group of businessmen, politicians and academics that meets in Davos, Switzerland, every January. The Great Reset was the theme of its (virtual) 2021 Summit, based on a July 2020 book titled Covid-19: The Great Reset co-authored by WEF founder Klaus Schwab. Some of the WEF’s proposals are summarized in a video on its website titled “8 Predictions for the World in 2030.” The first prediction is, “You’ll own nothing. And you’ll be happy. Whatever you want you’ll rent. And it will be delivered by drone.”

Schwab’s proposal would reset more than the currency. At a virtual meeting in June 2020, he said, “We need a ‘Great Reset’ of capitalism.” But as talk show host Kim Iversen observes, the proposed solution is more capitalism by a new name: “stakeholder capitalism,” where ownership will be with corporate stakeholders. You will have an account with the central bank and a mandatory federal digital ID. You will receive a welfare payment in the form of a marginally adequate basic income – so long as you maintain a proper social credit score. Your central bank digital currency will be “programmable” – rationed, controlled, and canceled if you get out of line or disagree with the official narrative. You will be kept happy with computer games and drugs.

According to WEF speaker and author Prof. Yuval Harari, “Covid is critical, because this is what convinces people to accept, to legitimize total biometric surveillance…. We need not just to monitor people, we need to monitor what’s happening under the skin.”

Harari is aware of the dangers of digital dictatorships. He said at a pre-Covid Davos presentation in January 2020:

In Davos we hear so much about the enormous promises of technology – and these promises are certainly real. But technology might also disrupt human society and the very meaning of human life in numerous ways, ranging from the creation of a global useless class to the rise of data colonialism and of digital dictatorships.…

We humans should get used to the idea that we are no longer mysterious souls – we are now hackable animals. … [I]f this power falls into the hands of a twenty-first century Stalin, the result will be the worst totalitarian regime in human history…

In the not-so-distant future, … algorithms might tell us where to work and who to marry, and also decide whether to hire us for a job, whether to give us a loan, and whether the central bank should raise the interest rate….

What will be the meaning of human life, when most decisions are taken by algorithms?

Clearing the Chessboard by Controlled Economic Demolition?

Before the game can be reset, the board must be cleared. What would make the population accept giving up their private property, surviving on a marginal basic income, and submitting to constant surveillance, internal and external?

The global pandemic and the lockdowns that followed have gone far toward achieving that result. Lockdowns not only eliminated smaller business competitors but drove up the debts of small countries, forcing them to increase their loans from the International Monetary Fund. The IMF is notorious for onerous loan terms, including imposing strict austerity measures, relinquishing control of natural resources, and marching in “lockstep” with pandemic restrictions.

In a June 2020 article on the blog of the IMF titled “From Great Lockdown To Great Transformation,” IMF Managing Director Kristalina Georgieva called the global policy response to the 2020 crisis the “Great Lockdown.” She is quoted as saying to the US Chamber of Commerce:

We call the current period ‘the Great Lockdown’ because we are fighting a health emergency by bringing production and consumption to a standstill….

In March, around one hundred billion dollars left emerging markets and developing countries—three times more than during the global financial crisis.

But in April and May—thanks to this massive injection of liquidity in advanced economies—some emerging markets were able to go back to the markets and issue bonds with competitive yields, with total issuance of around seventy-seven billion dollars. This is almost three and a half times as much as in the same two months last year. [Italics added.]

In other words, by bringing production and consumption to a standstill, the Great Lockdown had already, by June 2020, managed to strip emerging markets of $100 billion in additional assets and to lock them into $77 billion in new debt.

That helps explain why so many countries acquiesced to the Great Lockdown so quickly, even when some had only a handful of Covid-19 deaths. Lockdown was apparently a “conditionality” required for getting an IMF loan. At least that was true for Belarus, which rejected the offer. Said Belarus’ President:

We hear the demands … to model our coronavirus response on that of Italy. I do not want to see the Italian situation to be repeated in Belarus. We have our own country and our own situation. … [T]he IMF continues to demand from us quarantine measures, isolation, a curfew. This is nonsense. We will not dance to anyone’s tune.

Unlike Belarus, most countries acquiesced, and so did households and businesses locked into the debt trap by an economy in which production and consumption were brought to a standstill. Like most emerging economies, they acquiesced to whatever terms were imposed for returning to “normal.”

The lockdowns have now been lifted in most places, but the debt trap is about to snap shut. A moratorium on U.S. rents and student debt is due to come to an end, and cumulative arrears may need to be paid. Debtors unable to meet that burden could be out in the street, joining the “useless class” described by Prof. Harari. They may be forced into accepting the technocratic feudalism of the WEF Great Reset, but is not the sort of future most people want. However, what are the alternatives?

A Eurasian Jubilee?

For sovereign debt (the debt of national governments), a form of jubilee is envisioned by Sergei Glazyev in conjunction with the alternative monetary system currently being designed by the Eurasian Economic Union (EAEU), detailed in my last article here. Glazyev is the Minister for Integration and Macroeconomics of the Eurasia Economic Commission, the regulatory body of the EAEU. An article in The Cradle titled “Russia’s Sergey Glazyev Introduces the New Global Financial System” is headlined:

The world’s new monetary system, underpinned by a digital currency, will be backed by a basket of new foreign currencies and natural resources. And it will liberate the Global South from both western debt and IMF-induced austerity.

The article quotes Glazyev as stating:

Transition to the new world economic order will likely be accompanied by systematic refusal to honor obligations in dollars, euro, pound, and yen. In this respect, it will be no different from the example set by the countries issuing these currencies who thought it appropriate to steal foreign exchange reserves of Iraq, Iran, Venezuela, Afghanistan, and Russia to the tune of trillions of dollars. Since the US, Britain, EU, and Japan refused to honor their obligations and confiscated wealth of other nations which was held in their currencies, why should other countries be obliged to pay them back and to service their loans?

In any case, participation in the new economic system will not be constrained by the obligations in the old one. Countries of the Global South can be full participants of the new system regardless of their accumulated debts in dollars, euro, pound, and yen. Even if they were to default on their obligations in those currencies, this would have no bearing on their credit rating in the new financial system. Nationalization of extraction industry, likewise, would not cause a disruption. Further, should these countries reserve a portion of their natural resources for the backing of the new economic system, their respective weight in the currency basket of the new monetary unit would increase accordingly, providing that nation with larger currency reserves and credit capacity. In addition, bilateral swap lines with trading partner countries would provide them with adequate financing for co-investments and trade financing.

That may largely eliminate the sovereign debt overhang in the EAEU member countries, but what of the United States and other Western countries that are unlikely to join? Some innovative possibilities will be covered in Part 2 of this piece. Stay tuned.

• This article was first posted on ScheerPost.

The post A Monetary Reset Where the Rich Don’t Own Everything (Part 1) first appeared on Dissident Voice.

“Long COVID”: Economic Devastation and Quarter of a Billion Pushed Into Extreme Poverty  

There is a terrifying prospect that in excess of a quarter of a billion more people will fall into extreme levels of poverty in 2022 alone. Without immediate radical action, we could be witnessing the most profound collapse of humanity into extreme poverty and suffering in memory.

That is according to Oxfam International Executive Director Gabriela Bucher.

She adds this scenario is made more sickening given that trillions of dollars have been captured by a tiny group of powerful men who have no interest in interrupting this trajectory.

In its January 2021 report ‘The Inequality Virus’, Oxfam stated that the wealth of the world’s billionaires increased by $3.9tn between 18 March and 31 December 2020. Their total wealth then stood at $11.95tn, a 50 per cent increase in just 9.5 months.

In 2021, an Oxfam review of IMF COVID-19 loans showed that 33 African countries were encouraged to pursue austerity policies. This despite the IMF’s own research showing austerity worsens poverty and inequality.

Barely days into the shutdown of the global economy in April 2020, the Wall Street Journal ran the headline ‘IMF, World Bank Face Deluge of Aid Requests From Developing World‘. Scores of countries were asking for bailouts and loans from financial institutions with $1.2 trillion to lend.

Prior to that, in late March, World Bank Group President David Malpass said that poorer countries would be ‘helped’ to get back on their feet after the various COVID-related lockdowns. However, any assistance would be on condition that further neoliberal reforms became embedded.

Malpass said:

For those countries that have excessive regulations, subsidies, licensing regimes, trade protection or litigiousness as obstacles, we will work with them to foster markets, choice and faster growth prospects during the recovery.

Two years on and it is clear what ‘reforms’ really mean. In a press release issued on 19 April 2022, Oxfam International insists the IMF must abandon demands for austerity as a cost-of-living crisis continues to drive up hunger and poverty worldwide.

According to Oxfam’s analysis, 13 out of the 15 IMF loan programmes negotiated during the second year of COVID require new austerity measures such as taxes on food and fuel or spending cuts that could put vital public services at risk. The IMF is also encouraging six additional countries to adopt similar measures.

Kenya and the IMF agreed a $2.3 billion loan programme in 2021, which includes a three-year public sector pay freeze and increased taxes on cooking gas and food. More than three million Kenyans are facing acute hunger as the driest conditions in decades spread a devastating drought across the country. Oxfam says nearly half of all households in Kenya are having to borrow food or buy it on credit.

At the same time nine countries, including Cameroon, Senegal and Surinam are required to introduce or increase the collection of VAT, a tax that disproportionately impacts people living in poverty.

In Sudan, nearly half of the population live in poverty. However, it has been told to scrap fuel subsidies which will hit the poorest hardest. A country already reeling from international aid cuts, economic turmoil and rising prices for everyday basics such as food and medicine. More than 14 million people need humanitarian assistance (almost one in every three people) and 9.8 million are food insecure in Sudan.

In addition, 10 countries are likely to freeze or cut public sector wages and jobs, which could mean lower quality of education and fewer nurses and doctors in countries already short of healthcare staff. Consider that Namibia had fewer than six doctors per 10,000 people in early 2020.

Prior to Covid, the situation was bad enough. The IMF had consistently pushed a policy agenda based on cuts to public services, increases in taxes paid by the poorest and moves to undermine labour rights and protections. As a result, 52 per cent of Africans lack access to healthcare and 83 per cent have no safety nets to fall back on if they lose their job or become sick.

Nabil Abdo, Oxfam International’s senior policy advisor, says:

The IMF must suspend austerity conditions on existing loans and increase access to emergency financing. It should encourage countries to increase taxes on the wealthiest and corporations to replenish depleted coffers and shrink widening inequality.”

It is interesting to note what could be achieved. For instance, Argentina has collected about $2.4 billion from its one-off pandemic wealth tax. Oxfam estimates that a ‘Pandemic Profits Tax’ on 32 super-profitable global companies could have generated $104 billion in revenue in 2020 alone.

Many governments are nearing debt default and being forced to slash public spending to pay creditors and import food and fuel. The world’s poorest countries are due to pay $43 billion in debt repayments in 2022, which could otherwise cover the costs of their food imports. Oil and gas giants are reporting record-breaking profits, with similar trends expected to play out in the food and beverage sector.

Oxfam and Development Finance International (DFI) have also revealed that 43 out of 55 African Union member states face public expenditure cuts totalling $183 billion over the next five years.

Oxfam says that, despite COVID costs piling up and billionaire wealth rising more since COVID than in the previous 14 years combined, governments — with few exceptions — have failed to increase taxes on the richest.

Gabriela Bucher rejects any notion that governments do not have the money or means to lift all people out of poverty and hunger and ensure their health and welfare. She says the G20, World Bank and IMF must immediately cancel debts and increase aid to poorer countries and act to protect ordinary people from an avoidable catastrophe.

Nabil Abdo says:

The pandemic is not over for most of the world. Rising energy bills and food prices are hurting poor countries most. They need help boosting access to basic services and social protection, not harsh conditions that kick people when they are down.

The ‘pandemic’ is not over for most of the world – for sure. People too often conflate the effects of COVID-related policies with the impact of COVID itself. It is these policies that have caused the ongoing devastation to lives and livelihoods.

What it has amounted to is a multi-trillion-dollar bailout for a capitalist economy that was in meltdown prior to COVID. This came in the form of trillions of dollars pumped into financial markets by the US Fed (in the months prior to March 2020) and ‘COVID relief’.

As the world’s richest people lined their pockets even more in the past two years, COVID IMF loans are now piling more misery on some of the world’s poorest people. For them, ‘long COVID’ is biting austerity – their ‘new normal’.

All this resulting from policies supposedly brought in to protect public health – a claim that rings hollower by the day.

The post “Long COVID”: Economic Devastation and Quarter of a Billion Pushed Into Extreme Poverty   first appeared on Dissident Voice.

I Cannot Live on Tomorrow’s Bread

Takashi Murakami (Japan), Tan Tan Bo Puking – a.k.a. Gero Tan, 2002.

On April 19, the International Monetary Fund (IMF) released its annual World Economic Outlook, which forecasted a severe slowdown in global growth along with soaring prices.‘For 2022, inflation is projected at 5.7 percent in advanced economies and 8.7 percent in emerging market and developing economies – 1.8 and 2.8 percentage points higher than projected in … January’, the report noted. IMF Managing Director Kristalina Georgieva offered a sobering reflection on the data: ‘Inflation is reaching the highest levels seen in decades. Sharply higher prices for food and fertilizers put pressure on households worldwide – especially for the poorest. And we know that food crises can unleash social unrest’.

What is the root cause of this extraordinary wave of inflation? US President Joe Biden blamed Russia’s war in Ukraine: ‘What people don’t know is that 70 percent of the increase in inflation was the consequence of [Russian President Vladimir] Putin’s price hike because of the impact of oil prices’. However, even The Wall Street Journal editorial board noted that ‘this isn’t Putin’s inflation’. Georgieva of the IMF has tried to walk a middle ground, saying that ‘Russia’s invasion of Ukraine has created a crisis on top of a crisis’. Her view mirrored that of the World Economic Outlook, which pointed out that ‘the crisis unfold[ed] while the global economy was on a mending path but had not yet fully recovered from the COVID-19 pandemic’.

Beauford Delaney (USA), Exchange Place, 1943.

The No Cold War platform, with whom Tricontinental: Institute for Social Research has a close working relationship, has produced a very important intervention into this debate. Briefing no. 2, The United States Has Destabilised the World Economy, which appears below, makes the case that a governing factor in the current inflation crisis is the outsized impact of the United States on the global economy; here, US military spending, the scale of the United States in global consumption, the role of the Wall Street-Dollar-IMF regime, and other factors play a key role. We hope you find briefing no. 2 useful and circulate it widely.

The International Monetary Fund has announced that the global economy is entering a major slowdown, downgrading the growth prospects of 143 countries. At the same time, inflation rates have reached historic levels. Around the world, hundreds of millions of people are falling into poverty, particularly in the Global South. Oxfam has sounded the alarm that we are ‘witnessing the most profound collapse of humanity into extreme poverty and suffering in memory’. What is producing this immense human suffering?

An Economic Crisis ‘Made in Washington’

On 13 April, US Treasury Secretary Janet Yellen claimed that this global economic deterioration was due to the Russian war in Ukraine. This is factually incorrect. Although the conflict has worsened the situation, the key driver which has destabilised the world economy is the massive inflationary wave that had already built up in the United States and has now begun to crest on the world. Prior to the war in Ukraine, US inflation had already tripled in recent years from 2.5% (January 2020) to 7.5% (January 2022) before accelerating further to 8.5% (March 2022) after the war broke out.

‘This isn’t Putin’s inflation’, the Wall Street Journal editorial board noted. ‘This inflation was made in Washington’.

The US consumer market absorbs a fifth of the world’s goods and services; as the demand for these goods outstrips the global supply, the tendency for US inflation to spread around the world is very high. The average Commodity Research Bureau Index, a general indicator of global commodity markets, has risen astronomically: as of 25 April, year-to-year prices have soared for oil (60%), palm oil (60%), coffee (56%), wheat (45%), natural gas (139%), and coal (253%). These price increases have sent shock waves through the global economy.

This instability is inseparably connected to US economic policy. Since 2020, the United States has increased its budget by $2.8 trillion. To finance this budgetary expansion, the US government increased borrowing to 27% of the gross domestic product (GDP), and the Federal Reserve Bank increased the money supply (the quantity of money issued) by 27% year-on-year. Both of these increases are the highest in US peacetime history.

These huge US economic packages were generated to put cash in the hands of consumers. The US government focused on the economy’s demand side by putting money into circulation for consumption, but it did not increase spending on the economy’s supply side by putting money into investment. From 2019–21, 98% of US GDP growth was in consumption, while only 2% was in net investment. With a large increase in demand by consumers and almost no increase in supply, a huge inflationary wave grew in the United States.

Carmen Lomas Garza (USA), Tamalada, 1990.

Investing in Guns or People?

Inflation in the United States, which has global implications, is a by-product of its economic priorities. For the past half-century, US governments have not used the country’s social wealth to make substantial social investments in areas such as education, healthcare, and infrastructure, nor have they invested in the manufacturing sector to increase supply. Instead, to manage inflation the government has chosen to push an agenda which cuts demand. These cuts in demand have already lowered living standards; for instance, real wages in the United States have fallen by 2.7% in the past year.

Instead of making social investments to prevent such economic downturns, the US government has prioritised its military, which receives a budget increase every year. In 2022, the Biden administration proposed a military budget of $813 billion, a 9.2% increase over the military budget in 2021 – larger than the next eleven highest spending countries combined. To justify this massive expenditure, the Biden administration, like the Trump administration before it, has invoked the need to ‘combat threats’ posed by China and Russia.

A reduction in US military spending would free up government funds to invest in education, healthcare, infrastructure, and manufacturing. However, this would necessitate a shift in US foreign policy, which does not appear to be on the horizon. Until that time, the people of the United States and other countries will have to sustain the costs of Washington’s new Cold War.

Joseph Bertiers (Kenya), The Bar, 2020.

Against the shallow assessment that global inflation is caused by Russia’s war on Ukraine and the Western sanctions on Russia, No Cold War’s briefing no. 2 points its finger at the root of the crisis: the distortions produced by US military spending and by the Wall Street-Dollar-IMF regime gripping the world economy.

In December 2021, the IMF’s Georgieva said that Europe’s governments must not allow economic recovery to be endangered by the ‘suffocating force of austerity’. This is part of the West’s astonishing double-standards: at the same time, the IMF has enforced harsh austerity measures on the countries of Africa, Asia, and Latin America. As Oxfam notes in a new analysis, during the pandemic’s second year (from March 2021 to March 2022), the IMF approved 23 loans to 22 countries in the Global South – all of which either encouraged or required austerity measures. For example, the IMF’s $2.3 billion loan agreement with Kenya required a four-year public sector pay freeze alongside higher taxes on gas and food, all while 63 percent of Kenyan households experience multidimensional poverty, according to a report by the Kenya Institute of Public Policy Research and Analysis (KIPPRA).

The austerity policies that impact the vast mass of the populations in these countries must be reversed. We need less money spent on war and more money spent to solve what Frantz Fanon called the obstinate facts of human life, such as hunger, illiteracy, and indignity.

Langston Hughes’s poetry focused on the impact of these ‘obstinate facts’ on the lives of people in the United States, people who fought against a life built on wages that equalled ‘two bits minus two’. In 1962, the United States spent $49 billion on its military ($431 billion in 2022 dollars); in 2022, as noted in briefing no. 2, the US government proposes to spend $813 billion on its military, larger than the military spending of the next eleven countries combined.

There is immense social wealth available to us, but it is spent on the parts of human life that are most destructive rather than productive. In 1962, as the US military budget began to balloon, Langston Hughes wrote:

I tire so of hearing people say,
Let things take their course.
Tomorrow is another day.
I do not need my freedom when I’m dead.
I cannot live on tomorrow’s bread.

Freedom
Is a strong seed
Planted
In a great need.
I live here, too.
I want my freedom
Just as you.

We need to advance to the goal of human emancipation now. Not tomorrow, but now.

The post I Cannot Live on Tomorrow’s Bread first appeared on Dissident Voice.

These Dark Times Are Also Filled with Light

Shengtian Zheng and Jinbo Sun, Winds of Fusang, 2017.

‘Fusang’ is an ancient Chinese word referring to what some believe to be the shores of Mexico. The work is an homage to Latin America’s influence on China, particularly that of Mexican artists on the development of modern Chinese art.

In early March, Argentina’s government came to an agreement with the International Monetary Fund (IMF) on a $45 billion deal to shore up its shaky finances. This deal was motivated by the government’s need to pay a $2.8 billion instalment on a $57 billion IMF stand-by loan taken out under former President Mauricio Macri in 2018. This loan – the largest loan in the financial institution’s history – sharpened divides in Argentinian society. The following year, the Macri administration was ousted in elections by the centre-left Frente de Todos coalition which campaigned on a sharp anti-austerity, anti-IMF programme.

When President Alberto Fernández took office in December 2019, he refused the final $13 billion tranche of the IMF’s loan package, a move applauded by large sections of Argentinian society. The next year, Fernández’s government was able to restructure the $66 billion debt held by wealthy bondholders and open discussions with the IMF to delay repayment of the debt incurred by Macri’s government. But the IMF was rigid – it insisted on repayment. Neither the Macri loan nor the new deal under President Fernández settles Argentina’s long-term struggle with its public finances.

Carlos Alonso (Argentina), La oreja, 1972.

The term ‘odious debt’ is used to describe the money owed by societies whose governments have been undemocratic. The concept was crafted by Alexander Nahum Sack in his book The Effects of State Transformations on Their Public Debts and Other Financial Obligations (1927). ‘If a despotic power incurs a debt not for the needs or in the interests of the State, but to strengthen its despotic regime, to repress its population that fights against it, etc.’, Sack wrote, ‘this debt is odious for the population of the State’. When that despotic regime falls, then the debt falls.

When Argentina’s military ruled the country (1976–83), the IMF generously lent it money, ballooning the country’s debt from $7 billion at the time the military took power to $42 billion when the military was ousted. Plainly, the IMF’s provision of funds to the Argentinian military junta – which killed, tortured, and disappeared 30,000 people – set in motion the ugly cycle of debt and despair that continues till today. That those ‘odious debts’ were not annulled – just as the apartheid debt was not annulled in South Africa – tells us a great deal about the ugly reality of international finance.

Gracia Barrios (Chile), Desaparecidos, 1973.

The deal cut by the IMF with the Fernández government is exactly like other deals that the IMF has made with fragile countries. During the pandemic, 85% of the IMF’s loans to developing countries came with austerity conditions that sharpened their social crises. Three of the most common conditions of these IMF loans are cuts and freezes to public sector wages, the increase and introduction of value-added taxes, and deep cuts to public expenditure (notably for consumer subsidies). Through its new deal with Argentina, the IMF will inspect the operations of the government four times per year, effectively becoming an overseer of the Argentinian economy. The government has agreed to reduce the budget deficit from 3% (2021) to 0.9% (2024) to 0% (2025); to accomplish this, it will have to cut large areas of social spending, including subsidies for a range of consumer goods.

After reaching the agreement, IMF Managing Director Kristalina Georgieva pointed out the great difficulties faced by Argentina, though these difficulties will not be ameliorated by the IMF plan. ‘Argentina continues to face exceptional economic and social challenges, including depressed per capita income, elevated poverty levels, persistent high inflation, a heavy debt burden, and low external buffers’, she said. Consequently, Georgieva noted, ‘Risks to the program are exceptionally high’, meaning that further default is all but certain.

Shengtian Zheng and Jinbo Sun, Winds of Fusang (close up), 2017.

A few weeks before Argentina came to terms with the IMF, President Fernández and China’s President Xi Jinping held a bilateral meeting in Beijing at which Argentina signed onto the Chinese-led Belt and Road Initiative (BRI). Argentina is the twenty-first country from Latin America to join the BRI. It is also the largest economy from the region to join, pending applications from Brazil and Mexico. Expectations rose amongst sections in Argentina that the BRI would provide a pathway to exit the grip of the IMF. This remains a possibility even as President Fernández returned to the IMF.

Our team in Buenos Aires has been looking carefully at China’s growing ties with the Caribbean and Latin America. These studies resulted in our most recent dossier no. 51, Looking Towards China: Multipolarity as an Opportunity for the Latin American People (April 2022). The main argument of the dossier is that the emergence of programmes such as the BRI offers countries such as Argentina choices for development finance. If Argentina has more latitude in choosing its avenues for finance, then it will be better positioned to reject harsh offers of stand-by assistance from the IMF which come with conditions of austerity. The possibility of these choices opens the door for countries such as Argentina to develop an authentic national and regional development strategy that is not written by the IMF staff in Washington, DC.

The dossier is quite clear that the mere entry of the BRI into the Caribbean and Latin America is not sufficient. Deeper projects are necessary:

It is possible for Chinese integration to further the ‘development of underdevelopment’ if the Latin American state projects produce a new relationship of dependency on China by merely exporting primary products. On the other hand, it will be far better for the region’s peoples if the relationship is based on equality (multipolarity) as well as the transfer of technology, the upscaling of production processes, and regional integration (national and regional sovereignty).

Josefina Robirosa (Argentina), Bosque azul (‘Blue Forest’), 1993-94.

The BRI’s annual disbursement of funds is around $50 billion, with projections suggesting that, by 2027, total BRI spending will be about $1.3 trillion. These capital flows primarily focus on long-term investments in infrastructure rather than short-term bailouts, although new studies suggest that China has offered short-term liquidity to several countries. Between 2009 and 2020, the People’s Bank of China entered into bilateral currency swap arrangements with at least 41 countries. These currency swaps take place between the local currency (the Argentinian peso, for instance) and China’s renminbi (RMB), with the local currency as collateral and the RMB used either to buy goods or to acquire dollars. The combination of BRI investments and RMB currency swaps provide countries with immediate alternatives to the IMF and its austerity demands. In January 2022, Argentina’s government asked China to increase its 130-billion-yuan swap ($20.6 billion) by an additional 20 billion yuan ($3.14 billion) to cover the IMF payment. A few weeks later, the People’s Bank of China provided the necessary swap to Argentina’s Central Bank. Despite this infusion of cash, Argentina still went to the IMF.

The answer to why Argentina took that decision can perhaps be found in the letter written by Martín Guzman (minister of the economy) and Miguel Pesce (president of the Central Bank) to the IMF’s Georgieva on 3 March 2022. In the communication, Argentina promises to ‘improve public finances’ and to restrain inflation, which are straightforward orthodox positions. But then there is an interesting obligation: that Argentina will expand exports and draw in foreign direct investment to ‘pave the way to an eventual re-entry into international capital markets’. Rather than use the opportunity afforded by BRI-currency swaps to develop its own national and regional agenda, the government seems eager to use whatever platform possible to return to the status quo of integration into the capitalist marketplace for finance dominated by Wall Street and the City of London.

On 12 April 2022, the Committee of Creditors of Internal Debt (CADI) announced that the people of Argentina refuse to shoulder the burden of the IMF debt. The people should not pay a single peso: those who squirrelled away the billions that Macri borrowed from the IMF should be the ones who pay the price. Banking secrecy laws need to be suspended in order to draw up a list of those who took that money and hid it in tax havens. The hashtag of CADI’s campaign is #LaDeudaEsConElPueblo – the debt is with the people. It should be paid to the people, not drawn from them.

As the Argentinian poet Juan Gelman (1930–2014) wrote during the reign of the military junta, these are ‘dark times, filled with light’. This phrase resonates even now:

dark times/filled with light/the sun/
pours sunlight onto the city/ torn
by sudden sirens/the police on the hunt/night falls and we/ make love under this roof

Gelman, a communist, fought the dictatorship, which killed his son and daughter-in-law and damaged the spine of his country. Even the dark times, he wrote, echoing Brecht, are filled with light. These are tough moments in world history, but even now there remain possibilities, there remain people gathered on the streets of Buenos Aires and Rosario, La Plata and Córdoba. Their slogan is clear: no to the pact with the IMF. But theirs is not only a politics of ‘no’. It is also a politics of ‘yes’. Yes to taking advantage of the new openings to shape an agenda for the well-being of the Argentinian people. Yes, also yes.

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The Keep Africa Poor and Dependent Project  

Exploited and abused for generations by white colonial powers and manipulative economic structures, there is a growing feeling of solidarity within parts of the African continent, as exemplified by the #NoMore movement. Covid vaccine inequality and environmental injustice, together with recent events in Ethiopia, have galvanized people.

Ideas of African unity and rage against former imperial forces are nothing new; the chain of suppression and exploitation of African nations is long, running from slavery and colonialism (including colonial extraction) to wealth and climate inequality, racial capitalism and now Covid vaccine apartheid.

Despite the fact that many would say Africa was united long before Europe – family to tribe, tribe to nation, nation to continent, with 54 countries spread over a vast area –  establishing a defined Union of Africa seems unlikely, if not impossible. Standing in solidarity, rejecting western intervention, challenging the exploitative status quo and reductive notions of development based on a defunct western model is not; indeed, if African nations are to prosper and create vibrant economies allowing its burgeoning young population to fulfill their enormous potential, they must.

Poverty amidst abundance of resources

Blessed with rich environments and vast natural resources, Sub-Saharan Africa should certainly not be poor. But for huge numbers of people across the continent grinding poverty and hardship are the norm.

According to the World Bank report Accelerating Poverty Reduction in Africa, while those living in extreme poverty (less than $1.90 a day) has fallen in the last twenty years, the number of “poor people [living on $5 a day or less]…has increased from 278 million in 1990 to over 413 million” Over 80% of those living in stifling poverty are found in rural areas where education and  health care are scarce.

Natural resources dominate many African economies and, along with agriculture, are central to the livelihoods of the poor rural majority. African natural resources that are owned by multi-national mining companies, dug out of the ground by grossly underpaid local workers, are exported for production in goods that are sold in the rich developed nations. This has been the role of Sub-Saharan Africa for generations, and is fundamental to the prosperity of advanced countries: they need the raw materials and they need them to be dirt cheap.

The handful of conglomerates that dominate, collude in enabling monopoly buying structures. Contracts agreed at national levels are administered by middle-men, often corrupt, in the pockets of the corporation; the local workforce has little choice but to accept whatever ‘terms of employment’ are offered; poverty entraps and silences rebellion.

It is a crippling model of suppression and exploitation; a form of wage slavery that holds not just the workers in its suffocating grip, but the nation and continent. It is one of the main reasons African nations that are overly dependent on raw materials, whether cotton or oil, coffee, diamonds or Cobalt, are poor. Poverty is political, the result of short-term political and economic decisions taken in The West by duplicitous corporate-controlled governments.

The other reasons that ensure Africa remains poor and dependent are historical and economic: Colonization, which persists as economic and cultural imperialism, together with a certain mind-set of superiority/inferiority. A mind-set that maintains consciously or unconsciously that some people (black, brown) are worth less than others and, as Covid vaccine inequities demonstrate, can be sacrificed. The economic structures, global institutions and economic ideologies championed by abusive self-centered governments and promoted in the business schools around the world are all designed to ensure Africa remains poor: Imperialism never ended, it just changed form.

When colonial powers withdrew from the global south they needed new ways of maintaining the enslavement of Africa and Africans. Three interrelated weapons where used to create dependency: Aid, debt and the toxic Structural Adjustment Programmes (SAPs), the overarching umbrella of control.

In the 1980s SAP’s were introduced; the International Monetary Fund (IMF) and World Bank (WB) gave highly conditional loan packages to African nations in order to aid their ‘development’; in fact, the loans/SAPs, which destroyed African economies and agriculture, were simply forms of debt entrapment. Once a country is indebted it becomes easy to control. SAPs hollowed out national economies and incorporated Africa into the global political economic system, dominated by the US. It’s economic warfare: the rich countries set up these unaccountable institutions and systems to control the poor nations.

The IMF, WB, World Health Organization (WHO) and the World Trade Organization (WTO), were given enormous political influence/control of African governments and economies. Funding for public services (e.g. education and health care) was slashed to repay loans; countries were forced to ‘liberalize’ their economies, and privatize, selling off key areas like utilities to western or western-backed companies.

In his book Confessions Of An Economic Hitman, John Perkins designates this process of economic terrorism as ‘Predatory Capitalism’: he describes how  in an earlier period, during the 1950’s the IMF, CIA and US State Department set up a faceless bank to lend money to African countries that were producing raw materials; any national President that refused the loan was at risk of being handed over to the ‘Jackals’, as Perkins describes the CIA thugs that accompanied him.

At independence, many African countries were self-sufficient in food production and were, in fact, net exporters of food; SAPs and the WTO Agreement on Agriculture, changed all that. Countries were forced to withdraw State subsidies to agriculture (while farmers in Europe and the US receive huge subsidies); farmers suffered, food prices increased, food insecurity was created, dependency on aid and Western benefactors ensured and with it control by the US and her puppets, of Africa, its direction and ‘development’, or, as these paranoid selfish states would have it, its non-development.

‘Development as Westernisation’

Within the narrow socio-economic paradigm that dominates global affairs, ‘development’ and perpetual economic ‘growth’ are regarded as all important. Dominated by quarterly national GDP figures, it is a reductive model designed by donor’ nations to serve not the people of Africa or Asia, but western corporations and the unjust, defunct Ideology of Greed, so beloved.

The very idea of development has become synonymous with ‘Westernization’, including the way of life, the values, behavior and attitudes of the rich, ‘successful’ nations of The West: a hollow, deeply materialistic way of life rooted in division, selfishness and conformity that has poisoned and vandalized the natural environment, created unhealthy, unequal societies of anxious suppressed human beings.

In order to develop, economists maintain Africa must industrialise and manufacture – no country has ever ‘developed’ without manufacturing. All this is true, and some African nations, like Ethiopia, which has a vibrant leather industry, are beginning to do just this. But this is only true within the suffocating boundaries of the existing model of extreme capitalism based on unsustainable consumerism.

There must be another way; perhaps as we sit at this transitional time, not just for Africa, but for the world as a whole, the opportunity presents itself to re-design the socio-economic structures, reimagine civilization, and in so doing save the planet. And perhaps Africa, unburdened, energised and dynamic can play a leading role; working with the West, but rejecting the model of conformity and exploitation, the conditionality of support.

The existing development paradigm sits within the overarching political-economic system, a system of global monopolies, centralized control, massive inequality, grinding poverty, financial insecurity and stress. Not only should this model of development be rejected by Africa, and it would be were it not for the Noose of Debt, and the fact that it is presented as the one and only show in town, but the poisonous spring from which it flows – Market Fundamentalism as some call it – must also be radically dismantled.

It may appear impossible to challenge, but there are alternatives to the current unjust political-economic system. And as the environmental and social impact of the Neo-Liberal experiment becomes more apparent, as well as the economic pain of the majority, more and more people around the world, especially within Africa, where the environmental emergency has inspired powerful movements of activism, recognize the urgent need to reject this way of organizing life and are demanding change.

Western powers (dried-up imperial forces) do not want Africa and Africans to flourish and become strong, this is clear to all. Africa’s destiny must rest in the hands of Africans, in particular young Africans (the median age in Africa is around 20, Europe is a greying 43, US a complacent 39), who are increasingly standing up, organizing, particularly in regard to the environment, and calling for change.

But what should that change look like? Not a shadow of Western nations, but a creative evolving movement of development in which the people have a voice; social and environmental responsibility are championed and lasting human happiness sit at its core. Unity is essential, African unity is essential; together, not necessarily under some defined structure, but coordinated cooperation and support through the medium of the African Union and civil society.

The first and most basic step towards establishing a less brutal, more just system would be the equitable distribution of the resources of the world – the water, land and food; the machinery needed to build infrastructure; the skills, knowledge and expertise.

The world is one: We are brothers and sisters of one humanity. And if we are collectively, within Africa and the world, to establish An Alternative Way, this basic fact needs to form the foundation and provide the touchstone of new systems and modes of living. Only then will we begin to build a global society in which the values of unity, compassion, tolerance and sharing, which are found in tribal societies all over Africa, may flourish.f

The post The Keep Africa Poor and Dependent Project   first appeared on Dissident Voice.

A Short History of the US-Pakistan Relationship

On January 10, 2022, National Security Advisor (NSA) Moeed Yusuf said, “It [Pakistan] is still not [free from US influence] and I doubt that there is any country which is free from it.” He added that the country does not have any financial independence, being dependent on loans from International Monetary Fund (IMF) and other foreign organizations. “When we cannot [fulfill] the demands, we seek foreign loans. When you procure loans, your economic sovereignty is compromised.” These comments are not entirely stunning; they encapsulate the ambivalent essence of the US-Pakistan relationship. While the Pakistani elite greatly enjoys its self-imposed subservience to the American empire, it never just sits back and rest on its laurels. It continuously tries to exploit what little room for maneuver it has within the bond of servility to further more selfish, regional interests – ones which either demand too much from the patron or don’t neatly align with the US’ hegemonic ambitions.

Anticommunism

Unlike the many postcolonial nations of the time which exuded a great degree of interest in the development of an independent project, Pakistan was totally craven; its creators displayed a surprising lack of enthusiasm in the paraphernalia of sovereignty. They were only interested in somehow securing money, regardless of the consequences which the people would have to face later. Every option was on the table. In The Duel: Pakistan on the Flight Path of American Power, Tariq Ali notes that “the new rulers of Pakistan developed an early communal awareness that to survive they had to rent their country.” Washington was approached as a possible buyer but it rejected the offer to buy Pakistan “as it was busy securing Western Europe and Japan, as well as keeping an eye on China, where the Eighth Route Army was beginning to threaten a Communist victory.” However, this did not stop Pakistan from trying to sell itself.

Muhammad Ali Jinnah, the founder of Pakistan, continued to consistently market his country as an important ally against Soviet expansionism. Ali remarks that he hysterically “insisted that Soviet agents were present in Kalat and Gilgit in search of a base in Baluchistan.” These same sentiments were shared in a more sophisticated manner by then foreign minister Zafarullah Khan. “[H]e pleaded with the United States to shore up Pakistan, whose people were genetically anticommunist, since this was the best way to protect India against the Soviet Union, which would send its armies through the Khyber Pass.” Pakistan’s persistence in peddling threats about USSR paid off in May 1954 when it signed the Mutual Defense Assistance Agreement, through which the US provided resources and training to the Pakistani army, with the general aim of turning the new nation into a pliant Third World state. In September 1954, Pakistan was officially anointed as a crusader against the godless Communists, joining the Southeast Asia Treaty Organization together with Thailand and the Philippines.

Exactly one year later, in September 1955, Pakistan joined another pro-Western organization known as the Baghdad Pact, which included King Faisal’s Iraq, Iran, Turkey, and Britain. As Pakistan chummed up with its anti-Soviet friends, the inflows of money into the ruling class’ pockets increased. From 1953 to 1961, Pakistan received around $2 billion in assistance from the US. These wads of cash, however, did not signify a thoroughgoing bilateral camaraderie, one in which the imperialist benefactor would come to the help of its junior partner at all cost. Apart from acting as another chess piece in the anticommunist game, Pakistan served no other significant function for USA. Therefore, the latter felt no need for fulfilling all the demands of the former. In fact, what happened during the initial years of 1960s was the opposite. In United States and Pakistan in the 21st Century: Geostrategy and Geopolitics in South Asia, Syed Tahseen Raza writes:

The Sino-Indian Border struggle in 1962 paved the way for closer US-India ties because neutral India, desperate to have weapons in the immediate aftermath of Chinese aggression, made a frantic plea for US help. The US was pleased because this was an opportunity to wean India off the influence of the Soviet Union by offering help in a time of crisis. Meanwhile, Pakistan’s inching closer with China was not liked by the United States. When American finally decided to give arms aid to India in November 1962, Pakistan was not consulted before as was promised to them and this deeply offended the leaders of Pakistan. The [John F.] Kennedy administration, on the whole, tried to balance the American relationship with South Asia on equal footing and therefore did not view Pakistan as more important than India.

Feeling threatened by USA’s growing closeness with India, Pakistan extracted from the former, on November 5, 1962, a pledge “that it will come to Pakistan’s assistance in the event of aggression from India.” This pledge, nonetheless, did not help Pakistan during the Second Kashmir War (1965) when it undertook dangerous military adventures (Operation Gibraltar and Operation Grand Slam) against India. When the war started, the US cut aid to both Pakistan and India. A similar situation developed six years later. When New Delhi decisively intervened in East Pakistan’s civil war in late 1971, Washington was unwilling to directly support the Pakistani army’s Operation Searchlight against Bengali insurgents (though it did send part of its Seventh Fleet in the Bay of Bengal). The country’s eastern wing seceded to form the state of Bangladesh, dismembering Pakistan in a humiliating way. Spurred by this defeat, Pakistan’s governing caste realized that the continued existence of the nation was dependent on nuclear parity with India.

The development of nuclear weapons was smoothed by conjunctural reasons. In neighboring Afghanistan, the communists, who had backed the 1973 military coup by Prince Daoud after which a republic was proclaimed, withdrew their support from him. In April 1978, the Shah of Iran convinced Daoud to turn against the communist factions in his army and administration. In response to increasingly harsh state repression, left-wing officers in the military stormed the Presidential Palace in Kabul. The government was turned over to Noor Mohammed Taraki, a communist professor who became the President of the Revolutionary Council of Afghanistan. These developments – which were extensively supported by the USSR – came to be known as the Saur (April) Revolution. The US was terrified. It crafted a subversive plan that made General Zia’s dictatorship in Pakistan a principal node for sending jihadists to Afghanistan. Singularly focused on destabilizing Afghanistan’s communist regime, and, by extension, Soviet Union, USA cared less about Pakistan developing its nuclear programme in the 1980s.

War on Terror

America’s benign attitude toward Pakistan changed with the Soviet withdrawal from Afghanistan and the ultimate end of the Cold war. “[S]ans the American aim of defeating communism as their top priority,” comments Raza, “Pakistan was not given any extra consideration.” The “US Intelligence Report,” which had been indicting Pakistan for its nuclear quest, came to be invoked more frequently. When India conducted its Nuclear Test in March 1998, the Bill Clinton administration tried to prevent Pakistan from following suit, offering the resumption of the sale of F-16 aircraft (which had been frozen by George H.W. Bush when he did not certify Pakistan’s non-possession of nuclear devices) and economic and military aid. But Pakistan demanded more. Raza remarks: “Pakistan wanted tough punitive action against India. When the G-8 meeting on 17-18 May 1998 didn’t take very harsh measures against India in accordance with Pakistan’s expectations, bowing to public pressure, Pakistan decided to go for the Nuclear Test, which it ultimately carried out on 28 May, 1998.”

In response to Pakistan’s nuclear test, the US imposed sanctions, which included restriction of the provision of credits, military sales, economic assistance, and loans. These were, nevertheless, limited in scope and were not sustained. US-Pakistan relations exited this period of downturn in an explosive manner after 2001, thanks to the murky dynamics cultivated by imperialism in Afghanistan. After the USSR left in 1988, Pakistan maintained a strong footprint in Afghanistan to gain “strategic depth” against India, continuing to nurture the Islamist extremism that was earlier used to mobilize jihadist fighters from all over the world against USSR. These actions had severe repercussions. When hardhats of jihadism attacked New York in 2001 to express their disgruntlement with America’s bases in Saudi Arabia, the destruction of Iraq and support for Israel, Pakistan was caught in a dilemma. Networks of battle-hardened fighters that it had built along with the USA were now on the attack radar of its imperialist sponsor.

With limited options, Pakistan decided to join the US War on Terror, declaring support for the Hamid Karzai government in Kabul. “By providing the USA with help in the invasion of Afghanistan,” Justin Podur clarifies, “Pakistan was able to save its clients and its own personnel from destruction, as much of the Taliban and al-Qaeda crossed the border to Pakistan or went to ground and Afghanistan was taken over by US-friendly warlords.” This tactical move had its own disruptive consequences for Pakistan’s social osmosis. General Pervez Musharraf came to be accused of treason for supporting the USA against fellow Muslims in Pakistan and Afghanistan. This political effect complicated military operations. As the US and North Atlantic Treaty Organization (NATO) made the Pakistan army take action against insurgents operating in Khyber Pakhtunkhwa, casualties increased, eroding the state’s legitimacy in the region. When Pakistan cooperated with the insurgents on the sly, it faced US threats.

Conflicts

The convoluted workings of the War on Terror have had a destructive impact on Pakistan’s economy. It has lost $150 billion – 41% or two-fifths of the country’s total economy size, more than the $13 billion that it received from the US between 1999 and 2013. Since the US invasion of Afghanistan, more than 80,000 Pakistani civilians, security forces personnel and women and children have been killed in gun, bomb and suicide attacks. On average, every year Pakistan suffered losses of $7.7 billion – more than the country’s total expenditures on education, health and other social safety schemes. With the growing advance of the Taliban in Afghanistan, current Pakistan Prime Minister Imran Khan wrote an op-ed in the Washington Post in September 2021, saying: “Since 2001, I have repeatedly warned that the Afghan war was unwinnable. Given their history, Afghans would never accept a protracted foreign military presence, and no outsider, including Pakistan, could change this reality. Unfortunately, successive Pakistani governments after 9/11 sought to please the United States instead of pointing out the error of a military-dominated approach.”

Scarred by the War on Terror, Pakistan has been frustrated to see USA establish an alliance with India as part of an anti-China containment strategy. The US and Indian elites have found a common interest in countering China; India is embroiled in disputes on its land borders with China and the US and its allies are contesting China’s claim to maritime territories across shipping routes in the Indo-Pacific region. It is against this background that Pakistan has returned to China’s “all-weather friendship,” initiated in the 1960s by General Ayub Khan who felt betrayed by Washington’s overtures to India in the aftermath of the Sino-Indian border conflict. China has become Pakistan’s closest strategic ally, supplying it with modern defense equipment. Pakistan supports China’s stance on Xinjiang, Tibet and Taiwan, and China backs Pakistan on its Kashmir issue with India. Over the past five years, this cooperation has been further cemented by China’s Belt and Road Initiative (BRI) and its local cognate China-Pakistan Economic Corridor (CPEC), entailing over $60 billion worth of Chinese investments in infrastructure consisting mostly of loans.

Despite the economic heft of China, Pakistan still needs Washington’s support, both to get disbursements of its $6 billion bailout package from the IMF and to be removed from the terror-financing and money-laundering watchdog Financial Action Task Force’s “grey list,” a designation that encumbers Islamabad’s global financial operations. War on Terror cooperation had converted Pakistan into a major non-NATO ally of the US in 2004, granting it various military and financial privileges. The designation had also eased Pakistan’s access to IMF facilities. With the deterioration of Pakistan’s relationship with USA, accessing funds has become difficult. In October-November 2021, IMF withheld the release of a $1 billion tranche under an Extended Fund Facility (EFF) to Pakistan until the government agreed to close commercial bank accounts held by the armed forces and other state entities and remitted $17 billion worth of public funds into a single treasury account. It is believed that USA, the single largest financial contributor to the IMF, had a hand in the reform demands.

In a June 2021 interview on HBO’s documentary news series Axios, Khan had said, “Pakistan will “absolutely not” allow the CIA to use bases on its soil for cross-border counterterrorism missions after American forces withdraw from Afghanistan.” To change this policy decision, USA started using IMF monetary policy as a bargaining chip to force cash-strapped Islamabad to agree to Joe Biden administration’s counterterrorism operations in Afghanistan. These events highlight the conflictual nature of the contemporary US-Pakistan relationship. And it seems that both the parties have failed to arrive at a proper resolution till now. Yusuf’s criticism is significant in this regard as he was the one chosen for mending ties with the US. He has spent a decade or more in the think tank and security policy circle in the US capital as associate vice president for Asia at the Institute of Peace, a US government-backed institution. The Pakistani government had recently elevated him from the position of Special Assistant to the Prime Minister to NSA to signal seriousness in creating a new rapport with the US. It seems that Pakistan will have to wait longer for such a reset in relationships.

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The Fear Pandemic and the Crisis of Capitalism

In October 2019, in a speech at an International Monetary Fund conference, former Bank of England governor Mervyn King warned that the world was sleepwalking towards a fresh economic and financial crisis that would have devastating consequences for what he called the “democratic market system”.

According to King, the global economy was stuck in a low growth trap and recovery from the crisis of 2008 was weaker than that after the Great Depression. He concluded that it was time for the Federal Reserve and other central banks to begin talks behind closed doors with politicians.

In the repurchase agreement (repo) market, interest rates soared on 16 September. The Federal Reserve stepped in by intervening to the tune of $75 billion per day over four days, a sum not seen since the 2008 crisis.

At that time, according to Fabio Vighi, professor of critical theory at Cardiff University, the Fed began an emergency monetary programme that saw hundreds of billions of dollars per week pumped into Wall Street.

Over the last 18 months or so, under the guise of a ‘pandemic’, we have seen economies closed down, small businesses being crushed, workers being made unemployed and people’s rights being destroyed. Lockdowns and restrictions have facilitated this process. The purpose of these so-called ‘public health measures’ has little to do with public health and much to do with managing a crisis of capitalism and ultimately the restructuring of the economy.

Neoliberalism has squeezed workers income and benefits, offshored key sectors of economies and has used every tool at its disposal to maintain demand and create financial Ponzi schemes in which the rich can still invest in and profit from. The bailouts to the banking sector following the 2008 crash provided only temporary respite. The crash returned with a much bigger bang pre-Covid along with multi-billion-dollar bailouts.

The dystopian ‘great reset’ that we are currently witnessing is a response to this crisis. This reset envisages a transformation of capitalism.

Fabio Vighi sheds light on the role of the ‘pandemic’ in all of this:

… some may have started wondering why the usually unscrupulous ruling elites decided to freeze the global profit-making machine in the face of a pathogen that targets almost exclusively the unproductive (over 80s).

Vighi describes how, in pre-Covid times, the world economy was on the verge of another colossal meltdown and chronicles how the Swiss Bank of International Settlements, BlackRock (the world’s most powerful investment fund), G7 central bankers and others worked to avert a massive impending financial meltdown.

The world economy was suffocating under an unsustainable mountain of debt. Many companies could not generate enough profit to cover interest payments on their own debts and were staying afloat only by taking on new loans. Falling turnover, squeezed margins, limited cash flows and highly leveraged balance sheets were rising everywhere.

Lockdowns and the global suspension of economic transactions were intended to allow the Fed to flood the ailing financial markets (under the guise of COVID) with freshly printed money while shutting down the real economy to avoid hyperinflation.

Vighi says:

… the stock market did not collapse (in March 2020) because lockdowns had to be imposed; rather, lockdowns had to be imposed because financial markets were collapsing. With lockdowns came the suspension of business transactions, which drained the demand for credit and stopped the contagion. In other words, restructuring the financial architecture through extraordinary monetary policy was contingent on the economy’s engine being turned off.

It all amounted to a multi-trillion bailout for Wall Street under the guise of COVID ‘relief’ followed by an ongoing plan to fundamentally restructure capitalism that involves smaller enterprises being driven to bankruptcy or bought up by monopolies and global chains, thereby ensuring continued viable profits for these predatory corporations, and the eradication of millions of jobs resulting from lockdowns and accelerated automation.

Author and journalist Matt Taibbi noted in 2020:

It retains all the cruelties of the free market for those who live and work in the real world, but turns the paper economy into a state protectorate, surrounded by a kind of Trumpian Money Wall that is designed to keep the investor class safe from fear of loss. This financial economy is a fantasy casino, where the winnings are real but free chips cover the losses. For a rarefied segment of society, failure is being written out of the capitalist bargain.

The World Economic Forum says that by 2030 the public will ‘rent’ everything they require. This means undermining the right of ownership (or possibly seizing personal assets) and restricting consumer choice underpinned by the rhetoric of reducing public debt or ‘sustainable consumption’, which will be used to legitimise impending austerity as a result of the economic meltdown. Ordinary people will foot the bill for the ‘COVID relief’ packages.

If the financial bailouts do not go according to plan, we could see further lockdowns imposed, perhaps justified under the pretext of  ‘the virus’ but also ‘climate emergency’.

It is not only Big Finance that has been saved. A previously ailing pharmaceuticals industry has also received a massive bailout (public funds to develop and purchase the vaccines) and lifeline thanks to the money-making COVID jabs.

The lockdowns and restrictions we have seen since March 2020 have helped boost the bottom line of global chains and the e-commerce giants as well and have cemented their dominance. At the same time, fundamental rights have been eradicated under COVID government measures.

Capitalism and labour

Essential to this ‘new normal’ is the compulsion to remove individual liberties and personal freedoms. A significant part of the working class has long been deemed ‘surplus to requirements’ – such people were sacrificed on the altar of neo-liberalism. They lost their jobs due to automation and offshoring. Since then, this section of the population has had to rely on meagre state welfare and run-down public services or, if ‘lucky’, insecure low-paid service sector jobs.

What we saw following the 2008 crash was ordinary people being pushed further to the edge. After a decade of ‘austerity’ in the UK – a neoliberal assault on the living conditions of ordinary people carried out under the guise of reining in public debt following the bank bail outs – a leading UN poverty expert compared Conservative welfare policies to the creation of 19th-century workhouses and warned that, unless austerity is ended, the UK’s poorest people face lives that are “solitary, poor, nasty, brutish, and short”.

Philip Alston, the UN rapporteur on extreme poverty, accused ministers of being in a state of denial about the impact of policies. He accused them of the “systematic immiseration of a significant part of the British population”.

In another 2019 report, the Institute for Public Policy Research think tank laid the blame for more than 130,000 deaths in the UK since 2012 at the door of government policies. It claimed that these deaths could have been prevented if improvements in public health policy had not stalled as a direct result of austerity cuts.

Over the past 10 years in the UK, according to the Trussell Group, there has been rising food poverty and increasing reliance on food banks.

And in a damning report on poverty in the UK by Professor David Gordon of the University of Bristol, it was found that almost 18 million cannot afford adequate housing conditions, 12 million are too poor to engage in common social activities, one in three cannot afford to heat their homes adequately in winter and four million children and adults are not properly fed (Britain’s population is estimated at around 66 million).

Moreover, a 2015 report by the New Policy Institute noted that the total number of people in poverty in the UK had increased by 800,000, from 13.2 to 14.0 million in just two to three years.

Meanwhile, The Equality Trust in 2018 reported that the ‘austerity’ years were anything but austere for the richest 1,000 people in the UK. They had increased their wealth by £66 billion in one year alone (2017-2018), by £274 billion in five years (2013-2018) and had increased their total wealth to £724 billion – significantly more than the poorest 40% of households combined (£567 billion).

Just some of the cruelties of the ‘free market’ for those who live and work in the real world. And all of this hardship prior to lockdowns that have subsequently devastated lives, livelihoods and health, with cancer diagnoses and treatments and other conditions having been neglected due to the shutdown of health services.

During the current economic crisis, what we are seeing is many millions around the world being robbed of their livelihoods. With AI and advanced automation of production, distribution and service provision on the immediate horizon, a mass labour force will no longer be required.

It raises fundamental questions about the need for and the future of mass education, welfare and healthcare provision and systems that have traditionally served to reproduce and maintain labour that capitalist economic activity has required.

As the economy is restructured, labour’s relationship to capital is being transformed. If work is a condition of the existence of the labouring classes, then, in the eyes of capitalists, why maintain a pool of (surplus) labour that is no longer needed?

A concentration of wealth power and ownership is taking place as a result of COVID-related policies: according to research by Oxfam, the world’s billionaires gained $3.9 trillion while working people lost $3.7 trillion in 2020. At the same time, as large sections of the population head into a state of permanent unemployment, the rulers are weary of mass dissent and resistance. We are witnessing an emerging biosecurity surveillance state designed to curtail liberties ranging from freedom of movement and assembly to political protest and free speech.

The global implications are immense too. Barely a month into the COVID agenda, the IMF and World Bank were already facing a deluge of aid requests from developing countries that were asking for bailouts and loans. Ideal cover for rebooting the global economy via a massive debt crisis and the subsequent privatisation of national assets.

In 2020, World Bank Group President David Malpass stated that poorer countries will be ‘helped’ to get back on their feet after the various lockdowns but such ‘help’ would be on condition that neoliberal reforms become further embedded. In other words, the de facto privatisation of states (affecting all nations, rich and poor alike), the (complete) erosion of national sovereignty and dollar-denominated debt leading to a further strengthening of US leverage and power.

In a system of top-down surveillance capitalism with an increasing section of the population deemed ‘unproductive’ and ‘useless eaters’, notions of individualism, liberal democracy and the ideology of free choice and consumerism are regarded by the elite as ‘unnecessary luxuries’ along with political and civil rights and freedoms.

We need only look at the ongoing tyranny in Australia to see where other countries could be heading. How quickly Australia was transformed from a ‘liberal democracy’ to a brutal totalitarian police state of endless lockdowns where gathering and protests are not to be tolerated.

Being beaten and thrown to the ground and fired at with rubber bullets in the name of protecting health makes as much sense as devastating entire societies through socially and economically destructive lockdowns to ‘save lives’.

It makes as much sense as mask-wearing and social-distancing mandates unsupported by science, misused and flawed PCR tests, perfectly healthy people being labelled as ‘cases’, deliberately inflated COVID death figures, pushing dangerous experimental vaccines in the name of health, ramping up fear, relying on Neil Ferguson’s bogus modelling, censoring debate about any of this and the WHO declaring a worldwide ‘pandemic’ based on a very low number of global ‘cases’ back in early 2020 (44,279 ‘cases’ and 1,440 supposed COVID deaths outside China out of a population of 6.4 billion).

There is little if any logic to this. But of course, If we view what is happening in terms of a crisis of capitalism, it might begin to make a lot more sense.

The austerity measures that followed the 2008 crash were bad enough for ordinary people who were still reeling from the impacts when the first lockdown was imposed.

The authorities are aware that deeper, harsher impacts as well as much more wide-ranging changes will be experienced this time around and seem adamant that the masses must become more tightly controlled and conditioned to their coming servitude.

The post The Fear Pandemic and the Crisis of Capitalism first appeared on Dissident Voice.

Is the US Global Empire Actually in Decline?

It is almost taken for granted, if not an article of faith, in the progressive milieu (e.g., here) that the US empire is declining. Does this hold up, or is it comfort food for the frustrated hoping for the revolution?

First, it is essential not to confuse the ongoing decline of the living conditions of US working people with a decline in the power of the US corporate empire. The decline of one often means the strengthening of the other.

In the aftermath of World War II, the US was the world manufacturing center, with the middle class rapidly expanding, and this era did end in the 1970s. It is also true the heyday of uncontested US world and corporate neoliberal supremacy is over, its zenith being the decade of the 1990s after the collapse of the Soviet Union and its allies. Now, looming on the horizon is China, with the US empire and its subordinate imperial allies (Britain, France, Germany, Japan, Spain, Belgium, Canada, Australia, Italy) unable to thwart its rise this century, even more than when China stood up in 1949.

Yet the US imperial system still maintains decisive economic and political dominance, cultural and ideological hegemony, backed by tremendous military muscle. If US ruling class power were in decline, why have there been no socialist revolutions ­­­− the overturning of capitalist rule ­­­− in almost half a century? What would the world look like if the US lacked the muscle to be world cop?

Imperialism continually faces crises; this is inherent to their system. The question is: which class takes advantage of these crises to advance their interests, the corporate capitalist class or the working class and its allies at home and abroad. In the recent decades, capitalist crises have resulted in setbacks for our class, and a steady worsening of our conditions of life.

Previous proponents of US empire decline have predicted its demise with an expanding Communist bloc, then Germany and Japan with their supposedly more efficient capitalist production methods, then the European Union encompassing most of Western Europe into a supra-national entity, then the Asian Tigers, and then BRICS (Brazil, Russia, India, China, and South Africa). All challenges turned out to be wishful thinking. Now the proponents of decline expect China itself will soon supplant US dominion.  We explore a number of the economic, political, and military difficulties the US empire confronts in its role as world cop.

Imperial Decline or Adjustments in Methods of Rule?

A common misconception among believers of US ruling class demise holds that imperial failure to succeed in some particular aim signifies imperial weakening. Examples of setbacks include Afghanistan, the failure to block North Korea from developing nuclear weapons, catastrophic mishandling of the COVID pandemic, and seeming inability to reign in the mammoth US national debt. However, throughout history, successful maintenance of imperial hegemony has never precluded absence of terrible setbacks and defeats. Most importantly, the fundamental question arising from a setback is which class learns to advance its interests more effectively, the imperial overlords or the oppressed.

The US rulers, as with other imperial nations, have proven adept at engineering more effective methods of control from crises, as Naomi Klein’s Shock Doctrine illustrates. For instance, in the mid-20th century the imperial powers were forced to relinquish direct political governance of their colonial empires, often due to costly wars. Until after World War II, the Western nations owned outright most of Africa and much of Asia. Yet this new Third World political independence did not herald the end of imperial rule over their former colonies. The imperialists simply readjusted their domination through a neocolonial setup and continued to loot these countries, such as siphoning off over $1 trillion  every year since 2005 just through tax havens.

Likewise, for seven decades the imperial ruling classes endured repeated defeats attempting to overturn the seemingly invincible Russian revolution. But they only needed to succeed one time, using a new strategy, to emerge victorious.

A third example, the growing US national deficit due to the cost of the war on Vietnam forced Nixon to no longer peg the value of the dollar to gold at $35 an ounce. After World War II, the US had imposed the dollar as the international reserve currency, fixed at this exchange rate.  Today gold is $1806 an ounce, yet the dollar continues as the world reserve currency. The US rulers resolved their crisis by readjusting the manner their dollar reigned in international markets.

A fourth example is the world historic defeat dealt the empire at the hands of the Vietnamese. Yet Vietnam today poses no challenge to US supremacy, in sharp contrast to 50 years ago.

The US ruling class is well versed in the lessons gained from centuries of Western imperial supremacy. They have repeatedly demonstrated that the no longer effective methods of world control can be updated.  Bankruptcy in methods of rule may not signify a decline, but only the need for a reset, allowing the domination to continue.

Part 1:  US Economic and Financial Strength

Decline in US Share of World Production

A central element of the waning US empire argument comes from the unparalleled economic rise of China. As a productive powerhouse, the US has been losing ground. As of 2019, before the COVID year reduced it further, the US share of world manufacturing amounted to 16.8%, while China was number one, at 28.7%.

Similarly, the US Gross Domestic Product itself (GDP) slipped from 40% of the world economy in 1960 to 24% in 2019. GDP is the total market value of all the finished goods and services produced within a country.

When GDP is measured by the world reserve currency, the dollar, the US ranks first, at $21 trillion, with China number two at $14.7 trillion. Using the Purchasing Power Parity measure of GDP,  which measures economic output in terms of a nation’s own prices, China’s GDP surpasses the US at $24.16 trillion. By either measure, a steady US erosion over time is evident, particularly in relation to China, and a major concern for the US bosses.

Worsening US balance of trade reflects this decline. In 1971 the US had a negative balance of trade (the value of imports greater than the value of exports) for the first time in 78 years. Since then, the value of exports has exceeded that of imports only two times, in 1973 and 1975. From 2003 on, the US has been running an annual trade deficit of $500 billion or more. To date the US rulers “pay” for this by creating dollars out of thin air.

Ballooning US National Debt

The ballooning US national debt is considered another indicator of US imperial demise. The US debt clock puts the national debt at $28.5 trillion, up from $5.7 trillion in 2000. According to International Monetary Fund (IMF) numbers, the US debt is 118% of the GDP, near a historic high point, up from 79.2% at the end of 2019.

The international reserves of the imperialist nations do not even cover 2% of their foreign debt. In contrast, China tops the list with the largest international reserves, which covers 153% of its foreign debt.

However, today US debt as a percent of GDP is lower than in World War II, at the height of US economic supremacy. Germany’s debt to GDP ratio is 72%. Japan’s is 264%, making its debt over two and a half times the size of the country’s GDP. China’s is 66%.

Yet a key concern with the ballooning national debt − inflation caused by creating money backed with no corresponding increase in production − hasn’t been a problem in any of these countries, not even Japan. The immediate issue with debt is not its size in trillions of dollars, but the degree annual economic growth exceeds the annual interest payment on the debt.

In the US, this payout costs almost $400 billion a year, 1.9% of GDP. Federal Reserve Board president Powell stated: “Given the low level of interest rates, there’s no issue about the United States being able to service its debt at this time or in the foreseeable future.” Former IMF chief economist and president of the American Economic Association, Olivier Blanchard likewise declared: “Put bluntly, public debt may have no fiscal cost” given that “the current US situation in which safe interest rates are expected to remain below growth rates for a long time, is more the historical norm than the exception.” According to these ruling class economists, the huge size of the US national debt presents no economic difficulty for their bosses.

Technological Patents

Patents are an indicator of a country’s technological progress because they reflect the creation and dissemination of knowledge in productive activities. Today China is on the technological cutting edge in wind power, solar power, online payments, digital currencies, artificial intelligence (such as facial recognition), quantum computing, satellites and space exploration, 5G and 6G, drones, and ultra-high voltage power transmission. In 2019, China ended the US reign as the leading filer of international patents, a position previously held by the US every year since the UN World Intellectual Property Organization’s Patent Cooperation Treaty System began in 1978.

The failure of the US rulers to thwart China’s scientific and technological advances threatens the preeminence the US holds on technological innovation. Rents from the US corner on intellectual property is a major contributor to the US economy. The drastic measures the US has taken against Huawei exemplify the anxiety of the empire’s rulers.

US technological superiority is now being challenged. Yet, as John Ross points out, “Even using PPP measures, the US possesses overall technological superiority compared to China…. the level of productivity of the US economy is more than three times that of China.”1

The US Still Controls the Global Financial Network

While the world share of US manufacturing and exports has shrunk, the US overlords still reign over the world financial order. A pillar of their world primacy lies in the dollar as the world’s “reserve currency,” an innocuous term referring to US sway over the global financial and trade structure, including international banking networks, such as the World Bank and the IMF.

Following the 1971 end of the dollar’s $35 an ounce peg to gold, Nixon engineered deals with the Middle East oil exporting regimes, guaranteeing them military support on condition they sell their oil exclusively in dollars. This gave a compelling new reason for foreign governments and banks to hold dollars. The US could now flood international markets with dollars regardless of the amount of gold it held. Today, most of the world’s currencies remain pegged directly or indirectly to the dollar.

To facilitate growing international trade, the Society for Worldwide Interbank Financial Telecommunications (SWIFT) was created in 1973. SWIFT is a payment and transaction network used by international banks to monitor and process purchases and payments by individuals, companies, banks, and governments. Dominated by the US, it grants the country even greater mastery over world trade and financial markets. Here, China poses no challenge to US supremacy.

After the euro became established, the percent of world reserves held in US dollars diminished from the 71% share it held in 2001. Since 2003, the dollar has kept the principal share, fluctuating in the 60-65% range. Today, the percent of world nations’ currency reserves held in US dollars amounts to $7 trillion, 59.5% of international currency reserves.

In 2021 the dollar’s share of total foreign currency reserves is actually greater than in the 1980s and 1990s.

Because only a few reserve currencies are accepted in international trade, countries are not free to trade their goods in their own money. Rather, over 90% of nations’ imports and exports requires use of the dollar, the euro, or the currencies of other imperial states. The Chinese RMB, in contrast, constitutes merely 2.4% of international reserves, ranking China on the level of Canada. The US continues as the superpower in world currency reserves, while China is a marginal player.

The US Dollar as the World Reserve Currency

The US maintains preeminence because banks, governments and working peoples around the world regards US dollar as the safest, most reliable, and accepted currency to hold their savings.

A capitalist economic crisis, even when caused by the US itself, as in 2008, actually increases demand for the dollar, since the dollar is still viewed as the safe haven. People expect the dollar to be the currency most likely to retain its value in periods of uncertainty. Ironically, an economic crisis precipitated by the US results in money flooding into dollar assets, keeping world demand for dollars high. The 2008-09 crisis enabled the ruling class to advance their domination over working people, fleecing us of hundreds of billions of dollars.

SWIFT data show that China’s RMB plays a minor role in world trade transactions.  While China has become the world exporter, its currency was used in merely 1.9% of  international payments, versus 38% for the US dollar, with 77% of transactions in the dollar or euro. This means almost all China’s own imports and exports are not traded in Chinese currency, but in that of the US and its subordinates.

Being the leading force in SWIFT gives the US a powerful weapon. The US rulers can target countries it seeks to overthrow (such as Venezuela, North Korea, Syria, Cuba, and Iran) with sanctions declared illegal by the United Nations. SWIFT enables the US rulers to prevent those countries’ access to their overseas bank accounts, blocks their access to international trade as well as loans from the World Bank, the IMF and most international banks. The US uses its authority in the World Trade Organization to prevent countries like Venezuela from demanding the WTO punish the US for disrupting Venezuela’s legitimate trade by means of these sanctions.

Arguments that China and Russia are abandoning the dollar point out that, while in 2015 approximately 90% of trade between the two countries was conducted in dollars, by spring 2020 the figure had dropped to 46%, with 24% of the trade in their own currencies. This shows some increasing independence, yet almost twice as much China-Russia trade still takes place in the dollar rather than in their own money. Further, their moves from the dollar have been in reaction to US imposed sanctions and tariffs, forcing them off the dollar, not from their own choice to cast aside the dollar as the international currency.

If China and Russia had the means to create a new world economic order they could withdraw their over $1.1 trillion and $123 billion invested in US Treasury bonds and use the funds to start their own international financial structure.

That China pegs the RMB to the dollar, rather than the dollar pegged to the RMB, also indicates the economic power relations between China and the US. China has expressed unease about the US potential to cut China off from the SWIFT network. Zhou Li, a spokesperson for China’s Communist Party, urged his party’s leaders to prepare for decoupling from the dollar, because the US dollar “has us by the throat… By taking advantage of the dollar’s global monopoly position in the financial sector, the US will pose an increasingly severe threat to China’s further development.”

While China has displaced the US as the primary productive workhouse of the world, it remains far from displacing the US as the world financial center. The size of China’s economy has not translated into a matching economic power.

Part 2: Military and Ideological Forms of Domination

The US regards as its Manifest Destiny to rule the world. The US bosses equate their national security interests with global security interests; no place or issue is insignificant. The US sees its role as defending the world capitalist order even if narrow US interests are not immediately and practically involved.

The Question of a US Military Decline

The second central element of the waning US empire argument is based on the US armed forces failures in the Middle East wars. However, they overlook that the US rulers suffered more stinging defeats in Korea 70 years ago and Vietnam 50 years ago, when the US was considered at the height of its supremacy. While over 7000 US soldiers and 8000 “contractors,” a code word for mercenaries, have been killed in Afghanistan and Iraq, this is much smaller than the 41,300 troops killed in Korea, or the 58,000 in Vietnam. Although in wars against Iraq, Somalia, Libya, Syria, and Afghanistan, the US ruling class could not achieve its aims, these peoples’ anti-imperial struggles were derailed, a US key objective. To the extent the peoples of these countries “won,” they inherited a country in ruins.

Likewise, the rising British empire suffered defeats at the hands of the US in 1783 and 1814, but this had little impact on 19th century British global ascendancy.

Save Iraq in 1991, the US has not won a war since World War II. Yet even in its heyday, the US military did not take on and defeat another major power without considerable outside aid. Spain was mostly defeated in Cuba and the Philippines before the US attacked. The US entered World War I after the other fighting forces were reaching exhaustion. In World War II, the Soviet Red Army broke the back of the German Wehrmacht, not the US. Only against Japan did the US military play a key role in crushing an imperial rival, though even here, the bulk of Japanese troops were tied down fighting the Chinese.

While today, the US military is reluctant about engaging in a full-scale land war, this has been mostly the case for the whole 20th century before any alleged imperial deterioration. Previously, the US rulers proved adept at not entering a war until it could emerge on top once the wars ended.

The “Vietnam syndrome,” code word for the US people’s opposition to fighting wars to defend the corporate world order, continues to haunt and impede the US rulers when they consider new military aggressions. This “syndrome,” which Bush Sr boasted had been overcome, has only deepened as result of the Afghanistan and Iraq debacles. Yet the corporate class took advantage of these wars to loot trillions from public funds, with working people to pay the bill.

The US is spending over a trillion dollars to “upgrade” a nuclear capacity which could wipe out life on the planet.  Even if US military capacity were diminishing in some areas, this is immaterial so long as the US still can, with a push of the button, annihilate all it considers opponents, even if this means a likely mutually assured destruction. The US also possesses similarly dangerous arsenals of biological and chemical weapons. It is not rational to think the US rulers spend mind-boggling sums of money on this weaponry but will not use them again when considered necessary to preserve their supremacy.

The US empire’s military dominion remains firmly in place around the world. Peoples’ struggles to close US military bases have met with little success. US ruling class de facto military occupations overseas continue through its over 800 bases in over 160 countries. These constitute 95% of the world’s total foreign military bases.

To date, if there has been any lessening of US military destructive capacity, no new armed forces or uprisings have dared to take advantage of this. If some national force considered it possible to break out of the US world jailhouse, we would be seeing that.

Hybrid Warfare: US Regime-Change Tools Besides Military Intervention

Military victory is not necessary for the US rulers to keep “insubordinate” countries in line. It suffices for the US to leave in ruins their attempts to build political and economic systems that prioritize national sovereignty over US dictates.

When incapable of overturning a potential “threat of a good example” through military invasion, the US may engineer palace coups. Since 2000, it has succeeded in engineering coups in Honduras, Bolivia, Georgia, and Haiti, to name a few.

Alternatives to fomenting a military coup include the US conducting lawfare to overturn governments, as seen in Paraguay and Brazil. The US ruling class also skillfully co-opts “color revolutions,” as seen in the Arab Spring and in the implosion of the Soviet bloc. Worldwide, the US regularly violates the sovereignty of nations through its regime-change agencies such as the CIA, USAID, and NED.

Besides invasions, coups, lawfare, election interference, and color revolutions, the US relies on its command over the global financial system and the subservience of other imperialist nations. This enables the US overlords to impose crippling sanctions and blockades on countries that assert their national sovereignty. The blockades on Cuba, Venezuela, Iran, North Korea, and Syria constitute a boot on their neck, which have only become more severe the more these peoples valiantly defend their independence.

Condemnation of these blockades by working people and nations worldwide has yet to have material effect in constraining this imperial cruelty against whole peoples. Rather than a decline of the US empire’s ability to thwart another country’s right to determine their own future, there have been changes in method, from overtly militaristic to more covert hybrid warfare. Both are brutal and effective means of regime change.

US-First World Ideological Hegemony

The corporate leaders of the West wield world dominion over the international media, including news services, social media, and advertising. Their Coke and Disney characters, for instance, have penetrated even the remotest corners of the world. Today most of the world’s viewers of the news are fed a version of the news through media stage-managed by the US and its subordinate allies. In addition, there are almost 4 billion social media users in the world, with six social media companies having more than one billion users. China owns just one of these. Only the US and its subordinates have world reach in their control of news and social media, while China does not.

Ramon Labanino, one of the Cuban 5, illustrated how the US rulers use their media to foment the July 12 regime change operation in Cuba:

We are in the presence of an international media dictatorship, the big media are in the hands of imperialism and now the social networks and the alternative media also use them in a masterful way. They have the capacity, through data engineering, bots, to replicate a tweet millions of times, which is what they have done against Cuba. A ruthless attack on social networks and in the media to show a Cuba that is not real. On the other hand, we have an invasion in our networks to disarticulate our computer systems so that even we cannot respond to the lies. The interesting thing is the double purpose, not only that they attack us, but then we cannot defend ourselves because the media belong to them… Within the CIA, for example, they have a special operations group that is in charge of cyber attacks of this type and there is a group called the Political Action Group that organizes, structures and directs this type of attack.

Worldwide use of media disinformation and news spin plays a central role in preserving US primacy and acceptance of its propaganda. As Covert Action Magazine reported:

United States warmakers have become so skilled at propaganda that not only can they wage a war of aggression without arousing protest; they can also compel liberals to denounce peace activists using language reminiscent of the McCarthy era. Take the case of Syria. The people and groups one would normally count on to oppose wars have been the ones largely defending it. They have also often been the ones to label war opponents as “Assad apologists” or “genocide deniers”—causing them to be blacklisted.

The ruling class media’s effective massaging of what is called “news” has penetrated and disoriented many anti-war forces. This illustrates the appalling collapse of a world anti-war opposition that almost 20 years ago had been called “the new superpower,” not some decline of the US as world cop. Corporate media operations play a role comparable to military might in perpetuating US global control.

Part 3: The Threat US Rulers Perceive in China

Secretary of State Blinken spelled it out:

China is the only country with the economic, diplomatic, military and technological power to seriously challenge the stable and open international system, all the rules, values and relationships that make the world work the way we want it to, because it ultimately serves the interests and reflects the values of the American people.

China’s Foreign Ministry spokesperson Wang Wenbin responded to Washington’s view that the international system operates primarily to advance US corporate interests:

The ‘rules-based order’ claimed by the US…refers to rules set by the US alone, then it cannot be called international rules, but rather ‘hegemonic rules,’ which will only be rejected by the whole world.

Russian Foreign Minister Lavrov recently said:

The United States has declared limiting the advance of technology in Russia and China as its goal…They are promoting their ideology-driven agenda aimed at preserving their dominance by holding back progress in other countries.

The Challenge China Presents to US Rulers Differs from that of the Soviet Union

China’s development poses a threat to imperialist hegemony different from the former Soviet bloc. China competes in the world markets run by the Western nations, slowly supplanting their control. China’s economic performance, 70 years after its revolution, has been unprecedented in world history, even compared to the First World countries. In contrast, the Soviet economy after 70 years was faltering.

China does not provide the economic and military protection for nations striving to build a new society the way the Soviet Union had. The importance of the Communist bloc as a force constraining the US was immense and is underappreciated. The Communist bloc generally allied itself with anti-imperialist forces, encouraging Third World national liberation struggles as well as the Non-Aligned Movement. The Communist bloc’s exemplary social programs also prompted the rise of social-democratic welfare state regimes (e.g., Sweden) in the capitalist West to circumvent possible socialist revolution.

Now, with no Soviet Union and its allies to extend international solidarity assistance to oppressed peoples and nations, countries such as Venezuela, Cuba, and North Korea are much more on their own to defend themselves against US military maneuvers and blockades.

As John Ross points out, China is capable of slowly supplanting US-First World power over a long period of time, but in no position to replace these imperial states as world hegemon, nor does it desire to do so. US products are being driven out by China’s cheaper high-quality products and China’s more equitable “win-win” business arrangements with other countries, offering the opportunity for Third World countries to develop. However, China cannot displace the US in the world financial system, where the US and its allies retain overwhelming control.

The US has proven incapable of impeding China from becoming an independent world force. No matter the tariffs and sanctions placed on China, they have had little impact. Yet, the US has caused China to digress from its socialist planned economy, through US corporations and consumerist values penetrating the Chinese system.

Part 4:  The World if the US were in Decline

Revolutions on the International Stage

A weakened US imperialism would encourage peoples and nations to “seize the time” and score significant gains against this overlord’s hold on their countries. Yet since shortly after 1975, with the victories in Vietnam and Laos, a drought in socialist revolutions has persisted for almost half a century. If the US empire were in decline, we would find it handicapped in countering victorious socialist revolutions. However, the opposite has been the case, with the US rulers consolidating their hegemony over the world.

This contrasts with the 40-year period between 1917 and 1959, when socialist revolutions occurred in Russia, China, Korea, Vietnam, eleven countries across eastern Europe, and Cuba. These took place in the era of US rise, not decline. During this period, the US empire had to confront even greater challenges to its dictates than presented by today’s China and Russia in the form of the world Communist bloc, associated parties in capitalist countries, and the national liberation movements.

During the period of alleged US imperial demise, it has been socialist revolution that experienced catastrophic defeats. In the last 30 years, the struggle for socialist revolution has gone sharply in reverse, with the US and its subordinates not only blocking successful revolutions but overturning socialism in most of the former Communist sphere. The last three decades has witnessed greater consolidation of imperial supremacy over the world, not a deterioration.

The socialist revolutions that continue − North Korea, China, Vietnam, Laos, and Cuba − have all had to backtrack and reintroduce private enterprise and capitalist relations of production.  North Korea has allowed the growth of private markets; Cuba relies heavily on the Western tourist market. They have this forced upon them to survive more effectively in the present world neoliberal climate.

A victorious socialist revolution, even a much more limited anti-neoliberal revolution2 , requires a nation to stand up to the imperial vengeance that enforces neo-colonial subjugation. Small countries, such as Cuba, North Korea, and Venezuela, have established political and some economic independence, but they have been unable to significantly advance against crushing blockades and US-backed coups in order to create developed economies. Historically, the only countries that have effectively broken with dependency and developed independently based on their own resources have been the Soviet Union and China.

Raul Castro made clear this world primacy of the US neoliberal empire:

In many cases, governments [including the subsidiary imperial ones] do not even have the capacity to enforce their sovereign prerogatives over the actions of national entities based in their own territories, as these are often docilely subordinated to Washington, as if we were living in a world subjugated by the unipolar power of the United States. This is a phenomenon that is expressed with particular impact in the financial sector, with national banks of several countries giving a US administration’s stipulations priority over the political decisions of their own governments.

A test of the US overlords’ decline can be measured in the struggle against US economic warfare in the form of sanctions. To date, the US can arm twist most countries besides China and Russia into abiding by its unilateral sanctions against Cuba, Venezuela, Syria, North Korea, and Iran. The US rulers still possess the power and self-assurance to ignore United Nations resolutions against economic warfare, including the UN General Assembly’s annual condemnation of the US blockade on Cuba. The peoples and nations of the world cannot make the US rulers pay a price for this warfare.

Domestic Struggles by the Working Class and its Allies that Shake the System

If the US empire were weakened, our working class could be winning strikes and union organizing drives against a capitalist class on the defensive. But the working class remains either quiescent, its struggles derailed, or most strikes settled by limiting the degree of boss takebacks. The 1997 UPS and 2016 Verizon strike were two that heralded important gains for workers. So far, however, the weakening class at home is not the corporate bosses, but the working class and its allies.

The workers movement has not even succeeded in gaining a national $15 minimum wage. The US rulers can spend over $900 billion a year on its war machine even during a pandemic that has killed almost 700,000, amid deteriorating standard of living  − no national health care, no quality free education, no raising of the minimum wage − without angry mass protests. This money could be spent on actual national security at home: housing for the homeless, eliminating poverty, countering global warming, jobs programs, and effectively handling the pandemic as China has (with only two deaths since May 2020). Instead, just in the Pentagon budget, nearly a trillion dollars a year of our money is a welfare handout to corporations to maintain their rule over the world. This overwhelming imperial reign over our workers’ movement signifies a degeneration in our working class organizations, not in the corporate overlords.

A weakened empire would provide opportunities for working class victories, re-allocating national wealth in their favor. Instead, we live in a new Gilded Age, with growing impoverishment of our class as the corporate heads keep grabbing greater shares of our national wealth. Americans for Tax Fairness points out:

America’s 719 billionaires held over four times more wealth ($4.56 trillion) than all the roughly 165 million Americans in society’s bottom half ($1.01 trillion), according to Federal Reserve Board data. In 1990, the situation was reversed — billionaires were worth $240 billion and the bottom 50% had $380 billion in collective wealth.

US billionaire wealth increased 19-fold over the last 31 years, with the combined wealth of 713 billionaires surging by $1.8 trillion during the pandemic, one-third of their wealth gains since 1990.

This scandalous appropriation of working people’s wealth by less than one thousand bosses at the top without causing mass indignation and working class fightback, encapsules the present power relations between the two contending classes.

With a weakened empire, we would expect a rise of a militant mass current in the trade unions and the working class committed to the struggle to reverse this trend. Instead, trade unions support corporate governance and their political candidates for office, not even making noise about a labor party.

With a weakened empire, we would expect the US working people to be turning away from the two corporate parties and building our own labor party as an alternative. In 2016 the US electorate backed two “outsiders,” Bernie Sanders and Trump, in the primaries against the traditional Democratic and Republican candidates, but this movement was co-opted with little difficulty. That the two corporate-owned parties still wield the power to co-opt, if not extinguish, our working class movements, as with the mass anti-Iraq war movement, the Occupy movement, the Madison trade union protests, the pro-Bernie groundswells in 2016 and 2020, shows the empire’s continued vitality, not deterioration.

In 2020 most all liberals and lefts capitulated to the Democrats’ anti-Trumpism, under the guise of “fighting fascism.” The “resistance” became the “assistance.” The promising Black Lives Matter movement of summer 2020 became largely absorbed into the Biden campaign a few months later. If the corporate empire were declining, progressive forces and leftist groups would not have bowed to neoliberal politicians and the national security state by climbing on the elect-Biden bandwagon. The 2020 election brought out the highest percent of voters in over a century to vote for one or the other of two neoliberal politicians. This stunning victory for the US ruling class resulted from a stunning surrender by progressive forces. To speak of declining corporate US supremacy in this context is nonsense.

Likely Indicators of a Demise of US Supremacy

For all our political lives we have been reading reports of the impending decline of US global supremacy. If just a fraction of these reports were accurate, then surely the presidential executive orders that Venezuela, Nicaragua, Iran, and Cuba are “unusual and extraordinary threats to the national security of the United States” would have some basis in reality.

If US corporate dominion were declining, we might see:

  • The long called for democratization of the United Nations and other international bodies with one nation, one vote
  • Social democratic welfare governments would again be supplanting neoliberal regimes
  • Replacement of World Bank, WTO, and IMF with international financial institutions independent of US control
  • Curtailing NATO and other imperialist military alliances
  • End of the US dollar as the world’s reserve currency
  • Dismantling of US overseas military bases
  • Emergence of regional blocs independent of the US, replacing the current vassal organizations (e.g., European Union, OAS, Arab League, Organization of African Unity)
  • Nuclear disarmament rather than nuclear escalation
  • Working peoples of the world enforcing reductions in greenhouse gas emissions
  • A decline of the allure of US controlled world media culture (e.g., Disney, Hollywood)

Part 5: Conclusion:  US Decline looks like a Mirage

Proponents of US decline point to two key indicators: its diminished role in global production and ineffectiveness of the US ruler’s military as world cop. Yet, the US rulers, with the aid of those in the European Union and Japan, maintain world financial control and continue to keep both our country and the world under lock and key.

The US overlords represent the spokesperson and enforcer of the First World imperial system of looting, while compelling subservience from the other imperial nations. None dare pose as potential imperial rivals to the US, nor challenge it in any substantial manner.

It is misleading to compare China’s rise to the US alone, since the US represents a bloc of imperial states. To supplant US economic preeminence, China would have to supplant the economic power of this entire bloc. These countries still generate most world production with little prospect this will change. A China-Russia alliance scarcely equals this US controlled First World club.

To date, each capitalist crisis has only reinforced the US rulers’ dominion as the world financial hub. Just the first half of this year, world investors have poured $900 billion into the safe haven US assets, more than they put into funds in the rest of the world combined. So long as the US capitalists can export their economic downturns to other countries and onto the backs of its own working people, so long as the world turns to the US dollar as the safe haven, decline of US ruling class preeminence is not on the table.

The last period of imperial weakening occurred from the time of US defeat in Vietnam up to the reimposition of imperial diktat under Reagan and his sidekick, Margaret Thatcher. During this time, working peoples’ victories were achieved across the international stage: Afghanistan, Iran, Nicaragua, Ethiopia, and Grenada; Cuban military solidarity in Angola, Vietnam’s equivalent in Cambodia; revolution in Portugal and in its African colonies, in Zimbabwe, and seeming imminent victories in El Salvador and Guatemala. At home, a rising class struggle current arose in the working class, as in the Sadlowski Steelworkers Fight Back movement and the militant 110-day coal miners strike, which forced President Carter to back down. This worldwide upsurge against corporate rule ended about 40 years ago, as yet unmatched by new ones.

Proclamations of a waning US empire portray a wishful thinking bordering on empty bravado. Moreover, a crumbling empire will not lead to its final exit without a massive working peoples’ movement at home to overthrow it. Glen Ford observed that capitalism has lost its legitimacy, especially among the young: “But that doesn’t by itself bring down a system. It is simply a sign that people are not happy. Mass unhappiness may bring down an administration. But it doesn’t necessarily change a system one bit.”

Capitalism is wracked by crisis – inherent to the system, Marx explained. Yet, as the catastrophe of World War I and its aftermath showed, as the Great Depression showed, as Europe in chaos after World War II showed, capitalist crises are no harbinger of its collapse. The question is not how severe the crisis, but which class, capitalist or working class, takes advantage of it to advance their own interests.

A ruling class crisis allows us to seize the opportunity if our forces are willing to fight, are organized, and are well-led. As Lenin emphasized, “The proletariat has no other weapon in the fight for power except organization.” In regards to organization, we are unprepared. Contributing to our lack of effective anti-imperialist organization is our profound disbelief that a serious challenge at home to US ruling class control is even possible.

Whatever the indications of US deterioration as world superpower, recall that the Roman empire’s decay began around 177 AD. But it did not collapse in the West until 300 years later, in 476, and the eastern half did not collapse for 1000 years after that. Informing a Roman slave or plebe in 200 AD that the boot on their necks was faltering would fall on deaf ears. We are now in a similar situation. The empire will never collapse by itself, even with the engulfing climate catastrophe. Wishful thinking presents a dysfunctional substitute for actual organizing, for preparing people to seize the time when the opening arises.

  1. John Ross, “China and South-South Cooperation in the present global situation,” in China’s Great Road, p. 203.
  2. There is a continuous class struggle between popular forces demanding increased government resources and programs to serve their needs, against corporate power seeking to privatize in corporate hands all such government spending and authority. This unchecked corporate centralization of wealth and power is euphemistically called “neoliberalism.”  An anti-neoliberal revolution places popular forces in political control while economic power remains in the hands of the capitalist class.
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Afghan Crisis Must End America’s Empire of War, Corruption and Poverty

Millions of Afghans have been displaced by the war.  Photo: MikrofonNews

Americans have been shocked by videos of thousands of Afghans risking their lives to flee the Taliban’s return to power in their country – and then by an Islamic State suicide bombing and ensuing massacre by U.S. forces that together killed at least 170 people, including 13 U.S. troops.

Even as UN agencies warn of an impending humanitarian crisis in Afghanistan, the U.S. Treasury has frozen nearly all of the Afghan Central Bank’s $9.4 billion in foreign currency reserves, depriving the new government of funds that it will desperately need in the coming months to feed its people and provide basic services.

Under pressure from the Biden administration, the International Monetary Fund decided not to release $450 million in funds that were scheduled to be sent to Afghanistan to help the country cope with the coronavirus pandemic.

The U.S. and other Western countries have also halted humanitarian aid to Afghanistan. After chairing a G7 summit on Afghanistan on August 24, U.K. Prime Minister Boris Johnson said that withholding aid and recognition gave them “very considerable leverage – economic, diplomatic and political” over the Taliban.

Western politicians couch this leverage in terms of human rights, but they are clearly trying to ensure that their Afghan allies retain some power in the new government, and that Western influence and interests in Afghanistan do not end with the Taliban’s return. This leverage is being exercised in dollars, pounds and euros, but it will be paid for in Afghan lives.

To read or listen to Western analysts, one would think that the United States and its allies’ 20-year war was a benign and beneficial effort to modernize the country, liberate Afghan women and provide healthcare, education and good jobs, and that this has all now been swept away by capitulation to the Taliban.

The reality is quite different, and not so hard to understand. The United States spent $2.26 trillion on its war in Afghanistan. Spending that kind of money in any country should have lifted most people out of poverty. But the vast bulk of those funds, about $1.5 trillion, went to absurd, stratospheric military spending to maintain the U.S. military occupation, drop over 80,000 bombs and missiles on Afghans, pay private contractors, and transport troops, weapons and military equipment back and forth around the world for 20 years.

Since the United States fought this war with borrowed money, it has also cost half a trillion dollars in interest payments alone, which will continue far into the future. Medical and disability costs for U.S. soldiers wounded in Afghanistan already amount to over $175 billion, and they will likewise keep mounting as the soldiers age. Medical and disability costs for the U.S. wars in Iraq and Afghanistan could eventually top a trillion dollars.

So what about “rebuilding Afghanistan”? Congress appropriated $144 billion for reconstruction in Afghanistan since 2001, but $88 billion of that was spent to recruit, arm, train and pay the Afghan “security forces” that have now disintegrated, with soldiers returning to their villages or joining the Taliban. Another $15.5 billion spent between 2008 and 2017 was documented as “waste, fraud and abuse” by the U.S. Special Inspector General for Afghanistan Reconstruction.

The crumbs left over, less than 2% of total U.S. spending on Afghanistan, amount to about $40 billion, which should have provided some benefit to the Afghan people in economic development, healthcare, education, infrastructure and humanitarian aid.

But, as in Iraq, the government the U.S installed in Afghanistan was notoriously corrupt, and its corruption only became more entrenched and systemic over time. Transparency International (TI) has consistently ranked U.S.-occupied Afghanistan as among the most corrupt countries in the world.

Western readers may think that this corruption is a long-standing problem in Afghanistan, as opposed to a particular feature of the U.S. occupation, but this is not the case. TI notes that ”it is widely recognized that the scale of corruption in the post-2001 period has increased over previous levels.” A 2009 report by the Organization for Economic Cooperation and Development warned that “corruption has soared to levels not seen in previous administrations.”

Those administrations would include the Taliban government that U.S. invasion forces removed from power in 2001, and the Soviet-allied socialist governments that were overthrown by the U.S.-deployed precursors of Al Qaeda and the Taliban in the 1980s, destroying the substantial progress they had made in education, healthcare and women’s rights.

A 2010 report by former Reagan Pentagon official Anthony H. Cordesman, entitled “How America Corrupted Afghanistan”, chastised the U.S. government for throwing gobs of money into that country with virtually no accountability.

The New York Times reported in 2013 that every month for a decade, the CIA had been dropping off suitcases, backpacks and even plastic shopping bags stuffed with U.S. dollars for the Afghan president to bribe warlords and politicians.

Corruption also undermined the very areas that Western politicians now hold up as the successes of the occupation, like education and healthcare. The education system has been riddled with schools, teachers, and students that exist only on paper. Afghan pharmacies are stocked with fake, expired or low quality medicines, many smuggled in from neighboring Pakistan. At the personal level, corruption was fueled by civil servants like teachers earning only one-tenth the salaries of better-connected Afghans working for foreign NGOs and contractors.

Rooting out corruption and improving Afghan lives has always been secondary to the primary U.S. goal of fighting the Taliban and maintaining or extending its puppet government’s control. As TI reported, “The U.S. has intentionally paid different armed groups and Afghan civil servants to ensure cooperation and/or information, and cooperated with governors regardless of how corrupt they were… Corruption has undermined the U.S. mission in Afghanistan by fuelling grievances against the Afghan government and channelling material support to the insurgency.”

The endless violence of the U.S. occupation and the corruption of the U.S.-backed government boosted popular support for the Taliban, especially in rural areas where three quarters of Afghans live. The intractable poverty of occupied Afghanistan also contributed to the Taliban victory, as people naturally questioned how their occupation by wealthy countries like the United States and its Western allies could leave them in such abject poverty.

Well before the current crisis, the number of Afghans reporting that they were struggling to live on their current income increased from 60% in 2008 to 90% by 2018. A 2018 Gallup poll found the lowest levels of self-reported “well-being” that Gallup has ever recorded anywhere in the world. Afghans not only reported record levels of misery but also unprecedented hopelessness about their future.

Despite some gains in education for girls, only a third of Afghan girls attended primary school in 2019 and only 37% of adolescent Afghan girls were literate. One reason that so few children go to school in Afghanistan is that more than two million children between the ages of 6 and 14 have to work to support their poverty-stricken families.

Yet instead of atoning for our role in keeping most Afghans mired in poverty, Western leaders are now cutting off desperately needed economic and humanitarian aid that was funding three quarters of Afghanistan’s public sector and made up 40% of its total GDP.

In effect, the United States and its allies are responding to losing the war by threatening the Taliban and the people of Afghanistan with a second, economic war. If the new Afghan government does not give in to their “leverage” and meet their demands, our leaders will starve their people and then blame the Taliban for the ensuing famine and humanitarian crisis, just as they demonize and blame other victims of U.S. economic warfare, from Cuba to Iran.

After pouring trillions of dollars into endless war in Afghanistan, America’s main duty now is to help the 40 million Afghans who have not fled their country, as they try to recover from the terrible wounds and trauma of the war America inflicted on them, as well as a massive drought that devastated 40% of their crops this year and a crippling third wave of covid-19.

The U.S. should release the $9.4 billion in Afghan funds held in U.S. banks. It should shift the $6 billion allocated for the now defunct Afghan armed forces to humanitarian aid, instead of diverting it to other forms of wasteful military spending. It should encourage European allies and the IMF not to withhold funds. Instead, they should fully fund the UN 2021 appeal for $1.3 billion in emergency aid, which as of late August was less than 40% funded.

Once upon a time, the United States helped its British and Soviet allies to defeat Germany and Japan, and then helped to rebuild them as healthy, peaceful and prosperous countries. For all America’s serious faults – its racism, its crimes against humanity in Hiroshima and Nagasaki and its neocolonial relations with poorer countries – America held up a promise of prosperity that people in many countries around the world were ready to follow.

If all the United States has to offer other countries today is the war, corruption and poverty it brought to Afghanistan, then the world is wise to be moving on and looking at new models to follow: new experiments in popular and social democracy; renewed emphasis on national sovereignty and international law; alternatives to the use of military force to resolve international problems; and more equitable ways of organizing internationally to tackle global crises like the Covid pandemic and the climate disaster.

The United States can either stumble on in its fruitless attempt to control the world through militarism and coercion, or it can use this opportunity to rethink its place in the world. Americans should be ready to turn the page on our fading role as global hegemon and see how we can make a meaningful, cooperative contribution to a future that we will never again be able to dominate, but which we must help to build.

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