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America’s “Secret Wars” in Over 100 Countries Around the World: Empire Under Obama, Part 3
By: Andrew Gavin Marshall
Originally posted at The Hampton Institute
Obama’s global terror campaign is not only dependent upon his drone assassination program, but increasingly it has come to rely upon the deployment of Special Operations forces in countries all over the world, reportedly between 70 and 120 countries at any one time. As Obama has sought to draw down the large-scale ground invasions of countries (as Bush pursued in Afghanistan and Iraq), he has escalated the world of ‘covert warfare,’ largely outside the oversight of Congress and the public. One of the most important agencies in this global “secret war” is the Joint Special Operations Command, or JSOC for short.
JSOC was established in 1980 following the failed rescue of American hostages at the U.S. Embassy in Iran as “an obscure and secretive corner of the military’s hierarchy,” noted the Atlantic. It experienced a “rapid expansion” under the Bush administration, and since Obama came to power, “appears to be playing an increasingly prominent role in national security” and “counterterrorism,” in areas which were “traditionally covered by the CIA.” One of the most important differences between these covert warfare operations being conducted by JSOC instead of the CIA is that the CIA has to report to Congress, whereas JSOC only reports its most important activities to the President’s National Security Council.
During the Bush administration, JSOC “reported directly” to Vice President Dick Cheney, according to award-winning investigative journalist Seymour Hersh (of the New Yorker), who explained that, “It’s an executive assassination ring essentially, and it’s been going on and on and on.” He added: “Under President Bush’s authority, they’ve been going into countries, not talking to the ambassador or the CIA station chief, and finding people on a list and executing them and leaving. That’s been going on, in the name of all of us.”
In 2005, Dick Cheney referred to U.S. Special Forces as “the silent professionals” representing “the kind of force we want to build for the future… a force that is lighter, more adaptable, more agile, and more lethal in action.” And without a hint of irony, Cheney stated: “None of us wants to turn over the future of mankind to tiny groups of fanatics committing indiscriminate murder and plotting large-scale terror.” Not unless those “fanatics” happen to be wearing U.S. military uniforms, of course, in which case “committing indiscriminate murder and plotting large-scale terror” is not an issue.
The commander of JSOC during the Bush administration – when it served as Cheney’s “executive assassination ring” – was General Stanley McChrystal, whom Obama appointed as the top military commander in Afghanistan. Not surprisingly, JSOC began to play a much larger role in both Afghanistan and Pakistan. In early 2009, the new head of JSOC, Vice Admiral William H. McRaven ordered a two-week ‘halt’ to Special Operations missions inside Afghanistan, after several JSOC raids in previous months killed several women and children, adding to the growing “outrage” within Afghanistan about civilian deaths caused by US raids and airstrikes, which contributed to a surge in civilian deaths over 2008.
JSOC has also been involved in running a “secret war” inside of Pakistan, beginning in 2006 but accelerating rapidly under the Obama administration. The “secret war” was waged in cooperation with the CIA and the infamous private military contractor, Blackwater, made infamous for its massacre of Iraqi civilians, after which it was banned from operating in the country.
Blackwater’s founder, Erik Prince, was recruited as a CIA asset in 2004, and in subsequent years acquired over $1.5 billion in contracts from the Pentagon and CIA, and included among its leadership several former top-level CIA officials. Blackwater, which primarily hires former Special Forces soldiers, has largely functioned “as an overseas Praetorian guard for the CIA and State Department officials,” who were also “helping to craft, fund, and execute operations,” including “assembling hit teams,” all outside of any Congressional or public oversight (since it was technically a private corporation).
The CIA hired Blackwater to aid in a secret assassination program which was hidden from Congress for seven years. These operations would be overseen by the CIA or Special Forces personnel. Blackwater has also been contracted to arm drones at secret bases in Afghanistan and Pakistan for Obama’s assassination program, overseen by the CIA. The lines dividing the military, the CIA and Blackwater had become “blurred,” as one former CIA official commented, “It became a very brotherly relationship… There was a feeling that Blackwater eventually become an extension of the agency.”
The “secret war” in Pakistan may have begun under Bush, but it had rapidly expanded in the following years of the Obama administration. Wikileaks cables confirmed the operation of JSOC forces inside of Pakistan, with Pakistani Prime Minister Yousaf Raza Gillani telling the U.S. Ambassador to Pakistan, Anne Patterson (who would later be appointed as ambassador to Egypt), that, “I don’t care if they do it as long as they get the right people. We’ll protest in the National Assembly and then ignore it.”
Within the first five months of Obama’s presidency in 2009, he authorized “a massive expansion of clandestine military and intelligence operations worldwide,” granting the Pentagon’s regional combatant commanders “significant new authority” over such covert operations. The directive came from General Petraeus, commander of CENTCOM, authorizing Special Forces soldiers to be sent into “both friendly and hostile nations in the Middle East, Central Asia and the Horn of Africa.” The deployment of highly trained killers into dozens of countries was to become “systemic and long term,” designed to “penetrate, disrupt, defeat or destroy” enemies of the State, beyond the rule of law, no trial or pretenses of accountability. They also “prepare the environment” for larger attacks that the U.S. or NATO countries may have planned. Unlike with the CIA, these operations do not report to Congress, or even need “the President’s approval.” But for the big operations, they get the approval of the National Security Council (NSC), which includes the president, as well as most other major cabinet heads, of the Pentagon, CIA, State Department, etc.
The new orders gave regional commanders – such as Petraeus who headed CENTCOM, or General Ward of the newly-created Africa Command (AFRICOM) – authority over special operations forces in the area of their command, institutionalizing the authority to send trained killers into dozens of countries around the world to conduct secret operations with no oversight whatsoever; and this new ‘authority’ is given to multiple top military officials, who have risen to the top of an institution with absolutely no ‘democratic’ pretenses. Regardless of who is president, this “authority” remains institutionalized in the “combatant commands.”
The combatant commands include: AFRICOM over Africa (est. 2007), CENTCOM over the Middle East and Central Asia (est. 1983), EUCOM over Europe (est. 1947), NORTHCOM over North America (est. 2002), PACOM over the Pacific rim and Asia (est. 1947), SOUTHCOM over Central and South America and the Caribbean (est. 1963), SOCOM as Special Operations Command (est. 1987), STRATCOM as Strategic Command over military operations to do with outer space, intelligence, and weapons (est. 1992), and TRANSCOM handling all transportation for the Department of Defense. The State Department was given “oversight” to clear the operations from each embassy, just to make sure everyone was ‘in the loop,’ unlike during the Bush years when it was run out of Cheney’s office without telling anyone else.
In 2010, it was reported by the Washington Post that the U.S. has expanded the operations of its Special Forces around the world, from being deployed in roughly 60 countries under Bush to about 75 countries in 2010 under Obama, operating in notable spots such as the Philippines and Colombia, as well as Yemen, across the Middle East, Africa and Central Asia. The global deployment of Special Forces – alongside the CIA’s global drone warfare program – were two facets of Obama’s “national security doctrine of global engagement and domestic values,” in the words of the Washington Post, though the article was unclear on which aspect of waging “secret wars” in 75 countries constituted Obama’s “values.” Commanders for Special Operations forces have become “a far more regular presence at the White House” under Obama than George Bush, with one such commander commenting, “We have a lot more access… They are talking publicly much less but they are acting more. They are willing to get aggressive much more quickly.” Such Special Operations forces deployments “go beyond unilateral strikes and include the training of local counterterrorism forces and joint operations with them.”
So not only are U.S. forces conducting secret wars within dozens of countries around the world, but they are training the domestic military forces of many of these countries to undertake secret wars internally, and in the interests of the United States Mafia empire.
One military official even “set up a network” of private military corporations that hired former Special Forces and CIA operations to gather intelligence and conduct secret operations in foreign countries to support “lethal action”: publicly subsidized, privatized ‘accountability.’ Such a network was “generally considered illegal” and was “improperly financed.” When the news of these networks emerged, the Pentagon said it shut them down and opened a “criminal investigation.” Turns out, they found nothing “criminal,” because two months later, the operations were continuing and had “become an important source of intelligence.” The networks of covert-ops corporations were being “managed” by Lockheed Martin, one of the largest military contractors in the world, while being “supervised” by the Pentagon’s Special Operations Command.
Admiral Eric T. Olson had been the head of Special Operations Command from 2007 to 2011, and in that year, Olson led a successful initiative – endorsed by the Chairman of the Joint Chiefs Mike Mullen and Defense Secretary Robert Gates – to encourage the promotion of top special operations officials to higher positions in the whole military command structure. The “trend” was to continue under the following Defense Secretary Leon Panetta, who previously headed the CIA from 2009 to 2011. When Olson left his position as head of Special Operations Command, he was replaced with Admiral William McRaven, who served as the head of JSOC from 2008 to 2011, having followed Stanley McChrystal.
By January of 2012, Obama was continuing with seeking to move further away from large-scale ground wars such as in Iraq and Afghanistan, and refocus on “a smaller, more agile force across Asia, the Pacific and the Middle East.” Surrounded by the Joint Chiefs of Staff in full uniforms adorned with medals, along with other top Pentagon officials, President Obama delivered a rare press briefing at the Pentagon where he said that, “our military will be leaner, but the world must know the United States is going to maintain our military superiority.” The priorities in this strategy would be “financing for defense and offense in cyberspace, for Special Operations forces and for the broad area of intelligence, surveillance and reconnaissance.”
In February of 2012, Admiral William H. McRaven, the head of the Special Operations Command, was “pushing for a larger role for his elite units who have traditionally operated in the dark corners of American foreign policy,” advocating a plan that “would give him more autonomy to position his forces and their war-fighting equipment where intelligence and global events indicate they are most needed,” notably with expansions in mind for Asia, Africa and Latin America. McRaven stated that, “It’s not really about Socom [Special Operations Command] running the global war on terrorism… I don’t think we’re ready to do that. What it’s about is how do I better support” the major regional military command structures.
In the previous decade, roughly 80% of US Special Operations forces were deployed in the Middle East, but McRaven wanted them to spread to other regions, as well as to be able to “quickly move his units to potential hot spots without going through the standard Pentagon process governing overseas deployments.” The Special Operations Command numbered around 66,000 people, double the number since 2001, and its budget had reached $10.5 billion, from $4.2 billion in 2001.
In March of 2012, a Special Forces commander, Admiral William H. McRaven, developed plans to expand special operations units, making them “the force of choice” against “emerging threats” over the following decade. McRaven’s Special Operations Command oversees more than 60,000 military personnel and civilians, saying in a draft paper circulated at the Pentagon that: “We are in a generational struggle… For the foreseeable future, the United States will have to deal with various manifestations of inflamed violent extremism. In order to conduct sustained operations around the globe, our special operations must adapt.” McRaven stated that Special Forces were operating in over 71 countries around the world.
The expansion of global special forces operations was largely in reaction to the increasingly difficult challenge of positioning large military forces around the world, and carrying out large scale wars and occupations, for which there is very little public support at home or abroad. In 2013, the Special Operations Command had forces operating in 92 different countries around the world, with one Congressional critic accusing McRaven of engaging in “empire building.” The expanded presence of these operations is a major factor contributing to “destabilization” around the world, especially in major war zones like Pakistan.
In 2013, McRaven’s Special Operations Command gained new authorities and an expanded budget, with McRaven testifying before the Senate Armed Services Committee that, “On any day of the year you will find special operations forces [in] somewhere between 70 and 90 countries around the world.” In 2012, it was reported that such forces would be operating in 120 different countries by the end of the year.
In December of 2012, it was announced that the U.S. was sending 4,000 soldiers to 35 different African countries as “part of an intensifying Pentagon effort to train countries to battle extremists and give the U.S. a ready and trained force to dispatch to Africa if crises requiring the U.S. military emerge,” operating under the Pentagon’s newest regional command, AFRICOM, established in 2007.
By September of 2013, the U.S. military had been involved in various activities in Algeria, Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde Islands, Senegal, Seychelles, Togo, Tunisia, Uganda and Zambia, among others, constructing bases, undertaking “security cooperation engagements, training exercises, advisory deployments, special operations missions, and a growing logistics network.”
In short, Obama’s global ‘war of terror’ has expanded to roughly 100 countries around the world, winding down the large-scale military invasions and occupations such as those in Afghanistan and Iraq, and increasing the “small-scale” warfare operations of Special Forces, beyond the rule of law, outside Congressional and public oversight, conducting “snatch and grab” operations, training domestic repressive military forces in nations largely run by dictatorships to undertake their own operations on behalf of the ‘Global Godfather.’
Make no mistake: this is global warfare. Imagine for a moment the international outcry that would result from news of China or Russia conducting secret warfare operations in roughly 100 countries around the world. But when America does it, there’s barely a mention, save for the passing comments in the New York Times or the Washington Post portraying an unprecedented global campaign of terror as representative of Obama’s “values.” Well, indeed it is representative of Obama’s values, by virtue of the fact that he doesn’t have any.
Indeed, America has long been the Global Godfather applying the ‘Mafia Principles’ of international relations, lock-in-step with its Western lackey organized crime ‘Capo’ states such as Great Britain and France. Yet, under Obama, the president who had won public relations industry awards for his well-managed presidential advertising campaign promising “hope” and “change,” the empire has found itself waging war in roughly one hundred nations, conducting an unprecedented global terror campaign, increasing its abuses of human rights, war crimes and crimes against humanity, all under the aegis of the Nobel Peace Prize-winner Barack Obama.
Whether the president is Clinton, Bush, or Obama, the Empire of Terror wages on its global campaign of domination and subjugation, to the detriment of all humanity, save those interests that sit atop the constructed global hierarchy. It is in the interests of the ruling elite that America protects and projects its global imperial designs. It is in the interests of all humanity, then, that the Empire be opposed – and ultimately, deconstructed – no matter who sits in office, no matter who holds the title of the ‘high priest of hypocrisy’ (aka: President of the United States). It is the Empire that rules, and the Empire that destroys, and the Empire that must, in turn, be demolished.
The world at large – across the Middle East, Africa, Asia, Latin America – suffers the greatest hardships of the Western Mafia imperial system: entrenched poverty, exploitation, environmental degradation, war and destruction. The struggle against the Empire cannot we waged and won from the outside alone. The rest of the world has been struggling to survive against the Western Empire for decades, and, in truth, hundreds of years. For the struggle to succeed (and it can succeed), a strong anti-Empire movement must develop within the imperial powers themselves, and most especially within the United States. The future of humanity depends upon it.
Or… we could all just keep shopping and watching TV, blissfully blind to the global campaign of terror and war being waged in our names around the world. Certainly, such an option may be appealing, but ultimately, wars abroad come home to roost. As George Orwell once wrote: “The war is not meant to be won, it is meant to be continuous. Hierarchical society is only possible on the basis of poverty and ignorance. This new version is the past and no different past can ever have existed. In principle the war effort is always planned to keep society on the brink of starvation. The war is waged by the ruling group against its own subjects and its object is not the victory over either Eurasia or East Asia, but to keep the very structure of society intact.”
Andrew Gavin Marshall is a 26-year old researcher and writer based in Montreal, Canada. He is Project Manager of The People’s Book Project, chair of the Geopolitics Division of The Hampton Institute, research director for Occupy.com’s Global Power Project, and hosts a weekly podcast show with BoilingFrogsPost.
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Meet the Next Country That Might Explode into Protests Against Corporate Plunder and Slave Labor Working Conditions
Meet the Next Country That Might Explode into Protests Against Corporate Plunder and Slave Labor Working Conditions
Will the wave of global unrest crash on Indonesia next?
By: Andrew Gavin Marshall
Originally published on AlterNet
Indonesia – a Southeast Asian archipelago that is home to the largest Muslim population on Earth – is a key global hot spot for corporate plundering, worker exploitation, land grabs and environmental devastation. Simultaneously, the country is becoming a tinderbox for militant labour unrest, peasant rebellion and indigenous resistance. After 500 years of domination by imperial powers, the population of Indonesia is organizing and resisting the ‘new order’ of global corporate colonization. Much like Brazil and Turkey, Indonesia has been praised by the imperial powers as a “model democracy” and the IMF hails its progress as an “emerging economy.” The illusions of Turkish and Brazilian state-capitalist ‘democracy’ have been revealed by massive urban uprisings. The conditions are present for Indonesia to become home to its own national uprising, the only question may be: what will be the spark?
Indonesia: A “Model Democracy” and “Emerging Economy”
Indonesia has been roundly praised by the major imperial powers as a “model democracy” – assuming they have any legitimacy to judge what that may be, with former World Bank president and Pentagon official in the Bush administration, Paul Wolfowitz, having written that Indonesia was “an example for other aspiring democracies,” having shown a “remarkable” achievement in “building democratic institutions.” Then-Secretary of State Hillary Clinton praised the “great transformation” of Indonesia since the dictatorship of Suharto, stating: “If you want to know if Islam, democracy, modernity and women’s rights can coexist, go to Indonesia.”
President Obama even praised Indonesia’s “extraordinary democratic transformation” which demonstrated “that democracy and development reinforce one another.” British Prime Minister David Cameron proclaimed that Indonesia could “inspire” young Muslims around the world “to choose democracy as their future.” German Chancellor Angela Merkel said that Germans “view Indonesia as a model of peaceful and tolerant development,” and even suggested that the way in which Indonesia tackled its debt was “an example of what can be achieved and what Europe has to achieve.” Perhaps, Greece and Spain – in time – could become what Merkel views as “model democracies” along the lines of Indonesia.
Indonesia is the largest economy in Southeast Asia and one of the top 20 economies in the world – listed among the major “emerging economies” – with one of the cheapest labour forces in Asia, which the New York Times explained was “a main reason [corporations] are attracted to Indonesia.” In 2013, Indonesia was listed as the world’s 12th largest exporter of textile products, with the minimum wage averaging $80-160 per month (as determined by local governments), compared with $75 in Cambodia and $37 in Bangladesh.
In a country of 240 million people, roughly 120 million live on less than $2 per day, though the government maintains that only 12% of the population – 30 million – live in poverty (which it defines as less than 86 cents U.S. per day), while 40% of children under the age of five suffer from moderate to severe ‘stunting’ due to malnutrition.
Despite the mass poverty and increasing growth of slums, a small section of Indonesian society has witnessed a remarkable growth in wealth, with the explosion of shopping malls, luxury cars and goods, and high-rise buildings. For Indonesia, “wealth and poverty are both on the rise.” The combined wealth of the country’s 40 richest individuals equaled that of its 60 million poorest citizens. Standard Chartered Bank noted that, “despite the rhetoric about middle classes contributing to growth in Indonesia, 82 percent of the population is living on less than four dollars a day.” Further, most of the economic ‘growth’ was experienced only by the consumer elite within the country.
A Pew Research Poll released in 2013 noted that only 37% of Indonesians felt their economy was “doing well,” with the number one concern needing to be addressed was that of rising prices, ranked above economic disparity, unemployment and sovereign debt. Roughly 75% of Indonesians felt that the economic system “generally favors the wealthy,” with 60% saying inequality had increased in recent years.
A Human Rights Watch researcher noted that with the “routine” trampling of rights for religious and ethnic minorities in Indonesia, along with brutal repression of peaceful protests, the imprisoning of political prisoners, along with torture and denial of medical care for prisoners, “the country is by no means a bastion of tolerance.” A former Indonesian economic minister recently noted that “the outlook for Indonesia becoming a well-functioning democracy is fast deteriorating,” with a tiny elite controlling the country while most people “have few prospects for improving their lives.” A former Indonesian foreign minister suggested that the country was fast in need of “a second wave of democratic reforms,” as when economic conditions worsen, “we will have a reaction on the street” since there existed within the country, a “dissatisfaction at a deeper level with the current state of democracy.” Even the Wall Street Journal noted that with the country’s continuous economic growth, “underneath lies a restlessness for real change that would affect the common person.”
But let’s not let facts get in the way of further praise; the IMF certainly doesn’t.
The Rising “Restlessness” from “Underneath”
The IMF has written in glowing terms of the success of Indonesia’s “structural reforms” which have led to “healthy” balance sheets for corporations and financial institutions. Growth forecasts remained above 6%, though more work could be done, noted the IMF: ending fuel subsidies, investing in infrastructure (meeting the demands of corporations), and to continue with “reforms” to labour laws, allowing for reduced wages, less benefits and protections for workers, and thus, attracting “foreign investment.”
In April of 2013, the IMF warned that “emerging Asia” needed to be careful about asset bubbles – like those that helped plunge the U.S. economy into crisis – and recommended the countries of the region “liberalize rigid labour and product markets,” thus allowing for cheaper labour in what is already a region for some of the cheapest labour on Earth.
Being the 12th largest exporter of textile products in the world, Indonesia is home to a significant sweatshop economy, marred by pervasive exploitation of labour. One Taiwanese-owned sweatshop employs nearly 10,000 people, mostly women, who work for 50 cents per hour making shoes for Nike, where the employees were verbally and physically abused. Indonesia is home to Nike’s third largest manufacturing base, following China and Vietnam, exploiting roughly 140,000 workers.
Indonesia’s ‘labour law’ – which was passed several years earlier – provided for slightly increased wages and severance pay in the event that a company decides to ‘downsize’ its workforce. Corporations have gotten around this law by hiring labour as ‘contract workers’ and firing them without benefits (what Indonesians call “outsourcing”). While corporations have been able to find legal loopholes – or simply ignore the law altogether – they have been facing increased pressure from labour unrest in recent years, and not merely in the textiles sector.
As the economy boomed in recent years, the labour force wanted a greater share of the benefits. Strikes had been increasing with demands for higher wages by mine workers, supermarket clerks, pilots and others who have “disrupted business operations – and could potentially deter foreign dollars.” The country had 53 strikes in the first seven months of 2010 alone, and they were continuing through subsequent years.
A strike took place at a plant owned by the French retail giant Carrefour in 2011 in protests against the company’s avoidance of adhering to Indonesia’s labour laws and in demand of higher wages. The strike was organized by one of the country’s largest trade unions – Kasbi – which represents 130,000 workers and has as its slogan, “Young, brave, militant.” Increasingly, labour organizers and workers have been connecting through social media, gaining access to more information than ever before and facilitating new ways to organize.
During the strike wave of 2011, Indonesia’s investment chief complained about the labour unrest in his country in an interview with the New York Timeswhere he expressed his fears that it would “reduce profit margins and competitiveness,” adding: “My concern is this will trigger a domino effect … it may trigger pressure for a rise in wages that not all companies can afford.” In May of 2013, Basri would go on to be appointed as the country’s finance minister.
In early 2012, Nike paid a $1 million out-of-court settlement for not having paid 4,500 workers at a factory for over 600,000 hours of overtime over the course of two years. The chairman of Indonesia’s trade union Serikat Pekerja National noted, “This has the potential to send shockwaves through the Indonesian labour movement… We have only just begun.”
In October of 2012, roughly 2.8 million factory workers across the country went on a one-day strike supported by several unions in 24 cities. In the capital of Jakarta, more than 700 companies were shut down for the day, while the government deployed 11,000 police officers and 4,000 military personnel to “secure” the rallies throughout the city. The mass protests were in opposition to companies hiring labour as “contract workers” and in demand of higher wages. Rallies were held across Jakarta and the country, where trade union leaders gave what the Financial Times referred to as “fiery speeches,” while the managing director of the American Chamber of Commerce in Indonesia complained that corporations viewed the existing labour laws as “counter-productive.”
The mass protests continued into November, at which point the government announced it was considering a minimum wage increase of up to 50%, though corporations were warning they would move their factories elsewhere. Following continued agitation over the course of the month, which saw demonstrators entering factories, urging workers to join them and shutting down production, the new governor of Jakarta approved a 44% increase in the province’s minimum wage. Tens of thousands of workers continued to protest, while business leaders complained that, “the minimum wage should be lower.” As the protests threatened the President’s major infrastructure development plans, one large corporate group warned: “The frequent protests are obstructive… They are getting to be too much and must be stopped.”
As the Asian Development Bank (ADB) warned earlier in 2012, while many governments in Asia had been experiencing rapid economic growth, rising inequality had become a major problem that could lead to social unrest and create “pressure to take on populist policies that are economically not very wise.” It advised Asian countries “to do something about it.”
In December, President Susilo Bambang Yudhoyono (commonly known as SBY) declared an end to the “era of cheap labour,” noting that wages were set to increase in a few provinces, though added that the government could not tolerate “disturbances in the production process.” A government economic minister stated in a speech that, “We should also take sides with businesses. Companies unable to comply with the minimum wage increases should immediately file a report with the government to demand a wage freeze. We will definitely facilitate them.” The threat of unrest and resistance had prompted several Asian countries – including Indonesia, Thailand, Vietnam, Malaysia and China – to begin increasing their minimum wages by the end of the year.
As 2013 arrived and the wage increases were set to take effect, companies were finding their way around the new laws. Several Nike plants hired police and military officials to intimidate workers into signing away their rights to higher wages. Even before the New Year, roughly a thousand companies were seeking exemptions from the government in paying the higher wages. By mid-January, 941 companies had sought exemptions, by which time the government had granted 47. Thousands of workers took to the streets in protest, often met with police brutality or violence from “organized thugs.”
By early February, the government announced that of the total of 941 companies wanting exemptions, “we will grant about 80 percent of them.” Instead, 500 companies were given a “delay” in paying higher wages, with more expected. Labour groups were increasingly threatening action and agitation in response. Tens of thousands of workers continued to take to the streets in protest, demanding companies adhere to the law, that the government enforce it, and requesting a health insurance and pension system. Business groups were threatening to layoff up to a million workers and close 1,300 factories if they were forced to follow the law. One business group complained that companies were “facing tough times.”
On May 1 – the international labour day known as ‘May Day’ – tens of thousands of workers in Jakarta went on a one-day strike and march, bringing the city to a “standstill.” Roughly 50,000 people protested outside the Presidential Palace, not only demanding better wages and conditions, but also opposing the government’s new plan to raise fuel prices (by cutting subsidies). The Indonesia press reported that roughly 135,000 workers joined the May Day marches, as business groups complained such protests were a threat to “economic growth.”
Like any good state-capitalist ‘democracy,’ Indonesia went on to ignore the will of the people and bow to the will of the IMF. Following the advice of the IMF and World Bank, the government of Indonesia passed a law in mid-June to reduce fuel subsidies and increase the cost of fuel by 44% over the coming weeks. Thousands of protesters took to the streets over several days, met with tens of thousands of police and security personnel. Students and other groups joined demonstrations across the country, noting that increased costs of fuel raise the prices of other goods and services, such as food, clothing and public transportation. The cut to subsidies was designed to “ease investor concerns” about Indonesia’s finances. During the protests, the police used excessive force – as well as hiring “local thugs” – to attack protesters, and arrested 229 students in 62 cities, with roughly 118 students injured during protests, often by being fired upon with rubber bullets.
Can it really be said that Indonesia is a “model democracy” when so much of its economic “growth” is built on the backs of the mass exploitation of workers, and for the benefit of undemocratic global corporations? Indonesia is a model, perhaps, but not of democracy: it is a model for the global corporate plutocracy.
Though it has been fifteen years since the end of dictatorship, Indonesia’s transition to democracy has barely begun. The democratic aspirations of Indonesians are not seen in the luxury cars, shopping malls or high-rises that span the cityscapes – as the idolatries of economic ‘growth’ – but rather, it is seen in the workers who emerge from the factory sweatshops and take to the streets en masse, demanding the promises of democracy and economic growth be realized at long last.
Extractive Industries and Exploited Communities
Suharto’s ‘New Order’ witnessed the carving up of much of Indonesia’s wealth for American, British, French, German, Japanese and other corporations from the powerful countries of the world. The neoliberal era – from the 1980s onward – witnessed an exponential increase in corporate colonization, a process that accelerated with Indonesia’s transition from dictatorship to ‘democracy.’
In the early 1970s, the American oil company Mobil Oil discovered one of the world’s largest natural gas fields at Arun, located in Aceh province. For three decades, the Indonesian military waged a battle against the Free Aceh Movement (GAM), which sought autonomy from the country, leaving 10-30,000 people killed. When Mobil merged with Exxon in 1999, it retained control of the Arun project, and the military continued to attack local villages with the direct support of ExxonMobil. A lawsuit against Exxon alleges that the company “supervised, controlled and directed” military personnel who committed major human rights abuses between 1999 and 2001.
The region of West Papua was not part of Indonesia, but was a separate Dutch colony struggling for independence in the early 1960s. The U.S. and U.N. negotiated an agreement in 1962 where West Papua would be under the “interim control” of Indonesia for six years, at which point the country would vote for independence or to be part of Indonesia. When Suharto took full power in 1967, he negotiated an agreement with Freeport to grant a mining concession in the region. When the election in 1969 saw overwhelming support for independence, Suharto declared the area “a military operation zone” and sent in the military to crush the people’s local movement. Repression was rampant for decades, with up to 100,000 West Papuans having been murdered since 1969 in what some have referred to as a “slow-motion genocide.” Despite the region’s immense natural wealth, it remains as Indonesia’s poorest province. The Freeport mine itself has created “irreversible ecological devastation” to the region, with hundreds of thousands of tons of waste dumped into waterways and valleys daily.
The U.S.-based Freeport mine in West Papua – the largest copper and gold reserves in the world – experienced a three-month strike in 2011, where workers were demanding higher wages. Workers were paid as low as $1.50 per hour, while the mine made the company $5 billion in 2010 alone. Eventually, after a great deal of violence and injuries, including one death, the workers agreed to a 37% wage increase (far from their demands for a five-fold increase), but one union official noted, “This is not the end of our struggle.” Freeport had been paying millions of dollars directly to the police which guard its facilities, who had – on occasion – opened fire on the workers as they were protesting against the mine. In the ten years between 2001 and 2011, Freeport had given $79.1 million to Indonesian police and military forces.
As Amnesty International has noted, the police and security forces in Indonesia were often implicated in “torture, excessive use of force and unlawful killings.” Freeport’s chairman in 2005 explained: “There is no alternative to our reliance on the Indonesian military and police… The need for this security… as well as the decisions regarding our relationships with the Indonesian government and its security institutions, are ordinary business activities.”
Tin mining on the Indonesian island of Bangka has been popular among imperialists since the Dutch colonized the country in the early 19th century. Combined with the neighbouring island, Belitung, tin mining on these islands accounts for 90% of Indonesia’s tin, with the country being the second-largest exporter of tin in the world, used largely for consumer electronics. Indonesia supplies companies such as Samsung, Foxconn, Apple, Sony and LG with tin from these islands. The miners get paid low wages and workplace injuries (and deaths) have been on the rise in recent years. Further, the “lucrative but destructive trade… has scarred the island’s landscape, bulldozed its farms and forests, [and] killed off its fish stocks and coral reefs.” This destruction has often resulted in protests, some numbering over tens of thousands of locals.
In November of 2012, the U.S. Undersecretary of Commerce for International Trade Francisco Sanchez, stated that the United States hoped to “double its trade with Indonesia over the next five years,” as U.S. corporations were getting “excited about the opportunities” in the country for ‘growth.’ Sanchez traveled to Indonesia to encourage more trade between the countries, and he was accompanied by a delegation of corporate leaders from Cisco Systems, General Electric, and Honeywell International, among others.
Among the “opportunities” for growth – inspiring the ‘excitement’ of multinational corporate plunderers – is the profit that can be extracted from partaking in major land grabs and the destruction of the environment, with the added bonus of displacing thousands of peasant and indigenous communities in the process.
Land Grabs Lay Waste to Indonesia
Massive land grabs have been accelerating around the world since 2009, driving Indigenous peoples and farming communities off the land as foreign investors lay waste to the environment and create cash crops for export to rich countries. Oxfam noted in 2011 that the global land grabs were “already leading to conflict, hunger and human rights abuses,” since the ‘investment’ deals ignore the rights of those who live on the land, “leaving them homeless and without land to grow enough food to eat and make a living.” Land grabbing has been encouraged by the World Bank and IMF, most aggressively in Africa, but have spread across the world, from Central America to Indonesia.
In April of 2013, a Canadian mining company – East Asia Minerals Corporation – announced that it was working with the Indonesian government to “re-zone” nearly 2 million hectares of protected forest in Aceh for “industrial activities,” including mining, logging, and palm oil plantations. The company announced in a press release that they were working with the government to reclassify zones from “protected forest” to “production forest.”
Environmental groups warned that the reclassification could put biodiversity at risk, including endangered rhinos, elephants, orangutans, and tigers. Scientists from the Asia chapter of the Association for Tropical Biology and Conservation released a declaration stating: “Aceh forests are essential for food security, regulating water flows in both the monsoon and drought seasons to irrigate rice fields and other cash crops… Forest disruption in Aceh’s upland areas will increase the risk of destructive flooding for people living downstream in the coastal lowlands.” Despite opposition from environmental groups, scientists, human rights groups and local communities, the “model democracy” government said it hoped to approve the plan “as soon as possible,” which the mining company said was “positive news.”
This “positive news” has the effect of not only destroying what’s left of the third largest rainforest on Earth – and causing irreversible harm to its biodiversity – but it is also displacing the Indigenous and small farmer communities that live off the land and forests, most of whom are not compensated and forced to either migrate to urban slums or work for minimal wages at the companies that stole their land. Many communities resist, but are met with the “heavy-handed security and paramilitary forces.” In the previous ten years, more than 10 million hectares of land was “given away and converted to plantations,” destroying thousands of communities and laying waste to the environment in the process.
Over 600 conflicts over land in Indonesia were reported in 2011, including 22 deaths and hundreds of injuries. A national human rights commission in Indonesia reported over 5,000 human rights violations in 2012, largely linked to companies involved in deforestation. The founder of the Indonesian Peasant Union – with a membership of 700,000 – noted that the rapid expansion of palm oil plantations “has spawned a new poverty and is triggering a crisis of landlessness and hunger,” marred by forced evictions, violence, torture and even death.
A director of Friends of the Earth in Indonesia noted: “Who controls the land in Indonesia controls the politics. Corruption is massive around natural resources. We are seeing a new corporate colonialism. In the Suharto era you were sent to prison for talking about the government. Now you can be sent there for talking about corporations.” The police presence around plantations has been increasing, as has violent repression as the government “is trying to clamp down on mass protests.”
In the span of thirty years, global agribusiness, pulp and paper companies have turned the islands of Sumatra and Borneo – the third and sixth largest islands in the world – into near wastelands, threatening the incredible biodiversity – including endangered tigers, rhinos and elephants – to develop biofuels, vegetable oil and toilet paper. Scientists and environmentalists recently warned that “one of the 21st century’s greatest ecological disasters is rapidly unfolding.” In a matter of years, more than half of the third largest rainforest on Earth has been destroyed, and 70% of what remains is marked for “transition” into plantations. Nearly one million hectares of rainforest are destroyed every year in Indonesia, with scientists suggesting the endangered wildlife on the region will be extinct within a couple decades.
One Greenpeace official in Indonesia explained: “This is the fastest, most comprehensive transformation of an entire landscape that has ever taken place anywhere in the world including the Amazon. If it continues at this rate all that will be left in 20 years is a few fragmented areas of natural forest surrounded by huge manmade plantations. There will be increased floods, fires and droughts but no animals.” A director of Indonesia’s largest environmental group, Walhi, noted, “The legacy of deforestation has been conflict, increased poverty, migration to the cities and erosion of habitat for animals. As the forests come down, social conflicts are exploding everywhere.” Coal, copper, and gold mining companies are moving into Sumatra and Kalimantan, causing widespread deforestation and violent conflicts with local communities. The rare of deforestation is also increasing rapidly in the poorest province of West Papua.
In May of 2013, the United Nations Development Program (UNDP) reported that Indonesia – with the third largest tropical forest coverage in the world – was “not doing enough to protect its forests.” While Indonesia passed a moratorium on deforestation in May of 2013, a number of loopholes make it almost meaningless.
Due to its rapid rate of deforestation and the draining of peatlands, Indonesia is one of the world’s largest emitters of greenhouse gasses, ahead of Saudi Arabia, Australia, Brazil and France. The large paper company – APRIL (Asia Pacific Resources International Holdings) – has come into conflict with multiple villages in Sumatra as it undertakes a project to destroy 450,000 hectares of rainforest, an area which holds roughly 1.5 billion tons of carbon. A local village leader noted: “We would die for this [forest] if necessary. This is a matter of life and death. The forest is our life. We depend on it when we want to build our houses or boats. We protect it. The permits were handed out illegally, but now we have no option but to work for the companies or hire ourselves out for pitiful wages.”
The devastation to rainforests has not merely been confined to Indonesia, but has spread at an alarming rate across much of Southeast Asia, including Vietnam, Thailand, Laos, Cambodia and Burma, largely being driven by export-led growth, monoculture plantations, and the construction of dams and other large-scale infrastructure projects. The increasing rates of deforestation are exacerbated by the global explosion in land grabs, with the World Bank and other financial institutions like Deutsche Bank funding land grabs across Southeast Asia in which Indigenous people “are bearing the brunt of the seizures.”
In late June, fires started on or near major palm oil plantations owned by large companies became so large that the pollution spread across Malaysia and Singapore, causing a “hazardous” pollution warning in Singapore in the “worst haze” the country ever faced. Soon after, the Indonesian government announced it was investigating eight companies that might have started the fires on Sumatra, though the companies immediately blamed small landholders. An official from the Rainforest Action Network noted, “This recent smog is just the most visible part of the serious deforestation and human rights crisis sweeping Indonesia… Widespread, illegal burning to clear rainforests and peatlands for palm oil and pulp and paper plantation expansion is unfortunately a well-established yearly ritual in Sumatra.”
Farmers, workers, Indigenous people, women, youth, students and NGOs have been forming groups in which they pledged “resistance” in an “alliance against land grabbing” by the government and international corporations. Police have been using excessive force against protesters and Indigenous communities, and several peaceful activists have been imprisoned for opposing land grabs, deforestation and the construction of plantations.
The Indonesian People’s Alliance (IPA) formed in 2013 as an alliance of dozens of civil society groups, seeking to unite forces across Indonesia and internationally to oppose trade “liberalization” and respect national sovereignty. An IPA coordinator declared: “We have been told to preserve our forests, but large industry continues to wreck our environment and marginalize our own people. We cannot continue washing their dirty laundry.”
In June, a “militant peasant organization” – the Alliance of Agrarian Reform Movement (AGRA) – protested in the thousands against land grabbing in Indonesia, stating that the land “needs to be distributed back to the peasantry through genuine agrarian reform.” An official from the Asian Peasant Coalition (APC) – a regional Asian alliance of peasant organizations – noted that resistance was growing not only within Indonesia, but across much of Asia, where peasants were working to launch an “anti land grabbing campaign.”
Is an Indonesian Revolution in the Making?
The circumstances certainly exist – with 120 million people living on less than $2 per day, mass exploitation of workers, labour unrest, violent state repression, land grabs and corporate plundering, peasant and indigenous resistance, environmental devastation, and political corruption – for Indonesia to potentially witness a mass uprising. Workers are organizing across the cities against labour exploitation, while peasants and indigenous communities are organizing across the countryside against land grabs and environmental degradation, and increasingly, they are organizing and working together.
While the leaders of the imperial powers and institutions of the world praise Indonesia as an “emerging economy” and “model democracy,” the population of Indonesia is rising up against the corrupt, plutocratic elites, violent repression, environmental devastation, widespread exploitation and plundering that comes with those buzzwords. In short, the people of Indonesia are struggling to turn their country into a real model for democracy, and for the economy to emerge in respect of that ideal, not against it.
The demolition of a park in Istanbul sparked the urban uprising in Turkey, and the plan to raise bus fare sparked the urban uprising in Brazil. So perhaps the question is not ifIndonesia will experience similar circumstances, but rather: when, and what will be the spark?
Only time will tell, and no doubt, the Indonesians will let us know when it has happened.
Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada. He is Project Manager of The People’s Book Project, head of the Geopolitics Division of the Hampton Institute, the research director of Occupy.com’s Global Power Project, and has a weekly podcast with BoilingFrogsPost.
In the Arms of Dictators: America the Great… Global Arms Dealer
By: Andrew Gavin Marshall
The following is a first draft sample from a chapter currently being written for The People’s Book Project. Read more about The People’s Book Project here, and please consider donating to help the Project continue.
The American imperial system incorporates much more than supporting the occasional coup or undertaking the occasional war. Coups, wars, assassinations and other forms of overt and covert violence and destabilization, while relatively common and consistent for the United States – compared to other major powers – are secondary to the general maintenance of a system of imperial patronage. A “stable” system is what is desired most by strategic planners and policy-makers, but this has a technical definition. Stability means that the populations of subject nations and regions are under “control” – whether crushed by force or made passive by consent, while Western corporate and financial interests have and maintain unhindered access to the “markets” and resources of those nations and regions. Since the 19th century development of America’s overseas empire, this has been referred to as the “Open Door” policy: as in, the door opens for American and other Western economic interests to have access to and undertake exploitation of resources and labour.
As the only global imperial power, and by far the world’s largest military power, America does not merely rely upon the “goodwill” of smaller nations or the threat of force against them in order to maintain its dominance, it has established, over time, a large and complex network of imperial patronage: supplying economic aid, military aid (to allow its favoured regimes to control their own populations or engage in proxy-warfare), military and police training, among many other programs. These programs are largely coordinated by and between the Defense Department, State Department, and the United States Agency for International Development (USAID).
Arms sales are a major method through which the United States – and other powerful nations – are able to exert their hegemony, by arming and strengthening their key allies, directly or indirectly fueling civil wars and conflicts, and funneling money into the world’s major weapons manufacturers. The global economic crisis had “significantly pushed down purchases of weapons” over 2009 to the lowest level since 2005. In 2009, worldwide arms deals amounted to $57.5 billion, dropping 8.5% from the previous year. The United States maintained its esteemed role as the main arms dealer in the world, accounting for $22.6 billion – or 39% of the global market. In 2008, the U.S. contribution to global arms sales was significantly higher, at $38.1 billion, up from $25.7 billion in 2007. In 2009, the second-largest arms dealer in the world was Russia at $10.4 billion, then France at $7.4 billion, followed by Germany, Italy, China and Britain.
There are two official ways in which arms are sold to foreign nations: either through Foreign Military Sales (FMS), in which the Pentagon negotiates an agreement between the U.S. government and a foreign government for the sale and purchase of arms, and through Direct Commercial Sales (DCS), in which arms manufacturers (multinational corporations) negotiate directly with foreign governments for the sale and purchase of arms, having to apply for a license from the State Department.
Between 2005 and 2009, U.S. arms sales totaled roughly $101 billion, with direct commercial sales (DCS) accounting for more than half of the total value, at $59.86 billion, and Foreign Military Sales (FMS) accounting for $40.85 billion. The top seven recipients of U.S. arms sales between 2005 and 2009 were: Japan at $13.14 billion, the United Kingdom at $8.32 billion, Israel at $8 billion, South Korea at $6.53 billion, Australia at $4.17 billion, Egypt at $4.07 billion, and the United Arab Emirates (UAE) at $3.98 billion.
The United States experienced a slight decline in global arms sales over 2009, though it maintained its position as the world’s number one arms dealer, holding 30% of the global market. However, the Obama administration in 2010 decided to change certain “export control regulations” in order to make arms deals easier and increase the U.S. share of the global market. The stated reason for the legal change was “to simplify the sale of weapons to U.S. allies,” though it had the added benefit of “generating business for the U.S. defense industry.” The U.S. National Security Advisor at the time, General James Jones, claimed that without the changes, the existing system of arms sales “poses a potential national security risk based on the fact that its structure is overly complicated.”
In early 2010, the Obama administration began pressuring Saudi Arabia and other Gulf dictatorships (aka: “allies”) to increase their purchases of U.S. arms, upgrade their defense of oil installations and threaten Iran with overwhelming military superiority. In the lead were Saudi Arabia and the UAE in undertaking a regional “military buildup” – or arms race – resulting in more than $25 billion in U.S. arms sales to the region over the previous two years. A senior U.S. official in the Obama administration commented: “We’re developing a truly regional defensive capability, with missile systems, air defense and a hardening up of critical infrastructure… All of these have progressed significantly over the past year.” Another senior official stated, “It’s a tough neighborhood, and we have to make sure we are protected,” adding that Iran was the “number one threat in the region.”
Of course, Iran is actually a nation that exists within the region, and thus has the right to defend itself, whereas the United States cannot “defend” itself in a region in which it does not exist. But then, geographical trivialities have never been a concern to imperialists who believe that the world belongs to them and it was a mere accident of history that all the resources exist outside of the empire’s home country. Therefore, with such a rationalization, the United States – and the West more broadly – have a “right” to “defend” themselves (and their economic and political interests) everywhere in the world, and against everyone in the world. Any other nation which poses a challenge to Western domination of the world and its resources is thus a “threat” to whichever region it belongs, as well as to U.S. “national security.”
Iran is of course not the only competition for the United States and the West in its unhindered access to and control of the world, but China is another and arguably much more significant threat (though not an officially sanctioned U.S. enemy, as of yet). Around the same time the U.S. was pushing for increased arms sales to the Persian Gulf dictatorships (no doubt, to advance the causes of “democracy” and “peace”), the Obama administration secured an arms deal with Taiwan worth over $6 billion, incurring the frustration of China. The deal included the sale of 114 Patriot missiles, 60 Black Hawk helicopters, and communications equipment for Taiwan’s fleet of F-16s, with the possibility of future sales of F-16 fighter jets.
The Chinese vice foreign minister expressed “indignation” to the U.S. State Department in response to the arms deal, adding: “We believe this move endangers China’s national security and harms China’s peaceful reunification efforts [with Taiwan]… It will harm China-U.S. relations and bring about a serious and active impact on bilateral communication and cooperation.” In response, the U.S. National Security Advisor General James Jones stated that the announcement shouldn’t “come as a surprise to our Chinese friends.”
In September of 2010, the Obama administration announced the intention to undertake the largest arms deal in U.S. history, the sale of advanced aircraft to Saudi Arabia worth up to $60 billion for fighter jets and helicopters (84 F-15s, 70 Apaches, 72 Black Hawks, and 36 Little Birds), as well as engaging “in talks with the [Saudi] kingdom about potential naval and missile-defense upgrades that could be worth tens of billions of dollars more,” according to the Wall Street Journal, with “a potential $30 billion package to upgrade Saudi Arabia’s naval forces.” The stated objective was to counter the role of Iran in the region, though no agreement had been initially reached. The U.S. was selling the idea to Congress as a means of creating “jobs,” a political euphemism for corporate profits. One official involved in the talks noted, “It’s a big economic sale for the U.S. and the argument is that it is better to create jobs here than in Europe.”
The arms deal would purchase equipment and technology from Lockheed Martin, Raytheon, Boeing, and United Technologies. In recent years, Saudi Arabia had been purchasing more European and Russian-made arms from companies like BAE Systems. U.S. officials were also attempting to ease the fears of Israel while massively building up the arsenal of a close neighbor, ensuring that the planes sold to the Kingdom wouldn’t have long-range weapons systems and further, that the Israelis would purchase the more advanced F-35 jet fighters. The Israeli ambassador to the United States, Michael Oren, commented, “We appreciate the administration’s efforts to maintain Israel’s qualitative military edge.” The potential $60 billion arms deal with the Saudis would be stretched out over several years, though there was talk that the Saudis might only guarantee a purchase of at least $30 billion, at least, initially.
The Financial Times reported that the Arab dictatorships in the Gulf “have embarked on one of the largest re-armament exercises in peacetime history, ordering US weapons worth some $123 billion as they seek to counter Iran’s military power.” Saudi Arabia’s $60 billion was the largest, with the United Arab Emirates (UAE) signing arms deals worth between $35 and $40 billion in purchases of a “high altitude missile defence system” known as THAAD, developed by Lockheed Martin, as well as purchasing upgrades of its Patriot missile defense systems, produced by Raytheon. Oman was expected to purchase $12 billion and Kuwait $7 billion in arms and military technology. The CEO of Blenheim Capital Partners, a consultancy firm which helps arrange arms deals, noted that Middle Eastern and Southeast Asian countries were replacing Western European nations as the largest arms purchasers, adding: “They are the big buyers.”
Anthony Cordesman from the Center for Strategic and International Studies (CSIS) said that the United States was seeking to create a “new post-Iraq war security structure that can secure the flow of energy exports to the global economy.” These massive arms sales would then “reinforce the level of regional deterrence” – or in other words, expand American hegemony over the region through local proxy powers and dictatorships – and thus, “help reduce the size of forces the US must deploy in the region.” As a Saudi defense analyst noted, “[t]he Saudi aim is to send a message especially to the Iranians – that we have complete aerial superiority over them.”
According to three of four members of an ‘Expert Roundup’ published by the Council on Foreign Relations, the $123 billion arms deals with the Arab dictatorships are “a good idea for the United States and the Middle East.” One of the “experts” is Anthony Cordesman, the Arleigh A. Burke Chair in Strategy at CSIS, former director of intelligence assessment in the Office of the Secretary of Defense, as well as having served in several other State Department and NATO staffs, and has been a regular consultant to the Afghan and Iraqi occupation commands, U.S. embassies, and was a member of the Strategic Assessment Group which advised General Stanley McChrystal in developing a new strategy in Afghanistan for 2009. He also regularly consults with the U.S. State and Defense Departments and the intelligence community. Cordesman wrote that the US “shares critical strategic interests with Saudi Arabia,” notably the control of oil for “the health” of the global economy.
Cordesman also emphasized the role of pliant dictatorships in carrying out U.S imperial objectives in the region, writing that the U.S. “needs allies that have interoperable forces that can both fight effectively alongside the United States and ease the U.S. burden by defending themselves,” meaning, to defend America’s interests, which then become the interests of America’s proxies – or “allies.” The arms sales would be a helpful counter to Iran in the region, and secure a strong relationship between “the current Saudi government as well as Saudi governments for the next fifteen to twenty years,” the suggested timeline for delivery of all purchases, providing Saudi Arabia with a “strong incentive to work with the United States” over the long-term.
Loren B. Thompson, the Chief Operating Officer of the Lexington Institute, also participated in the Council on Foreign Relations ‘Roundup’ report, writing that the arms deal “appears to be a careful reconciliation of Saudi requirements with Israeli fears, while also offering a strategic balance against Iran.” Whatever the differences between Saudi Arabia and the United States, he wrote, casting aside the fact that the Kingdom is one of the most brutal and dictatorial regimes in the world, “the Saudis have been reliable allies of America for decades and have exercised a moderating influence on the behavior of other oil-producing states.” Helping the Saudis, Thompson wrote, “means helping ourselves.”
F. Gregory Gause III, Professor and Chair of the Political Science Department at the University of Vermont wrote that the arms deal “will not buy much security in the long run in the Persian Gulf,” but, he added, “there are no good reasons not to sell the Saudis those weapons, and there are some potentially positive results (besides the economic benefits to the US),” such as opposing the “Iranian regional challenge,” with which he included Hezbollah in Lebanon, Hamas in the Occupied Territories of Palestine, “various Iraqi parties,” Syria, and “Shia activists in the Gulf monarchies.” One could not object to the arms sale on the basis of supporting a regime with a horrible record on democracy, women’s rights, Islam, and human rights, Gause wrote, adding: “Moral purity would be purchased at the price of reduced American regional influence.” In other words, it’s a terrible regime, but it’s America’s terrible regime, and thus, challenging or changing the nature of the regime could undermine and erode America’s influence through the dictatorship and over the region.
William Hartung, the director of the Arms and Security Initiative at the New America Foundation, was another “expert” in the Council on Foreign Relations ‘Roundup’ report, providing the one “cautionary note” on the arms deal on the basis that it could amount to fueling an arms race in the region, building up the forces of Saudi Arabia, the Gulf monarchs, and Israel, thus providing pressure on Iran “to ratchet up its own military capabilities.” The Saudi deal “consists primary of offensive weapons,” though it is stated to be for defensive purposes, and if Saudi Arabia were to undertake aggressive military actions in the region, such as in Yemen (as it has), it would more likely “inflame passions” against Saudi Arabia instead of solving security problems.
The United States has for years dominated the arms market of the Persian Gulf, supplying military equipment to Saudi Arabia, UAE, Kuwait, Oman, Qatar and Bahrain, all members of the Gulf Cooperation Council (GCC), a regional governance association. A Middle East “defense analyst” with Forecast International, stated: “The U.S. arms sales to these countries are meant to improve the defense capabilities of the recipient nations, reinforce the sense of U.S. solidarity with its GCC partners and, finally, create a semblance of interoperability with American forces.” After the United States, the largest arms dealers to the region are France, Russia, Britain and China. Russian and Chinese arms mostly went to Iran, while Israel received $2.78 billion in U.S. military aid in 2010.
In October of 2010, the United States assistant secretary of state for political-military affairs, Andrew Shapiro, formally announced the intended Saudi arms deal for the U.S. Congress to approve for a program to last from 15 to 20 years. Shapiro stated that, “This is not solely about Iran… It’s about helping the Saudis with their legitimate security needs… they live in a dangerous neighbourhood and we are helping them preserve and protect their security.”
For an average of $13 billion per year in arms sales between 1995 and 2005, the Department of Defense announced in 2010 that it intended to sell up to $103 billion, though presumably achieving a lower number, such as $50 billion, over the course of the year. A defense industry consultant, Loren Thompson, stated that, “Obama is much more favorably disposed to arms exports than any of the previous Democratic administrations.” Jeff Abramson of the Arms Control Association stated that there was “an Obama arms bazaar going on.” While the discussion about the massive arms sales in most of the press and political discourse was focused upon supporting 200,000 workers in the ‘defense’ industry, industry consultant Thompson was less ambiguous: “It’s about U.S. allies, it’s about maintaining jobs, and it’s about America’s broader role in the world – and what you have to do to maintain that role;” the role being – of course – that of the global imperial hegemon.
Military contractors spread their factories and workforce out across several U.S. states in order to use their leverage as “major employers” with the U.S. Congress and other political powers. Boeing has facilities in over 20 U.S. states, and the corporation’s head of business development for military aircraft, Lt. Gen. Jeffrey Kohler, was previously responsible for overseeing arms exports for the Pentagon. The entire industry of military contractors is entirely dependent upon massive state subsidies to survive, doing 80-90% of their business with the Pentagon. And, as CNN Money reported, “business recently has been good,” with the U.S. more than doubling its military spending since 2001 to roughly $700 billion, nearly as much as the rest of the entire world spends combined.
Congress agreed in December of 2010 to spend $725 billion on ‘defense’ for 2011. Military contractors were largely seeking “growth” – a euphemism for exploitation and profit – by turning to foreign arms sales. The military contractor EADS sought to establish a headquarters in Asia, Honeywell created a new “international sales” division, and Lockheed Martin was planning to increase its revenue share acquired outside the United States from 14 to 20% by 2012, Boeing aimed to increase international sales from 17-25%, and Raytheon had the largest percentage of revenue from overseas at 23%. But sadly, for the arms dealers, it’s not so easy to sell weapons to foreign governments, since each deal requires a license from the U.S. State Department, a pesky barrier to “growth.” The countries with the “biggest appetite for U.S weapons” are “oil-rich nations in the Middle East,” with roughly 50% of foreign military sales by U.S. contractors between 2006 and 2009 being sold to countries in the region, with Boeing reaping the most overall profits. Mark Kronenberg, the head of Boeing’s international business development, noted: “The last time we had a period like this in the Middle East was the early ‘90s,” during the lead up to and aftermath of the first Gulf War, adding, “Here we are, 20 years later, and they’re recapitalizing.”
A report prepared by the U.S. Congressional Research Service and published in December of 2011 detailed Foreign Military Sales (FMS) agreements between the United States and other nations for the period of 2003 to 2010. Between 2003 and 2006, the top ten largest recipients of U.S. arms through FMS (and excluding Direct Commercial Sales and Foreign Military Aid programs) were: Egypt ($4.5 billion), Saudi Arabia ($4.2 billion), Poland ($4.1 billion), followed by Australia, Japan, Greece, South Korea, Kuwait, Turkey, and Israel. For the years 2007 to 2010, the top ten recipients were: Saudi Arabia ($13.8 billion), UAE ($10.4 billion), Egypt ($7.8 billion), followed by Taiwan, Australia, Iraq, Pakistan, UK, Turkey, and South Korea. In 2010, the top ten purchases of U.S. arms were: Taiwan ($2.7 billion), Egypt ($1.8 billion), Saudi Arabia ($1.5 billion), followed by Australia, UK, Israel, Iraq, Jordan, South Korea, and Singapore.
In April of 2011, Leslie H. Gelb, the President Emeritus of the Council on Foreign Relations, wrote that in light of “the possible consequences of the new popular awakenings” across the Middle East, and the fact that as dictatorships increasingly “crack down even harder against the protesters… enabled by Western arms,” Americans “don’t like thinking of themselves or having others think of them as merchants of death.” The “nightmares” of Western policy-makers “comes from their hopes for Arab democracy” – that is, the emergence of “stable democracies over time” – and “their fears that fledgling Arab democracies will go awry.” So naturally, arms deals are a good means to secure U.S. interests in the region.
In May of 2011, Andrew Shapiro, the Assistant Secretary of State for Political-Military Affairs, spoke to the U.S. Department of State’s Defense Trade Advisory Group, at which he said the “demand” for U.S. arms and military technology “will remain strong because the U.S. has longstanding defense commitments to allies around the world,” and “we will remain very busy no matter the fluctuations of the global market.” The “dynamic nature of the geopolitical landscape” would require the U.S. “to adapt to changing situations.” Shapiro stated that, “we are witnessing another geopolitical shift, which may have broad implications for U.S. foreign policy,” referencing the popular uprisings across the Middle East as “perhaps the most significant geopolitical development since the end of the Cold War.” In his speech, Shapiro praised his audience at the Defense Trade Advisory Group (DTAG) as “valuable” in “giving us a formal channel to the private sector,” enabling the State Department “to better evaluate U.S. laws and regulations, especially during times of immense change.”
The members of the DTAG included top executives and officials from such companies as BAE Systems, ITT Defense, Boeing, Booz Allen Hamilton, EADS North America, Intel, General Electric, General Dynamics, United Technologies, Tyco, Northrop Grumman, Honeywell International, Raytheon, and Lockheed Martin, among a total of 45 individuals. According to its website, the DTAG advises the State Department Bureau of Political-Military Affairs “on its support for and regulation of defense trade to help ensure that impediments to legitimate exports are reduced while the foreign policy and national security interests of the U.S. continue to be protected and advanced.”
Shapiro told these corporate representatives that, “It is important to emphasize that arms transfers are a tool to advance U.S. foreign policy. And therefore when U.S. foreign policy interests, goals, and objectives shift, evolve, and transform over time, so will our arms transfer policy.” As always, stated Shapiro, “we urge you to provide your thoughts and ideas over how we should move forward.” Foreign military sales – especially to the Middle East – will continue as “a critical foreign policy instrument” allowing the U.S. to “gain influence and leverage, which can be used to help advance our foreign policy goals and objectives.”
As an example, the United States approved $200 million in military sales from U.S. corporations to the government of Bahrain in 2010, just months before pro-democracy protests erupted in the country, resulting in “a harsh crackdown on protesters,” killing at least 30 and injuring hundreds of more people in a matter of months.
In December of 2011, Andrew Shapiro announced the formal signing with Saudi Arabia to sell the dictatorship $30 billion in F-15 fighter jets to be delivered by 2015, as well as other plans to sell $11 billion in arms to Iraq. The Saudi deal was the result of extensive lobbying efforts by top government officials, including Obama making several phone calls to Saudi King Abdullah, and the U.S. National Security Advisor, Thomas E. Donilon, twice traveling to Riyadh while Vice President Joe Biden led a “high-level delegation” to a funeral for a Saudi Prince in October of 2011.
Embracing the World with Open “Arms”
In 2009, worldwide arms sales stood at $65.2 billion, dropping by 38% to $40.4 billion in 2010, the lowest number since 2003, with the United States contributing $21.4 billion – or 52.7% – of the global arms deals, Russia in second place at $7.8 billion over 2010, followed by France, Britain, China, Germany and Italy, according to a report by the Congressional Research Service. Over 75% of global arms sales in 2010 were for ‘developing’ countries, with India in top place at $5.8 billion in arms deals, followed by Taiwan at $2.7 billion, Saudi Arabia at $2.2 billion, Egypt, Israel, Algeria, Syria, South Korea, Singapore and Jordan.
This relative decline in global arms sales over 2010 was not to be repeated for 2011, with the number skyrocketing to $85.3 billion, with the U.S. contribution tripling to $66.3 billion, accounting for more than three-quarters of global arms deals. Russia stood in a distant second place with $4.8 billion in arms sales. While the United States controls roughly 75% of the global arms trade, it would be wrong to ignore the role of the other major players, though they are far from even competing with the U.S.
The Stockholm International Peace Research Institute (SIPRI) reported that the rise in arms sales had increased by 60% in real terms since 2002, with the total sales of the top 100 arms companies reaching $411.1 billion in 2010. The arms industry is “increasingly concentrated” to the point where the top ten firms account for 56% of all sales, with Lockheed Martin at the top with sales of $35.7 billion in 2010, followed by Britain’s BAE Systems at $32.8 billion, Boeing at $31.3 billion, and Northrop Grumman at $28.5 billion. Other major companies on the top 100 list of arms manufacturers include: General Dynamics, Raytheon, EADS, L-3 Communications, United Technologies, Thales, SAIC, Honeywell, Rolls-Royce, General Electric, KBR, Hewlett-Packard, and DynCorp.
Following the beginning of the Arab Spring and the toppling of the Western-backed dictators in Tunisia and Egypt, British Prime Minister David Cameron continued with a pre-planned tour of the Middle East in February of 2011, leading what the British Green Party leader called a “delegation of arms traders,” with almost 75% of the businessmen accompanying the Prime Minister on his trip to the region representing the defense and aerospace industries. As the first Western leader to visit Egypt following the fall of Mubarak, Cameron praised the pro-democracy movement: “Meeting the young people and the representatives of the groups in Tahrir Square [in Cairo] was genuinely inspiring,” adding: “These are people who have risked a huge amount for what they believe in.” Immediately after praising Egypt’s revolution and expressing his own ‘beliefs’ in democracy, Cameron flew to Kuwait with his arms dealer delegation to sell weapons to other Arab dictatorships. When criticized for the excessive hypocrisy of his democracy-praising and dictatorship arms-dealing tour of the Middle East, Cameron simply asserted that Britain had “nothing to be ashamed of,” as there was nothing wrong with such transactions.
As dictators across the region were becoming increasingly belligerent toward protesters, seeking to violently crush resistance after the successful examples of Tunisians and Egyptians toppling their long-standing dictators, increasing arms shipments to the region’s despots seemed to be only natural for Western imperial powers seeking stability and control. Kevan Jones, the British Shadow Defence Minister noted: “The defence industry is crucially important to Britain but many people will be surprised that the prime minister in this week of all weeks may be considering bolstering arms sales to the Middle East.” Accompanying David Cameron on his trip were 36 corporate representatives, including Ian King, the CEO of BAE Systems, as well as Victor Chavez of Thales UK, Alastair Bisset of Qinetiq, and Rob Watson of Rolls Royce. When questioned about his ‘arms dealer delegation,’ Cameron stated: “I have got a range of business people on the aeroplane, people involved in infrastructure and people involved in the arts and cultural exchanges. Yes, we have defence manufacturers as well. Britain does have a range of defence relationships with countries in the region. I seem to remember that we spent a lot of effort and indeed life in helping to defend Kuwait. So it is quite right to have defence relationships with some of these countries.”
As Cameron was hopping around the region selling weapons, the largest arms fair in the Middle East – the Index 2011 – was taking place in Abu Dhabi, bringing thousands of arms dealers to an exhibition hall with fighter jets flying overhead, tanks in the sand, with Predator drones and assault rifles on display, models fully dressed in the latest riot police outfits, and all choreographed to a hip-hop soundtrack. Meanwhile, not very far from the booming arms fair, protesters in Bahrain were being violently repressed by a dictatorship armed and supported by the West. The British delegation to the arms fair was led by the Defence Minister, Gerald Howarth, helping represent British companies which were displaying and selling their latest tools for ‘crowd control,’ showcasing teargas grenades, stun grenades, and rubber bullets.
A British officer from the government’s Trade and Industry stand at the arms fair was explaining the benefits of a particular fragmentation bomb to a top military official from the Algerian dictatorship. Howarth explained, “I am here as the minister for national security strategy, supporting this important exhibition.” While in 2011 the British had to revoke export licenses to Bahrain and Libya following the violence erupting in both countries, over the previous year the British issued 20 licenses for exports of “riot control weapons,” such as teargas, smoke and stun grenades, to Bahrain, Qatar, the United Arab Emirates, and Oman, as well as nearly 200 million pounds in “crowd control ammunition” to the government of Libya.
Weapons manufacturers stated that they felt the increased criticism inflicted upon their industry following the start of the Arab Spring had left them “battered and bruised.” One arms trader, commenting less than two weeks after Mubarak was toppled, stated that, “[t]he Middle East was a growing market until a few weeks ago,” while a representative from BAE agreed that the market for arms was insecure: “It is too early to say where it will end up… Given what is going on at the moment, nobody is likely to be talking about how to spend their defence procurement budget.” When a representative for the British arms exporter Chemring was questioned about selling CS gas shotgun cartridges and stun grenades, he explained, “we have an ethical policy in place and look closely at the countries we are considering exporting to and see if they fit that.” A representative for Primetake, a British firm selling rubber ball shot, teargas, and rubber baton rounds, defended his firm: “We are a very respectable organization and we take very careful advice from the Ministry of Defense and the business department.”
Between October of 2009 and October of 2010, the British exported arms and military equipment to multiple countries in the Middle East and North Africa, including over 270 million pounds in materials to Algeria, including combat helicopters, roughly 6.4 million pounds in arms deals with Bahrain, nearly 17 million pounds with Egypt, 477 million pounds with Iraq, 27 million pounds with Israel, 21 million pounds with Jordan, 14.5 million pounds with Kuwait, 6.2 million pounds with Lebanon, 215 million pounds with Libya, 2.2 million pounds with Morocco, 14 million pounds with Oman, 13 million pounds with Qatar, 140 million pounds with Saudi Arabia, 2.6 million pounds with Syria, 4.5 million pounds to Tunisia, and 210 million pounds to the UAE. These sales included assault rifles, tear gas, ammunition, bombs, missiles, body armour, gun parts, gas mask filters, signaling and radar equipment, armoured vehicles, anti-riot shields, patrol boats, military software, shotguns, “crowd-control equipment,” tank parts, military cargo vehicles, air surveillance equipment, armoured personnel carriers, small arms ammunition, heavy machine guns, and a plethora of other products, almost exclusively delivered to dictatorships (with the exception of Israel).
Germany, which stood as the world’s third-largest arms exporter in previous years (after the US and Russia), had doubled its share of the global arms trade over the previous decade to 11%, totaling roughly 6 billion euros in arms deals for 2008 alone, with companies like EADS, Rheinmetall and Heckler & Koch leading the way. Even Russia was becoming a big customer for German military equipment, purchasing armoured plating and tanks.
In 2009, the European Union had established new export rules for arms and military technology, much-praised as preventing the export of arms that “might be used for undesirable purposes such as internal repression or international aggression or contribut[ing] to regional instability.” With the EU rules in place, member countries were free to completely disregard them. A European Commission study leaked to Der Spiegel in 2012 revealed that combined exports from EU nations made the European Union “the world’s largest exporter of weapons” to Saudi Arabia, delivering at least $4.34 billion in equipment in 2010 alone. Sweden helped the Saudi dictatorship build a missile factory, Finland delivered grenade launchers, Germany sold tanks and Britain provided fighter jets. The arms exporters were unfazed by the fact that equipment such as the tanks were used by Saudi Arabia in its “invitation” to invade Bahrain and help the Bahraini dictatorship crush the pro-democracy movement in early 2011. An official with the Swedish Peace and Arbitration Society noted that the Swedish support for building a missile factory in Saudi Arabia has meant that, “we are legitimizing one of the most brutal regimes in the world.” Pakistan had meanwhile become China’s biggest customer for arms exports, while India purchased 10% of the world’s arms exports in 2010 “to defend itself against neighbor and arch enemy Pakistan.”
When German Chancellor Angela Merkel spoke at the Munich Security Conference in 2011, she mentioned the “obligation to pursue value-based foreign policy,” and has often argued that “no compromises” can be made on issues of human rights. As part of Merkel’s respect for “human rights” and “value-based foreign policy,” weapons sales have increased as a significant factor in Germany’s foreign policy strategy, quietly changing the rules for arms exports to increase weapons sales to “crisis regions” as “a major pillar of the country’s security policy.” The objective would be to strengthen countries within “crisis regions” and therefore reduce the possibility that the German military would itself have to participate in “international missions.”
The German publication Der Spiegel referred to this as the “Merkel doctrine” of “tanks instead of soldiers.” Among the key countries to support, identified by Merkel and eight other ministers who met behind closed doors under the aegis of the Federal Security Council, were Saudi Arabia, Indonesia, Qatar, India, and Angola. Merkel explained her doctrine in a speech at an event in Berlin in September of 2011 where she stated that if the West lacks the will and ability to undertake direct military intervention, “then it’s generally not enough to send other countries and organizations words of encouragement. We must also provide the necessary means to those nations that are prepared to get involved. I’ll say it clearly: This includes arms exports.” This, of course, Merkel added, would nicely manifest as a foreign policy “that is aligned with respect for human rights.”
As part of the “Merkel doctrine” of engaging in a “value-based foreign policy” with “respect for human rights,” Germany increased its arms sales to the Algerian dictatorship from 20 million euros in 2010 to nearly 400 million euros in 2012, with German military manufacturer Rheinmetall planning to produce 1,200 armored personnel carriers for Algeria over the next ten years. According to published European Union documents, over 2011, the top five arms exporting countries in the EU were France, the U.K., Germany, Italy, and Spain, collectively exporting over 80% of 37.5 billion euros in arms from EU countries. The European Union, winner of the 2012 Nobel Peace Prize, increased its arms exports by 18.3% since the previous year, with an increase in export licenses to Asia, the Middle East, and sub-Saharan Africa. There were arms licenses issued to Libya, Tunisia, Algeria, Morocco, and over 300-million euros-worth of arms for Egypt. The EU increased its arms exports to “areas of tension,” including India, Pakistan, and a record 465 million euros in arms to Afghanistan, “a country still under partial arms embargo.” However, ‘partial’ is apparently debatable.
With the United States reaching a record-breaking $60 billion in arms deals over 2011, Andrew Shapiro at the State Department stated that 2012 was set to be an equally – if not larger – bonanza for arms dealers. Revealing the role of diplomats and top government officials as glorified lobbyists and corporate representatives, Shapiro told a group of defense writers in the Summer of 2012: “We’ve really upped our game in terms of advocating on behalf of U.S. companies,” adding, “I’ve got the frequent-flyer miles to prove it.” Shapiro had traveled to more than 11 countries over 2012 promoting arms deals, noting that sales were at a record level for the third quarter of 2012, already passing $50 billion. Secretary of State Hillary Clinton had made “advocacy” for arms dealers “a key priority” for U.S. diplomats and State Department officials who “were now expected to undertake such efforts on all trips abroad.” Shapiro and others had been lobbying for American military contractors in deals ranging from Japan’s $10 billion purchase of aircraft from Lockheed Martin to India’s increased arms purchases, where Shapiro saw “tremendous potential” for U.S. arms sales, and to Brazil, where Boeing was competing with France’s Dassault company for a multibillion-dollar defense contract, of which Shapiro stated, “We’re eager to make the best possible case for the Boeing aircraft, and we’re hopeful that it will be selected.”
By March of 2013, the world’s five largest arms exporters were the U.S., Russia, Germany, France, and China overtook the UK for the first time in fifth place, having increased its arms exports by 162% between 2008 and 2012, increasing its share of the global arms trade from 2 to 5%, over 50% of which are delivered to Pakistan, with other large recipients being Myanmar, Bangladesh, Algeria, Venezuela and Morocco. Li Hong, the secretary-general of the China Arms Control and Disarmament Association noted: “Military exports are one way for China to increase its international status,” explaining that, “China needs to increase its influence in regional affairs and from that perspective it needs to increase weapons exports further.” As China increased its own military budget in recent years, it had turned to developing its own weapons industries, thus moving from being the world’s number one arms importer (of conventional weapons) between 2003-2007 to taking second place behind India in the 2008-2012 period, acquiring roughly 69% of its arms imports from Russia.
British Prime Minister David Cameron again traveled to the Middle East, accompanied by his Defense Secretary Philip Hammond and another delegation of arms dealers in 2012, seeking to sell up to 100 Eurofighter Typhoon jets to Saudi Arabia and the UAE, built by EADS and marketed by BAE, competing with France’s cheaper Rafale strike jet made by Dassault Aviation. The increased – and increasingly profitable – arms race in the Middle East was largely facilitated by America’s policies toward Iran. William Cohen is a former U.S. Secretary of Defense in the Clinton administration, current Counselor and Trustee to the Center for Strategic and International Studies (CSIS), former member of the board of directors of the Council on Foreign Relations from 1989 to 1997, current Vice Chairman of the U.S.-China Business Council, on the board of directors of CBS Corporation, and is Chairman and CEO of The Cohen Group, an international business consulting firm. Commenting on the growing arms race in the Middle East, Cohen repeated the usual American propaganda, stating that there was “A very legitimate concern about Iran being a revolutionary country,” though also adding that terrorism, cyberattack threats, and “the implications of the Arab Spring” spurred each country in the region “to make sure it’s protected against that.” Cohen added that military contractors, information technology firms and other corporations “have an enormous opportunity” in the region.
When British Defense Secretary Philip Hammond traveled to Indonesia to promote arms deals for British military contractors like BAE Systems and Rolls-Royce, he explained that increasing military ties with notoriously corrupt Indonesia, posed “manageable” risks. He commented: “From the companies I have talked to, they recognize that there is a challenge but they think that it is manageable, and they can operate here successfully while observing the UK and US legal requirements to address anti-corruption issues.” This statement came amid accusations of Rolls-Royce engaging in bribery to acquire business in China, Indonesia, and elsewhere. Hammond noted that in light of the U.S. “pivot” to Asia, Britain was “looking east in a way we have not done before.” Indonesia had recently purchased F-16 fighter jets and Apache helicopters from the U.S., Sukhoi fighters from Russia, missile systems from China, anti-aircraft missiles, Hawk jets and small arms from British companies. Prime Minister David Cameron defended arms sales to oppressive regimes such as Saudi Arabia, declaring it to be “completely legitimate and right.”
The International Institute for Strategic Studies (IISS), a major think tank, projected that defense spending in Asia would overtake that of Europe for the first time in 2012, noting that Asia was in the midst of an arms race between China and other states in the region. The expenditure of European members of NATO on defense spending over 2011 was just under $270 billion, whereas in Asia it had reached $262 billion (excluding Australia and New Zealand). As China announced increased defense spending, the United States announced a “shift in military strategy” which treats the Asia-Pacific region “as one of the Pentagon’s priorities at a time when forces in Europe are being sharply cut.” Secretary of State Hillary Clinton stated that large and rising powers like China “have a special obligation to demonstrate in concrete ways that they are going to pursue a constructive path.” Leon Panetta, the U.S. Defense Secretary, noted that America’s “military posture in Asia will be increased.”
Indeed, in 2012, Asian defense spending surpassed that of Europe for the first time, reaching a record level of $287.4 billion, though the United States continued to account for 45.3% of total global military spending, meaning that the United States spends almost as much on military expenditures than the rest of the entire world combined. The United States, as part of its Pacific ‘pivot’ in military strategy, increased its arms sales to countries neighbouring China and North Korea. Fred Downey, vice president of the U.S. trade group, Aerospace Industries Association, which includes top U.S. military contractors, noted that the Pacific pivot “will result in growing opportunities for our industry to help equip our friends.” U.S. arms sales to the region increased to $13.7 billion in 2012, up more than 5% from the previous year. There were 65 individual notifications to the U.S. Congress over the previous year regarding total foreign military sales brokered by the Pentagon with a collective value exceeding $63 billion. The State Department, responsible for issuing licenses for direct commercial sales between military contractors and foreign governments, noted that 2012 saw a new record increase with more than 85,000 license requests.
As Obama set a new record for arms sales to the Middle East in 2012, Assistant Secretary of State Andrew Shapiro noted, “If countries view the United States unfavorably, they will be less willing to cooperate on security matters,” and for this reason, “the current administration has sought to revitalize U.S. diplomatic engagement, especially relating to security assistance and defense trade.” The growth in arms sales, noted Shapiro, speaking to the Defense Trade Advisory Group in November of 2012, “has been truly remarkable,” that in spite of the global economic crisis, “demand for U.S. defense sales abroad remains robust” with “significant growth both in direct commercial sales and in foreign military sales.”
As part of America’s Pacific ‘pivot,’ the United States announced a $5.9 billion arms deal with Taiwan in 2011, upgrading the country’s fleet of 145 F-16 fighter jets. Zhang Zhijun, a Chinese Vice-Foreign Minister, commented: “The wrongdoing by the US side will inevitably undermine bilateral relations as well as exchanges and co-operation in military and security areas.” Upon the announcement of the arms deal, Zhijun summoned the U.S. ambassador to China, Gary Locke, and informed him that, “China strongly urges the US to be fully aware of the high sensitivity and serious harm of the issue, [to] seriously treat the solemn stance of China, honour its commitment and immediately cancel the wrong decision.” A top Obama administration official replied, “We believe that our contribution to the legitimate defense needs of Taiwan will contribute to stability across the Taiwan Strait.” The Chinese Ministry of Defense warned that the arms deal “will create a serious obstacle to developing normal exchanges between the two militaries” and that the “U.S. has ignored China’s firm opposition and insisted on selling arms to Taiwan.” Obviously, there are different definitions of “stability” at play.
In April of 2012, the Pentagon announced an arms deal with Japan of four F-35 Joint Strike Fighter aircraft with an option to purchase an additional 38 F-35 jets from Lockheed Martin at an estimated cost of $10 billion. In late 2011, Japan announced its intention to relax a ban on weapons exports which dated back to 1967, which, the Financial Times reported, could open “the way for Japanese companies to participate in the international development and manufacture of advanced weapon systems.” Japan’s largest business lobby, the Keidanren, praised the move as “epoch-making.” Following the “relaxing” of controls, Japan and Britain announced that they would jointly develop weaponry, the first time that Japan would work with another country (apart from the United States) on constructing military equipment.
In October of 2012, the United States announced an arms deal in which South Korea would get longer-range missiles capable of striking anywhere in North Korea, “altering” (or violating) a 2001 accord which barred the U.S. “from developing and deploying ballistic missiles with a range of more than 300km (186 miles),” in order to avert a regional arms race. Obviously, a decision was made to create a regional arms race, so the accord was “altered” and the US agreed to sell South Korea missiles with a range of 800km. South Korea’s defense ministry praised the new deal, stating that they would then be able to “strike all of North Korea, even from southern areas.” The 2001 accord also ensured that the U.S. would not deploy or develop missiles for the South with a payload of more than 500 kg (1,100lbs), since the “heavier a payload is, the more destructive power it can have.” So obviously, that pesky restriction also had to be “altered,” and while long-range missiles maintain the 1,100lb payload, missiles with shorter ranges will be permitted to hold much more. South Korea will also be able to operate U.S.-supplied drones, permitted to hold payloads up to 5,510lb with a range of more than 300km, and no payload restrictions on drones with a flying distance less than 300km. South Korea can also acquire cruise missiles with unlimited range, and some media reports suggested that South Korea had already deployed cruise missiles with a range of more than 1,000km, though officials “refused to confirm” if that were true. The South Korean Defense Ministry reported that North Korea had missiles that could reach South Korea, Japan, and Guam, a Pacific territory of the United States. Thus, the United States intends to counter the “threat” of North Korea by instigating a massive arms race in the region.
Arms Trade Diplomacy: “Chief Commercial Officer” or Ambassador?
As the massive release of diplomatic cables from Wikileaks revealed, U.S. and other diplomats are often little more than glorified lobbyists and salesmen for the Western arms industry. Lockheed Martin got help from the U.S. State Department in selling C-130 military transport planes to the government in Chad starting in 2007. The U.S. Embassy in Chad noted that the government likely could not afford the aircraft, not to mention that it would probably use the aircraft “to defend the regime against a backlash provoked by its refusal so far to open its political system and provide for a peaceful democratic transition.” In other words, the government of Chad wanted to use the military equipment to crush a pro-democracy movement. Nevertheless, noted the U.S. Embassy, we “would concur in allowing the sale to go forward.”
With Chad’s air force chief, its ambassador to the U.S. and a representative from Lockheed Martin promoting the deal with the State Department, the Embassy noted that the sale “would provide a healthy boost to U.S. exports to Chad” and “strengthen U.S. military cooperation.” While Chad told the State Department that it wanted the aircraft “to go after terrorists or help refugees,” the U.S. Embassy noted that in reality, “it needs them to support combat operations against the armed rebellion in eastern Chad,” and commented: “A decision to approve the sale would be met with dismay by many Chadian supporters of peaceful democratic change.” Our conclusion, noted a U.S. Embassy cable, “is that, like it or not, our interests line up in favor of allowing the sale in some form to go forward.” However, the U.S. would have to promote the sale with full knowledge of how Chadians will perceive it, and will have to undertake “a strategy to counter these perceptions.”
Ben Berkowitz wrote for Reuters that Wikileaks cables painted “a picture of foreign service officers and political appointees willing to go to great lengths to sell American products and services,” where, “in some cases, the efforts were so strenuous they raise the question of where if anywhere the line is being drawn between diplomacy and salesmanship.” A State Department spokesperson said in response that the U.S. government “has broad, though not unlimited, discretion to promote and assist U.S. commercial interests abroad.” Such practice became official policy shortly after the end of the Cold War when U.S. Secretary of State Lawrence Eagleburger introduced a bill which gave corporations a direct role in foreign policy. One former U.S. diplomat in Asia noted, “Until (then), U.S. diplomats were not particularly encouraged to help U.S. business. They were busy fighting the Cold War.” Suddenly, he noted, “we were given new direction: if a single U.S. company is looking for business, we should advocate for them by name; if more than one U.S. company was in the mix, stress buying the American product.” The former diplomat added: “It was great to see how influential the right word from the U.S. ambassador was.”
Former Spanish Prime Minister Jose Luis Zapatero had informed the U.S. Embassy, “to let him know if there was something important to the (U.S. government) and he would take care of it,” according to a 2009 diplomatic cable. The embassy took up the offer when General Electric was bidding against Rolls-Royce to sell helicopters to the Spanish Ministry of Defense (MOD), with GE informing the U.S. Embassy that if it did not get the contract, it would close part of its business in Spain. The U.S. Embassy passed the information along to Zapatero’s economic adviser, and, although there was “considerable” evidence that the government was going to award the contract to Rolls Royce, the Zapatero’s office “overturned the decision and it was announced that GE had won the bid,” and the U.S. Ambassador was “convinced that Zapatero personally intervened in the case in favor of GE.”
The U.S. Embassy in the United Arab Emirates promoted the interests of Halliburton to participate in a joint venture with the Abu Dhabi National Oil Co. in 2003, a time at which Halliburton’s former CEO, Dick Cheney, was Vice President of the United States. The contract was eventually awarded to Halliburton. The U.S. Ambassador to the UAE at the time, Marcelle Wahba, noted, “I can’t think of a time when a month went by when a commercial issues wasn’t on my plate… Some administrations put more of an emphasis on it than others, but now I think, regardless of who’s in power you really find it’s become an integral part of the State Department mandate.”
Tom Niles, a former U.S. ambassador to Canada, the European Union and Greece, as well as former president of the “pro-trade group” the U.S. Council for International Business, stated: “By the time I was retired from the Foreign Service, which was 1998, things had changed fundamentally and being an active participant in the commercial program and promoting trade using the prestige of the ambassador and receptions held at the ambassador’s residence was an important part of what I did.” Niles suggested that a U.S. ambassador was as much a “chief commercial officer” for corporations as a diplomat. “We might have been a little bit late to the game. The Europeans understood the crucial role of foreign trade in the growth and development of their economies before we did.” A former ambassador to the UAE noted: “Oftentimes European ambassadors, that’s all they’re there for.” Of course, that’s only logical, considering that European ambassadors do not have to be concerned with managing the world in the same way the United States does. Therefore, their interests are specific: economic.
In the Arms of America
With all the flowery rhetoric of “democracy” and “freedom,” American – and the Western world’s – hypocrisy can easily be revealed with a brief look at the global arms trade: supporting ruthless and repressive dictatorships, as well as creating and supporting regional arms races which increase instability and the threat of war. The objective is simple, and from the imperial perspective, very practical: support regional proxy states to do our dirty work for us. If this happens to increase regional instability and even lead to war, well, such things are inevitable within and as a result of an imperial system. So long as the final result is that the United States and the West maintain their “access” to and control over regions, resources, and populations, the means are incidental.
To put it another way: if our nations were actually interested in concepts and ideas of “democracy” and “freedom” for all people, around the world, why do we sell billions of dollars in weapons and military technology to the countries which most enthusiastically crush democracy and prevent freedom?
The answer to that question reveals the true nature of our society.
Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, with a focus on studying the ideas, institutions, and individuals of power and resistance across a wide spectrum of social, political, economic, and historical spheres. He has been published in AlterNet, CounterPunch, Occupy.com, Truth-Out, RoarMag, and a number of other alternative media groups, and regularly does radio, Internet, and television interviews with both alternative and mainstream news outlets. He is Project Manager of The People’s Book Project, Research Director of Occupy.com’s Global Power Project, and has a weekly podcast show with BoilingFrogsPost.
 Thom Shanker, “Bad Economy Drives Down American Arms Sales,” The New York Times, 12 September 2010:
 Matt Sugrue, “GAO Report on U.S. Arms Sales, 2005-2009,” Arms Control Now, 29 September 2010:
 Maggie Bridgeman, “Obama seeks to expand arms exports by trimming approval process,” McClatchy, 29 July 2010:
 Joby Warrick, “U.S. steps up weapon sales to Mideast allies,” The Washington Post, 31 January 2010:
 Helene Cooper, “U.S. Approval of Taiwan Arms Sales Angers China,” The New York Times, 29 January 2010:
 Adam Entous, “Saudi Arms Deal Advances,” The Wall Street Journal, 12 September 2010:
 Roula Khalaf and James Drummond, “Gulf states in $123bn US arms spree,” The Financial Times, 20 September 2010:
 Anthony H. Cordesman, et. al, “Is Big Saudi Arms Sale a Good Idea?” Expert Roundup, the Council on Foreign Relations, 27 September 2010:
[12 – 15] Ibid.
 “U.S. dominates Middle East arms market,” UPI, 28 December 2010:
 “US confirms $60bn Saudi arms deal,” Al-Jazeera, 20 October 2010:
 Mina Kimes, “America’s hottest export: Weapons – Full version,” CNN money, 24 February 2011:
 Richard F. Grimmett, “U.S. Arms Sales: Agreements with and Deliveries to Major Clients, 2003-2010,” U.S. Congressional Research Service, 16 December 2011, page 3.
 Leslie H. Gelb, “Mideast Arms Sales Not So Bad,” The Daily Beat, 12 April 2011:
 Andrew J. Shapiro, “Remarks: Defense Trade Advisory Group Plenary,” Dean Acheson Auditorium, U.S. Department of State, 3 May 2011:
 DTAG Activity 2010, “2010-2012 Membership,” The Defense Trade Advisory Group (DTAG), U.S. Department of State:
 Andrew J. Shapiro, “Remarks: Defense Trade Advisory Group Plenary,” Dean Acheson Auditorium, U.S. Department of State, 3 May 2011:
 Agencies, “US arms sales to Bahrain surged in 2010,” Al-Jazeera, 11 June 2011:
 Mark Landler and Steven Myers, “With $30 Billion Arms Deal, U.S. Bolsters Saudi Ties,” The New York Times, 29 December 2011:
 Thom Shanker, “Global Arms Sales Dropped Sharply in 2010, Study Finds,” The New York Times, 23 September 2011:
 Harry Bradford, “U.S. Arms Sales Tripled In 2011 To $66.3 Billion: Report,” The Huffington Post, 27 August 2012:
 Thom Shanker, “U.S. Arms Sales Make Up Most of Global Market,” The New York Times, 26 August 2012:
 Richard Northon-Taylor, “Arms sales rise during downturn to more than $400bn, report reveals,” The Guardian, 29 February 2012:
 Ami Sedghi, “Arms sales: who are the world’s 100 top arms producers?,” The Guardian Data Blog, 2 March 2012:
 “Cameron Middle East visit ‘morally obscene’ says Lucas,” BBC News, 23 February 2011:
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 Nicholas Watt and Robert Booth, “David Cameron’s Cairo visit overshadowed by defence tour,” The Guardian, 21 February 2011:
 Robert Booth, “Abu Dhabi arms fair: Tanks, guns, teargas and trade at Index 2011,” The Guardian, 21 February 2011:
 Simon Rogers, “UK arms sales to the Middle East and North Africa: who do we sell to, how much is military and how much just ‘controlled’?” The Guardian, 22 February 2011:
 Benjamin Bidder and Clemens Hoges, “Democracy or Dollars?: Weapons Sales to the Arab World under Scrutiny,” Der Spiegel, 1 April 2011:
 “Weapons Exports: EU Nations Sell the Most Arms to Saudi Arabia,” Der Spiegel, 19 March 2012:
 Ulrike Demmer, Ralf Neukirch and Holger Stark, “Arming the World for Peace: Merkel’s Risky Weapons Exports,” Der Spiegel, 30 July 2012:
 “Tanks in the Desert: Germany Plans Extensive Arms Deal with Algeria,” Der Spiegel, 12 November 2012:
 Press Release, “Large increase in EU arms exports revealed,” Campaign Against Arms Trade, 10 January 2013:
 Andrea Shalal-Esa, “U.S. government advocacy said boosting foreign arms sales,” Reuters, 27 July 2012:
 Michael Martina, “World’s Top 5 Arms Exporters: China Replaces UK In Weapons Trade,” Reuters, 18 March 2013:
 Jamil Anderlini and Victor Mallet, “China joins top five arms exporters,” The Financial Times, 18 March 2013:
 “Defense contest over major gulf arms buys,” UPI, 20 November 2012:
 Ben Bland, “UK defence minister bullish on arms sales,” The Financial Times, 16 January 2013:
 “David Cameron defends arms deals with Gulf states,” The Telegraph, 5 November 2012:
 FT Reporters, “Asia defence spending to overtake Europe,” The Financial Times, 7 March 2012:
 Myra MacDonald, “Asia’s defense spending overtakes Europe’s: IISS,” Reuters, 14 March 2013:
 “US Arms Sales to Asia Set to Boom on Pacific ‘Pivot’,” Reuters, 2 January 2013:
 “Obama set record in 2012 for Mideast defense exports,” World Tribune, 4 December 2012:
 Richard McGregor, “US agrees $5.9bn arms deal with Taiwan,” The Financial Times, 21 September 2011:
 Kathrin Hille, “China hits at US over Taiwan arms deal,” The Financial Times, 22 September 2011:
 “U.S. Government Says Japan’s Cost to Buy 42 F-35s Around $10 Billion,” Ottawa Citizen, 2 May 2012:
 Mure Dickie, “Japan relaxes weapons export ban,” The Financial Times, 27 December 2011:
 Reuters, “Japan and Britain ‘set to agree arms deal’,” The Telegraph, 4 April 2012:
 AP, “South Korea to get longer-range missiles under new deal with US,” The Guardian, 7 October 2012:
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 Ben Berkowitz, “Wikileaks reveals extent of State Department’s involvement in arms sales, oil deals,” Reuters, 4 March 2011:
The Financialization of Food and the Profitability of Poverty
By: Andrew Gavin Marshall
The following is a brief excerpt from a chapter of The People’s Book Project, covering issues related to food, water, land grabs, environmental destruction, hunger and poverty. This excerpt examines the global food crisis.
There are a few things upon which humanity is entirely dependent for survival: food, water, land and the environment. One of the central questions with which humanity currently has to address its part, past and present, is the ways in which we, as a species, interact with our environment. When it comes to environmental issues, the primary focus is placed upon the issue of climate change, and while this is indeed an important issue, it could be said that this focus almost misses the forest for the trees. Climatic change is here to stay, it is an inevitability, and it is a requirement for humanity to begin the process of adaptation. However, climate change is not “the problem,” it is a symptom of the problems associated with the environment. The source of the problem is how human society – specifically Western state-capitalist society – interacts with the environment at the local and global level. When examining this question, the issues and concerns raised go far beyond climatic changes, though they all interact.
One cannot separate our interaction with the environment from the interaction between power structures and people, whether we are discussing large states, banks, corporations, international organizations, etc. In a global system in which people are themselves treated as commodities, where more than half the world’s population lives in abject poverty, with hunger and starvation increasing, with imperial powers destabilizing countries, bombing communities, supporting coups and waging wars, oppressing, impoverishing, and destroying, environmental issues are inseparable from social, political, and economic issues.
One need only look at the issue of militarization and war to see a clear relationship between these issues: wars are mostly waged by large states – whether directly or indirectly through proxies – against poor populations in weak ‘Third World’ states. Aside from the obvious destruction the physical war takes – through bombs and bullets – a nation’s infrastructure is destroyed, its people impoverished and oppressed. The American military system – by far the largest in the world – through the maintenance of aircraft carriers, ships, jets, equipment, transportation, weapons, with roughly one thousand military bases around the world, foreign occupations and operations, make this single institution known as the Pentagon “the largest institutional user of petroleum products and energy” in the world. The United States wages wars to secure resources around the world, to dominate and oppress populations, and in doing so, exploits and plunders those very same resources, destroys the environment, spreads poverty, death, and destruction. Its purpose is to serve minute – yet powerful – interests. Yet, it is devastating for the world’s people and the environment.
If we are truly interested with answering the question of how we move forward as a species in dealing with environmental issues, we must ask the parallel questions of how we deal with issues of poverty, hunger, land, exploitation, oppression, war, empire, and power. It seemingly makes the task harder, but it also makes the answers more plausible, and, indeed, possible.
Again, looking at the issue of climate change, we have seen countless international conferences held by global plutocrats, governments, international organizations, banks and corporations and global NGOs and environmental organizations like the World Wildlife Fund and Conservation International, whose boards of directors are dominated by individuals from banks, corporations and oil conglomerates. And we phase surprise that nothing productive is done. The ‘solutions’ we are given for complex problems are based around ideas of carbon credits, carbon trading, carbon caps and carbon markets, effectively commodifying the entire atmosphere, turning pollution itself into a profitable enterprise, and thus, making the problems that much worse. We are told that there are ways to simply ‘Green’ the economy, to promote the interests of state-capitalism and the environment simultaneously. But in a system which has always subjugated the environment and the population at large to the powerful interests which dominate, we are fools to assume they have changed their interests.
A great deal of press was given to the 2009 Copenhagen Conference, and the fact that it ended in failure. The focus was on “who” screwed it up: it was China, it was America, it was Canada! Everyone was pointing the finger at one another. The reality, however, was far more revealing, not only of the failure of Copenhagen, but of the true intent and the result of pursuing environmental issues through the institutions of power which have created the environmental problems in the first place.
The Copenhagen conference was viewed by elites as a means to advancing their institutional power to a more global level, as internal UN documents revealed that the focus was on a “green economy,” noting: “moving towards a green economy would also provide an opportunity to re-examine national and global governance structures.” The document stated that “linkages between environmental sustainability and the economy will emerge as a key focus for public policymaking and a determinant of future market opportunities,” and one top official stated that the environmental, food, and economic “crises provide a unique opportunity for fundamental restructuring of economies so that they encourage and sustain green energy, green growth and green jobs.”
It sounds well enough, but its focus on “market opportunities” for the “green economy” ignores entirely the nature of “market opportunities” being one of the most significant factors in creating environmental crises in the first place. With a focus on advancing issues of “global governance” in order to address environmental issues, the role of dominant institutions in creating the environmental crisis is overlooked, and thus, the ‘solution’ is to enhance the power of those very same institutions to global levels, further removing power from populations and communities (where the real solutions to environmental issues lie). In short, if the issue of ‘power’ – and the global distribution of power between institutions and populations – is not addressed, the ‘solutions’ offered are, at best, little more than band-aids on broken arms.
China received a great deal of the blame for the failure of the Copenhagen talks, but there is more to this story. Perhaps the most significant factor was due to what was called the ‘Danish Text,’ a leaked Danish government document written in secret between the rich and powerful nations to serve as a framework for their actions and intentions at the conference. The agreement would have handed more power to the rich nations, and sideline the UN in any final agreement, as well as “setting unequal limits on per capita carbon emissions for developed and developing countries in 2050; meaning that people in rich countries would be permitted to emit nearly twice as much under the proposals.” In other words, with true Western cultural state-capitalist logic: find the problem, acknowledge the problem, then double the problem! The text was drafted by a select coterie of representatives from Denmark, the U.K. and the United States, and the draft “hands effective control of climate change finance to the World Bank; would abandon the Kyoto protocol – the only legally binding treaty that the world has on emissions reductions; and would make any money to help poor countries adapt to climate change dependent on them taking a range of actions.”
Thus, one of the central institutions of world power – the World Bank – which has advanced the interests of Western banks and corporations across the ‘developing’ world, promoting privatization, deregulation, exploitation, resource extraction, and ultimately, environmental degradation, would then be given the responsibility of ‘solving’ the environmental crisis. And how would it do this? The World Bank would be given control over the dispersal of funds in the same way that it has handled the dispersal of loans in the past. Here’s a hint: it comes with “strings attached.”
A senior diplomat at the talks described the Danish Text as “a very dangerous document for developing countries.” Among the many points in the document were to “force developing countries to agree to specific emissions cuts and measures that were not part of the original UN agreement” and to “weaken the UN’s role in handling climate finance,” as well as aiming to “divide poor countries further.” Allowing for the rich countries to increase their emissions, while poor countries face severe restraints, overlooks the fact that the countries with most emissions already are those very same rich countries. Preventing poor countries from producing emissions would prevent them from developing their own resources as they see fit, instead allowing for the rich countries to move in and further dictate policies in their own interests. Ultimately, it was a draft agreement to advance imperial domination of the rich world over the poor world, using the issue of “climate change” as the excuse.
When the Danish text was leaked, representatives of poor nations were “furious that it is being promoted by rich countries without their knowledge and without discussion in the negotiations.” One diplomat noted: “It is being done in secret. Clearly the intention is to get Obama and the leaders of other rich countries to muscle it through when they arrive next week. It effectively is the end of the UN process.” Further, “It proposes a green fund to be run by a board but the big risk is that it will be run by the World Bank and the Global Environment Facility,” a partnership of ten agencies including the World Bank and UN Environment Programme, thus bypassing more democratically accountable and representative institutions, such as the UN itself. This, stated one diplomat, “would be a step backwards, and it tries to put constraints on developing countries when none were negotiated in earlier UN climate talks.” Since poor countries already suffer the greatest burden, not only of poverty, but of environmental devastation and climatic change (not to mention, war, imperialism, and oppression), the notion of the powerful countries exporting their responsibility to the poor and oppressed does not only fail to address the issues, but would inevitably make the problems much worse. We tend to call this “market logic.”
The release of the Danish text prompted the developing nations, represented by the G-77 (the vast majority of the world’s population) to suspend their participation in the negotiations. Days following the conclusion of the Copenhagen conference, the UN’s climate chief wrote in a confidential internal memo that it was the ‘Danish Text’ that led to the ultimate failure of the talks, stating that, “the text was clearly advantageous to the US and the west, would have steamrollered the developing countries, and was presented to a few countries a week before the meeting officially started.” Within days of the leaking of the ‘Danish Text’, developing nations were accusing the rich countries of engaging in “climate colonialism.” The Sudanese diplomat to the conference stated, “This is all based on the dominance and supremacy of developed countries. One could say the Empire has been doing this since the 16th Century, the Empire has always ruthlessly grabbed natural resources – the new resource is the global atmospheric space and carbon space.” One activist and participant called the deal an act of “carbon colonialism.”
The British delegation at Copenhagen further inflamed tensions and calls of colonialism when it suggested the creation of a “climate fund” by diverting western aid budgets from poverty reduction funds into climate change “adaptation.” Thus, “money earmarked for education or health would be diverted into projects such as solar panels and wind farms,” incurring anger from several developing nations. As one commentator with the Guardian explained, Copenhagen was “a disaster for Africa,” the continent that contributes the least amount of carbon emissions in the world, and will disproportionately suffer the consequences more than any other. Several African nations were coerced into signing the final deal, even though they had walked out of negotiations following the Danish Text, with industrial rich nations threatening to withdraw foreign aid if the deal was not signed.
Again, this is but one of many examples of how environmental issues are intimately related to those of poverty, economics, imperialism, and power, more generally. To address one with any substance, we must address all with perseverance. Or, we could just continue to push for international conferences met with the self-congratulations of global elites who pride themselves on having flown around the world on taxpayers’ dollars to stay in five-star hotels and eat gourmet meals while they discuss issues of poverty and environmental protection, amounting to little more than “agreements to agree” at some point in the future, while globally, business as usual, and more accurately, accelerated rates of exploitation and devastation, dominate the decisions and actions of the powerful.
The Financialization of Food and the Profitability of Poverty
The global food crisis hit international headlines in 2008, with “food riots” erupting in dozens of countries around the world, in Asia, Africa, and Latin America. By May of 2008, it was reported that food riots had hit roughly 37 countries, with some of the more dramatic taking place in Cameroon, Niger, Egypt, and Haiti. At that time, the Food and Agricultural Organization (FAO) warned: “Food is no longer the cheap commodity that it once was. Rising food prices are bound to worsen he already unacceptable level of food deprivation suffered by 854 million people… We are facing the risk that the number of hungry will increase by many more millions of people.”
Governments and repressive regimes around the world were under threat from the rising tide of food price rebellions (commonly referred to as “food riots”), with the rapidly accelerating costs of life’s necessities driving people to desperation, and even pushing governments to the brink of collapse. A UN adviser and economist, Jeffrey Sachs, noted, “It’s the worst crisis of its kind in more than 30 years… It’s a big deal and it’s obviously threatening a lot of governments. There are a number of governments on the ropes, and I think there’s more political fallout to come.” El Salvador’s president, Elias Antonio Saca, told the World Economic Forum that it “is a perfect storm… How long can we withstand the situation? We have to feed our people, and commodities are becoming scarce. This scandalous storm might become a hurricane that could upset not only our economies but also the stability of our countries.” A former adviser to the Ministry of Agriculture in Indonesia added that “[t]he biggest concern is food riots… It has happened in the past and can happen again.” In Haiti, where roughly 75% of the population earn less than $2 per day, with one in five children chronically malnourished, hunger had become so extreme that one “booming” commodity had become “the selling of patties made of mud, oil and sugar, typically consumed only by the most destitute.”
In Haiti, as protesters approached the presidential palace, United Nations “peacekeepers” fired rubber bullets on the hungry and starving, as well as using tear gas, and several protesters were reported to have been killed in the chaos. Food prices rose by an average of 40% since the middle of 2007, and with the price increases, came increased instability and social unrest. An adviser to the Haitian president commented: “I compare this situation to having a bucket full of gasoline and having some people around with a box of matches… As long as the two have a possibility to meet, you’re going to have trouble.”
The American government scrambled to increase “food aid” to countries around the world, fearful for the stability of its protectorates and puppet governments. A U.S. Senator, Richard Durbin, noted: “This is the worst global food crisis in more than 30 years… It threatens not only the health and survival of millions of people around the world, many of them children, but it also is a threat to global security,” with over 36 countries “now facing food crises [and] requiring help from abroad.”
An analyst at a major risk management agency told the Financial Times in November of 2008 that there had been “food protests in 25 countries in the past year,” adding: “In Indonesia the price of rice is directly correlated to the number of strikes or riots… A sharp increase in prices could cause production problems if there are strikes by workers and civil unrest could damage vital infrastructure like roads or telecoms or the government could impose a political crackdown.” The analyst provided advice for global corporations: “What global companies need to do is to avoid being seen as contributing to or being complicit with an issue. Some governments will blame rising food prices on the west, for example.” An analyst at an insurance conglomerate agreed: “Companies need to be aware of how they are perceived and seek to win hearts and minds.” In other words, what is needed is an excellent public relations campaign to ensure that western corporations do not get their deserved share of the blame for rising food prices. The advice was not to avoid contributing to the crisis, but to “avoid being seen as contributing,” after all.
In the span of a year between 2007 and 2008, the global price of wheat rose by 130%, the price of rice – the staple food for the majority of the world’s population – rose by 74%, going up by more than 10% in one day alone. While rising food prices were causing riots, social unrest, and the instability of governments across the ‘Third World,’ the prices were noticeably increasing within the industrial nations themselves, though by no means to the same degree, or with the same dramatic and devastating effects. The FAO estimated that food prices were likely to remain high for at least a decade. Global droughts, climate change, environmental destruction, massive farm subsidies in the west, population growth, and the development of biofuels (food for fuel), have all contributed to the rising costs of food. Of course, a number of other important factors were involved, such as the liberalization of food production and global markets, largely a staple of the neoliberal era, from the mid-1970s onward, and of enormous importance, the role of financial speculation, with banks, hedge funds, and investors speculating on food costs increasing, and thus, driving up the costs of food.
According to a confidential report by the World Bank in 2008 which was leaked to the Guardian, biofuels forced global food prices up by roughly 75%, contradicting the claims of the U.S. government, the main promoter and developer of biofuels, that their production led to a 3% price rise in the cost of food. Robert Bailey, a policy adviser at Oxfam stated: “Political leaders seem intent on suppressing and ignoring the strong evidence that biofuels are a major factor in recent food price rises… It is imperative that we have the full picture. While politicians concentrate on keeping industry lobbies happy, people in poor countries cannot afford enough to eat.” The World Bank estimated that the rising food prices pushed 100 million people worldwide below the poverty line, with government ministers at the G8 conference in Japan describing the food crisis as “the first real economic crisis of globalization.”
The World Bank report contested that: “Rapid income growth in developing countries has not led to large increases in global grain consumption and was not a major factor responsible for the large price increases.” The major droughts in Australia and elsewhere, according to the World Bank report, did not have a significant impact on food prices, with the biggest cause being the US and European drive for biofuels. The report noted: “Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate,” adding that the higher costs of energy and fertilizer contributed to a 15% increase of food costs. Use of biofuels has diverted grain production away from food and toward fuel, with over one-third of U.S. corn used to produce ethanol, and roughly half of vegetable oils in the European Union used to produce biodiesel. Further, farmers have been encouraged to put aside land for use in the production of biofuels instead of food. Finally, and perhaps most importantly, the production of biofuels has encouraged financial speculation in food markets, as prices were expected to increase, and thus speculators were set to make enormous amounts of money if and when prices go up. Speculation, of course, is a self-fulfilling prophecy, as speculators betting that prices will go up inevitably pushes the prices up.
The production of biofuels has been a major strategy by North American and European governments in order to reduce dependency on foreign oil and address climate change and environmental issues. A secret report conducted by the British government – the Gallagher Report – released in 2008, reported that the development of biofuels played a “significant” role in the food price increases. All petrol and diesel in Britain had to contain 2.5% of biofuels by 2008, and was aimed to meet a target of 5% by 2010, while the EU was itself contemplating a 10% target for 2020. Naturally, this would increase food prices accordingly, creating much larger and deeper food crises.
For all the contributory factors, not least of which was the development of biofuels, which collectively account for moderate increases in the cost of food, the primary driver of the food prices was financial speculation. This has been made exceedingly evident as the food crisis was not ended in 2008, but has continued to reach new heights, and the crisis has become almost permanent.
At an emergency meeting on food price inflation in 2010, the UN’s special rapporteur on food, Olivier De Schutter, released a paper in which the increase of food prices was blamed on a “speculative bubble” created by pension funds, hedge funds, sovereign wealth funds, and big banks that speculate on commodity markets. The paper noted that beginning in 2001, “food commodities derivatives markets, and commodities indexes began to see an influx of non-traditional investors… The reason for this was because other markets dried up one by one: the dotcoms vanished at the end of 2001, the stock market soon after, and the US housing market in August 2007. As each bubble burst, these large institutional investors moved into other markets, each traditionally considered more stable than the last. Strong similarities can be seen between the price behaviour of food commodities and other refuge values, such as gold.” De Schutter further wrote: “A significant contributory cause of the price spike [was] speculation by institutional investors who did not have any expertise or interest in agricultural commodities, and who invested in commodities index funds or in order to hedge speculative bets.”
As prices nearly doubled between 2007 and 2008, riots erupted in over 30 countries and 150 million more people were pushed into hunger, the majority of commodity prices in 2010 remained well over 50% of their pre-2007 figures, and were set to continue upwards: “Once again we find ourselves in a situation where basic food commodities are undergoing supply shocks. World wheat futures and spot prices climbed steadily until the beginning of August 2010, when Russia – faced with massive wildfires that destroyed its wheat harvest – imposed an export ban on that commodity. In addition, other markets such as sugar and oilseeds [were] witnessing significant price increases.” Gregory Barrow of the UN World Food Program noted: “What we have seen over the past few weeks is a period of volatility driven partly by the announcement from Russia of an export ban on grain food until next year, and this has driven prices up. They have fallen back again, but this has had an impact.” Food prices were rising by roughly 15% per year in India, Nepal, Latin America and China. A British Green Party MP stated: “Food has become a commodity to be traded. The only thing that matters under the current system is profit. Trading in food must not be treated as simply another form of business as usual: for many people it is a matter of life and death. We must insist on the complete removal of agriculture from the remit of the World Trade Organization.”
In December of 2010, food prices reached a new record high, surpassing the 2008 levels, entering what an FAO economist referred to as “a danger territory,” adding that there was “still room for prices to go up much higher.” As John Vidal wrote in the Guardian, “[t]he same banks, hedge funds and financiers whose speculation on the global money markets caused the sub-prime mortgage crisis are thought to be causing food prices to yo-yo and inflate,” as they have taken “advantage of the deregulation of global commodity markets” and are thus “making billions from speculating on food and causing misery around the world.” Food prices were even rising 10% per year in Britain and Europe, with the UN reporting that prices could be expected to rise at least another 40% within the following decade.
In the mid-1990s, “following heavy lobbying by banks, hedge funds and free market politicians in the US and Britain, the regulations on commodity markets were steadily abolished.” What had previously been “contracts” between farmers and traders turned into “derivatives” which were to be bought and sold on international markets between global investors, “who had nothing to do with agriculture.” Thus, a global market of “food speculation” had been born, noted Vidal: “Cocoa, fruit juices, sugar, staples, meat and coffee are all now global commodities, along with oil, gold and metals.” The same institutions which were responsible for creating the massive housing bubble which resulted in the economic crisis, with foreclosures on millions of homes, reacted to the bursting of that bubble by creating a new one in commodity markets, notably food. Except with this bubble, people don’t have to wait for it to burst in order to suffer, as people are driven deeper into poverty and hunger as it inflates, all the while the institutional “investors” make a killing, quite literally.
When banks and investors began moving billions out of the housing market and into new markets, food speculation became especially attractive. Mike Masters, the fund manager at Masters Capital Management testified in the US Senate in 2008 that, “We first became aware of this [food speculation] in 2006. It didn’t seem like a big factor then. But in 2007/08 it really spiked up… When you looked at the flows there was strong evidence. I know a lot of traders and they confirmed what was happening. Most of the business is now speculation – I would say 70-80%.” In other words, roughly 70-80% of the food price increases were determined by speculation, compared to the plethora of other given reasons, combined. Masters warned the Senate: “Let’s say news comes about bad crops and rain somewhere. Normally the price would rise about $1 [per bushel]. [However] when you have a 70-80% speculative market it goes up $2-3 to account for the extra costs. It adds to the volatility. It will end badly as all Wall Street fads do. It’s going to blow up.”
The president of Strategic Investment Group in New York warned that this speculative market has only increased in size, and that “speculative demand for commodity futures has increased since 2008 by 40-80% in agriculture futures.” In 2010, one London-based hedge fund purchased more than 7% of the world’s stocks of cocoa beans, which drove the price of chocolate to its highest price in 33 years. The UN rapporteur on food, Olivier De Schutter agreed: “Prices of wheat, maize and rice have increased very significantly but this is not linked to low stock levels or harvests, but rather to traders reacting to information and speculating on the markets.” Deborah Doane of the World Development Movement noted: “People die from hunger while the banks make a killing from betting on food.”
The World Development Movement (WDM) issued a report in the Summer of 2010 blaming the rising food prices on investors and speculators, just as cocoa spiked to its 33-year high after a London hedge fund purchased massive amounts of cocoa stock. The report noted that “risky and secretive” speculative bets on food prices were exacerbating the conditions of the world’s poor, as well as sparking social unrest. Deborah Doane, director of the WDM, noted: “Investment banks, like Goldman Sachs, are making huge profits by gambling on the price of everyday foods. But this is leaving people in the UK out of pocket, and risks the poorest people in the world starving.” She added: “Nobody benefits from this kind of reckless gambling except a few City [of London] wheeler-dealers. British consumers suffer because it pushes up inflation, because of unpredictable oil and raw material prices, and the world’s poorest people suffer because basic foods become unaffordable.” The WDM estimated that Goldman Sachs likely made a profit of $1 billion in 2009 through speculating on food prices, though Goldman Sachs stated that these profits from poverty and hunger were “ludicrously overstated.”
Even in the establishment journal, Foreign Policy, ever an apologist and advocate for American imperialism and global hegemony, the food price increases were blamed on “Wall Street greed.” Perhaps not surprisingly, it was bankers at Goldman Sachs in 1991 that developed a derivative (speculative bet) based upon 24 raw materials, from metals and energy, to coffee, cocoa, cattle, corn, wheat and soy, known as the Goldman Sachs Commodity Index (GSCI). In 1999, when futures markets were deregulated, “bankers could take as large a position on grains as they liked, an opportunity which had, since the Great Depression, only been available to those who actually had something to do with the production of our food.” Other banks followed the lead of Goldman Sachs, and found that they too could reap enormous profits from speculating on food prices (and thereby causing mass poverty, hunger, and starvation), including Barclays, Deutsche Bank, Pimco, JP Morgan Chase, AIG, Bear Stearns, and Lehman Brothers. As Frederick Kaufman wrote: “The result of Wall Street’s venture into grain and feed and livestock has been a shock to the global food production and delivery system. Not only does the world’s food supply have to contend with constricted supply and increased demand for real grain, but investment bankers have engineered an artificial upward pull on the price of grain futures.” Speculation thus resulted in a situation where “imaginary wheat dominates the price of real wheat,” as “bankers and traders sit at the top of the food chain – the carnivores of the system, devouring everyone and everything below.”
Alan Knuckman is an analyst with Agora Financials, a consulting firm specializing in commodity investments, which has Knuckman spending his time on the floor of the Chicago Board of Trade (CBOT), the world’s largest commodity futures exchange. Knuckman stated: “This is capitalism in its purest form… This is where millionaires are made.” One might add, however, that it’s also where millions more people in hunger are “made.” Knuckman explained: “I trade in anything you can get in and out of quickly… I’m here to make money.” And that’s what he does, and he does it well. Knuckman reflected the view of many in his field, stating: “I don’t believe in politics… I believe in the market, and the market is always right.” When asked if the soaring food prices were the result of financial speculation, something in which he is directly engaged, Knuckman replied: “I don’t see it.”
One is reminded of a bad joke: two fish meet, one asks the other, “how’s the water today?” to which the other replies, “what’s water?” When one is entirely submerged in a specific universe, it requires a great deal of effort to remove one’s perspective to see a wider world view, and their place within it. Alan Knuckman is quite obviously far removed from the everyday struggles of most people, in his own country, let alone the rest of the world. When questioned by Der Spiegel about the high cost of food, he explained: “The age of cheap food is over… Most Americans eat too much, anyway.” While Americans spend roughly 13% of their disposable income, on average, on food, the world’s poor spend roughly 70% of their budget on food, and thus, high food prices for this population, with one billion people on earth classified as living in hunger, and with food prices hitting new record highs almost every passing year, pushing tens of millions more into poverty and hunger, these price-hikes are “life-threatening.” So what did Knuckman have to say about this? He contended that it amounted to “undesirable side effects of the market,” but of course, as he earlier stated, “the market is always right,” and thus, with that logic of thinking, there is nothing “wrong” with one billion people going hungry, nor with more being pushed into poverty and hunger, which are amounted to mere “undesirable side effects.” As he earlier explained, “I’m here to make money,” and obviously, everything else is incidental.
The international food market, which “is always right,” is also incidentally dominated by major banking houses, and the speculative trade in food securities was created and inflated by the very same banks that created, inflated, and profited off of the housing boom in the United States, such as Goldman Sachs, Lehman Brothers, Bear Stearns, Morgan Stanley, and JP Morgan Chase. These banks, hedge funds, and other speculators are able to reap enormous profits as millions are pushed into hunger and poverty, and the brilliance of this scheme is that the investors don’t have to produce a single thing, and never even come into contact with the real food market, whether production or distribution. They trade in “futures,” betting that prices will go up (or possibly down) in the future, and the real prices of food follow the speculative increases and decreases, and when prices go up, the speculators make money. The World Bank estimated that an increase of 10% in worldwide food prices pushes roughly 10 million more people into poverty, and that while there is enough food to feed the world, “many die of hunger simply because they can no longer afford to pay for it.”
In 2011, the annual meeting for Barclays faced protests by anti-poverty campaigners who were raising awareness about the role of Barclays in driving up food prices and profiting off of hunger, as the UK’s largest participant in food commodity trading, and one of the top three banks involved globally, according to information from the World Development Movement (WDM). The other top two banks in global commodity trading are Goldman Sachs and Morgan Stanley. Deborah Doane of the WDM noted: “First, it was sub-prime mortgages, now it’s food commodities… The lack of transparency in these markets bears worrying resemblance to the behaviour that led to the 2008 financial crash. Like any irrational asset bubble, the investors pile their money in for short-term profits, in spite of the consequences.” Estimates from WDM put the profits Barclays accumulated from food speculation at 340 million pounds in 2010.
By 2012, it was reported that Barclays had made as much as half a billion pounds in two years from food speculation. An official at Oxfam noted: “The food market is becoming a playground for investors rather than a market place for farmers. The trend of big investors betting on food prices is transforming food into a financial asset while exacerbating the risk of price spikes that hit the poor hardest.”
In an early 2012 interview with Der Spiegel, the head of the United Nations Food and Agriculture Organization (FAO), José Graziano da Silva, stated that, “speculation is indeed an important cause of the heavily fluctuating and very high prices” of food, and “only benefits banks and hedge funds, but not producers, processors and buyers – and certainly not consumers.” Apart from placing “regulations” on food speculation, da Silva suggested that the rich industrial countries should end their agricultural subsidies, noting that when the U.S. ended its subsidies for corn-based biofuels in the summer of 2011, global prices of corn immediately dropped, which “had a direct and positive effect on the food situation.” The FAO is hardly a radical organization, firmly entrenched within global power structures, it continues to promote “market solutions” to problems of hunger and food, though is critical of market “excesses.” Da Silva noted, however, that “there is enough food for everybody, but for many people, especially the poor, it’s simply too expensive. They are going hungry, even with full shelves of food.” Thus, when asked if the food crisis was “really a financial problem,” da Silva replied, “Of course.”
In 2011, speculative investment in agricultural commodities amounted to 20 times the amount of money spent by all countries of the world on food and agricultural “aid.” The three biggest players in agricultural commodity speculation – Goldman Sachs, Morgan Stanley, and Barclays, respectively – have reaped hundreds of millions and billions in profits in this speculative assault against the world’s poorest billion people suffering from hunger. The UN rapporteur on food, Olivier De Schutter, noted: “What we are seeing now is that these financial markets have developed massively with the arrival of these new financial investors, who are purely interested in the short-term monetary gain and are not really interested in the physical thing – they never actually buy the ton of wheat or maize; they only buy a promise to buy or sell. The result of this financialisation of the commodities market is that the prices of the products respond increasingly to a purely speculative logic. That explains why in very short periods of time we see prices spiking or bubbles exploding, because prices are less and less determined by the real match between supply and demand.”
The UN World Food Programme referred to the 2008-2011 global spike in food prices as a “silent tsunami of hunger,” pushing 115 million more people into hunger and poverty since 2008. This, explained De Schutter, is “an absolute catastrophe” for the world’s poor. In Kenya, an unemployed single-mother looking after her eight-year-old daughter and 83-year old father explained that since the massive food price hikes: “We stopped eating lunch, and saved the little we had to eat for supper. We drank tea without sugar and sometimes we also missed breakfast. I had to travel so much to wash clothes to get money for food, but sometimes I was so weak I fell down. For supper, we had one or two cups of flour mixed with water and salt. Our life was so hard.” It is worth remembering – and reminding yourself continuously – that there is more than enough food in the world to feed the population of the world, yet, stories like this single mother’s are becoming increasingly common among billions of people. If ever there was a clear sign that something is fundamentally wrong with the global system – and “market solutions” – this is it.
In the summer of 2012, the United States experienced the worst draught in decades, contributing to increased speculation in food markets, driving prices up higher and inducing warnings of another major global food crisis on the brink. Chris Mahoney, the head of agriculture at Glencore, a major global commodity trader, let slip some industry honesty when he stated: “The U.S. weather starting mid-May… has been among the worst three or four years of the century, comparable to the dust bowl years of the mid-1930s… In terms of the outlook for the balance [profits] of the year, the environment is a good one. High prices, lots of volatility, a lot of dislocation, tightness, a lot of arbitrage opportunities… I think we will both be able to provide the world with solutions, getting stuff to where it’s needed quickly and timely, and that should also be good for Glencore.” The CEO of Glencore, Ivan Glasenberg, referred to the volatile food market as “a time when industry fundamentals are the most positive they have been for some time.” Put simply, increased food prices, and thus, increased hunger, is “good for Glencore.” Tens of millions more people pushed into abject poverty and hunger? No need to be concerned, that only means that “industry fundamentals are the most positive they have been for some time.”
What can we conclude, therefore, from a global system of ‘markets’ in which poverty and starvation create massive profits for a few select institutions and individuals, at the expense of literally billions of human beings, and entire nations and societies? Does this really reflect, as one trader stated that, “the market is always right”? Or does it reveal a market which benefits few at the expense of many? The answer is, of course, self-evident: so then why is the issue not framed in such a manner? Instead of acknowledging global markets as inherently and structurally (not to mention ideologically) immoral and wrong, we talk about “reforming” and “regulating” these markets as if minor changes would rectify the fundamental problems. The truth – as hard as it may be for many to accept – is that global markets are fundamentally wrong and immoral.
We acknowledge this type of immorality on an individual level, say with the literary character of Ebenezer Scrooge who profited from the misery of others, but when it reaches global institutional and ideological proportions, we often justify and excuse it, or possibly acknowledge that it is “not perfect” and there are “undesirable side effects,” possibly warranting ‘reform.’ Perhaps the institutional ideology could be best summarized by Ebenezer Scrooge when he was asked to donate to a charity to help the poor and hungry who were at risk of dying, to which Scrooge replied, “If they would rather die… they had better do it, and decrease the surplus population.”
At what point is it acceptable to suggest that humanity is in need of an entirely new way of organization and function? In a world of seven billion people, when billions live in poverty, in slums, and with hunger, at what point do we begin to acknowledge that this system simply does not work? Sadly, it seems that people only often recognize this when they are among the poor, within the slums, and starving. By that point, however, their concerns become those of daily survival, not issues of reform or even activism and revolution. Their days are spent toiling and struggling for a meager dollar or two so that they could afford a meager meal, or if lucky, two meals. Looking after other family members, they do not have the luxury of education, information, and the ready capacity for organization and activism that we – who do not live in hunger and absolute poverty – have. If we continue to uphold a world system which has created and sustains and exacerbates the conditions and prevalence of global poverty, slums, and hunger, we doom others – and indeed ourselves – to that same fate.
Future samples from this chapter will focus on environmental degradation, poverty, and the global land grabs. If you found this excerpt of interest, please consider making a donation to The People’s Book Project to help the research and writing continue.
Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, with a focus on studying the ideas, institutions, and individuals of power and resistance across a wide spectrum of social, political, economic, and historical spheres. He has been published in AlterNet, CounterPunch, Occupy.com, Truth-Out, RoarMag, and a number of other alternative media groups, and regularly does radio, Internet, and television interviews with both alternative and mainstream news outlets. He is Project Manager of The People’s Book Project and has a weekly podcast show with BoilingFrogsPost.
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Corporate Culture and Global Empire: Food Crisis, Land Grabs, Poverty, Slums, Environmental Devastation and Resistance
Corporate Culture and Global Empire: Food Crisis, Land Grabs, Poverty, Slums, Environmental Devastation and Resistance
By: Andrew Gavin Marshall
Corporate power is immense. The world’s largest corporation is Royal Dutch Shell, surpassed in wealth only by the 24 largest countries on earth. Of the 150 largest economic entities in the world, 58% are corporations. Corporations are institutionally totalitarian, the result of power’s resistance to the democratic revolution, which was begrudgingly accepted in the political sphere, but denied the economic sphere, and thus was denied a truly democratic society. They are driven by a religion called “short-term profits.” Corporate society – a state-capitalist society – flourished in the United States, and managed the transition of American society in the early 20th century, just as Fascists and Communists were managing transitions across Europe. With each World War, American society – its political and economic power – grew in global influence, and with the end of World War II, that corporate society was exported globally.
This is empire. The American military, intelligence agencies, and national security apparatus operate with the intention of serving U.S. – and now increasingly global – state and corporate interests. Wars, coups, destabilization campaigns, support for dictators, tyrants, genocides and oppression are the products of Western interaction with the rest of the world.
In the same sense that “God made man in his own image,” corporations remade society in their own interest; and with equal arrogance. Corporations and banks created or took over think tanks, foundations, educational institutions, media, public relations, advertising, and other sectors of society. Through their control of other institutions, they extend their ideologies of power – and the variances between them – to the population, to other elites, the ‘educated’ class, middle class, the poor and working class. So long as the ideas expressed support power, it’s ‘acceptable.’ It can extend critiques, but institutional analysis is not permitted. Ideas which oppose institutional power are ‘ideological’, ‘idealist’, ‘utopian’, and ultimately, unacceptable.
Corporate culture dominates our society in the West. Being inherently totalitarian institutions, the culture – and its institutions – become increasingly totalitarian. This is the response by private economic power to undo the achievements in human history which came through increased democracy in the political sphere. Corporations and banks seek to control and consume all things, to dominate without end.
The only reason corporations were and are able to be the defining cultural institution of the 20th and now 21st century, is because of their economic power. This is derived from exploitation: of resources, the environment, labour, and consumers. It is enforced with repression: the job of the state in the state-capitalist society, along with massive subsidies and protectionist measures for corporate and financial interests. As corporate power extended around the world, the rapid destruction of the environment and resources accelerated, and Western powers ‘outsourced’ the environmental devastation our consumer societies ‘require’ to the so-called Third World. We consume, and they suffer; a marriage of inconvenience that we call “civilization.” Corporations and our state keep the rest of the world in a state of poverty and repression, eternally attempting to block the inevitable global revolution to create a human society that acts… humanely. We were busy buying things. Couldn’t be bothered.
Now what our societies have done to the people on whose land we now live, or everyone else in the world, is being done internally, to us. Everything is up for sale! Corporations make record profits, hoard billions and trillions in cash reserves, NOT being invested, but likely waiting until your standard of living is significantly reduced so that your labour and resources are cheaper, and thus, ultimately more profitable. This is called ‘austerity’ and ‘structural reform,’ political euphemisms for impoverishment and exploitation.
Corporations, banks and states have in recent years caused a massive global food crisis, driving food costs to record highs almost every subsequent year from 2007 onward. With billions of people in the world living on less than $2 per day, the majority of humanity spends most of their income on food. Price increases in food, caused primarily by financial speculation (big players include Goldman Sachs, Morgan Stanley, and Barclays), push tens of millions more people into poverty and hunger. Roughly one billion – 1/7th of the world’s population – live in slums. And they are growing rapidly. Massive urban slums were developed out of the imperialism Western states and corporations imposed upon the rest of the world, pushing people off the land and into the cities, whether induced by poverty or coerced by bombs and guns. All billed to the imperial Western state sponsors of terrorism. We supported (and support) ruthless and tiny elites in the countries we dominate[d] around the world, and now we are just beginning to realize the ruthless and tiny elite which rules over our own domestic lives. Their social function is that of a parasite: to suck the life blood out of all global society.
Food price increases have helped spur a massive global land grab, with Western (as well as Gulf and Asian powers) grabbing vast tracts of land – and water – around the world, for pennies on the dollar. This grab is most extensive in Africa, where in the past several years, mostly Western investors have grabbed land which amounts to an area roughly the size of Western Europe. The land not only contains extensive resource wealth, most importantly water (the Nile is up for sale!), but it is home to hundreds of millions of people, and globally, there are 2.5 billion poor people engaged in small-scale farming. This is primarily done through communal land ownership, something which Western society – with its ‘divine right’ of private property – does not understand. Thus, in international, state, and corporate law – which we designed – we deem communally owned and used land to be legally owned by the state. Our ‘investors’ – banks, hedge funds, pension funds, corporations and states – strike deals with corrupt states across the world to give us 40-100 year contracts for vast tracts of land, paying little or sometimes no rent. Then the “empty land” – as we call it – is cleared (of it’s “emptiness”, no doubt), evicting peoples who have been there for generations and beyond, who depend upon the land and the food it produces for their very lives. These people are being driven to cities, and ultimately, slums.
This is what we call “productive” use of land. So naturally, we then destroy it, eviscerate its environment, poison and pollute, extract, exploit, plunder and profit. Or we simply hold onto the land, not using it at all, just waiting until it goes up in profit. Even major American universities like Harvard are getting involved in the massive land grabs across Africa and elsewhere. This is the largest land grab in history since the late 19th century ‘Scramble for Africa’ where Europeans colonized almost the entire continent. When we do use the land for ‘productive use’, we say it will “help the climate” and “reduce hunger.” How? Because we will produce food and biofuels. And in doing so, we will use massive amounts of chemicals, pesticides, genetically modified organisms, deforestation, biodiversity destruction, highly mechanized and heavy fuel-use farming techniques. The food we produce – which is not much, we have more interest in things like biofuels, lumber, minerals, oil, cash-crops, etc. – is then exported to our countries, and away from the poor ones where hunger and poverty are so prevalent. They lose their land, gain more poverty, with the added bonus of extensive food insecurity, hunger, starvation, slum growth, increased mortality rates, disease, and violence. Poverty is violence.
This is how Western states, banks, corporations and international organizations address the issue of “hunger”: by creating more of it. And in a deeply disturbing irony, we call this moving towards “sustainability.” Little did we know that power interests have a different definition of “sustainability” than most people: they simply combined the words sustained and profitability, and called it “sustainability.” And coincidentally, that word already has a meaning to most people, so we simply misinterpreted the meaning. But there are people who take that concept seriously, those who experience the major costs of an unsustainable society.
We are witnessing a massive global resistance to these processes, largely driven by indigenous peoples – in Africa, Latin America, Asia, and now in North America. In Canada, the ‘Idle No More‘ movement began with four indigenous women in Saskatchewan deciding to meet up and discuss their concerns about Steven Harper’s “budget bill,” which, among other things, had reduced the amount of Canada’s protected rivers, lakes, and streams from roughly 2.5 million (as of Dec. 4, 2012) to somewhere around 62 (as of Dec. 5, 2012). Now a large, expanding, and increasingly international social movement led by indigenous peoples is taking place. Less than two months ago, it began with four women having a discussion.
Canada’s Indigenous peoples are showing Canadians – and others around the world – how to stand up against power. And they’ve had practice. For over 500 years, our societies have been oppressing and often eradicating indigenous populations at ‘home’ and abroad. Indigenous peoples, like other oppressed peoples, are at the front lines of the most oppressive nature of our society: they experience and have experienced exploitation, environmental devastation, domination and decimation. With the world’s Indigenous peoples speaking – not only in Canada, but across Latin America, Africa, and elsewhere – it is time that we in the West begin to listen. It is always important to listen to those who are most oppressed; the histories of our ‘victims’ are rarely written or known, at least not to us. Victims remember. And it matters that we begin to listen.
How can we expect to change – or know what and how to change – our societies if we do not listen and learn from those who have experienced the worst of our society? Indigenous people are now giving us a lesson in democratic struggle. If we continue on our current path, Indigenous communities will be completely wiped out; the powers that rule our society will have completed a 500-year genocide.
So we have to ask ourselves the question: should we now listen to, learn from, and join with these people in common struggle for justice and the idea of a humane society, or… are we still too busy buying things?
Perhaps it is time we all should be ‘Idle No More’.
The above was a short summary of roughly three separate chapters currently being researched and written as part of The People’s Book Project. To help the Project continue, please consider spreading the word, sharing articles, or donating.
The Trans-Pacific Partnership: What “Free Trade” Actually Means
By: Andrew Gavin Marshall
The following is part 3 of a three-part exclusive series on the Trans-Pacific Partnership for Occupy.com
To discuss “free trade agreements” or the “free market,” we must first identify the theoretical versus the functional definitions of these terms – because theoretical definitions look at what those terms should mean, whereas functional definitions look at what the terms mean actually.
The theoretical definition of a “free market” is one in which every individual actor in the realm of exchange exists in a state of equality of opportunity; where all compete with one another to produce the best products at the cheapest prices for consumers, thus the most innovative and efficient producers succeed while others fail, unregulated – and unhelped – by the state. Within “free markets,” what we call “free trade agreements” are meant to reduce barriers such as tariffs, subsidies and regulations so that market “competitors” can freely move products and goods across borders and compete in an ever-expanding global “free market.”
The functional, or technical, definition of a “free market” is one in which the state regulates the market – the realm of economic exchange and activity – for the benefit of large transnational corporations and banks.
Barriers to profits, such as environmental, labor, safety and financial regulations, are dismantled. Meanwhile, subsidies and legal rights and protections are granted to major corporations, undermining competition and supporting monopolization. So while the rhetoric of “free markets” tends to be all about reducing state interference in the economy, in actuality state interference increases – but only for the benefit of large corporations and banks.
At the same time, state “interference” decreases in sectors that benefit the actual population, such as welfare, social services, pensions, healthcare, education, labor protections and so on. In the actual “free market,” these protections are dismantled, subjecting populations to “market discipline” quite unlike the large corporations and banks that receive direct protection against “market discipline.” The most obvious example of this is the post-2008 bank bailouts.
In a theoretical “free market,” all the banks that gambled badly would have failed and collapsed. But with the functional “free market” we have today, the banks went to the state and got bailed out with trillions of dollars of taxpayer money.
The same dichotomy exists for the term “free trade agreement,” which in theory is the opposite of “protectionism,” where states intervene in the market by establishing tariffs, regulations, subsidies and protections for various imports and exports, thus undermining the “free market.”
The technical definition, however, is one in which protectionism is rampant, with enormous subsidies and protective barriers, and very often includes thousands of pages of regulations and provisions. But because all of this is done to protect corporate and financial interests, it is called “free trade.” It is “protectionism” if the barriers, regulations and protections benefit the nation or population and prevent transnational corporations and banks from having unhindered access to the “market”?
Likewise, is it “free trade” if the barriers, regulations, and protections benefit corporations and banks at the expense of the nation and population? In actuality, so-called “free trade” is a drain on the economy, creates enormous national debts, undermines labor, creates poverty and exploitation, wastes natural resources and devastates the environment. However, it is very profitable for banks and corporations, so is endlessly repeated as something “good” and “necessary.”
In theory, “free trade” would enhance competition because it would allow all parties to compete on an even playing field internationally, thus companies would have to find ways to lower their costs of production while increasing their product standards, ultimately decreasing the final price to consumers. In this theoretical form of “free trade,” the best and cheapest product, the company that made it, and the consumer and society as a whole would all benefit.
The reality is the exact opposite: the production cycle is broken up (this is commonly called “offshoring”), which increases the use of transportation, resources and the overall cost of production, making the final product more expensive to consumers. Case in point is the North American Free Trade Agreement (NAFTA), where competition between corporations is undermined while access to resources and markets is enhanced, subsidized and protected.
Corporate cooperation with each other and the state is enhanced while the poor, working and middle classes of Canada, the United States and Mexico are put in direct competition with each other. Corporations in Canada and the U.S. close their factories and move them to Mexico where labor is cheaper, increasing unemployment and poverty, destroying unions and labor protections, and forcing down wages while costs and corporate profits increase.
The role of the state is to regulate these markets and agreements for the benefit of the corporations and banks, and to force the populations to compete with each other in a race to the bottom: market monopolization for the elite, and market discipline for the population.
The break-up of the production cycle, especially from the late 1980s onward, has redefined what “trade” actually is. Typically, we think of trade as a system where countries export and import products or goods. With the era of “free trade,” the production cycle was no longer confined within national borders, and was broken up between several countries.
The result was that a large percentage of what we call “trade” is actually one corporation moving parts or goods to a subsidiary or another corporation in a different country, to continue the production cycle until it returns to the home country as a finished product for consumption.
This is referred to as “intra-industry trade” (transporting parts or goods between corporations) or “intra-firm trade” (transporting parts or goods between a corporation and its subsidiaries). When the parts move across borders, often several times before the final product is created, customs agents at borders register the cumulative value of those products as a “traded” good, and these numbers are then used to determine the “actual contribution” of that good to the economy.
For example, a product which has parts manufactured in Canada, assembled in Mexico, and sold in the United States, would have to cross borders several times before it becomes a final product. Each time the parts cross a border, the total value of those parts at that time of transport gets registered as an import/export, instead of differentiating between the value added at each part of the production cycle. Thus, the statistics of exports and imports become heavily skewed and inflated since they do not account for “value-added.” While the production cycle is broken up over several countries, the determination of “value” is not broken up to fit the actual trading system as it exists.
For a hypothetical comparison to reveal how absurd this process is, imagine a country that attempts to measure the total education of its population by including in its statistics the degrees and credentials of all the tourists who entered the country for short periods of time. The recorded education level of the country’s population would be enormously inflated, since the educated tourists entering the nation would not be staying and contributing their education to the benefit of the society. Something similar happens when parts move across borders several times before they become a finished product, yet have their total value registered each time they cross a border.
According to a report from a Canadian think tank, the Conference Board of Canada, if countries were to apply a “value-added” measurement of trade instead of using inflated numbers applied to the cumulative value of a good, the actual contribution of trade to a country would rapidly diminish. In conventional measurements, trade accounts for 35% of Canada’s economy, but with the value-added measurement, it drops to 24%. These manipulations are important because they serve as a basis for claiming that countries like Canada are “trade dependent” nations, which justify implementing more “free trade” agreements.
When a country imports more than it exports, it builds up a large amount of debt called a trade deficit. When a country exports more than it imports, it establishes a trade surplus. However, because the process of determining the value of imports and exports is enormously inflated and misleading, countries are saddled with inflated and inaccurate debts. They are then pressured into reducing those debts through austerity measures, which punish those countries’ populations into poverty.
Apple is a great example of this process, often hailed as one of the great corporate success stories, being enormously profitable and therefore “good for the economy.” As the Asian Development Bank Institute in Tokyo reported in 2010, while Apple is a U.S.-based company, the iPhone is itself considered to be a Chinese export to the U.S. The iPhone is produced in many different pieces and parts through several Asian and European countries, which are then transported to China where they are assembled and shipped to the United States and elsewhere.
The estimated value of the Chinese laborers in assembling the iPhone was 3.6% (or $6.50) of the total value of the finished product, estimated at $178.96 in 2009. Yet, the wholesale cost of the shipped iPhone is credited to China as an export. China was merely the last stop in the production cycle, but China records the total value of the finished product as an export, while the United States records it as an import. Thus, the researchers at the Asian Development Bank Institute concluded that “even high-tech products invented by U.S. companies will not increase U.S. exports.”
Pascal Lamy, director-general of the World Trade Organization (WTO), commented, “What we call ‘Made in China’ is indeed assembled in China, but what makes up the commercial value of the product comes from the numerous countries… The concept of country of origin for manufactured goods has gradually become obsolete.”
If trade statistics were adjusted to reflect the actual value contributed to a given product by a country, the U.S. trade deficit with China (which in 2010 stood at $226.88 billion) would likely be cut in half. In 2009, the iPhone left the United States with a $1.9 billion trade deficit with China, but if the value-added approach to determining trade statistics were applied, the United States would have a $48 million trade surplus with China (in relation to the iPhone alone).
With the production cycle broken up and scattered around the globe, this adds enormous costs to transportation of equipment, machinery, goods and products between these nations, which in turn requires enormous quantities of oil and fuel to facilitate this transport system, and thus produces unnecessary amounts of pollution. Because of the high costs of transportation, fuel, and assembly, the value of the end product goes up, making it far more costly than if it were simply produced in one or two countries.
With countries determining their exports and imports based on inflated and inaccurate statistics, populations are saddled with enormous debts and thus the financial cost of breaking up the production cycle lands on the shoulders of the population, who were already subjected to increased competition between labor forces, reduced environmental and social protections, dismantled subsidies and regulations, increased personal debt and poverty.
So if “free trade agreements” are bad for people, bad for labor – at home and abroad – and bad for the environment and the nation as a whole, why are they pursued?
The answer is simple: they create enormous profits for banks and corporations, whose losses are subsidized by the state. In an actual “free market,” breaking up the production cycle would be far too costly to be a rational choice for a corporation, but because the state takes on the cost of doing so (largely through its trade deficit), the process continues.
When it comes to agreements like the Trans-Pacific Partnership, it is not difficult to see what the results will be: increased subsidies, protections and regulations for the benefit of large corporations and banks (notably the 600 corporations involved in secretly drafting the agreement over recent years) and decreased protections, subsidies and regulations that benefit the population, environment and society as a whole.
The TPP advances corporate monopolistic protections through intellectual property rights; undermines labor protections, putting the working class of 11 different nations in direct competition with one another; dismantles environmental protections and financial regulations; and expands corporate rights and privileges to allow undemocratic corporate institutions to challenge national laws through an unaccountable international tribunal of corporate lawyers who are given powers to overturn national laws or demand immense compensation from any nations that hinder those corporations’ “potential profits,” thus further increasing the heavy cost of “free trade.”
The Occupy movement and other activists have a strong mandate to oppose the TPP and all related “free trade agreements.” Popular opinion is swinging against “free trade” as people seem instinctively to recognize – even without all the details – that such agreements undermine labor, increase debt and benefit only the rich.
But while public opinion may oppose the TPP in principle, the bigger problem is that “the public” does not know the TPP even exists. This is a challenge that the Occupy movement can step up to: promoting an educational campaign that crosses borders, organizing international protests and actions against the TPP, and establishing a “free market” of resistance based upon the “free trade” of information.
As corporate rights expand and democratic rights decrease, so must people demand an end to the TPP. Organized resistance, information and action have stopped “free trade agreements” in the past, and they can – and must – do so in the future. The coming corporate tyranny of the Trans-Pacific Partnership can only be defeated through a democratic movement of Transnational People Power.
Our already frail and dying democratic institutions lack the capacity to take up the challenge, so the challenge now rests with the people alone.
Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, with a focus on studying the ideas, institutions, and individuals of power and resistance across a wide spectrum of social, political, economic, and historical spheres. He has been published in AlterNet, CounterPunch, Occupy.com, Truth-Out, RoarMag, and a number of other alternative media groups, and regularly does radio, Internet, and television interviews with both alternative and mainstream news outlets. He is Project Manager of The People’s Book Project and has a weekly podcast show with BoilingFrogsPost.
Why So Secretive? The Trans-Pacific Partnership as Global Corporate Coup
By: Andrew Gavin Marshall
The following is the second installment of a three-part exclusive on the TPP for Occupy.com.
The Trans-Pacific Partnership is the most secretive and “least transparent” trade negotiations in history.
Luckily for the populations and societies that will be affected by the agreement, there are public research organizations and alternative media outlets campaigning against it – and they’ve even released several leaks of draft agreement chapters. From these leaks, which are not covered by mainstream corporate-controlled news outlets, we are able to get a better understanding of what the Trans-Pacific Partnership actually encompasses.
For example, public interest groups have been warning that the TPP could result in millions of lost jobs. As a letter from Congress to United States Trade Representative Ron Kirk stated, the TPP “will create binding policies on future Congresses in numerous areas,” including “those related to labor, patent and copyright, land use, food, agriculture and product standards, natural resources, the environment, professional licensing, state-owned enterprises and government procurement policies, as well as financial, healthcare, energy, telecommunications and other service sector regulations.”
In other words, as promised, the TPP goes far beyond “trade.”
Dubbed by many as “NAFTA on steroids” and a “corporate coup,” only two of the TPP’s 26 chapters actually have anything to do with trade. Most of it grants far-reaching new rights and privileges to corporations, specifically related to intellectual property rights (copyright and patent laws), as well as constraints on government regulations.
The leaked documents revealed that the Obama administration “intends to bestow radical new political powers upon multinational corporations,” as Obama and Kirk have emerged as strong advocates “for policies that environmental activists, financial reform advocates and labor unions have long rejected for eroding key protections currently in domestic laws.”
In other words, the already ineffective and mostly toothless environmental, financial, and labor regulations that exist are unacceptable to the Obama administration and the 600 corporations aligned with the TPP who are giving him his orders.
The agreement stipulates that foreign corporations operating in the United States would no longer be subject to domestic U.S. laws regarding protections for the environment, finance or labor rights, and could appeal to an “international tribunal” which would be given the power to overrule American law and impose sanctions on the U.S. for violating the new “rights” of corporations.
The “international tribunal” that would dictate the laws of the countries would be staffed by corporate lawyers acting as “judges,” thus ensuring that cases taken before them have a “fair and balanced” hearing – fairly balanced in favor of corporate rights above anything else.
A public interest coalition known as Citizens Trade Campaign published a draft of the TPP chapter on “investment” revealing information about the “international tribunal” which would allow corporations to directly sue governments that have barriers to “potential profits.”
Arthur Stamoulis, the executive director of Citizens Trade Campaign, explained that the draft texts “clearly contain proposals designed to give transnational corporations special rights that go far beyond those possessed by domestic businesses and American citizens… A proposal that could have such broad effects on environmental, consumer safety and other public interest regulations deserves public scrutiny and debate. It shouldn’t be crafted behind closed doors.”
Public Citizen’s Global Trade Watch, a public interest organization, undertook an analysis of the leaked document on investment and explained that the international corporate tribunal would allow corporations to overturn national laws and regulations or demand enormous sums in compensation, with the tribunal “empowered to order payment of unlimited government Treasury funds to foreign investors over TPP claims.”
Even under NAFTA, over $350 million has been paid by NAFTA-aligned governments to corporations for “barriers” to investment “rights,” including toxic waste dumps, logging rules, as well as bans on various toxic chemicals.
Because let’s be clear: for corporations, such regulations and concerns over health, safety and environmental issues are perceived solely as “barriers” to investment and profit. Thus their “government” would sue the foreign government on behalf of the corporation, on the premise that such regulations led to potential lost profits, for which the corporation should be compensated.
The TPP allows the corporations to directly sue the government in question. All of the TPP member countries, except for Australia, have agreed to adhere to the jurisdiction of this international tribunal, an unelected, anti-democratic and corporate-staffed kangaroo-court with legal authority over at least ten nations and their populations.
Further, TPP countries have not agreed on a set of obligations for corporations to meet in relation to health, labor or environmental standards, and thus a door is opened for corporations to obtain even more rights and privileges to plunder and exploit. Where corporate rights are extended, human and democratic rights are dismantled.
One of the most important areas in which the TPP has a profound effect is in relation to intellectual property rights, or copyright and patent laws. Corporations have been strong advocates of expanding intellectual property rights, namely, their intellectual property rights.
Pharmaceutical corporations are major proponents of these rights and are likely to be among the major beneficiaries of the intellectual property chapter of the TPP. The pharmaceutical industry ensured that strong patent rules were included in the 1995 World Trade Organization agreement, but ultimately felt that those rules did not go far enough.
Dean Baker, writing in the Guardian, explained that stronger patent rules establish “a government-granted monopoly, often as long as 14 years, that prohibits generic competitors from entering a market based on another company’s test results that show a drug to be safe and effective.” Baker noted that such laws are actually “the opposite of free trade” since they “involve increased government intervention in the market” and “restrict competition and lead to higher prices for consumers.”
Essentially, what this means is that in poor countries where more people need access to life-saving drugs, and at cheaper cost, it would be impossible for companies or governments to manufacture and sell cheaper generic brands of successful drugs held by multinational corporate patents. Such an agreement would hand over a monopoly of price-controls to these corporations, allowing them to set the prices as they deem fit, thus making the drugs incredibly expensive and often inaccessible to the people who need them most.
As U.S. Congressman Henry Waxman correctly noted, “In many parts of the world, access to generic drugs means the difference between life and death.”
The TPP is expected to increase such corporate patent rights more than any other agreement in history. Generic drug manufacturers in countries like Vietnam and Malaysia would suffer. So would sales of larger generics manufacturers in the U.S., Canada, and Australia, which supply low-cost drugs to much of the world.
While the United States has given up the right to negotiate drug prices with pharmaceutical corporations (hence the exorbitant price for drugs purchased in the U.S.), countries like New Zealand and even Canada to a lesser extent negotiate drug prices in order to keep the costs down for consumers. The TPP will grant new negotiating privileges to corporations, allowing them to appeal decisions by governments to challenge the high cost of drugs or to go with cheap alternatives. Referring to these changes, the U.S. manager of Doctors Without Borders’ Access to Medicines Campaign stated, “Bush was better than Obama on this.”
But that’s not all the TPP threatens: Internet freedom is also a major target.
The Council of Canadians and OpenMedia, major campaigners for Internet freedom, have warned that the TPP would “criminalize some everyday uses of the Internet,” including music downloads as well as the combining of different media works. OpenMedia warned that the TPP would “force service providers to collect and hand over your private data without privacy safeguards, and give media conglomerates more power to send you fines in the mail, remove online content – including entire websites – and even terminate your access to the Internet.”
Also advanced under the TPP chapter on intellectual property rights, new laws would have to be put in place by governments to regulate Internet usage. OpenMedia further warned that, from the leaked documents on intellectual property rights, “there can be heavy fines for average citizens online,” adding: “you could be fined for clicking on a link, people could be knocked off the Internet and web sites could be locked off.”
The TPP, warned OpenMedia founder Steve Anderson, “will limit innovation and free expression.” Under the TPP, there is no distinction between commercial and non-commercial copyright infringement. Thus, users who download music for personal use would face the same penalties as those who sell pirated music for profit.
Information that is created or shared on social networking sites could have Internet users fined, have their computers seized, their Internet usage terminated, or even get them a jail sentence. The TPP imposes a “three strikes” system for copyright infringement, where three violations would result in the termination of a household’s Internet access.
So, why all the secrecy? Corporate and political decision-makers study public opinion very closely; they know how to manipulate the public based upon what the majority think and believe. When it comes to “free trade” agreements, public opinion has forced negotiators into the darkness of back-room deals and unaccountable secrecy precisely because populations are so overwhelmingly against such agreements.
An opinion poll from 2011 revealed that the American public has – just over the previous few years – moved from “broad opposition” to “overwhelming opposition” toward NAFTA-style trade deals.
A major NBC News-Wall Street Journal poll from September of 2010 revealed that “the impact of trade and outsourcing is one of the only issues on which Americans of different classes, occupations and political persuasions agree,” with 86% saying that outsourcing jobs by U.S. companies to poor countries was “a top cause of our economic woes,” with 69% thinking that “free trade agreements between the United States and other countries cost the U.S. jobs.” Only 17% of Americans in 2010 felt that “free trade agreements” benefit the U.S., compared to 28% in 2007.
Because public opinion is strongly – and increasingly – against “free trade agreements,” secrecy is required in order to prevent the public from even knowing about, let alone actively opposing, agreements like the Trans-Pacific Partnership. And this, as U.S. Trade Representative Kirk explained, is a very “practical” reason for all the secrecy.
Part III of Marshall’s investigative series on the Trans-Pacific Partnership will appear Monday.
Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, writing on a number of social, political, economic, and historical issues. He is also Project Manager of The People’s Book Project. He also hosts a weekly podcast show, “Empire, Power, and People,” on BoilingFrogsPost.com.
The Trans-Pacific Partnership: This is What Corporate Governance Looks Like
By: Andrew Gavin Marshall
The following is the first installment of a three-part exclusive for Occupy.com on the Trans-Pacific Partnership.
Originally published at Occupy.com
In 2008, the United States Trade Representative Susan Schwab announced the U.S. entry into the Trans-Pacific Partnership talks as “a pathway to broader Asia-Pacific regional economic integration.” Originating in 2005 as a “Strategic Economic Partnership” between a few select Pacific countries, the TPP has, as of October 2012, expanded to include 11 nations in total: the United States, Canada, Mexico, Peru, Chile, New Zealand, Australia, Brunei, Singapore, Vietnam and Malaysia, with the possibility of several more joining in the future.
What makes the TPP unique is not simply the fact that it may be the largest “free trade agreement” ever negotiated, nor even the fact that only two of its roughly 26 articles actually deal with “trade,” but that it is also the most secretive trade negotiations in history, with no public oversight, input, or consultations.
Since the Obama administration came to power in January of 2009, the Trans-Pacific Partnership has become a quiet priority for the U.S., which overtook the leadership role in the “trade agreement” talks. In 2010, when Malaysia joined the TPP, the Wall Street Journal suggested that the “free-trade pact” could “serve as a counterweight to China’s economic influence,” with Japan and the Philippines both expressing interest in joining the talks.
In the meantime, the Obama administration and other participating nations have been consulting and negotiating not only with each other, but with roughly 600 corporations involved. The TPP is accelerating the most dangerous free market policies of previous U.S. administrations, bestowing unprecedented powers and privileges upon Trans-National Corporations (TNCs) while dismantling regulations and laws without any democratic oversight or input.
This three-part investigative series examines the Trans-Pacific Partnership, a legally binding trade agreement for advancing transnational corporate tyranny and dismantling domestic democratic accountability.
I. Trade Representatives: The Global Corporate Lobby
Who negotiates trade agreements? The answer is simple: trade representatives. The term “trade representative” is essentially another way of saying “corporate lobbyist.”
To prove this point, it would be useful to quickly glance over the biographies of the important U.S. Trade Representatives (USTR) since the George H.W. Bush administration, when USTR Carla A. Hills was lead negotiator for NAFTA and the WTO.
Embedded within the U.S. foreign policy establishment, Hills had a long career in government and was the USTR from 1989 to 1993, after which she established and became CEO of Hills & Company, an international consulting firm with a focus on global trade and investment for clients such as the Coca-Cola Company, Procter & Gamble, American International Group (AIG), Novartis, Bechtel, Boeing, Rolls-Royce, Inter-American Development Bank, Pfizer and Chevron.
A few accolades: Hills is a member of the board of the Council on Foreign Relations, Gilead Sciences, and is on international advisory boards for Rolls Royce, the Coca-Cola Company and JPMorgan Chase. She is also a member of the Trilateral Commission, the Peterson Institute for International Economics and the Center for Strategic and International Studies (CSIS).
Following Hill, from 1993 to 1997, the U.S. Trade Representative was Michael Kantor, who now advises corporate clients as a partner in the law firm Mayer-Brown. A member of the board of CBRE (a real estate services company), Kantor also serves on the advisory boards of ING USA and Fleishman-Hillard, a public relations firm.
Next in line, from 1997 to 2001 the USTR was Charlene Barshefsky, who is now on the boards of American Express, the Estée Lauder Company and Intel; like Hill, she is a member of both the Trilateral Commission and the Council on Foreign Relations.
The USTR from 2001 to 2005 was Robert Zoellick, who afterwards served as Deputy Secretary of State, Vice Chairman of Goldman Sachs from 2006 to 2007, and President of the World Bank from 2007 to 2012. Following Zoellick, from 2005 to 2006, the USTR was Rob Portman, a U.S. Senator who was a possible running mate for Mitt Romney’s presidential campaign.
And only after him did Susan Schwab, the USTR from 2006 to 2009, commit the U.S. to joining the Trans-Pacific Partnership. Schwab has since joined the boards of FedEx, Caterpillar and Boeing. Based on the evidence of her and her predecessors’ tenures, it is safe to say there has been a significant interchange between “trade representatives” and “corporate representatives” — to the point where it is almost impossible to distinguish them apart.
Now let’s get even more caught up to speed on appointed “government officials” so we can know exactly what we’re talking about.
In 2008, as Obama was campaigning for president, he stated, “I have done more to take on lobbyists than any other candidate in this race. I don’t take a dime of their money, and when I am president, they won’t find a job in my White House.”
Within a week of becoming president, Obama changed his mind and his “transition team” (responsible for selecting the Obama cabinet) became co-chaired by John Podesta, co-founder with his brother Tony Podesta of the Podesta Group, a major Washington lobbying firm.
Podesta was Bill Clinton’s former chief of staff and, as co-chair of Obama’s transition team, he declared his team was implementing “rules that are the strictest, the most far-reaching ethics rules of any transition team in history.” A top lobbyist whose firm has represented clients ranging from Wal-Mart, BP and Lockheed Martin to the Egyptian military dictatorship, Podesta appeared the ideal figure to implement Obama’s “strict” rules against hiring corporate lobbyists, right?
A little further background: the Podesta Group counts among its recent lobbying successes the stalling of a Senate bill which was calling on Egypt “to curtail human rights abuses.” The Group’s website also boasts that it “challenged” Wall Street reform after “one of the world’s largest banking firms came to the Podesta Group seeking help with their opposition” to proposed regulations for banks.
Thus, it should come as little surprise that part of the “strictest” and most “far-reaching ethics rules” announced by John Podesta in relation to lobbying was that no official could be appointed to the Obama administration if s/he had been an active lobbyist within the previous two years. Luckily for Ron Kirk, Obama’s U.S. Trade Representative, these “strict” rules only applied to the Washington D.C. area; and since Kirk was a corporate lobbyist in Austin, Texas, for the investment bank Merrill Lynch (before it was taken over by Bank of America in 2008), the “far-reaching ethics” promised by Podesta didn’t reach Kirk.
Kirk’s main priority since becoming USTR has been the Trans-Pacific Partnership, worked on in secret for nearly four years with several other countries and 600 corporations. President Obama has called it “a next-generation trade agreement” and a “model” for future agreements.
But not everyone agrees.
In May of 2012, more than 30 legal scholars from nations that will be affected by the TPP signed a letter addressed to USTR Kirk expressing their “profound concern and disappointment at the lack of public participation, transparency and open government processes in the negotiation” of the TPP.
In late June of 2012, more than 130 members of Congress followed this up with a letter that they signed and sent to Kirk urging transparency in TPP negotiations, and an inclusion of Congressional consultations, stating: “We are troubled that important policy decisions are being made without full input from Congress.”
In his not-to-worry response, Kirk reassured the public: “I believe … that we have very faithfully operated within the spirit of the Obama administration to have the most engaged and transparent process as we possibly could.”
Meanwhile, the TPP has received strong endorsements from large transnational corporations and their official lobbies, such as Thomas Donohue, the CEO of the U.S. Chamber of Commerce, who told the Financial Times that, “[t]his must be an agreement with high standards. These standards will set the bar on regulatory coherence, investment and intellectual property.”
Part of these “high standards,” according to a meeting of the Asia-Pacific Economic Co-operation group (APEC), are “deep commitments that go beyond tariff reduction and pass existing World Trade Organization standards.” In other words, it goes far beyond “trade.” This was confirmed by Iwan Azis, the head of the Asian Development Bank’s regional integration office, who stated that the TPP was intended to deal with “behind the border” issues, typically decided by domestic policy, and “which go beyond the normal scope of trade agreements” including issues of labor, environmental and intellectual property standards.
Azis commented: “As a concept, this is definitely something big… This is so comprehensive, it is like a Grade A agreement.” The TPP is designed “to be a structure on to which other nations, including possibly South Korea, and eventually even China, could be bolted.”
At the 2011 APEC summit, Chinese president Hu Jintao stated: “China supports the goal of the regional integration of the Asia-Pacific economy, using the East Asian free trade zone, full economic partnerships in Asia and the Trans-Pacific Partnership as foundations.”
The aim of the TPP appears to be in establishing a core “trade bloc” in order “to create a gravitational force that would bring others in,” according to Karan Bhatia, the Vice-President for international law at General Electric and a former deputy U.S. trade representative. Ultimately, this objective includes bringing both Japan and China into the fold.
In May of 2012, Kirk stated that he “would love nothing more” than to have China join the TPP, following the more immediate additions of Mexico, Canada, and Japan. And in November of 2011, President Obama spoke to the Australian parliament, explaining: “I have directed my national security team to make our presence and missions in the Asia Pacific a top priority… The United States is a Pacific power and we are here to stay.”
One observer and critic has noted that the TPP has the potential to become a new “global trade agreement.” Charlene Barshefsky, the USTR from 1997 to 2001, wrote an article for the Wall Street Journal in October of 2012 in which she strongly endorsed the TPP as a “crucial opportunity” to overcome “barriers to innovation.” Referring to the TPP as the “most important trade negotiation of the past decade,” Barshefsky wrote that it “will set the terms of trade for many years in the world’s most economically dynamic region.”
Gary Horlick, who is rated one of the world’s top international trade lawyers with a long career representing major U.S. and global multinational corporations, and more than 20 countries in international trade negotiations and disputes – and who was the first Chairman of the World Trade Organization’s Permanent Group of Experts on subsidies – commented on the TPP: “This is the least transparent trade negotiation I have ever seen.” As part of this “transparency,” participants in the negotiations had to sign a memorandum of understanding which forbids them from releasing any “negotiating documents until four years after a deal is done or abandoned.”
What Horlick referred to as the “least transparent trade negotiations” he had ever seen, Kirk referred to as “the most engaged and transparent process” possible. Perhaps this can be explained by the fact that Kirk has access to the draft document and observes and participates in the negotiations, unlike the representative bodies of governments or their populations.
So let’s call this what it is: a transnational corporate coup over the democratic process and public accountability.
Kirk explained that “there’s a practical reason” for all the secrecy in the negotiations over the TPP: “for our ability both to preserve negotiating strength and to encourage our partners to be willing to put issues on the table they may not otherwise, that we have to preserve some measure of discretion and confidentiality.”
Indeed, this is “practical.” After all, as he explained, if the talks were not done in secret, the public would be aware of what was being discussed, and if the public knew what was being planned, they would oppose it.
So secrecy is necessary in order to make the agreement as undemocratic and unaccountable as possible, to ensure that corporations get what they want while the public remains in the dark. Deceptive and saturated with disdain for democracy, certainly, but “practical” nevertheless.
Part II of Marshall’s investigative series on the Trans-Pacific Partnership will appear Wednesday.
Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, writing on a number of social, political, economic, and historical issues. He is also Project Manager of The People’s Book Project. He also hosts a weekly podcast show, “Empire, Power, and People,” on BoilingFrogsPost.com.
The American Empire had an early start in East and Southeast Asia, beginning with a U.S. Marine invasion of an Indonesian town in 1832, another Indonesian town in 1839, and a brief occupation of Danang (Vietnam) in 1846. From there, the United States sought to expand its commercial hegemony and establish trade relations in East and Southeast Asia. When a U.S. mission to Japan arrived in 1853, to establish a coaling station for American ships on their way to the lucrative market of China, this marked the “opening” of Japan, which had been isolated for over 200 years. From then on, the Japanese Empire and nation state formed, expanding with the colonization of Formosa (Taiwan) in 1895 and Korea in 1910. In the late 1890s, America established its first colony during the Philippine-American War (1899-1902), and thereafter, the American and Japanese empires expanded their commercial hegemony and military strength over the region, until an inevitable clash of empires took place in World War II, and thereafter established the United States as the reigning imperial hegemony of all East and Southeast Asia.