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Global Power Project: Bilderberg Group and the Power of the Finance Ministry
By: Andrew Gavin Marshall
8 January 2015
Originally posted at Occupy.com
This is the seventh installment in a series looking at the activities and individuals behind the Bilderberg Group. Read the first part, second part, third part, fourth part, fifth part and sixth part in the series.
Throughout the course of the financial and debt crises in Europe, politicians played a supporting role to financial markets and financial technocrats – that is, the economists, academics, central bankers, finance ministers and heads of international organizations who articulate the interests of powerful financial and social groups in the technocratic language of “expertise,” and who enact policies, create and shape major institutions, and whose decisions affect the lives of hundreds of millions, even billions, of people.
A number of the world’s top technocrats between 2008 and 2014 have been members or guests of Bilderberg meetings. Most especially, European technocrats have been highly represented within the membership, and were among the most influential players throughout Europe’s financial and debt crises. This article examines the technocratic institution of the “Finance Ministry,” specifically as it relates to the European debt crisis and the Bilderberg Group.
The Ministry of Finance
Finance ministers and ministries have truly immense power in the modern world. They manage the finances – money and debt – and budgets of states, and are responsible for the allocation of funding to governments, their departments, and their policies. Depending on an individual nation’s power and governance system, finance ministries can often wield influence that dwarfs other top government officials, and occasionally even presidents and prime ministers. They are pivotal determining domestic and foreign policy, and most responsible for designing and implementing financial and economic policy.
The wealthier a nation, the more important its finance ministry, and the more powerful are its officials. In the United States, it’s the Treasury Department and its secretary; in the U.K. it’s the Treasury and the Chancellor of the Exchequer; in most European nations, and in Japan, it’s simply the Finance Minister.
In January of 1979, U.S. President Jimmy Carter met with the leaders of France, Britain and West Germany. The New York Times noted that Carter was the only leader in the group who had not previously served as a finance minister. The paper’s Frank Vogl wrote: “More former finance ministers are now occupying the top political offices in the leading industrial nations than ever,” with the addition of Japan’s new prime minister, Masayoshi Ohira. The leaders knew each other well, having spent years interacting at major conferences and coordinating policies as finance ministers before taking the top political spots. Collectively, they are key officials of “global economic leadership.”
The role of finance ministers in global economic leadership has only expanded in subsequent decades. They meet, discuss and coordinate global policies alongside central bankers at the G7, G8 and G20 meetings. The also hold shares in and are represented on the boards of international organizations like the International Monetary Fund (IMF), which manages the finances and economic policies of dozens of countries around the world.
Europe in Crisis
Europe’s finance ministers were pivotal in the management of the European debt crisis. These technocrats shaped the financial policies of powerful nations and international organizations, coordinated with central banks, created new transnational institutions, and pushed policies that have had profound effects upon the future of the European Union and the 500 million people who live within it. Many of the most influential finance ministers in Europe were also frequent participants in Bilderberg meetings over the period of time from the beginning of the financial crisis in 2008 and throughout the debt crisis until 2014.
Throughout the course of the European debt crisis, Germany was joined by what the Financial Times called “its two closest allies in the Eurozone,” the Netherlands and Finland, who shared the German hardline demands of austerity and structural reforms for countries in crisis. Together, the central banks and finance ministries of these three nations frequently coordinated actions and objectives.
The three countries were among the major creditors to the crisis-hit debtor nations, and thus their united response to the crisis guaranteed that they would be the most influential national bloc within the E.U. This gave them a great deal of leverage in shaping the policies of other major technocratic institutions, like the European Central Bank (ECB) and the European Commission (EC).
In 2008, the Financial Times ranked Finland’s Jyrki Katainen as the top finance minister in Europe, describing him as “part of a new wave of youthful center-right European leaders,” and one who could possibly become the future Finnish prime minister. In 2010, Katainen was again ranked on the top ten list of the best finance ministers in Europe, as determined by a group of judges who were mainly chief economists from major banks.
The Financial Times noted that Katainen, who had served as minister since 2007, led Finland “through its deepest recession since independence from Russia in 1917,” and that he was “a chief ally of Germany in the push for tougher European Union fiscal rules.” Katainen had attended Bilderberg meetings in both 2009 and 2010.
The following year, in 2011, Katainen took the top job as Prime Minister of Finland, forming a coalition government in which he appointed one of the opposition party leaders, Jutta Urpilainen, as the Finance Minister, the first woman to hold the post. The Financial Times noted that Urpilainen was “likely to take a tough stance on Eurozone policy,” committing herself and the government “to helping create a more stable Eurozone.”
In May of 2012, the Financial Times wrote that previously as finance minister and presently as prime minister, Jyrki Katainen had taken Finland on “a hard line over matters such as the Greek bailout and austerity, often exceeding the position even of Germany.” As part of this “hard line” abroad, Finland also employed it at home, with Katainen overseeing the implementation of successive austerity measures. In 2013, while Finland was entering its third recession since the financial crisis began – all under Katainen’s watch – the prime minister announced further budget cuts.
Finland’s hard line from 2011 on was pushed by its finance minister Jutta Urpilainen, “who took a more demanding position on the crisis.” Urpilainen attended Bilderberg meetings in 2012 and 2013. In 2011, the Financial Times ranked Urpilainen on the list of top ten European finance ministers, noting that she “demanded ailing fellow Eurozone economies provide collateral in return for aid… earning herself a reputation in Brussels as stubborn.”
She again earned a top ten spot in 2012, with the Financial Times commenting that she had “taken one of the toughest approaches on bailouts among her European counterparts,” and in doing so had “caused tension with her predecessor, Kyrki Katainen,” then serving as prime minister.
In the midst of the eruption of the Greek debt crisis in 2010, the Greek Finance Minister, George Papaconstantinou, who was responsible for negotiating the E.U. bailout, attended that year’s Bilderberg meeting. That same year, the Financial Times gave him a top ten ranking, noting that he had “stayed cool while negotiating harsh fiscal and structural reforms with the European Union and [IMF],” and that he cut the budget deficit “by a national record.” This, of course, had extremely negative consequences for the population of Greece.
In the midst of Italy’s exploding debt crisis in 2011, its finance minister, Giulio Tremonti, attended that year’s Bilderberg meeting having also earned himself a top ten ranking in 2009. A former Italian finance minister, Tomasso Padoa-Schioppa, had also attended Bilderberg meetings between 2008 and 2010.
In 2013, the Bilderberg meeting was attended by Bjarne Corydon, the Danish finance minister, as well as Anders Borg, the Swedish finance minister. Anders Borg ranked among the top ten finance ministers in all of the Financial Times surveys between 2008 and 2012, including holding the number one and number two ranking for 2011 and 2012, respectively. In 2010, the Financial Times noted that “Borg has had a good crisis,” as he “established himself as one of Europe’s most authoritative economic voices, and his reputation has been enhanced by Sweden’s rapid recovery from recession.”
In 2011, the Financial Times wrote that Borg, a former banker who had served as Swedish finance minister since 2005, “is a master at blending erudition with popular appeal,” noting that his criticism of bank bonuses “won voters’ hearts while his devotion to fiscal discipline [austerity] and sound public finances has endeared him to the markets.” Borg carries heavy weight in Brussels, headquarters of the European Union, earning a reputation as “the wizard behind one of Europe’s best-performing economies.”
Shortly after the democratically-elected governments of Greece and Italy were replaced with bankers and economists in a technocratic coup in November of 2011, the Financial Times reported that “Sweden has, in effect, had an unelected technocrat running its public finances for the past six years.” That technocrat, Anders Borg, previously “worked as a bank economist in the private sector and as an adviser to both Sweden’s central bank and the country’s Moderate party.”
Throughout the European debt crisis, meetings of the Eurogroup, composed of the finance ministers of the 17-member states of the single currency, played a key role doing “the heavy lifting on the bloc’s economic policy, from banking reforms to bailouts.” The “Troika” that was formed to manage the debt crisis – composed of the European Central Bank, the European Commission and the International Monetary Fund – would report directly to the Eurogroup of finance ministers on all important decisions related to the bailouts and austerity packages.
Finance ministers, together with Europe’s central bankers and other technocrats leading major EU and international organizations, were key to shaping the response and policies of the financial and debt crisis. At Bilderberg meetings, all of these officials were able to gather together, alongside captains of industry and top financiers, to discuss Europe’s problems and coordinate responses.
Andrew Gavin Marshall is a freelance writer and researcher based in Montreal, Canada.
The West Marches East, Part 2: Georgia Starts a War, Russia Draws a Line
By: Andrew Gavin Marshall
Originally posted at The Hampton Institute
19 June 2014
In Part 1 of this series – ‘The West Marches East’ – I examined the circumstance that while Russia has received the majority of the blame for the more than six-month-crisis in Ukraine, these events did not take place in a vacuum, and, in fact, the Western powers and institutions – notably the United States, NATO and the European Union – have broke promises made at the end of the Cold War to expand NATO – a Western military alliance that was created in opposition to the Soviet Union – to Russia’s borders. Simultaneously, the European Union has expanded eastwards, bringing Eastern and Central European countries within its orbit and in adherence to its economic orthodoxy. Further, many NATO powers had worked together to promote ‘colour revolutions’ across much of Eastern Europe over the previous decade or so, helping to overthrow pro-Russian leaders and replace them with pro-Western leaders.
After nearly a quarter-century of Western expansion – militarily, politically, economically – to Russia’s borders, Russia has had enough. But Ukraine was not the first instance in which Russia has been provoked by the West into a response that the West subsequently declared as an act of imperial “aggression.” In 2008, the small Caucasus nation and former Soviet republic of Georgia started a war with Russia, leading to Russia’s invasion of the tiny country, effectively ending nearly two decades of NATO and Western expansion. This report examines the 2008 war in Georgia and the roles played by Russia and the NATO powers.
Setting the Stage
As documented in part 1, Georgia was – in 2003 – subjected to a NATO sponsored ‘Colour Revolution’ which removed the previous leader and replaced him with a pro-Western (and Western-educated) politician, Mikeil Saakashvili. In December of 2003, Georgian defense officials met with the U.S. Secretary of Defense Donald Rumsfeld to discuss enhancing military cooperation between the two countries. The US had sent roughly 60 military trainers to Georgia in 2002, but the Georgians had been lobbying for a US military base in their country.
Instead, the Pentagon decided to ” privatize its military presence in Georgia” through a security contractor, Cubic, which signed a three-year $15 million contract with the Pentagon to support the Georgian ministry of defense. The team from Cubic would engage in training and equipping the Georgian military, as well as protection for the oil pipeline that was to take oil from Baku, Azerbaijan, to Turkey through Georgia. Western diplomats suggested that the country could become a “forward operations area” for the US military, “similar to support structures in the Gulf.” In return for the program, Georgia agreed to send 500 soldiers to Iraq.
As the BBC reported in 2006, Georgia was discarding its ties with Moscow and instead, leading “westwards – towards NATO, and perhaps eventually the European Union.” US military instructors were in the country “to drive that change,” training Georgian soldiers to manage checkpoints in US-occupied Iraq. Georgia was largely uneasy with Russia due to the fact that Moscow provided – since the early 1990s – moral and material support to the country’s two breakaway regions of South Ossetia and Abkhazia. A Georgian corporal deployed in Iraq was quoted in the New York Times in 2007 saying, “As soldiers here [in Iraq], we help the American soldiers… Then America as a country will help our country.” This reflected the implicit thinking within Georgia up until the 2008 war.
In early April of 2008, U.S. President George W. Bush said he “strongly supported” Ukraine and Georgia’s bids to join NATO, despite the enormous objections from Russia, which would then see NATO powers located directly on its borders. Bush made the comments following a NATO meeting, where France, Germany, Italy, Hungary, Belgium, the Netherlands and Luxembourg all opposed the U.S. position of fast-tracking Georgian and Ukrainian membership into NATO, seeing it as ” an unnecessary offense to Russia.” Shortly after Bush made his announcement, a former Russian armed forces chief of staff said that Russia would ” take military and other steps along its borders if ex-Soviet Ukraine and Georgia join NATO,” claiming that “such a move would pose a direct threat to its security and endanger the fragile balance of forces in Europe.”
Within Georgia and its separatist regions, which were home to Russian soldiers, tensions were increasingly flaring over the summer months of 2008. With both sides undertaking provocative measures, there was a growing awareness that war could break out. In July of 2008, following her visit to the Czech Republic where she signed an agreement to base part of a new U.S. missile defense system in the country, U.S. Secretary of State Condoleezza Rice traveled to Georgia to meet with the country’s leadership. At that time, U.S. military forces in the region had begun joint exercises with soldiers from Georgia, Armenia, Ukraine and Azerbaijan. The exercises were taking place less than 100km from Russia’s border, with roughly 1,000 U.S. soldiers and an equal number of Georgian troops. As Rice arrived in Georgia, the Russian foreign ministry issued a statement accusing Georgia “of pushing the region towards war through actions openly supported by the United States.”
Then-Russian President Dmitri Medvedev later explained that as tensions escalated into July of 2008, he was in contact with his Georgian counterparts. However, following Secretary Rice’s July 2008 visit to Georgia, he claimed, “my Georgian colleague simply dropped all communication with us. He simply stopped talking to us, he stopped writing letters and making phone calls. It was apparent that he had new plans now. And those plans were implemented later.”
Indeed, as the New York Times noted, when Rice went to Georgia, she had two different goals, one private, and one public. Privately, she reportedly told the Georgians “not to get into a military conflict with Russia that Georgia could not win.” However, in public, standing alongside the Georgian president, Rice spoke defiantly against Russia and in support of Georgia and its “territorial integrity” in the regions of South Ossetia and Abkhazia. Standing next to the president, Rice declared that Russia “needs to be a part of resolving the problem… and not contributing to it.” The NYT claimed that these public statements of support for Georgia – and antagonism toward Russia – not to mention the fact that the US was engaging in large-scale military exercises with Georgians, expanding military installations all across Eastern Europe and providing Georgia with military advisers, had the combined effect of sending the small country “mixed messages ” about U.S. support for a war with Russia.
No doubt contributing to these ‘mixed messages’ was when – at the very same news conference with President Saakashvili – Rice was asked a question about a potential conflict with Iran, to which she replied that, “We will defend our interests and defend our allies… We take very, very strongly our obligations to defend our allies and no one should be confused of that.” Apparently, Georgia was a little confused.
When the Soviet Union collapsed and Georgia declared independence, the two regions of South Ossetia and Abkhazia gained de facto independence in the early 1990s following conflict between the breakaway regions and the central state. Following this brief period of fighting, tensions were largely reduced, though Russian ‘peacekeepers’ were on the ground monitoring the fragile balance. That balance was upset when Saakashvili became president in 2004, making one of his pledges “national unification.” By 2008, when tensions were reaching a breaking point, there were over 2,000 American civilians in Georgia, according to the Pentagon, with over 130 U.S. military trainers and 30 Defense Department civilians.
Another facet to the increased tensions was the fact that Georgia was an important conduit for a major pipeline, bringing oil from Baku in Azerbaijan through Georgia and to the Turkish port of Ceyhan on the Mediterranean. When the pipeline was completed in 2006, it was the second-longest pipeline in the world, and its construction and use was specifically designed to “bypass Russia, denying Moscow leverage over a key resource and a potential source of pressure.” As Jonathan Steele wrote in the Guardian, the resulting war was about more than pipeline politics, however, as it represented “an attempt, sponsored largely by the United States but eagerly subscribed to by several of its new ex-Soviet allies, to reduce every aspect of Russian influence throughout the region, whether it be economic, political, diplomatic or military.”
The Wall Street Journal reported that the Baku-Tbilisi-Ceyhan pipeline was built by a consortium of major Western energy corporations, and was “the first pipeline on former Soviet territory that bypasse[d] Russia,” which “was strongly backed by the US as a way of loosening Moscow’s grip on the Caspian’s oil wealth.”
When War Broke Out
On August 7, 2008, war broke out. Georgia claimed that it was responding to an attack on the country by separatists in South Ossetia and Russian aggressors. However, independent military observers from the Organization for Security and Cooperation in Europe (OSCE) who were deployed in the region refuted the Georgian government’s claim, and instead reported that, “Georgia’s inexperienced military attacked the isolated separatist [South Ossetian] capital of Tskhinvali on Aug. 7 with indiscriminate artillery and rocket fire, exposing civilians, Russian peacekeepers and unarmed monitors to harm.” While Georgian President Saakashvili presented the Georgian military actions as “defensive,” in response to separatist and Russian shelling of Georgian villages, the OSCE monitors were unable to confirm that such villages had been attacked, with no shelling heard in the villages prior to the Georgian bombardment of Tskhinvali. Two senior Western military officials who were stationed in Georgia, working with the Georgian military, told theNew York Times that, “whatever Russia’s behaviour or intentions for the enclave, once Georgia’s artillery or rockets struck Russian positions, conflict with Russia was all but inevitable.”
A year after the war, an EU-commissioned report which took nine months to compile concluded that despite much of the blame at the time of – and since – the war being directed at ‘Russian aggression,’ the conflict began “with a massive Georgian artillery attack.” The “damning indictment” of Georgia, however, blamed both Georgia and Russia for committing war crimes during the conflict, and noted that the conflict resulted from months and years of growing conflict. However, the report flatly stated: ” There was no ongoing armed attack by Russia before the start of the Georgian operation… Georgian claims of a large-scale presence of Russian armed forces in South Ossetia prior to the Georgian offensive could not be substantiated… It could also not be verified that Russia was on the verge of such a major attack.” However, Vladimir Putin stated in 2012 that Russia had drawn up plans to counter a Georgian attack as far back as 2006 and 2007, when he was president. Still, while the Russians were clearly aware – and preparing – for a war, it was ultimately Georgia that fired the first shots.
Months before the war broke out, according to documents and interviews obtained by the Financial Times, senior U.S. military officials and U.S. military contractors were inside Georgia training special forces commandos. The two contractors, MPRI and American Systems, both of which are based in Virginia, were responsible for training the Georgian special forces as part of a program run by the Pentagon. The Pentagon had previously hired MPRI to train the Croatian military in 1995, just prior to the Croatian military’s invasion of the ethnically-Serbian region of Krajina, “which led to the displacement of 200,000 refugees and was one of the worst incidents of ethnic cleansing in the Balkan wars.” MPRI, of course – in both cases – denied “any wrongdoing.” The first phase of the training in Georgia took place between January and April of 2008, and the second phase was due to begin on August 11, with the trainers arriving in Georgia on August 3, four days before the war broke out.
Just prior to the outbreak of war, as U.S. diplomatic cables showed, the U.S. Embassy in Georgia knew and reported about the fact that Georgian forces were concentrating their forces near South Ossetia, “either as part of a show of force or readiness, or both.” The U.S. ambassador reportedly told Georgian officials “to remain calm, not overreact, and to de-escalate the situation.” As the diplomatic cables from Georgia revealed, unlike in neighboring countries, U.S. diplomats in Georgia “relied heavily on the Saakashvili government’s accounts of its own behavior” and embraced the “Georgian versions of important and disputed events.” Whereas in other regional countries, U.S. diplomats would report to Washington on their “private misgivings” about their host countries’ claims, in Georgia, the Saakashvili government’s “versions of events were passed to Washington largely unchallenged.”
The five-day war between Russia and Georgia lasted from August 7 – 12, leading to a decisive Russian victory and a humiliating defeat for the US-puppet regime in Georgia. Months of ‘mixed messages’ and indecision and divisions within the Bush administration directly led to the conflict, inflaming internal confrontations within the Bush administration itself. A New York Times article tells this brief story based upon interviews with diplomats and senior officials in the US, EU, Russia and Georgia. Five months before Georgia started the war – in March of 2008 – President Saakashvili had gone to Washington to lobby for NATO membership at Congress, the State Department and the Pentagon. Bush promised the Georgian president ” to push hard for Georgia’s acceptance into NATO.”
In early April, President Bush flew to the Russian resort city of Sochi where he met with President Putin. Putin delivered Bush a message: “the push to offer Ukraine and Georgia NATO membership was crossing Russia’s ‘red lines’.” The United States, however, clearly underestimated Russia and Putin’s determination to adhere to those ‘red lines’. Meanwhile, Vice President Dick Cheney saw Georgia as a “model” for the administration’s “democracy promotion campaign,” and continued to push for selling Georgia more arms and military equipment “so that it could defend itself against possible Russian aggression.” Opposing Cheney were Secretary of State Rice, National Security Adviser Stephen J. Hadley and Undersecretary of State for Political Affairs William J. Burns, who were arguing that ” such a sale would provoke Russia, which would see it as arrogant meddling in its turf.”
While the official line of the Bush administration after the war broke out was to blame Russia, quietly and internally, top U.S. officials noted that Georgia was largely to blame, and that U.S. officials had contributed to that process by sending confused messages. Indeed, as some administration officials reported, the Georgian military had created a “concept of operations” plan for a military operation in South Ossetia which “called for its army units to sweep across the region and rapidly establish such firm control that a Russian response could be pre-empted.” As early as January of 2008, Georgia’s Ministry of Defense laid out plans in a “strategic defense review” which “set out goals for the Georgian armed forces and refers specifically to the threat of conflict in the separatist regions.” U.S. officials had reportedly warned the Georgians that, ” the plan had little chance of success.”
Indeed, as the war was under way, debates were raging within the Bush administration regarding the possible US response. In particular, tensions started to erupt between Bush and Cheney, as Cheney’s office felt that when Bush had previously met Putin in April, his silent response to Putin’s warning “inadvertently gave Russia the all-clear to attack.” There was discussion within the administration (from Cheney’s side of the debate) of launching air strikes to halt the Russian invasion. After four days of talks with the National Security Council (NSC), George Bush “cut off the discussion,” siding with his somewhat more rational advisers, as there was “a clear sense around the table that any military steps could lead to a confrontation with Moscow.”
Putin had also spoken with Georgian president Saakashvili in February of 2008, where he warned the Georgian president: “You think you can trust the Americans, and they will rush to assist you?” Putin then reportedly claimed that, ” Nobody can be trusted! Except me.” Interestingly, in this respect, Putin happened to be correct.
European governments were not big fans of Saakashvili, either, seeing him as “an American-backed hothead who spelled trouble.” During the five-day war, French President Nicolas Sarkozy shuttled between Russia and Georgia attempting to negotiate a ceasefire. Sarkozy reportedly told the Georgians: “Where is Bush? Where are the Americans?… They are not coming to save you. No Europeans are coming, either. You are alone. If you don’t sign [the ceasefire], the Russian tanks will be here soon.”
The day after the war began, the Russians called an emergency session at the United Nations to find a resolution to the conflict. The Russian’s proposed a short, three-paragraph draft resolution calling on all parties to “renounce the use of force.” This phrase ran into opposition from the United States, France and Britain, who claimed the phrase was “unbalanced” because it “would have undermined Georgia’s ability to defend itself.” The US, British and French opposition to “renounce the use of force” led to a collapse of diplomatic attempts at the UN to end the fighting, according to the New York Times. When the French President eventually negotiated a ceasefire on August 12, at least one senior U.S. official (presumably Cheney) was reportedly ” appalled” by the ceasefire text.
Erosi Kitsmarishvili, a former Georgian diplomat and ambassador to Moscow (and confidante of President Saakashvili) caused controversy within Georgia when he testified at a parliamentary hearing in Georgia in November of 2008 that Georgian officials were responsible for starting the war. He said that he was told by Georgian officials in April of 2008 that they had “planned to start a war in Abkhazia,” saying that they “had received a green light from the United States government to do so.” However, he added, the officials later decided to start the war in South Ossetia instead, believing that ” United States officials had given their approval.” He discussed the July 2008 meeting between Georgian officials and Secretary of State Rice, saying, “Some people who attended the meeting between Condoleezza Rice and Saakashvili were saying that Condoleezza Rice gave them the green light for military action,” though U.S. and Georgian officials “categorically denied this information.”
When the war broke out, the United States military airlifted Georgian troops from Iraq back to Georgia to participate in the fighting against Russia. In the Pentagon, a 28-year-old junior staffer, Mark Simakovsky, “almost overnight… became a key policy adviser” to Secretary of Defense Robert Gates and other top administration officials. Serving as the Pentagon’s country director for Georgia, he “used his expert knowledge and contacts throughout the government and in Georgia to quickly gather information about developments on the ground.” He was pivotal in shaping the Pentagon’s response to the crisis, including the coordination of airlifting 2,000 Georgian soldiers from Iraq back to Georgia.
Within a week of the Georgian war ending on August 12, Secretary of State Condoleezza Rice declared that the United States “would not push for Georgia to be allowed into NATO” during an upcoming emergency meeting of the NATO countries in Brussels, in what the New York Times reported as, “a tacit admission that America and its European allies lack the stomach for a military fight with Russia.”
However, NATO foreign ministers were expected to reaffirm that they would eventually like to see both Georgia and Ukraine join NATO, but not to fast-track the process through the Membership Action Plan (MAP), for which Georgia and the US had previously been lobbying. In November of 2008, Rice affirmed that the US was no longer attempting to fast-track Georgian and Ukrainian membership into NATO, largely due to opposition from France and Germany . In 2011, Russian President Dmitri Medvedev stated that if Russia hadn’t invaded Georgia in 2008, NATO would have expanded already to include Georgia as a member.
In late August, Russian commanders were reportedly “growing alarmed at the number of NATO warships sailing into the Black Sea.” The U.S. said it was delivering “humanitarian aid on military transport planes and ships,” though the Russians suspected that the Pentagon was shipping in weapons and military equipment “under the guise” of humanitarian assistance.
Weeks following Georgia’s defeat, officials at the White House, Pentagon and State Department were “examining what would be required to rebuild Georgia’s military.” The U.S. Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, stated during a news conference that Georgia was ” a very important country to us” and that the U.S. would continue to pursue a “military-to-military relationship.” Both Democrats and Republicans proclaimed their unyielding support for Georgia, as both the John McCain and Barack Obama presidential campaigns had “cultivated close ties” to President Saakashvili. John McCain’s wife and Senator Joe Biden (who would become Obama’s Vice President) had gone to visit Georgia in August of 2008, just following the end of the war.
In early September, President Bush promised $1 billion in ” humanitarian and economic assistance” to help rebuild the country following the war, making Georgia one of the largest recipients of U.S. foreign aid, after Israel, Egypt and Iraq. Comparatively, in the previous 17 years, the United States had provided a total of $1.8 billion in aid to the country. The European Union also pledged to contribute funds to Georgia, as did the International Monetary Fund (IMF), declaring its intention to provide the country with a $750 million loan.
In September of 2008, Vice President Dick Cheney flew to Georgia “to deliver a forceful American pledge to rebuild Georgia and its economy, to preserve its sovereignty and its territory and to bring it into the NATO alliance in defiance of Russia.” Cheney, who arrived in Georgia a day after the U.S. announced a $1 billion rescue package to help the country, then flew to Ukraine to deliver a similar message. Russia, meanwhile, was entrenching its control over the breakaway regions of South Ossetia and Abkhazia, recognizing their independence from Georgia and keeping military units stationed within them.
Cheney’s visit, which began in Azerbaijan, then to Georgia and Ukraine, was orchestrated to confirm that the U.S. had “a deep and abiding interest” in the region, and notably in terms of ensuring that these and neighboring countries remained “free from a new era of Russian domination.” Cheney was the highest-ranking U.S. official to visit Azerbaijan since it gained independence in 1991. Underscoring the importance of the BP-led pipeline transporting oil from Azerbaijan through Georgia to Turkey, Cheney’s first meetings in Azerbaijan were not with political officials, but with representatives from BP and Chevron.
In the last weeks of the Bush administration, Condoleezza Rice and the Georgian Minister of Foreign Affairs signed the U.S.-Georgian Charter on Strategic Partnership. This was followed up by the Obama administration, holding the first meeting of the Strategic Partnership Commission meeting in Washington on June 22, 2009, marking the launch of four bilateral working groups on “democracy, defense and security, economic, trade and energy issues, and people-to-people cultural exchanges.” The Strategic Partnership reflected U.S. commitment “to deepening Georgia’s integration into Euro-Atlantic institutions and enhancing security cooperation,” including eventual membership into NATO.
The Obama administration sent Vice President Joe Biden to Georgia in July of 2009, with Saakashvili lobbying for the U.S. to sell the country weapons, which Russia strongly opposed, considering the rearmament of Georgia to be ” more serious than whether Georgia enters NATO.”
In 2010, Georgia began a “serious push” to lobby the U.S. for “defensive weapons,” notably air defense and anti-tank systems. To help achieve this objective, Georgia spent roughly $1.5 million at four top Washington, D.C. lobbying firms over the course of the year. Meanwhile, Russia had been “intimidating” many of Georgia’s past arms suppliers, including Israel and other Eastern European nations, not to resume arms sales to the country.
In 2010, the United States also resumed its military training exercises in Georgia, which have continued in recent years, much to Russia’s displeasure. However, Saakashvili lost the 2012 elections and was replaced with a billionaire Bidzina Ivanishvili, who had made his fortune in Russia, leading to slightly improved relations with Putin. In 2013, Russia accused the U.S. of ” putting peace at risk” by holding joint military exercises in Georgia.
Bidzina Ivanishvili was the Georgian Prime Minister from 2012 to 2013, during which time Saakashvili was still president. As the Economist reported in October of 2013, weeks before the Georgian presidential elections to replace him, Saakashvili, who came to power through the U.S.-sponsored ‘Rose Revolution’ in 2003, had, in the following decade, “fought and lost a war with Russia, cracked down on the opposition, dominated the media, interfered with justice and monopolized power .” No wonder Cheney saw him as an ideal representation of America’s “democracy promotion” project.
The billionaire oligarch prime minister, Ivanishvili, Georgia’s richest man, had put his weight behind a presidential candidate, Giorgi Margvelashvili, who subsequently won the October 2013 elections. Under reforms implemented by Saakashvili, the role of president would become “largely ceremonial, with the bulk of power resting with the prime minister.” Ivanishvili proclaimed his intention to turn Georgia into a ” perfect European democracy.”
In May of 2014, months into the Ukrainian conflict, NATO announced its intentions to find ways of bringing Georgia ” even closer” to the military alliance. Just days earlier, both France and Germany “assured Georgia that a deal bringing it closer to the European Union would be sealed soon.”
Georgian officials were holding “extensive discussions” with US and German and other NATO members seeking ways to accelerate the country’s membership into NATO. Whereas previously, the US and NATO powers had decided to put Georgia’s NATO membership on the backburner, the conflict in Ukraine had changed the situation. Georgia’s Defense Minister stated: “Clearly, what’s happening in Ukraine impacts the thinking in Europe… Now it’s very different.” The Defense Minister went to Washington in May 2014 to visit with Vice President Biden and U.S. Secretary of Defense Chuck Hagel.
And so, in the more than ten years since Georgia’s U.S. and NATO-supported colour revolution, the West – particularly the United States – have increased Georgia’s military capabilities, armed and trained its forces, all the while aggravating Russia as NATO and Western military, political and economic influence spread ever-closer to its borders. This ultimately resulted in a war. Though, since then – and with the recent conflict in Ukraine – it is clear that rearming Georgia and further aggravating Russia is back on the agenda.
The hypocrisy and imperious expansionism of the West in Georgia is but a minor reflection of a similar process which has been taking place across much of Eastern Europe, and most especially in Ukraine. Thus, despite the never-ending proclamations of “Russian aggression,” it is once again the Western powers, NATO, the EU, the IMF and especially the United States that are the most to blame for the current conflict in Ukraine.
The 2008 war in Georgia had seemingly put an end – or a halt – on NATO’s eastward expansion. Russia had – after 18 years of NATO expansion – finally drawn a line in the sand over how much it was willing to put up with. It was clear, then, that a similar process with Ukraine, a much larger and more strategically significant country than Georgia, was sure to incur a military response from Russia. If anything, the only surprise is that Russia’s military response has been so minimal, comparatively speaking; at least, for the time being. But as this process continues in response to Ukraine’s crisis, and as NATO and the U.S. military, the EU and the IMF accelerate their advance eastward, future conflict is seemingly all but inevitable.
No doubt, when that conflict comes, we will once again hear the amnesic proclamations of “Russian aggression” and Western benevolence.
Andrew Gavin Marshall is a 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 the World of Resistance (WoR) Report, and hosts a weekly podcast show with BoilingFrogsPost.
State of Power 2014: The Transnational Institute
By: Andrew Gavin Marshall
Originally posted at the Transnational Institute, 21 January 2014
In its third annual ‘State of Power’ report, TNI uses vibrant infographics and penetrating essays to expose and analyse the principal power-brokers that have caused financial, economic, social and ecological crises worldwide.
In my contribution to the ‘State of Power’ report (and in cooperation with Occupy.com), “State of Europe: How the European Round Table of Industrialists Came to Wage Class War on Europe,” I examine the role of a major corporate interest group in shaping the policies of the European Union.
From the introduction:
“Founded in 1983, the European Round Table of Industrialists (ERT) quickly became – and today remains – one of the most influential voices of organized corporate interests in Europe. Not quite a lobby, not quite a think tank, the ERT is an action-oriented group made up of roughly 50 CEOs or Chairmen of Europe’s top industrial corporations who collectively push specific ideologies, pressure political elites, and plan objectives and programs designed to shape the European Union and the ‘common market’.
The past thirty years of the ERT’s existence has revealed it one of the most influential organizations in Europe, widely known to the EU’s political, technocratic, and financial elites, holding regular meetings, dinners, and social events with prime ministers and cabinet officials of EU member states, as well as the leadership of the European Commission itself. In the wake of the European debt crisis of the past several years, the ERT has again been at the forefront of shaping the changes within the EU, promoting austerity and structural reforms as the ‘solution’ to the debt crisis.
As through their three-decade history, the Round Table today continues to promote the ideologies and interests of corporate and financial power at the expense of the interests of labour and the population more widely. This paper aims to examine this highly influential group in order to shed some light on an organization very well known to those who make the important decisions within the EU, yet largely in the shadows to those who have to suffer the consequences of those decisions.”
To read the full essay on the ERT and the European Union, click here.
To review and access all of the reports which contributed to the TNI ‘State of Power’ report, click here.
The Debtor’s War: A Modern Greek Tragedy
By: Andrew Gavin Marshall
Early on Thursday, 7 November 2013, Greek riot police stormed the offices of Greece’s main public broadcaster, which had been under a five-month occupation by workers who opposed the government’s decision to shutdown the broadcaster, firing thousands and destroying a major cultural institution. The broadcast seems to have come to an end.
The long and painful Greek tragedy continues, where society and culture are gutted, people impoverished, driven into a deep depression, with growing political and social conflicts, the rise of fascism, detention camps filled with immigrants from Africa and the Middle East, trying to escape the dictators we arm, or the wars we support, with suicide rates spiking, health and well-being deteriorate, services and support vanish, and all the people are left to be punished, humiliated, oppressed and destroyed… These are called “solutions” to an economic crisis, on the road to “economic recovery”… think about that for a moment.
Why is this done? Because some of the world’s largest banks demand it. The same banks that created the global financial crisis, and the European debt crisis, and the global food crisis (which drives tens of millions more people into hunger, and makes the banks richer in the process)., and which launder hundreds of billions of dollars in drug money, profit from arms sales, war and terror. Those banks want the people of Greece (and Spain, and Italy, Portugal, and Ireland, and everywhere, always, across the world) to pay the interest they feel they are owed.
Let me put this simply: a computer screen somewhere, at some big bank, says that some country owes that bank a certain amount of money, and thus, the people of that country must suffer and even die, so that the government can afford to pay back the bank. That’s what government’s are for, right? To serve banks… right?
Greece needs to pay the bank, because the bank and all the bank’s friends (what we call “financial markets”) have decided to punish the country of Greece by betting against the ability of the country to repay its debts, to crash its credit rating, making its ability to borrow and spend increasingly expensive and impossible. Now Greece is basically broke. Greece needs money, so it turns to the EU, the European Central Bank, and the IMF for “assistance.”
They demand that Greece – in return for the loan(s) – impoverish its population, cut all social services and health care, education, anything of benefit to the population – destroy it! – because it’s “too costly.” These are called “austerity measures.” Then, ensure that the newly-impoverished population has all their ‘benefits’ withdrawn, which were promised to them through the ‘social contract’ between the population and the government (essentially, a social agreement between people and the state which legitimizes the state’s ability to rule over them). These things must be destroyed. So things like pensions, social security, labour rights and regulations, protections and safety, industries, resources, services and anything that again benefits the population, must be dismantled and sold for cheap to foreign banks and corporations. All must be dismantled to ensure that the newly-impoverished population and country can be effectively and efficiently exploited by cosmopolitical corporations. These are called “structural reforms,” presumably because they ‘reform’ the very structure of society.
Then, with the combination of impoverishment and exploitation, comes the saintly glow of the all-encompassing human desire and civilizational drive – our goal and purpose as a species on this planet, what our societies are organized by and for – the highest stage of humanity: “economic growth.” Who wouldn’t want “growth”? Well, unless we’re talking about something like a wart, rash, infection, inflammation, or a tumour, everyone wants “growth”, right? Even if it’s at the expense of entire societies and populations of actual individual and living human beings, like any single one of us. Just so long as they suffer for “growth,” all will be well and happy.
So what does “growth” mean? It means that the banks and corporations – which worked with government agencies and officials in creating the global economic and financial crises in the first place – now have the ability to reap the benefits of destruction: massive profits, and growing global power. Large corporations have more money than most countries on earth. Their power is protected by the state, their influence unquestioned, their domination of the world’s resources, materials, culture and society is rapidly advancing, and they are – institutionally and ideologically – totalitarian. So what’s not to love, really?
They want it all. Profit and power. Our world is dominated and being re-shaped by a tiny global financial, corporate, political and intellectual elite. And all must suffer so that they can have what anyone in their position would want to have: more, they want it all. And they want you to just shut up and let them take it all. If you have a problem with that, well, that’s what riot police, prisons, and fascism are for.
This is why Greece must suffer. This is why we hear the unholy trinity economic mantra of: “austerity,” “structural reform,” and “economic growth.” The modern Greek Tragedy of ‘The Debtor’s War’ is driven by the tyrannical trio known as the ‘Troika': the European Commission (of unelected, unaccountable supranational elite technocrats who serve the interests of global corporate and financial power), the European Central Bank (of unelected technocrats and economists who serve the interests of “financial markets” and the big banks), and the IMF (of unelected technocrats and economists who serve global financial and corporate interests). This institutional ‘Troika’ (the EC, ECB, and IMF) demanded the implementation of the ideological ‘Troika': austerity, structural reform, and economic growth.
Together, institutionally and ideologically, they wreak havoc upon humanity.
Welcome to the most completely INSANE point in human history; the all-or-nothing. Welcome to reality.
Now please, kindly help change it.
Global Power Project: Connecting Josef Ackermann, the Institute of International Finance and the Euro Debt Crisis
Global Power Project: Connecting Josef Ackermann, the Institute of International Finance and the Euro Debt Crisis
By: Andrew Gavin Marshall
Originally posted at Occupy.com
In Part 1 of a Global Power Project exposé on the Institute of International Finance (IIF), I examined the founding the institute as a response by leading world banks to organize and manage their interests in relation to the 1980s debt crisis. When the European debt crisis hit headlines in 2010, the IIF was again on the scene and playing a major part. At the center was the CEO of Deutsche Bank, Josef Ackermann.
Josef Ackermann served as CEO of Deutsche Bank from 2002 to 2012, and over the same period served as Chairman of the IIF. Ackermann was also, and still remains, a member of the Steering Committee of the Bilderberg Group and continues to serve on the IIF’s Group of Trustees, a board which includes a number of prominent central bankers including Christian Noyer, the Governor of the Bank of France and Chairman of the Bank for International Settlements (BIS); Jamie Caruana, the General Manager of the BIS; and Jean-Claude Trichet, who was the president of the European Central Bank from 2003 to 2011.
During the early stages of the financial crisis, Ackermann served as an “unofficial adviser” to German Chancellor Angela Merkel and her then-Finance Minister Peer Steinbrueck. In December of 2009, Ackermann was speaking at a summit in Berlin attended by Chancellor Merkel and several other German cabinet ministers, corporate CEOs and others, where he explained that while the financial crisis had largely been “abated,” many “time bombs” remained — in particular, Greece, which he referred to as the “problem child” of Europe. Ackermann blamed the debt crisis on people having “lived beyond their means for years, if not decades,” warning that pensions and health care systems would “compound the problem” in the future.
The Financial Times has referred to Ackermann as a “reluctant power broker” who “has the ear of Angela Merkel, Europe’s most powerful politician.” Ackermann not only became one of the most influential bankers in the world, but a major political figure as well. As he himself explained: “Financial markets now are very political – political considerations have to play an important role.” In 2011, Ackermann warned that in terms of Europe’s crisis, “I don’t see a quick economic recovery, so we will have a longer time of somewhat lower growth – certainly three to five years.”
In October of 2011, Ackermann delivered a speech in which he said that Europe had “now entered a period of deleveraging” which “will inevitably entail a long period of austerity as governments, households and firms raise their savings.” At an economic forum in December of 2011, Josef Ackermann stated that Europe had to get its debt under control, “even at the cost of national sovereignty,” suggesting that neither “the pressure of financial markets” nor austerity measures “threaten democracy.” The real threat to democracy, according to Ackermann, was the “excessive debt” of European states.
In 2011, France and Germany agreed to negotiate directly with the “private sector” in the next planned Greek bailout agreement. The lead negotiator for the banks was the Institute of International Finance, which was brought in to discuss the potential for the banks to take a slight loss on their holdings of Greek debt. Ackermann was to be one of the lead negotiators for the IIF (also representing Deutsche Bank,a major private holder of Greek debt).
The Institute of International Finance under Ackermann’s chairmanship in turn became directly involved in major European summits, providing key input and suggestions that led to the Greek bailout. In July of 2011, the IIF warned the Eurozone countries that they would have to conclude a bailout agreement for Greece in order to avoid financial markets “spinning out of control.” The IIF delivered these warnings in a report delivered directly to European finance ministers, stating: “It is essential that euro area member states and the IMF act in the coming days to avoid market developments spinning out of control and risk contagion accelerating.”
The IIF undertook talks with Greek political leaders as well as EU officials, the European Central Bank and the IMF, with the organization noting that its managing director Charles Dallara and an IFF team “had extensive meetings with very senior European government officials over several weeks.” The three main IFF officials involved in discussions and negotiations were Charles Dallara (managing director from 1993-2013), Ackermann and Baudouin Prot, the Chairman of BNP Paribas.
According to one report, Ackermann even attended a meeting of the European Council during the EU summit to discuss the Greek bailout. Dallara was reported to have engaged in a conference call with top EU officials, including the Eurogroup chair Jean-Claude Juncker and the European Commissioner for Economic and Monetary Affairs, Olli Rehn. Dallara also reportedly met with European Council President Herman van Rompuy, then-French President Nicolas Sarkozy and Angela Merkel.
Discussions continued over the following months with little resolution. In an October meeting, EU officials reportedly hit a wall, at which point they summoned Dallara as the representative of the banks to the meeting in order “to break the deadlock.” Dallara met with Sarkozy and Merkel and other leading EU officials. While a general agreement was reached with the banks, negotiations over the technicalities continued into 2012, taking place between the Greek government, the EU, IMF and the IIF.
Ackermann explained that the banks were being “extremely generous” and then warned that failure to agree on a new program would open“a new Pandora’s box” for the debt crisis. Ackermann spoke at the World Economic Forum where he said that any agreement would have to force Greece to adhere to “harsh new austerity measures,” including cuts to wages and pensions, as well as making “the labor market more flexible.”
The final agreement had the banks holding Greek debt to take a 50% “loss” of their holdings of that debt, which would be done through a “bond swap” where they were to exchange their current junk status Greek debt for long-term Greek government bonds (debt) with a higher rating. In other words, the much-touted “write off,” or “loss,” for banks holding Greek debt amounted to a fancy financial method of kicking the can down the road.
After leaving his position as Chairman and CEO of Deutsche Bank as well as Chairman of the IIF, Ackermann spoke at the Atlantic Council, a U.S. think tank where he stated that elections in Greece were “not necessary” and “a big mistake.” What was necessary, he said, was “to make the funding of the banking system more certain,” and claimed it would require between 1 and 2 trillion euros. The European Stability Mechanism’s (ESM) ability to provide banks with $1 trillion was, according to Ackermann, “sufficient,” but he added, “we have to do more” and “we should maintain the pressure on the countries to do the necessary structural reforms and the necessary financial reforms to reduce the debt burden.” However, he noted, “if it comes to the worst,” in terms of a potential collapse of the Eurozone, “everything will be done to bail the Eurozone out.”
When Ackermann was asked why Germany did not simply come out and say that it would guarantee bank debts in the Eurozone, he explained that “it would be very difficult to get parliamentary approval for such behavior or attitude. People would not support it at all.” Further, if Germany did publicly state that it would guarantee bailouts for banks, many countries in the Eurozone would then ask, “Well, why then go on with our austerity programs? Why go on with our reforms? We have what we need.” Thus, Germany was not saying so publicly, based on what Ackermann called “political tactical consideration,” adding: “I think to keep the pressure up until the last minute is probably… not a bad political solution.”
Ackermann has never lacked as a source for controversy. He has been referred to as “a global banker and political power broker” by one financial analyst, and Simon Johnson, former Chief Economist at the IMF, referred to him as “one of the most dangerous bank managers” in the world whose advice not just to Germany and Greece but also to Belgium and Switzerland “shaped talks to bail out German lenders [banks], reduce Greece’s debt, leverage the euro-area’s rescue fund and influence regulation.” Ackermann himself stated, “Financial markets have become highly political over the past years… Politics and finance will become even more intertwined in the future. Accordingly, bankers have to think and act more politically as well.” One financial analyst stated: “He’s the most influential banker in the euro zone.” A German economics professor noted, “Deutsche Bank and its CEO are the target of all the people who feel our social or economic system is unfair or wrong.”
In 2011, Ackermann was targeted by an Italian anarchist group that claimed responsibility for sending a letter bomb to the Deutsche Bank CEO, though it was intercepted by police. When confronted by Occupy protesters during a speech he gave in November of 2011, Ackermann touted his “environmental” credentials, explaining that the UN Secretary General had referred to him as a “visionary.”
When Ackermann left Deutsche Bank and the IIF, he did not leave the world of financial and political power. He continued holding positions as a member of the Steering Committee of the Bilderberg Group; Vice Chairman of the Foundation Board of the World Economic Forum; and as a member of the Group of Trustees of the Principles for the Institute of International Finance. On top of that, he became a board member of Investor AB, Siemens AG, and Royal Dutch Shell, as well as being appointed Chairman of Zurich Insurance Group. Ackermann also sits on the international advisory boards of the China Banking Regulatory Commission, the National Bank of Kuwait, and Akbank, Turkey’s largest bank, as well as sitting on the boards of a number of other corporate and financial institutions.
When Ackermann left his position as CEO of Deutsche Bank and Chairman of the IIF, he was replaced at the IIF by Douglas Flint, the chairman of HSBC Holdings, who also sits on the board of the IIF. Flint is a member of the Mayor of Beijing’s International Business Leaders’ Advisory Council, a member of the Mayor of Shanghai’s International Business Leaders’ Advisory Council, a member of the International Advisory Board of the China Europe International Business School, a former director of BP (from 2005-2011), a participant in Bilderberg meetings (including for the years 2011-2013), a member of the European Financial Services Round Table (a group of CEOs and chairmen from Europe’s top banks), a member of the Financial Services Forum, a member of the European Banking Group (a group of over ten top European bank leaders formed to directly lobby the EU on “regulation” of the financial industry), and a member of the International Monetary Conference (IMC), an annual conference of private bankers formed to “compliment” the annual IMF meetings.
Whether through the leadership of Josef Ackermann, or now under the chairmanship of Douglas Flint, the IIF has been and will remain a major global player within the debt crisis and future financial crises, representing the organized interests of the financial markets. It’s no surprise, then, that even the Financial Times noted in 2010 that, three years after the financial crisis began, “the markets (and the bankers) still rule.”
Or as former Deputy Treasury Secretary Roger Altman noted, in 2011, that financial markets had become “a global supra-government” that “oust entrenched regimes… force austerity, banking bail-outs and other major policy changes,” whose “influence dwarfs multilateral institutions such as the International Monetary Fund” as “they have become the most powerful force on earth.”
We need look no further than the Institute of International Finance to see just how “the most powerful force on earth” is organized.
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.
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:
 Benjamin Bidder and Clemens Hoges, “Democracy or Dollars?: Weapons Sales to the Arab World under Scrutiny,” Der Spiegel, 1 April 2011:
 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:
 07NDJAMENA43, “C-130’s for Chad?”, 12 January 2007, Wikileaks Diplomatic Cables:
 Ben Berkowitz, “Wikileaks reveals extent of State Department’s involvement in arms sales, oil deals,” Reuters, 4 March 2011:
The Great Corporate Colony: Welcome to Canada Inc., A Subsidiary of the American Empire & Co.
By: Andrew Gavin Marshall
The following is a sample from the first volume of The People’s Book Project, a crowd-funded initiative to produce a series of books studying the ideas, institutions, and individuals of power and resistance. Please consider donating to help the Project come to fruition.
As one of the most resource-rich countries on earth, and the largest single trading partner with the United States, Canada is strategically positioned to influence the changing nature of global power structures. Do we support – and siphon our resources for the benefit of – the American Empire, co-operating in the wholesale plundering of the world, the oppression and impoverishment of peoples, destruction of global ecology, all for the benefit of an increasingly small class of global corporations and banks… Or, do we become independent and free? Canada’s Prime Minister Stephen Harper once said, “You won’t recognize Canada when I get through with it.” With multiple “free trade” agreements under way, expanded corporate rights, expropriation of vast amounts of natural resources, Canada is becoming one of the world’s foremost corporate colonies, unrecognizable from what Canadians once imagined our nation to be.
The Plundering Potential of Resource Wealth
Canada is the second largest country by landmass in the world, after Russia, and with roughly 10% of the population of the United States, it is also one of the most resource rich countries on the entire planet. Looking at a list of the ten most resource-rich nations on earth (determined not by the multitude, but rather the ‘market value’ of the resources they contain) is rather revealing. At number ten, and in descending order is: Venezuela, Iraq, Australia, Brazil, China, Iran, Canada, Saudi Arabia, the United States, and Russia. Canada has one of the largest oil reserves in the world after Saudi Arabia and Iran (though these are largely located in the difficult-to-extract Alberta tar sands), as well as having some of the largest mineral resource deposits in the world, with the second-largest proven reserves of uranium and the third largest amount of timber. According to Statistics Canada, the nation’s natural wealth tripled in value between 1990 and 2009, then valued at $3 trillion, largely due to the increased price of oil.
In June of 2012, the United Nations released a major report in which it established a new index to account for and define ‘wealth’ beyond mere reports of GDP. Termed the “Inclusive Wealth Index” (IWI), it determines national wealth based upon three types of assets: “manufactured” (machinery, buildings, infrastructure, etc.), “human capital” (the population’s education and skills), and “natural capital” (land, forests, fossil fuels, minerals, etc.). The study, Inclusive Wealth Report 2012, analyzed 20 different countries, and was intended to take into account depleting resources and sustainability for future generations when determining a nation’s real wealth. While GDP growth has taken place in China, the U.S., South Africa and Brazil, these nations have significantly reduced their natural capital. Between 1990 and 2008, the “natural capital” of the United States declined by 20%, 17% for China, 25% for Brazil, and 33% for South Africa. In fact, 19 out of the 20 countries studied showed a decline in natural capital, offset only by an increase in human capital (education and skills).
Human capital is based upon the average years of schooling, wages that the country’s workers can demand, and how many years they are expected to work before they retire or die. With this measurement, human capital amounts to the largest percentage of a nation’s wealth (except for Nigeria, Russia, and Saudi Arabia), accounting for 88% of Britain’s wealth and 75% of America’s. Canada is of course included among the 19 countries with rapidly declining natural capital.
Canada’s Minister of Natural Resources Joe Oliver spoke to a gathering of Canaccord Genuity Corporation (a financial services conglomerate) in Toronto in September of 2012, where he explained that Canada’s “tremendous natural wealth” included “huge capacities and reserves of energy, including the third-largest proven oil reserves in the world,” as well as “tremendous hydroelectric capacity, massive tracts of forests and an abundance of minerals and metals.” He added, however: “it’s not enough to have the resources… You have to do something with them.” Oliver listed some of the many resources which Canada has and produces in abundance: oil, natural gas, hydroelectricity, uranium (second largest producer in the world), more than 200 mines turning out more than 60 minerals, “including more potash than anyone else,” as well as aluminum, cobalt, diamonds, nickel, platinum group metals, titanium concentrate, tungsten, chromite, the second-largest exporter of primary forest products, and is the “biggest exporter of wood pulp, newsprint and softwood lumber.” The resource sector, explained Oliver, “is the cornerstone of our economy, our long-term prosperity and our quality of life.”
Oliver explained that the energy, forestry, metals and minerals industries accounted for roughly 15% of Canada’s nominal GDP, the “direct contribution” to the Canadian economy, while the indirect GDP (taking into account “goods and services purchased from other sectors – construction, machinery and equipment, business and professional services”) takes the number up to roughly 20%. The key areas and industries are oil in Alberta, forestry in British Columbia, potash and uranium in Saskatchewan, mining in Ontario and hydro-power in Quebec. Oliver told the assembled crowd in the heart of Toronto’s finance industry that there was “about $650 billion invested in over 600 major resource projects currently underway in Canada or planned in the next 10 years.” He added: “Countries in the Asia-Pacific region are especially hungry for the energy and minerals and metals and forest products they need to fuel their growth and build a better quality of life for their citizens.” There were, he acknowledged, still inherent problems with the global economy which could effect this outlook, but suggested that what the Canadian government can – “and is doing – is establish a competitive business climate so the private sector can capitalize on our enormous potential.” In other words, the Canadian government will establish a highly protective and subsidized market for multinational corporations to more effectively plunder the natural resources. All for altruistic intentions, of course!
Canada’s highly influential big business dominated think tanks have not been far behind in promoting resource plundering by multinational corporations. The Conference Board of Canada published a report in June of 2012 arguing that “Canada’s trade strengths are concentrated in industries that extract natural resources and process raw materials,” including agricultural and food products, minerals and metals, forest products, and electricity exports. In the report, Adding Value to Trade: Moving Beyond Being Hewers of Wood, Michael Burt wrote: “These industries rely heavily on natural resource wealth such as land, water, forests, and mineral products. The abundance of these resources gives Canada a robust comparative advantage in the industries that extract and process them.” Thus, it would be desirable to promote the “development and use of our natural resources, and industries that support the primary sector are competitive with world standards.” The board of directors of the Conference Board of Canada includes executives and/or board members of the Business Development Bank of Canada, EPCOR Utilities, CGI Group, GE Canada, Canada Post Corporation, TransAlta Corporation, ICICI Bank Canada, Cisco Systems Canada, Desjardins Group, IBM Canada, Shell Canada, Xerox Canada, SaskTel, SaskPower, and John Manley, the President and CEO of the Canadian Council of Chief Executives (CCCE), the main business interest group in Canada, made up of the top 150 corporate CEOs in the country.
In October of 2012, the Canadian International Council (CIC) – the Canadian counterpart to the Council on Foreign Relations in the U.S. – published a report entitled, Becoming a Resource Superpower, in which the author, Madelaine Drohan (the Canada correspondent for The Economist) argued that, “without strong leadership and collaboration we risk losing an opportunity to become a real resource superpower.” A series of recommendations were laid out, including the possibility of establishing a sovereign wealth fund (SWF) to pool and invest money made from resources, encouraging the provincial and federal governments in Canada to “stop treating” revenue from resources “as income to be spent and start treating them as capital to be saved or invested.” In other words, the money made from resources should not go back to benefit Canadians, but rather be used to exclusively benefit the investor class.
Other recommendations focused on expanding the relationship between government, business, and academia (as if we don’t have enough of this already): “To do this, federal and provincial governments must concentrate their funding for research and development on collaborative projects between groups of companies and academic institutions.” Another recommendation focused on expanding “trade” networks and energy customers, specifically in the Asia-Pacific, noting: “Canada should focus on negotiations involving the largest possible number of countries, such as the Trans-Pacific Partnership, and look beyond China so we do not repeat the error of putting all our eggs in one basket.” The report then recommended the government to establish highly protectionist trade agreements for corporations, writing: “Government can help companies plug into global value chains by removing impediments and securing the right trade and investment deals.” By definition, that is the opposite of “free trade,” which is why it is important that we call it “free trade,” when in actuality, it is highly protectionist, involving state intervention designed to undermine the ‘market’ and give corporations a subsidized advantage, thus, undermining competition. The last major recommendation was for federal, provincial, and territorial governments to “collaborate on a national blueprint for resource development that identifies the gaps to be filled – including in infrastructure, environmental protection, trade diversification, education, immigration, technology, and supporting sectors – and sets out how to address them, with achievable goals and deadlines.” In other words, massive state-capitalist planning and plundering is required.
The board of directors of the Canadian International Council (CIC) includes the president and CEO of the Canadian Chamber of Commerce, Chair of the Atlantic Council of Canada, Raymond Chrétien (nephew of former Prime Minister Jean Chrétien), while the chief sponsors of the CIC include: Bennett Jones, Power Corporation of Canada (owned by the Desmarais family, Canada’s Rockefellers), the Royal Bank of Canada, AGF, Barrick Gold, BMO Financial Group, Sun Life Financial, Scotiabank, and TD Bank. So naturally, it has everyone’s interests at heart, and by ‘everyone’, I mean, everyone that matters to the investor class (i.e., the investor class).
So, as Canada increases production of oil from Alberta’s tar sands, the government is seeking to expand the major pipelines to the coast in the hopes of acquiring China as a major trading partner, instead of just the United States. Canada sits atop “unknown quantities” of natural gas reserves, what The Economist calls an “unconventional bonanza,” adding: “Just as the 20th century was the age of oil, the 21st could prove to be the century of gas.” However, in August of 2012, Canadian Prime Minister Stephen Harper declared that Canada’s future economic hopes depend upon the natural resources of the Arctic, which has been the focus of a new global grab for resources since the Arctic ice has begun to break up more rapidly. On a visit to the region, Harper stated, “Obviously, there is a tremendous economic opportunity here. The fact that we are attracting investment not just domestically, but from around the globe speaks very highly to the future.” As revealed by documents released to the press, in late 2011, the Mining Association of Canada was lobbying the Environment Minister Peter Kent “to change regulations and allow non-metal mines, such as diamonds, oilsands and coal, to discharge potentially polluted water under federal guidelines.”
In other words, now that the ice is breaking and resources are being readied for plunder, the major mining conglomerates want the government’s permission to treat the Canadian environment the way they treat the environment in the rest of the world, notably, in poor, conflict-ridden countries like Colombia and the Democratic Republic of Congo. After all, what is plundering without the added bonus of environmental devastation? It’s not just a matter of extracting and exploiting all available resources, from which to gain massive profits, but it’s also important for corporations to destroy the surrounding environment so that little, if anything, can flourish and replenish. That is plundering at its most profitable. In October of 2012, it was reported that Canada was going to claim ownership of a massive size of undersea territory in the Arctic, larger than the size of the province of Québec, and roughly equal to 20% of the country’s surface area.
In 2013, Canada will begin chairing a two-year term of the Arctic Council, a grouping of eight nations working together to manage the development of the Arctic as an economically and strategically important global region. With the opening of new and large opportunities for economic exploitation and resource plundering, the states with territory in the Arctic have become increasingly aggressive in their military posturing in the region, “increasingly designed for combat rather than policing,” according to a study by the Centre for Climate and Energy Solutions. The report noted: “Although the pursuit of co-operation is the stated priority, most of the Arctic states have begun to rebuild and modernize their military capabilities in the region.”
Canadian Prime Minister Stephen Harper had been publicly making aggressive statements about competition in the Arctic, particularly in relation to Russia. In private, however, Harper had been making different claims. As revealed by Wikileaks, Harper expressed the message to the Secretary-General of NATO that there was no real military threat in the Arctic, instead expressing the perspective that, “Canada has a good working relationship with Russia with respect to the Arctic, and a NATO presence could backfire by exacerbating tensions.” Harper added, according to the released cables, “that there is no likelihood of Arctic states going to war, but that some non-Arctic members favoured a NATO role in the Arctic because it would afford them influence in an area where ‘they don’t belong’.” All the public statements and aggressive military stances in the region have, however, helped to sway public opinion into believing that there is a “security or sovereignty threat to the northern border,” and thus justify increased expansion into the region for exploitation. The issue is not one of security, but of securing resources (for corporations, no doubt). One released cable from 2009 relayed this point accurately, noting that Canada’s defense plan to build six Arctic Patrol ships for the navy was “an example of a requirement driven by political rather than military imperatives, since the navy did not request these patrol ships. The Conservatives have nonetheless long found domestic political capital in asserting Canada’s ‘Arctic Sovereignty’.” By the summer of 2012, the aggressive rhetoric had essentially vanished, and Harper’s missions to the Arctic were entirely diplomatic and aimed at exploiting the region’s vast natural resources. The Obama administration has also identified the Arctic as “an area of key strategic interest.”
Canada For Sale: “Free Trade” Fanaticism
Canada has been pursuing a vast array of so-called “free trade” agreements with specific countries around the world, as part of the overall program of plundering resources and giving multinational corporations unprecedented control over society. Since the 1988 Canada-U.S. Free Trade Agreement and the 1994 North American Free Trade Agreement (NAFTA), Canada has pursued agreements with several countries, including Israel, Jordan, Chile, Costa Rica, Colombia, Honduras, Panama, Peru and is in talks with the European Union and Japan, as well as China and India.
On August 15, 2011, the Canada-Colombia Free Trade Agreement – a highly protectionist corporate-driven agreement (like all “free trade” agreements) – came into effect. The agreement was reached in 2008, receiving “royal assent” in 2010, and is sure to benefit major corporations and help finance a state which is responsible for the greatest human rights violations in the Western Hemisphere. Canada’s top five exports to Colombia include wheat, newsprint and paper, machinery and equipment, dump trucks as well as beans, peas, and lentils. Colombia’s top five exports to Canada include coal, coffee, bananas, fuel oil and cut flowers (note: this list excludes illicit trade products like cocaine, of which Colombia is a major global exporter).
As critics of the deal pointed to Colombia’s record on human rights abuses, Stephen Harper commented, “No good purpose is served in this country or in the United States by anybody who is standing in the way of the development of the prosperity of Colombia,” by which he means to say that human rights are irrelevant so long as multinational corporations are making large profits. And indeed, policies fit that paradigm very well. Harper added: “Colombia is a wonderful country with great possibility and great ambition. And we need to be encouraging that every step of the way. That’s why we have made this a priority to get this deal done. We can’t block the progress of a country like this for protectionist reasons.” In this sense, the word “protectionist” refers to any impediments, regulations, or barriers to the unhindered exploitation and plundering of a country by multinational corporations. When agreements are protectionist in favour of corporations, securing and enforcing their unhindered monopolization of markets and exploitation of resources, this is called “free trade.”
With more than 70 Canadian corporations in Colombia, from oil and mining to finance, the agreement will open up more access for major companies. For those who mention human rights abuses, Harper had this to say: “I think there are protectionist forces in our country and in the United States that don’t care about development and prosperity in this part of the world. And that’s unfortunate.” Chris Spaulding of Talisman Energy, a Canadian corporation doing business in Colombia, commented that, “It’s very business friendly. They want foreign investment. The labor force is very good. The resources are there.”
According to the Globe and Mail, Colombia has “near bullet-proof potential for rapid growth,” due to low wages, abundant resources, and with the return of “order” (a euphemism for state oppression and control), though the country still has a high murder rate, five times the rate of the United States. Colombia not only signed a free trade agreement with Canada, but also with the U.S., and has received top rates from the World Bank for fostering a good “business climate.” Scotiabank, one of Canada’s big five banks, made a $1 billion purchase of a 51% stake in Colombia’s fifth largest bank, Banco Colpatria. Rick Waugh, the CEO of Scotiabank, declared that, “Colombia is very important to us.”
Toronto-based mining company Gran Colombia Gold Corp has been seeking to remove an entire town, a 500-year old community, to make way for an open-pit mine. When the Colombian government was preparing to displace the town, villagers in the community formed a committee to defend themselves. One of the organizers, a local priest, Father José Reinel Restrepo, publicly denounced the plan to move the town for the benefit of a foreign corporation, even giving television interviews in which he denounced “Canadian imperialism.” He explained: “If they are going to drive me out of here, I would tell them they would have to expel me by way of bullets or machetes – but they can’t oblige me to leave.” Four days later, Father Restrepo was shot dead while traveling to visit his family.
Colombia has a long history with powerful business interests allying themselves with paramilitary outfits to “silence opponents and displace rural populations living atop natural resources.” Under the guise of the “war on drugs,” Colombia’s military, with billions in “aid” from the United States, has co-operated with big business interests and criminal paramilitary groups, purportedly to fight rebel groups (notably FARC), but mostly to clear rural communities to allow for corporate plundering of the resources upon which they sit. In recent decades, some four million people have been displaced by such actions, leaving the country with Latin America’s “most inequitable distribution of wealth.” On top of that, Colombia is a major narco-state, with state, paramilitary and rebel groups all participating in the massive cocaine trade. Many historians have described Colombia as “the world’s most enduringly violent country,” with over five decades of constant internal warfare. With over 20 major Canadian companies holding major investments in Colombia, it’s no wonder that the World Bank rated the country as the best investment climate in Latin America.
The brand of “order” that the government of Colombia has enforced in recent years represents a continuation of the policies of several administrations before it. The human rights and humanitarian crisis in Colombia is “staggering in scale,” with millions displaced, killed, tortured, raped, kidnapped or “disappeared,” more than 280,000 people had to flee their homes in 2010 alone. State, paramilitary and rebel groups have all routinely been accused of vast human rights abuses and war crimes. While the new government of President Santos promised to prioritize human rights when he came to power in 2010, the reality, according to Amnesty International, was that “threats against and killings of leaders of displaced communities and of those seeking the return of lands misappropriated during the conflict, mainly by paramilitary groups, have increased during the Santos government.” In criminal investigations of human rights abuses, witnesses, victims, lawyers, and judges have continuously been threatened or even killed. Threats and murders have also increased for human rights activists, trade unionists, and community leaders.
Canadian law demands that the government table a human rights report for Parliament on the impact of the Canada-Colombia Free Trade Agreement. Instead of submitting the report, the Canadian government decided, in May of 2012, that it would not even adhere to Canadian law, and refused to submit any such report, instead stating that it would produce a report for May of 2013. With more than 259,000 people displaced from their homes in Colombia in 2011 (on top of the 280,000 displaced in 2010), human rights abuses and war crimes will continue, with the tacit (and perhaps active) cooperation of Canadian corporations, notably mining companies. The Canadian government has effectively given the green light for such abuses to continue. While Colombia’s Constitutional Court identified 34 Indigenous nations in the country that were in “grave danger of extinction,” Canadian indifference continued. Alex Neve, the Secretary General of Amnesty International Canada declared that, “Canada must not turn its back on the human rights crisis in Colombia for yet another year… The crucial question that should not be postponed is what role is Canadian investment playing with regard to this emergency?” Neve added: “Failure to carry out a full impact assessment violates Canada’s responsibility of due diligence under international law and denies Canadian corporations working in Colombia the information they need to avoid implicating themselves in grave human rights violations.”
The website for the Canadian ministry for Foreign Affairs and International Trade declared that the Canada-Colombia FTA provided “a key boost for Canadian companies in five important sectors: agriculture, information and communication technologies, mining, oil and gas, and services.” Noting that Canada’s interest in the narco-state was “growing strongly,” the ministry website added that Colombia had “undergone important economic and legal reforms, spurring democracy and global direct investment.” The business climate, it declared, was “now stable and predictable, making Colombia a secure business partner and a solid investment destination.” With that in mind, Canada’s Defence Minister Peter MacKay signed an agreement with the Colombian military in November of 2012 to strengthen its “military relationship with Colombia,” which MacKay stated, “represents a natural evolution in our relationship… And we look forward to continuing to build our ties with the Colombian Armed Forces.” No doubt, as they continue to displace hundreds of thousands of innocent people in order to clear the land for foreign corporations, and of course, to help advance the profits of the international illicit drug trade.
Scotiabank decided to expand its operations further in Colombia, with the purchase of a majority stake in one of Colombia’s largest pension fund companies. Scotiabank has taken on a major role in “financing Colombia’s energy and mining sectors,” with the bank’s head of global wealth management stating, “We look to continue the growth and expansion of this business.” Another executive at Scotiabank stated, “We continue to invest in Colombia because we see this as a market with great potential for growth.” Interestingly, the Canadian Embassy in Colombia is located in the new Scotiabank Tower in Bogota.
Canada continues to pursue further “free trade agreements” with other countries as well, notably, Japan and China. In March of 2012, Canada and Japan agreed to begin free trade talks, already steadfast trading partners. On top of “free trade,” the Japanese Prime Minister Yoshihiko Noda announced that Canada and Japan would also be advancing defence and security “co-operation.” At the announcement, Harper declared that, “This is a truly historic step that will help create jobs and growth for both countries.” Jayson Myers, the president of the Canadian Manufacturers & Exporters association stated, “Japan is a strategic commercial partner… However, it is also a country with whom we’ve had a persistent trade deficit when it comes to manufacturing. These negotiations provide the appropriate forum to resolve ongoing concerns.”
As revealed by secret documents obtained by the media, the Canadian government had been lobbying the United States to join the Trans-Pacific Partnership agreement for the main reason of gaining more access to Japan, with one document noting that the TPP without Japan “does not excite us.” In November of 2012, it was reported that Japan was likely to follow Canada’s entrance into the TPP, the largest and most secretive trade agreement in history, involving 11 Pacific rim countries, and negotiated in cooperation with over 600 corporations. The TPP is highly controversial within Japan, since it could potentially – and likely would – lead to reduced protections and subsidies for the Japanese agriculture sector, an area long considered untouchable. A spokesperson for the Canadian department of Foreign Affairs and International Trade stated, “We welcome Japan’s interest in joining the TPP. Japan’s participation in the TPP would further strengthen Canada and Japan’s strong trade and investment relationship. We are already working closely with Japan towards a bilateral free trade agreement that will bring new jobs and increased prosperity to Canadians and we would welcome the opportunity to also work together in the TPP.”
(For more information on the TPP, please see my three-part series here: The Trans-Pacific Partnership)
Canada has also begun talks with India and hoped to sign a free trade deal with the country by the end of 2013, with Stephen Harper stating, upon a visit to India, “I think I am very clear that we need to go farther and faster.” Stephen Harper lamented against the fact that India has democratic institutions, and thus, undemocratic policies are harder to implement. He stated: “What we do have to realize when we deal with India, as opposed to some other countries that we’re dealing with in the developing world – this country is a democracy… And that means that governments cannot simply dictate a whole set of policy changes to happen the next day. That means governments must develop consensus behind policy changes. And that, in this country is not easy. We understand that.” Luckily for Harper, he doesn’t have to face any such problems at home, with a majority government, tearing the country to pieces day-by-day. Stephen Harper once boasted many years ago, that if he was given the chance to become Prime Minister, “You won’t recognize Canada when I get through with it.” Indeed, that turns out to be quite true. Indeed, back in 1997, Harper wrote an article in which he referred to Canada as “a benign dictatorship,” though there seems to be little ‘benign’ about his majority-government rule.
In September of 2012, Stephen Harper signed an investment treaty with China (as a precursor to a potential free trade agreement), called the Foreign Investment Promotion and Protection Agreement (FIPA). The details of the agreement were kept secret until the deal was tabled in the Canadian Parliament in late September, but the agreement is not to be debated in Parliament because treaty making “is a royal prerogative,” and can thus become law through the initiative of the Prime Minister’s cabinet alone, so long as the treaty is ‘tabled’ in Parliament. Canada already had roughly 24 FIPAs in operation, with roughly a dozen more in the works. FIPAs are not “free trade agreements,” but are designed to simply “protect and promote” foreign investment in legally-binding agreements. In essence, they are quicker and smaller versions of “free trade” agreements, and designed with a similar purpose: to advance corporate rights and the expense of democratic rights.
China’s ambassador to Canada stated that the two countries should move quickly toward a free-trade agreement within a decade, adding, “It’s time to open each other’s markets.” The comments came as a major Chinese state-owned corporation was seeking to take over a Canadian energy company, which would be the first direct foreign takeover of a major actor in Canada’s energy sector, a major concern for Canadians who fear Canada’s resource wealth will not benefit Canadians. On this issue, the Chinese ambassador noted, “Business is business. It should not be politicized… If we politicize all this, then we can’t do business.” The ambassador told a Canadian journalist, “We are not coming to control your resources.” No, of course not, they’re just coming to take the resources. Within a couple months, Prime Minister Harper approved of the Chinese takeover of the Canadian energy company Nexen, as well as another takeover by a Malaysian company in the Canadian energy sector. However, Harper then stated that there would be restrictions on foreign governments buying some of Canada’s largest energy conglomerates (just not these ones in particular). At a press conference, Harper stated, “When we say that Canada is open for business, we do not mean that Canada is for sale to foreign governments.” Except, of course, for all the exceptions to that rule.
Critics of the Canada-China FIPA warned that it would reduce Canada to little more than a “resource colony,” which would bind Canada to new investment rights with China for 30 years. Not only does it allow China to gain an increased foothold in Canada’s economy, and specifically, in purchasing Canadian resources, but it also acts “to protect Canadian capitalists when they go into China.” What more could someone ask for? The Council of Canadians, a public interest organization, referred to the Canada-China FIPA as a “corporate rights pact” that would have serious repercussions on Canadian environmental, energy, and financial policies. This is because the deal would allow for lawsuits against the Canadian federal and provincial governments for having “barriers” to investments, which could then be overturned.
Canada is also in the final stages of negotiating a trade agreement with the European Union, called the Comprehensive Economic Trade Agreement (CETA), designed to reduce tariffs and open up “new markets,” having major impacts upon agriculture, intellectual property rights (copyright and patent laws), with drug prices likely to increase “significantly,” as well as allowing for more “labour mobility,” a euphemism for increased labour exploitation. The agreement, which has been in negotiations for years, would “deal another blow to Canada’s already battered manufacturing sector,” with roughly 28,000 jobs under threat, deemed to be the “best-case scenario” by the Canadian Centre for Policy Alternatives. The “worst-case” scenario could see up to 152,000 jobs being “vaporized.”
As is typical, the negotiations are “behind closed doors” and barely deal with actual “trade.” CETA is, much like the TPP, termed a “next generation” free trade agreement, negotiated since May of 2009, and would further deregulate and privatize the Canadian economy, and of course, therefore, increase corporate power, and thus at the expense of democratic accountability. The agreement could restrict how local and provincial governments could spend money, even banning “buy local” policies, increase the cost of drugs by $3 billion, increase Canada’s trade deficit with the EU, allow for European corporations to attack environmental and health protections within Canada as “barriers to investment,” potentially even apply pressure to privatize water, transit, and energy, and even prevent farmers from saving their seeds, as a major gift to GMO manufacturers. Where corporate rights are advanced, democratic rights are dismantled.
A leaked document from the European Commission dated November 6, 2012, revealed that the practice of Canadian municipalities “buying locally” would disappear with the Canada-EU CETA, and that “provincial development programs could go with them.” Canadian municipalities were offering better terms for European access to municipal contracts that those which Canadian provinces give each other. The document, prepared for the European Commission’s Trade Policy Committee noted that the agreement is “the most ambitious and comprehensive offer Canada and its provinces have made to any partner, including the U.S.” EU negotiations will, however, continue to press for more access to energy sectors. Maude Barlow of the Council of Canadians noted: “The amount of room our provinces, municipalities and local communities have to support local farmers and otherwise create the jobs of tomorrow is threatened again by a Canada-European Union free trade deal that will forever prohibit these kinds of economic strategies.” The province of Ontario could alone lose between 13,000 and 70,000 jobs as a result of the agreement, according to the Canadian Centre for Policy Alternatives.
Openly acknowledged by European politicians was that Canada would be getting the short end of the stick in the CETA deal, as a Danish member of the European Parliament stated, “At the moment Europe will be able to export more than what Canada will be exporting.” Another European official closely linked to the negotiations stated, “We will gain a bit more.” Canadian Trade Minister Ed Fast said, “[t]he potential benefits to Canadians under a free trade agreement with the European Union are immense,” though he forgot to acknowledge that the ‘Canadians’ he was referring to are largely corporations, and the elite class that owns them. Michael Hart, a trade expert at Carleton University noted, “[t]rade agreements do not create jobs. Never have. Never will. But ministers have never accepted that economic insight.” And understandably so, after all, it’s rather challenging to sell a trade deal to the public if one openly declares it is for the singular purpose of advancing corporate rights, domination, and plundering. So instead, politicians must always mutter the magical word of “jobs,” which in political language, translates accurately into “profits,” as Noam Chomsky has suggested in the past. Thus, when politicians say that trade agreements will “create jobs,” which they never do, what they are actually saying is that such agreements will “create profits,” and exclusively for major multinational corporations, which they always do.
Canada’s trade agenda is of course driven by big business, whose interests will be served by such “free trade” agreements. In regards to CETA, the Canada Europe Roundtable for Business (CERT) was established in 1999 to contribute “recommendations on trade and investment to government officials and hosting thematic, high-level meeting focused on developing strategic relationships between company executives and with government officials,” according to the website for CERT. A declaration of support in 2008 for a Canada-EU trade agreement was signed by over 100 executives in Europe and Canada, urging Canadian and EU leaders to “design a new type of forward-looking, wide-ranging and binding bilateral trade and investment agreement.” Such an agreement, the document stated, “will provide European companies with a gateway into the vast North American free trade area, while increasing Canadian opportunities in the European Common Market,” serving as “a strategic and important step towards the eventual creation of a comprehensive transatlantic trade and investment area.” Among the signatories to the statement were top executives at the following companies: Anglo American plc, AstraZeneca, Barrick Gold Corporation, BASF, Bayer, Bertelsmann, BNP-Paribas, Bombardier, British Airways, Canadian Chamber of Commerce, Canadian Manufacturers & Exporters, CN, Commerzbank, Deutsche Bank, E.ON AG, Gaz de France, GlaxoSmithKline, Lafarge, Manulife Financial, Merck, Monsanto Canada, Munich Re, Pfizer Canada, Power Financial Corporation, Rio Tinto plc, Royal Dutch Shell, Siemens, SNC-Lavalin, Société Générale, SUEZ, Suncor, ThyssenKrupp, TOTAL SA., TSX Group, Ubisoft Entertainment, and Volkswagen, among many others.
In late October 2012, a number of European and Canadian big business lobbying groups, including BusinessEurope, the Canadian Chamber of Commerce, and the Canada Europe Roundtable for Business (CERT), sent a letter to the Canadian and European trade negotiators, Ed Fast and Karel de Gucht, respectively, urging them to push through on the CETA. The signatories called for Canada and the EU to reach “an ambitious and successful conclusion to the Comprehensive Economic and Trade Agreement (CETA) negotiations by the end of 2012.” The letter said it was “imperative” to “maintain a high level of ambition” in key areas which would benefit Canadian and European corporate interests. Among the many areas for which the letter suggested “a high level of ambition” were in recommending the “full and rapid dismantling of tariffs for all industrial goods,” and “[a]ccess to raw materials and energy products,” the removal of barriers and “discriminations” in service sectors, “full access” to the agricultural sector, including “a satisfactory path forward on the bio-tech issues that have caused trade impediments,” by which is meant to advance the interests of GMO manufacturers. Further recommendations included “access to government procurement” which removes all barriers and allows for increased privatization, and of course, “[r]obust protection and enforcement of intellectual property (IP) rights in both markets,” which would include “the targeting, seizing and destroying of counterfeit imports and exports,” so as to undermine competition and protect monopoly and oligopoly corporations. Finally, the letter stated that the Canada-EU agreement “must also ensure improved labour mobility,” which would allow for increased labour exploitation, enhancing competition between the labour forces of Europe and Canada, which always results in lost jobs, lower wages, and reduced protections and benefits. These are, of course, all very good things for multinational corporations. Since they are terrible things for the populations, they have to be coded in political and economic language, so instead of saying, “we want easily exploitable and cheap labour,” they suggest, “improved labour mobility,” which is also at times referred to as “labour flexibility” (i.e., making labour “flexible” to the interests of multinational corporations).
The Great Canadian Corporate Colony
Such letters from corporate leaders are necessary in order to remind political leaders whose interests they are in office to serve. The Canadian government ensured that it would serve big business interests through trade policy by appointing, in May of 2012, a new ‘advisory panel’ which would “help guide Canada’s ambitious, pro-trade plan in large, dynamic and fast-growing priority markets.” Speaking at the Canadian Chamber of Commerce, International Trade Minister Ed Fast stated: “Our government’s top priority is the economy – creating jobs, growth and long-term prosperity for Canadian workers, businesses and families… We understand the importance of trade to our economy… That is why we are deepening Canada’s trading relationships in priority markets around the world.”
Ed Fast announced the formation of the new advisory panel at the Canadian Chamber of Commerce. The members of the panel include: Murad Al-Katib, president and CEO of Alliance Grain Traders Inc.; Paul Reynolds, president and CEO of Canaccord Financial; Kathleen Sullivan, executive director of the Canadian Agri-Food Trade Alliance (CAFTA), representing 80% of Canada’s agri-food sector; Perrin Beatty, president and CEO of the Canadian Chamber of Commerce, former president and CEO of the Canadian Manufacturers & Exporters, former president and CEO of the Canadian Broadcasting Corporations (CBC), and former government minister; John Manley, former Deputy Prime Minister of Canada, former Foreign Affairs and Finance Minister, and currently president and CEO of the Canadian Council of Chief Executives (CCCE), a corporate interest group made up of Canada’s top 150 CEOs; Catherine Swift, president and CEO of the Canadian Federation of Independent Businesses; Jayson Myers, president and CEO of Canadian Manufacturers & Exporters; Brian Ferguson, president and CEO of Cenovus Energy Inc, a major Canadian oil company; Serge Godin, founder and executive chairman of the board of CGI Group Inc, one of the largest information technology businesses in the world; and Indira Samarasekera, president of the University of Alberta. Upon the announcement of this panel, Ed Fast stated: “I look forward to receiving advice from these knowledgeable Canadian leaders.”
So we return to the statement once made by Prime Minister Stephen Harper: “You won’t recognize Canada when I get through with it.” Sadly, this is quite true as Harper Inc. advance Canada to the status of one of the world’s premier corporate colonies, where plundering for profits, environmental degradation, mass privatization, deregulation, and democratic devastation are the rules of the day. A Canada once thought of as democratic, free, and peaceful, is ever-advancing toward a fully privatized outpost of global corporate tyranny: Canada Inc., a subsidiary of the American Empire & Co.
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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