Will Barack Obama be the first American president to invade Africa?

April 21, 2011 at 9:29 pm | Posted in Arms Control, democracy, Human Rights, International Relations, Political Economy, World Politics | 1 Comment
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One month into the bombing of Libya by NATO forces, if anything the situation is worse than before. After an initial assault, the United States withdrew to a supporting role but those of its NATO allies that chose to participate in the military attack against Colonel Muammer Gaddafi’s forces–mainly France and the UK, with some support from Spain, Denmark, Canada, and Belgium–have discovered that they do not have the military force required to roll back the Libyan government troops. Without anti-tank planes, they were unable to stop the pro-Gaddafi forces’ advance against the rebels in the east or to relieve the siege of Misurata. President Barack Obama has now authorized the use of US Predator drones and is gradually being drawn out of the supporting role he had sought. Will the NATO allies and the US have to commit ground troops to resolve the impossible situation they have got themselves into? Will Barack Obama go down in history as the first American president to invade an African state?

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Despite the aerial bombardment of Colonel Gaddafi’s forces, the ragtag militia of the rebels do not have the training or the weaponry to withstand his forces which have now adapted measures to blunt the effectiveness of air raids–using human shields, riding in pickup trucks, using camouflage. About the rebels, a New York Times correspondent wrote:

… by almost all measures by which a military might be assessed, they are a hapless bunch. They have almost no communication equipment. There is no visible officer or noncommissioned officer corps. Their weapons are a mishmash of hastily acquired arms, which few of them know how to use.

Military chiefs on both sides of the Altantic had urged caution but France’s Nicholas Sarkozy to boost his domestic poll ratings and Britain’s David Cameron seeking some of the glory that Margaret Thatcher reaped from her victory over Argentina in the Malvinas conflict urged President Obama to support their ‘humanitarian intervention’ in Libya. Yet, there was never any clarity as to who the rebels were–as General Carter Ham, commander of the US Africa Command, told Congressional leaders and it appears that they represent coastal tribes of Cyrenaica while the tribes of the interior and the west continue their allegiance to Colonel Gaddafi.

Most notably, the objectives of the NATO mission in Libya are unclear or cannot be achieved merely by an air campaign. Its efforts have certainly postponed the defeat of the insurgents but without ground troops, it cannot oust the Colonel from power even though Sarkozy, Brown, and Obama have all called for his departure as the only acceptable solution. Note that this was not mandated by the UN Security Council resolution 1973 which sanctions the NATO operation and the resolution had explicitly forbidden ‘foreign occupation troops of any form.’ Yet, Britain, France, and Italy have all said they would send ‘unarmed military advisors‘–a prospect almost certain to involve deeper involvement: what would happen if these ‘unarmed’ advisors were targeted by the Libyan government forces as they surely are a legitimate military target?

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Insistence of the removal of Colonel Gaddafi from power rules out a negotiated settlement. A more likely prospect is that Libya will be partitioned into an eastern part which will effectively become a NATO protectorate with the bulk of Libya’s oil supplies. Neither France nor Britain has sufficient forces to keep pro-Gaddafi forces from attacking the Benghazi enclave–and it would require US boots on the ground–making the first African-American president of the US to be the first American president to invade and occupy an African state! After all, Khalifa Haftar who has been claiming to be the field commander of the rebel forces had been living near the CIA headquarters in Langley, Virginia for 20 years and they had provided him with a training camp.

The whole of Libya–east and west–would require massive reconstruction assistance given the damage done to its infrastructure by civil war and aerial bombardment. Who is going to fund this reconstruction? Is it ‘humanitarian to bomb the hell out of a country and then leave it in shambles? After all, the neo-conversatives claim that Iraq–which has far greater oil reserves–can pay for its own reconstruction remains hollow eight years after the US invasion.

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Even if the Gaddafi regime were to implode due to economic sanctions and the loss of the bulk of its oil revenues, his boast of arming every Libyan is likely to plunge the country into a prolonged phase of violent disruptions.

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Libya and the Politics of Intervention

March 28, 2011 at 10:17 pm | Posted in Arms Control, Human Rights, International Relations, Nuclear Non-Proliferation, World Politics | 2 Comments
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US-led attacks appear to have turned the tide against Colonel Muammer Gaddafi’s counter-revolution in Libya. Attacks by some 120 Tomahawk cruise missiles–each costing $575,000–and some eight days of air raids have established a ‘no-fly zone’ over Libya and US, French, British, Danish, Canadian, and other air forces have also targeted the Libyan government’s ground forces to deadly effect. The Libyan rebels, who had been virtually encircled in Benghazi have, as a result been able to roll back the government forces from Brega, Ras Lanuf, Ajdabiyia, and other towns in the east and are now attacking the town of Sirte, Gaddafi’s birth place.

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How are we to react to this exercise of Western military might against a state of the Global South? People like Gilbert Achcar and Juan Cole have vigorously defended the intervention in Libya. To them, the alternative would have been a brutal massacre of Gaddafi’s opponents by the better trained and equipped militias of the regime. For them, there were no other countervailing forces capable of intervening–not the African Union or Arab States. Western intervention was the only available option to stop a murderous dictator. It was sanctioned by the Arab League and the rebels themselves had pleaded for a ‘no-fly’ zone–a plea from a popular movement that could not be ignored. This was, a humanitarian intervention and not an attempt to secure access to Libya’s oil resources. After all, as Achcar points out, virtually all Western countries had oil companies operating in Libya already: “Italy’s ENI, Germany’s Wintershall, Britain’s BP, France’s Total and GDF Suez, US companies ConocoPhillips, Hess, and Occidental, British-Dutch Shell, Spain’s Repsol, Canada’s Suncor, Norway’s Statoil.”

There is of course the obvious objection: the West applies double standards, not only to Israel’s murderous assault on the Palestinians in Gaza but also to the brutal repression of protest movements in Bahrain and Yemen. As Richard Falk puts it:

How is this Libyan response different in character than the tactics relied upon by the regimes in Yemen and Bahrain, and in the face of far less of a threat to the status quo, and even that taking the form of political resistance, not military action. In Libya the opposition forces were relying almost from the outset on heavy weapons, while elsewhere in the region the people were in the streets in massive numbers, and mostly with no weapons, and in a few instances, with very primitive ones (stones, simple guns) that were used in retaliation for regime violence.

Indeed, almost from the very beginning of the protests, the rebels had taken arms and before Colonel Gaddafi’s forces launched a counter-assault, ragtag rebel militias had taken towns militarily from the regime’s gendarmes. Claiming that the regime was using African mercenaries, the rebels targeted anyone who looked “African’ including members of Libya’s African tribes because it is both an African and an Arab state.

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Analogies are often drawn to the situation in Rwanda but as the allusion to the African tribes in Libya suggests, no binary ethnic divide exists in Libya. There are many tribes and the confrontation between the regime and its opposition does not fracture along a single overriding ethnic divide and there is no genocidal intent in what is essentially a civil war between the regime and its opponents.

The character of the opposition also remains ambiguous–they include former members of the regime, local notables, radical Islamists, and eastern tribes opposed to western tribes. This was not the democratic movement that had swept autocrats from office in Tunisia and Egypt. The Arab League and the Gulf Cooperation Council may have supported the imposition of ‘no-fly’ zone but they do not speak for the Arab street and many of their members–Bahrain, Yemen–are actively engaged in brutally repressing democracy movements in their own states, and Saudi Arabia and other members of the Gulf Cooperation Council have intervened in Bahrain to help the al-Khalifa family crush its opponents.

The United Nations Security Council authorized the intervention–but only because the five members who abstained (Russia, China, India, Brazil, Germany) did not exercise their responsibilities. If they did not have enough information as the Indian delegate said–they should have abstained. The Russian Foreign Minister has subsequently said that the US-led air raids have far exceeded the Security Council’s authorization: this had been also raised by Amr Moussa, the Secretary General of the Arab League before he was pressured to retract his words.

Moreover, since Gaddafi has paid off many tribes, especially in the west, with oil revenues over the last 40 years, he has a solid core of support. What happens when the rebel forces attacks these population centers? Does the Security Council resolution to ‘protect the civilians’ not apply to them?

As also mentioned in an earlier post, if the regime follows through on its promise to arm its supporters, it could lead to a prolonged period of civil strife if Gaddafi is ousted as remnants of his supports could mount an armed resistance. This could lead to a new flow of African asylum-seekers to Europe. After all, as Achcar notes, a deal struck between Italy’s Silvio Berlusconi and Gaddafi reduced the flow of asylum-seekers to Italy from 36,000 in 2008 to a mere 4,300 in 2010. A prolonged stalemate or civil war in Libya, moreover as Vijay Prashad has written would constrain the West’s “ability to transit the oil that sits under its soil, and so dangerously harm the “way of life” of those who matter. Events had to be hastened.”

Intervention in Libya also raises a question: if Gaddafi had not abandoned his nuclear program in 2003, would the West have intervened in its civil war. Even though Gaddafi had sided with Idi Amin, President Yoweri Museveni of Uganda harshly criticizes “by now habit of the Western countries over-using their superiority in technology to impose war on less developed societies without impeachable logic. This will be the igniting of an arms race in the world.”

Finally, to the argument that there was no alternative to Western intervention in preventing a blood bath, the African Union had created an ad hoc commission to negotiate between the Libyan regime and its opponents but it was not allowed to begin its work on account of the air strikes and missile launches.

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It is also perhaps worth wondering whether the United States which had been opposed to the French and British clamor for intervention, suddenly changed its mind just as Der Spiegel published photographs of grinning American troops posing with Afghan corpses–an event that got scant coverage in the event of the war against Libya. Otherwise, it may have got as much coverage as the atrocities in the Abu Gharib prison in Iraq. So much for humanitarian intervention!

 

Western Imperialism, Libya, and the Arab Revolts

March 22, 2011 at 3:42 am | Posted in democracy, International Relations, World Politics | 3 Comments
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The United States and some of its European allies have once again launched an attack against a state in the Global South–this time as a humanitarian intervention to prevent Colonel Muammar Gaddafi from ‘slaughtering’ his opponents in Libya, and backed by a United Nations Security Council resolution and a resolution by the League of Arab States. Strikingly, none of the combatant governments–the United States, Britain, France, or the lesser European powers–sought legislative approval for before launching missiles and war planes against Libya. For an assault against a third-rate military power, it seems such democratic niceties need not be observed.

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Even if it was a foregone conclusion that their national legislatures would have supported the assault against Colonel Gaddafi’s forces–as the British House of Commons did by a lopsided margin–this was largely due to a blanketing of other options in the mainstream media which made no mention of the ad hoc commission established by the Peace and Security Council of the African Union to mediate between the Colonel and his opponents. Equally importantly, in the absence of a detailed debate, there has been little planning on what would happen were a stalemate to develop–a possibility that Admiral Mike Mullen, the Chairman of the US Joint Chiefs of Staff admitted was a real possibility–or in a post-Gaddafi Libya

Indeed, this is hardly a war against Libya. The superiority of the United States in the air is so overwhelming that as Tom Englehardt has noted there is no element of danger for the pilots of US planes who last faced a serious threat in Vietnam in the early 1970s. The Serbian air force did not even bother to take to the air in the war over Kosovo, and in the First Gulf War, the powerful Iraqi air force flew most of its planes to Iran rather than engage with the US-led forces. For American pilots it is as safe to bomb another country as it is to pilot drones over Afghanistan from the Creech Air Force base in Nevada where “those leaving [the base] pass that warns them to “drive carefully” as this is “the most dangerous part of your day”!

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With the absence of any danger to US pilots, this resembles colonial wars where well-armed European troops mowed down with their repeater rifles hordes of native warriors armed only with spears and bows and arrows. Once American planes have taken out all Libyan air defense systems, British and French planes will enforce a no-fly zone, again at no risk to themselves. Underlining the suspension of the ordinary calculus of war, President Barack Obama embarked on his previously scheduled tour of three South American states even as his planes and missiles were pounding Libya.

For NIcolas Sarkozy of France, after the right wing Front National led by Marine Le Pen made historic gains in the first round of municipal elections, an image as a ‘war President‘ may just be the thing to propel him to victory in next year’s presidential elections–damn the consequences for Libyans, in true imperialist tradition!

 

A Libyan rebel empties th 023But the sheer ferocity of the assault is causing anguish even among those who initially called for the imposition of a no-fly zone. Though the League of Arab States had called for the imposition of a no-fly zone, images of the carnage wrought by missiles and bombs led its Secretary-General Amr Moussa to say after the second day of air strikes: “what is happening in Libya differs from the aim of imposing a no-fly zone, and what we want is the protection of civilians and not the bombardment of more civilians.” Intense pressure however made him back-track, despite widespread revulsion in the Arab world at the carnage sustained by Libyan civilians. Nevertheless, only two small states–Qatar and the United Arab Emirates–among the 22-member states of the League have agreed to take part in war effort. Russia and China which abstained from the Security Council vote have voiced concerns about the attacks and India, which also abstained from the Security Council resolution, became the first country to call for a cessation of air strikes.

The role of the League of Arab States also appears compromised. First, Robert Fisk reported that Washington had asked Saudi Arabia to furnish arms to the rebels in Benghazi to which King Abdullah, facing his own problems, had failed to respond even though he loathes the Libyan leader who had tried to have him assassinated just over a year ago. Then the Wall Street Journal reported that with Washington’s encouragement and knowledge, the Egyptian military had begun to slip arms to the rebels. This raises the question of whether the post-Mubarak regime is going to play the role of another Western puppet–indeed Amr Moussa sudden back-tracking of his condemnation of the killings of civilians in the Western air raids gives no assurance of an independent regime emerging from the ashes of Mubarak’s autocracy. Indeed, it may well be that as Ali Abunimah wrote in the Electronic Intifada: “The greatest danger to the Egyptian revolution and the prospects for a free and independent Egypt emanates not from the baltagiyya–the mercenaries and thugs the regime sent to beat, stone, stab, shoot and kill protestors in Cairo, Alexandria and other cities– but from Washington.”

Many of the commentators who support the assault against forces loyal to Colonel Gaddafi suggest, even if grudgingly, that only the Western powers have the means to stop his slaughter of his opponents. This is not only to conveniently forget that the Colonel has ruled Libya with an iron hand but also that after he agreed to give up his weapons of mass destruction and join the war on terror, Western powers cosied up to him for lucrartive arms and oil contracts.

It is also to ignore that the African Union had opposed military intervention in the Libyan conflict and that the AU’s own ad hoc commission which Colonel Gaddafi had agreed to meet was not permitted to work as Western military intervention effectively ruled out a peaceful resolution of the conflict.

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Most importantly, there appears to be no clarity on the goals of the air attacks on Libya. The British and American military leaderships claim that the removal of Colonel Gaddafi is not the aim of the air strikes–and indeed not within the scope of the Security Council resolution–but their political leaderships assert that regime change is indeed the goal. Responding to the attacks, the Libyan regime has said that it would arm civilians to fight against ‘crusader colonialists’–this could lead to a prolonged conflict were the regime to be deposed as what is left of his forces and supporters launch a bloody civil war. A civil war on the footsteps of Europe could lead to a flood of refugees and may well pave the way to occupation. Alternatively, in the case of a stalemate, Benghazi and eastern Libya may turn into a Western protectorate.

Japan: Geoeconomic Consequences of Nature’s Fury and Human Folly

March 18, 2011 at 4:02 pm | Posted in Nuclear Non-Proliferation, Outsourcing, Political Economy, Production | Leave a comment
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Scarcely believable images of the destruction wrought by a 9.0 earthquake that struck 250 miles northeast of Tokyo and unleashed a tsunami that generated 10 meter high waves–of entire communities being obliterated–and made worse by triggering a nuclear meltdown at the Fukushima Daiichi plant has been at the center of world news. While concern has understandably been on the human cost of the tragedy, the economic costs are also staggering. While it is too early to make an assessment, early estimates already suggest that world economic growth may fall by at least a full percentage point.

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In the most immediate instance, it would cause enormous supply chain disruptions to production as Japanese manufacturers produce a whole array of sophisticated components and finished products. For an economy vitally dependent on exports this could be a vital blow–but it would also affect manufacturers world-wide as they source components from Japan, Additionally, the demand for reconstruction funds for Japan could reasonably be expected to lead to a redirection of financial flows with adverse consequences not only for debt-ridden economies like those of the United States but also for the ’emerging economies’ of the Global South.

The estimated $200 billion required to rebuild Japan after the earthquake on March 11, 2011 and the tsunami already triggered a 6 percent rise in the yen with 5 days–from a peak of ¥76.25 to the dollar to ¥81.20–as investors started repatriating funds for Japanese reconstruction before the G-7 economies intervened in currency markets in a concerted effort to drive the yen lower and help stabilize the Japanese economy as a higher yen would have made Japanese exports dearer overseas and hence driven down demand for them.

Fears that radiation from the crippled nuclear reactors at Fukushima Daiichi may be transported through Japanese exports has led to many restaurants to ban Japanese food items like sushi, Kobe beef, and sake. But there has also been apprehension that consumers may be exposed to radiation when driving a Prius car or using a Japanese DVD–a severe blow to an export dependent economy. Even though such fears may be misplaced because the main manufacturing centers are located away from areas near the crippled nuclear reactors and most manufacturing occurs indoors in factories and hence is not directly exposed to airborne radioactive particles, apprehensions are by nature irrational and could lead to a steep decline in consumer demand.

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On March 17, General Motors became the first automobile manufacturer to announce that it will temporarily halt production in its truck plant in Shreveport, Louisiana because of a shortage of Japanese-made parts as a result of the natural disasters in that island nation. The fact that was GM rather than Toyota, Honda, or Nissan to be the first auto manufacturer to stop production because of supply-related problems stemming from the natural disasters underlines the gravity and extent of the disruption of supply-chains from Japan for producers the world over. 10 percent of Volvo’s parts for instance comes from 33 Japanese suppliers, 9 of which were in areas affected by the disasters and Volkswagen has warned of medium-term supply problems. Some Japanese manufacturers–Mitsubishi and Nissan–have opened some of their facilities while Toyota is due to open some of its plants early next week. It is uncertain how long these can operate because they and their suppliers may face problems obtaining raw materials and parts and in shipping finished products due to logistical problems caused by the earthquake, tsunami, and the exclusion zone imposed by fears of a nuclear meltdown at the reactors in Fukushima Daiichi. A Detroit based consultant, John Hoffecker, estimates that an average car had 20,000 components and the abrupt loss of any one component could halt production in its tracks, especially because most manufacturers have implemented just-in-time production systems that reduce inventories.

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Given Japan’s advanced manufacturing technologies, disruptions are not limited of course to the automobile sector. Sony Ericsson and Nokia have warned that they face supply problems for their smart phones, for instance. Apple Computer’s latest gadget the iPad 2 depends on the advanced manufacturing technologies of Japan for crucial components like flash memory to store audio and video files that are manufactured by Toyota which shut down its manufacturing facilities due to the earthquake and tsunami. Other iPad 2 components sourced from Japan include “AKM Semiconductor and DRAM memory produced by Elpida Memory. A touchscreen overlay glass is likely from Asahi Glass.” Even if these suppliers are not directly hit by the earthquake, tsunami, or t, the logistical disruptions caused by the natural disasters including obtaining raw materials and parts and shipping finished goods are likely to hamper production.

it is impossible to assess the costs of reconstruction. Initial estimates of $200 billion were based on the experience of the 1995 Kobe earthquake. Not only was the present earthquake much more destructive in scale but it was also accompanied by a massive tsunami and a nuclear meltdown. With a debt-to-GDP ratio double that of the United States, and credit-rating agencies being more prudent after the financial crisis of 2008-09, raising funds at a tolerable rate of interest could be difficult. Unlike the United States which could pump $600 billion as stimulus during the financial crisis, the yen does not enjoy international reserve currency status and hence this is not an option for the Japanese.

This raises the possibility that Japan, which is the third largest holder of US Treasuries, will sell off large chunks of the $877 billion it holds to finance its reconstruction–a sell-off that will have a major impact on interest rates all across the world and depress the value of US Treasuries and could trigger an avalanche of sales of the Treasuries as other holders seek to minimize their holdings. It could cause another enormous liquidity crisis as the financial crisis just did and comes at a time when the economies of the US and the European Union are still weak.

Oil, Civil War, and the Politics of Intervention

March 6, 2011 at 1:34 pm | Posted in democracy, Human Rights, International Relations, Political Economy, World Politics | 2 Comments
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Reports of four British Special Air Service (SAS) troops being captured 30 kilometers from Benghazi is ominous especially since the rebels they were ostensibly sent to help had no inkling that these troops were being parachuted into the areas they control. The refusal of the Gaddafi regime to crumble in the face of widespread protests–unlike the regimes in Tunisia to its west and Egypt to its east–has meant that the struggle for power in that oil-rich desert state had flared into a full-blown civil war.

While it is much too early to predict how the civil war will pan out, it has provided a wedge for US and European leaders to speculate openly about intervening in Libya. That Senators John McCain and Joseph Lieberman called to arm the rebels comes as no surprise, it is troubling that President Barack Obama has refused to take the options of imposing a ‘no-fly zone’ and military intervention off the table, especially after his Defense Secretary, Robert Gates, injected a rare bit of sanity when he told cadets at West Point:

“In my opinion, any future defense secretary who advises the president to again send a big American land army into Asia or into the Middle East or Africa should ‘have his head examined,’ as General MacArthur so delicately put it.”


Ostensibly, the case for intervention is couched in humanitarian terms and cloaked under the UN doctrine of the “responsibility to protect.” It is easy to dismiss the humanitarian justifications as Seumas Milne has shown:

“When more than 300 people were killed by Hosni Mubarak’s security forces in a couple of weeks, Washington initially called for “restraint on both sides”. In Iraq, 50,000 US occupation troops protect a government which last Friday [25 Feb 2011] killed 29 peaceful demonstrators demanding reform. In Bahrain, home of the US fifth fleet, the regime has been shooting and gassing protesters with British-supplied equipment for weeks.”

The ‘prime directive’ if you will of the UN doctrine of “responsibility to protect” is that intervention does no harm–and on these grounds, any intervention in Libya would fail spectacularly! Even some opponents of the Libyan regime have warned against foreign intervention. Certain Russian and Chinese vetoes ensure that there will be no UN Security Council sanction for intervention and that any intervention will be under NATO auspices–or by the US, the UK and some of their allies acting on their own initiative.

If there is intervention, it is almost certain that it will have to be followed by an occupation–the opposition is disparate and only united against the regime; it is clear that the regime has some significant support–otherwise it would not have been able to mount an offensive. Since both factions will have access to weapons, an occupation to pacify the country would have to follow.

Moreover, for all the talk of Libyan government forces launching murderous assaults against its citizens, the Libyan military has been largely ineffective. Opposition forces already are reported to control some 80 percent of Libya’s oil supplies. Government planes have been unable to bomb targets–leading to speculation that the sympathies of pilots are with the rebels though it is at least equally plausible that it is because they are poorly trained.

Aljazeera English that the strength of the Libyan military is overly exaggerated. Years of sanctions and poor maintenance has meant that much of its military hardware are obsolescent or unusable and it estimates that the regime has only about 10-12 thousand well-trained and well-armed troops.

The very weakness of the Libyan forces makes threats of foreign intervention ominous. If US, British or NATO forces can intervene on a pretext, they can establish bases in Libya as they can install another kleptocratic regime–once such bases are established, they take a life of their own and are rarely dismantled as shown by the history of post-Second World War US bases.

Libya has the largest oil reserves in Africa and that as world demand for petroleum surges insatiably, there is a greater urgency to control sources of supply. However, Michael Klare has documented that every effort by the UK and the US to control supplies has led to disaster–stretching from the coup d’etat that London and Washington engineered to depose the democratically elected government of Mohammed Mossadeq in Iran in 1953, to the fall of the Shah in 1979, and to the two invasions of Iraq in 1991 and 2003. To site bases that could be used for war against another Arab country would be anathema to the protestors.

Advocates of foreign intervention, as Milne also notes,

“seem brazenly untroubled by the fact that throughout the Arab world, foreign intervention, occupation and support for dictatorship is regarded as central to the problems of the region. Inextricably tied up with the demand for democratic freedoms is a profound desire for independence and self-determination.”

Riots across North Africa and the Persian Gulf for once is not about imperialism or Israel–but about food and employment, for democracy and dignity, and against corruption and nepotism. Here too Libya is noteworthy in that it has the best Human Development Index among all African states. Here it is a case of the young and the middle class demanding an end to autocracy more than the bread-and-butter struggles that animated the Egyptian revolts and these rebels are not going to tolerate the establishment of another pro-Western kleptocracy.

Obama’s India Visit

November 1, 2010 at 8:05 am | Posted in Political Economy | Leave a comment
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Projections that the Republicans will make substantial gains in the midterm elections add significance to President Barack Obama’s visit to India during the Diwali weekend. The visit was to focus on two issues: the economy and geopolitics.

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To underline the importance of economics and to tap into India’s growing market, President Obama–unlike the four other US presidents who have visited India–will begin his visit in Mumbai, the country’s business capital and will spend more time there than in New Delhi. He is also bringing with him a bevy of some 250 CEOs of US corporations as the US seeks increased access to Indian markets not only for the large transnational corporations but also for small- and medium-scale enterprises. Reflecting domestic US concerns about outsourcing jobs to India, unlike his immediate two predecessors, President Obama will not travel to the information technology centers of Hyderabad and Bangalore. And, because so many in the US continue to believe that their president is a Muslim, despite all evidence to the contrary, President Obama has also eschewed a visit to the holiest of Sikh gurdwaras–the Golden Temple in Amritsar–as he would have to cover his head and this may be construed by the rabid right-wing in the United States as him being Muslim!

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While Indian capitalists bristle at allegations that they use unfair trade practices to take jobs away from Americans and resent restrictions placed on the employees they can send to the US, they are also more closely linked to the United States than ever before. For one thing–partly to ensure access to high-level contacts–they have been making substantial donations to US universities. Ratan Tata donated $50 million to Cornell University in 2008 and followed it up with a $50 million donation to the Harvard Business School last month–the largest international private donation in the institution’s 102-year history. Several other Indian industrialists–Nandan Nilekani, Anand Mahindra. N. R. Narayana Murthy, among others–have made substantial donations to US universities–and strikingly none to more cash-strapped Indian institutions of higher learning.

Apart from seeking access to US policy makers, these donations reflect close family relationships with US universities–many of the industrialists and their children have studied in the universities that are now the recipients of their largesse. Indeed, most Indian middle- and upper-class families have relatives now living in the US, most of them working in the software, financial, and engineering sectors and fully supportive of US policies. Perhaps the most indicative sign of the growing influence of US “soft” power was the recruitment of Washington Redskins cheerleaders to provide a model for Indian cheer leaders in that most un-American game: cricket (though cricket was once the preferred bat-and-ball game among colonists in what is now the US!). And shamefully, India was only one of three countries–the others being Israel and the United States–where there was popular support for the US-led invasion of Iraq in 2003.

This congruence of strategic interests gains added significance in the light of likely Republican gains in the US midterm elections. Many Republicans have expressed their opposition to ‘nation-building’ exercises in Afghanistan and yet a resolution to the ongoing problems in Afghanistan continues to be elusive. Just last week, a joint raid on opium producing facilities by NATO, the Russians, and the Afghan Interior Ministry’s Counter-Narcotics Police Sensitive Investigative Unit and National Interdictive Unit was denounced by President Hamid Karzai as “a blatant violation of Afghanistan’s sovereignty.”

Leaving aside, Karzai’s chutzpah, India is an obvious partner to the US in Afghanistan: it is already the largest regional donor to Afghanistan and is eager to increase its role there to gain “strategic depth” against Pakistan and to emerge as a regional power. Republican opposition to foreign aid also provides an opportunity for India to step up its aid to Africa and show that it is more than a regional power–that its tentacles spread beyond the South Asian region. Of course, it is deeply ironic that the Indian government is stepping in to provide aid to Africa when not only do many Indian states fall below many African states in the Global Hunger Index but many Indian companies are now buying land or leasing land in Africa to export crops back to India. Surely, for sheer immorality, exporting food from an chronically food-deficient continent cannot be beaten. But such ironies are lost on the policy-making establishments!

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For the Indian government, partnership with the United States is essential for India’s emergence as a global power–though what that says about the nature of its ‘global power’ if such status depends on another (the US) is never discussed! For the United States, given its enduring difficulties in Afghanistan and Iraq, and a continued economic downturn at home, India provides a counterweight to China. President Obama had come to office seeking a strategic partnership with China and last year, in his first visit to Asia after assuming office, his speech on Asian Security in Tokyo did not even mention India–a factor which probably led to him having Prime Minister Manmohan Singh as guest for his first state dinner at the White House.

Since then, increasing difficulties with China, and China’s assertive stance towards its neighbors and a brief stoppage in the export of rare earths to Japan, the US, and increasing Chinese incursions into the Indian Ocean have shifted US foreign policy perceptions. Hence, it is now willing to sell advanced weaponry to India to cement ties between the two countries and of course to boost the US domestic economy.While the Indian political leadership welcomes these initiatives, what they would most like to see is unambiguous and strong US support for a seat as a permanent member of the UN Security Council. This is unlikely, though President Obama may sponsor India’s membership in the Nuclear Supplier’s Group (NSG) formed by an angry US administration in 1974 after India’s first ‘peaceful’ nuclear explosion to deny India dual-use nuclear technology.

 

Remembering Nestor Kirchner

October 28, 2010 at 9:41 pm | Posted in Political Economy | Leave a comment
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It is not surprising that stock markets responded to the sudden and untimely death of former Argentine President, Nestor Kirchner on Wednesday October 27, 2010  by a strong rally. Elected President in 2003, Kirchner was responsible for steering Argentina out of its pervasive debt crisis.

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The immediate trigger to the crisis of 2001-02 was the refusal of the International Monetary Fund (IMF)  to release a $1.3 billion loan that had already been approved to finance the Latin American state’s $142 billion external debt on the argument that the government of the then-president Fernando De La Rua had not cut government expenditures to levels demanded by the IMF. This was despite the fact that the government had already privatized social security and so stringently cut allocations to the provinces that many of them had had to resort to issuing their own scips.

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That the Argentine government could not cut expenditures further was due to the fact that some 18 percent of the population was unemployed and a further 18 percent were underemployed. Following the withholding of the IMF loan, the government restricted withdrawals from private bank accounts to $250 a week–a move that resulted in massive demonstrations that drove the De La Rua out of office. This was followed by a period of deep political and economic stability with a sovereign debt default, a failed attempt to issue a new non-convertible currency, and a succession of four presidents in less that eighteen months before Kirchner was elected President in 2003.

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Immediately on assuming office, Kirchner served notice that he was not going to accept the dictates of the IMF which were designed to favor foreign creditors and defaulted on loan payments to the IMF in September 2003–something that only “failed” states had done before because all others feared that the IMF could cut off lines of credit. Instead, Kirchner drove a tough bargain with international creditors arguing that since most of the loans were incurred by the private sector, these should not be socialized. Eventually, he struck a deal agreeing to pay 30 cents on the dollar.

After contracting for three months after the default, the economy grew at an annual rate of 8 percent, raising some 11 million, or 28 percent of the population out of poverty. This was done by the Kirchner government pursing a competitive and stable exchange rate, carefully monitoring interest rates, price controls, and targeted spending to benefit urban populations. In 2006, Kirchner announced that his government would use over a third of its foreign exchange reserves to pay off its debt to, and end its dependency on, the IMF: there is “no way in hell” that Argentina would return to the IMF, he said. He was able to quickly replenish Argentina’s foreign exchange reserves since Venezuela agreed to buy over $2.4 billion in Argentinian bonds.

Kirchner’s policies then also had a regional impact as he joined with Venezuela’s Hugo Chavez, Ecuador’s Rafael Correa, Bolivia’s Evo Morales, and Brazil’s Luiz Inacio Lula da Silva in streering Latin America away from neo-liberal policies that saw an end to Washington’s plans for a “Free Trade for the Americas.”

By flouting neoliberal orthodoxy, Kirchner was able to lift the Argentine economy and especially to lift millions of people from poverty by refusing to socialize private debt and refusing to succumb to pressures to further privatize and de-regulate the economy. After his term in office, his influence continued as his wife, Cristina Fernandez de Kirchner succeeded him as president, and was widely expected to let him stand again for the presidency in elections scheduled for 2011. Hence the stock market rally was in anticipation of the end or the era of Kirchners.

 

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