Monday, 30 April 2012

DECONSTRUCTING A BANKRUPT NATION: GREECE

INTRODUCTION: TRAITS OF COUNTRIES

 In Persian Letters, French Enlightenment thinker Montesquieu  makes a case for cultural relativism rooted in a value system and traditions that become the norm as part of a societal construct, thus 'good' for society. In Persian Letters and The Spirit of the Laws, the French philosopher makes a case for writers (intelligentsia) of a society that manufactures a reality based on fragments of societal myths and empirical conditions. This manufactured reality reflects society as much as it shapes it and among the influences are everything from geography and climate to religion and music.

Given the interplay in society between religion and political regime, an ideology develops that accounts for most people in a given society accepting societal institutions as 'natural', products of the laws of nature and not human constructs. From ancient times to the era of the trans-Atlantic slave trade the master-slave relationship was regarded as 'natural', even by great philosophers and clergy, and not just slave owners. Besides political expediency, moral imperatives are attached to institutions that help shape the human mind in society that strives to distinguish itself from others.

Throughout history, some countries have become notorious for their 'Leviathan' regimes, invariably ruled under  personality cult - monarchs, or dictators of the extreme right or the left. Russia under the Peter the Great as well as Russia and Stalin fits the mold of the above description. Institutionally and culturally, such societies always carry remnants of the Leviathan regime, no matter how far they may attempt to remove themselves, as we can see in Russia under Putin's nationalist (quasi-statist) rule.

Some countries have become notorious for their obsession with warfare and aggressive foreign policies intended to help them reach great strength. Still others, most notably the Scandinavian countries in the second half of the 20th century, stood apart for their quest toward social justice despite the global tide in political economy that runs counter toward such trends.

In a world dominated by the Great Powers, it is difficult for a small country to catch global attention, unless something very serious is taking place, something like the case of Cuba that has defied the US for decades, or North Korea that opted for relative isolation with China as its major patron state. From 2010 until 2012, Greece became notorious for its sovereign debt, which had the potential of severe international consequences because the country is a eurozone member. That nations great and small feared emulating the 'Greek disaster' is indicative of the stigmatizing role Greece has had internationally.

It is simply irrational, at least it should be, that a country as tiny as Greece in terms of geographical size, population and GDP that is one-third the market cap of Apple Computers, has the ability to trigger EU monetary instability, global market shocks and a double-dip recession. Yet, the symbolic significance of Greece and what its sovereign debt problems mean for the capitalist system under the neoliberal model is significant.

Keeping in mind that human nature is the same, it is environment and within that cultural influences that play a catalytic role in differences between societies and communities, whether under the nation-state structure or under any other as have existed in the past. Modern open (pluralistic) societies under the same political economy of capitalism share similar structural traits from a hierarchical social structure to a multi-party system and basic freedoms of the individual as well as basic human rights.

Cultural heritage of a society steeped in 'traditionalism' (societal value system rooted in secular but especially religious traditions) differs from one that has undergone modernization through a political, cultural, technological and/or industrial revolution. Thus an open society like modern Turkey is very different from France, although both share in the same global economy that influences their institutions. Similarly, an open society like Japan is very different from Brazil. The degree to which Japan and to a large degree France look forward toward the future is not the same as the cases of Turkey and Brazil, both thriving economies, but immersed in the historical past. The nuances of each society as well as the degree to which they respond to the process of cultural diffusion and the degree to which they are prepared to subordinate the past for the sake of a more promising future is what sets open societies apart from each other. 

SYNOPTIC HISTORICAL PERSPECTIVE OF DEPENDENCY
With the help of Russia, France and England, Greece carried out a national independence movement from the Ottoman Empire in the 1820s. The creation of Greece as a nation-state owing to the efforts of the Great Powers entails political, military and economic dependence on the Great Powers, and especially industrialized England that would retain hegemonic role over Greece until the Second World War. Unlike the French Revolution that was a grassroots uprising intended to change the entire institutional structure, the Greek War of Independence was a movement carried out primarily by large landowners and merchants with the backing of the Orthodox Church.

To carry out the rebellion, rebels borrowed heavily throughout the 1820s from the House of Rothschild and from London financiers who had every intention of forcing their government into the conflict so they would not lose their money. Anglo-French loans continue pouring in throughout the 19th century until the country declared bankruptcy in 1893 when the deep recession swept across Europe and US. Sustaining the government and economy through inordinate foreign borrowing without using the resources to become more self-reliant was a prescription for perpetuating economic and political dependence indefinitely.

From the War of Independence until the present, Greek politicians as well as businesspeople looked West for political, economic and political integration. A comprador (middlemen and externally dependent) political class has always existed alongside the compador socioeconomic class whose fortunes rested with northwest Europe. Given that the country rests between three continents, it has always held geopolitical significance, something that became even more apparent after WWII when the US and its Western partners resolved to secure the energy sources of the Middle East. Whether in the early 19th century as a base of British naval operations in the Eastern Mediterranean, or in 2012 as a launching base for possible operations against any Middle Eastern country, Greece has value owing to its location on the map.

Greek politics under an external dependency and internal clientist structure has never been the process of a social contract that has as the ultimate goal the advancement of society as a whole with all social groups benefiting, or at least not creating extreme social polarization. Instead, politics was a matter of catering to the foreign patron power (s) under a patron-client relationship. Individual relationships based on private interests invariably against public welfare is at the core of externally dependent and clientist politics. The voter delivers the votes, and the politician delivers favors that range from securing a job for the client, to making sure that the client's relative secures priority in a hospital for a surgical procedure; a process that necessarily entails the rejection of rationalizing institutions and rejecting professionalism in bureaucracies of both the public and private sectors.

The patron-client system, which has existed in various forms since the Roman era and characterizes the political process in many less developed nations today, best served both the comprador bourgeoisie as well as the foreign businesses that were able to buy influence. The same system served the 'patron' country on which Greece was dependent, namely Great Britain from the mid-1830s until the Truman Doctrine, the US from Truman to Clinton, and Germany in the last fifteen years.The significant question is the degree to which it has contributed to the bankrupt nation.

CULTURE and ETHNIC IDENTITY
Ethnic identity is an issue for Greeks, only in so far as they are in denial about the true origins of the populations that lives in southeastern Europe and speaks a language that is a variation of classical Greek. It is no secret that people who live in Greece believe they are the direct descendants of classical Greeks whose creative accomplishments are the rich legacy to the Western World. That Greeks believe they are the 'other chosen people', namely, the gentiles that 'civilized the world', entails their cultural assumptions are an impediment to forward-looking thinking to progress. This mindset resting on the laurels of ancestors is an obstacle to societal progress in so far as it entails  that the entire nation is immersed in myths and illusions of grandeur of the distant past and fails to appreciate societal and individual (personal) limitations set by the structural perimeters of external dependency and clientist relations, to say nothing of the fact that when one swims in such myths and illusions, then there is less effort to be productive, creative and self-reliant.

After all, if I am carrying the legacy of classical Greece, why would I need anything more to prove my inner self-worth, and why would not arrogance to an extreme degree be my distinguishing trait that sets me apart from the 'Barbarian other' who is not carrying such a legacy as I do? This is to some degree a tragic reality with the Greeks who remain convinced that they are separate and distinct from the rest of (barbarian) humanity, an illusion that permits them to be content with the archaic and decadent status quo, which is itself rooted in Medieval Ottoman culture.

Added to the illusion of grandeur owing to the legacy of classical Greece, there are the illusions that the Orthodox Church contributes. An institution that has been intertwined with the political world from Independence to the present, the church inculcates the illusion of separateness, uniqueness on top of other-worldliness into the minds of the masses; myths that politicians use and exploit to engender sociopolitical conformity. That the church has a major role in the economy and society, is a reflection of adherence to 'traditionalism' and 'exceptionalism', both obstacles to assessing societal conditions objectively without the injections of illusions regarding uniqueness, other-worldliness and above all dogmatic thinking derived from religion but applied in all endeavors. If the church were a socially progressive and corrupt-free institution as some of the more radical Protestant sects that could have been a positive influence on society, but it is a Medieval institution perpetuating an archaic mindset on the broader masses of society.

Needless to say, Greek politicians are a reflection of some of the most decadent and archaic traits of a the culture of 'traditionalism' that is still influenced by aspects of the legacy of the classical world, the Orthodox Church, and the Ottoman Empire. At the surface level, society projects an image of modernity simply because of prevailing consumerist Western values, everything from dress mode, entertainment and lifestyle that are thin layers on top of the underlying 'traditionalism' substructure of society. In short, Greece is a society that never had a cultural/intellectual revolution endeavoring to modernize by simply copying the consumerist and lifestyle habits of the West.

POLITICAL ECONOMY
There are two parallel elites that exert power and influence in how society operates. The first is the political class and the second the socioeconomic class, both comprador - externally dependent - and both resting on the cultural foundations of 'traditionalism'. Without going into detailed historical analysis, suffice it to say that structurally those pyramids have been in place for the duration of modern Greece and remain so to this day, both constituting obstacles to socioeconomic progress rooted in social justice.

From the War of Independence to the present, there have always been a few thousand families that have owned most of the assets in the country and this group constitutes the dependent capitalist (comprador) class invariably linked to foreign capital and exerting hegemonic influence in the political arena. 
How does this class operate differently than the dominant sociopolitical class in a modern Western society?
My theory is that 'Baksheesh capitalism, a system rooted in clientist relationships between consumer and provider and a reward system to provider by the consumer to demonstrate appreciation for products/services rendered, is at the root of the political economy. There are endless examples of how the system operates, but let us consider a few.

The medical devices and pharmaceutical provider to hospital offers payoffs to various individuals starting with ministry of health officials all the way down to the doctor who orders the specific product for the hospital and takes a bribe. Similarly, defense contractors (Russian, US, French, German, etc.) offer millions in bribes to everyone from the defense minister all the way down to military officers and trade union officials whose shop will receive the product for services. Similar bribery schemes are across every sector, some very sophisticated involving offshore companies around the world that launder money and involve every sector in the public and private domains as well as segments of the Church/monasteries. This means that the cost of products/services is much higher owing to layers of bribes, and that the product or service not necessarily the best in the marketplace. The price for baksheesh capitalism is perpetual backwardness for the entire society and blatant social injustice.

Is it difficult to track down the web of baksheesh capitalism and go to its source if the entire society is immersed in it? The web begins with the political class and socioeconomic hierarchy. For example, the energy is a sector where the state loses billions of euros owing to black market operations starts with the two large refineries owned by two multi-billionaire families. The corruption scheme then filters down to distributors and truck drivers delivering the product.

The black market energy racket could not take place in the absence of bribes to everyone from top politicians, judges, police, customs officials, and a host of others whose assistance is essential to sell the product illegally.The ultimate goal of all parties in the web of baksheesh capitalism is to make as high a profit as possible by avoiding tax payments, a situation that necessarily leads the government to borrow heavily, and thus to higher debt that eventually must be paid under bankrupt or semi-bankrupt conditions.

The paradox of baksheesh capitalism web is that everyone involved from the gasoline station cheating with a computer chip inserted in the machine to government ministers has the following reactions to endemic corruption that contributes to perpetual external dependence and the current bankruptcy. First, everyone takes and gives bribes and/or is somehow involved in a corrupt scheme. Second, the 'other' is to blame because the 'other' offers or receives larger bribes than I do. Third, the problem is not baksheesh capitalism but the foreign enemy that offers bribes to domestic players (comprador bourgeoisie and politicians) and foreign banks and governments that do not offer 'cheap and endless credit'.

There is general agreement that the entire society is swimming in the system of baksheesh capitalism, but there is no agreement on a) who/what  is to blame; b) how to fix the system without impacting the personal interests of the few thousand families that own most of the wealth but evade paying fair share of taxes; c) how to end baksheesh capitalism without impacting the political class that uses the economy as a tool to perpetuate itself. For its part, the large segment of the labor force that works for the public sector as part of a clientist system does not wish to lose its privileged position where bribery is a component for everything from school teachers and university professors to clerks at social security offices.

Realizing that bankruptcy under a structured loan program from the European Union, European Central Bank and IMF entails impoverishment for at least one-third of the population and substantially low living standards for the middle one-third of the population, the political class and the socioeconomic elites have tried to convince the general public that the problem is to curb the 'bureaucratic state' and strengthen the private sector under a neo-liberal model that would permit foreign capital investment to absorb all the lucrative economic sectors. Naturally, the leftist political elements argue in favor of wealth redistribution primarily through fiscal and monetary policy. Environmentalists argue in favor of solar and other forms of renewable energy to replace fossil fuels. Ultra-nationalists, now popular among the young, argue in favor of closing the borders to foreigners and creating a more 'pure' society fit for the true 'Hellenic' descendants of Plato and Pericles, as though there are any.

Not one word about self-reflection without the myths that Montesquieu discussed in Persian Letters, nor a word about the need for a grassroots sociopolitical and cultural revolution that would give life to a new society looking toward a promising future with social justice at its core. Nor is there any self-reflection and self-criticism about the fact that the vast majority believe that the public sector is there to cater to the individual, namely, that society as a whole owes to the individual and it exists to buttress the individual who in turn has no responsibility to society in any respect from paying taxes to making sure that garbage is properly disposed and not scattered just anywhere. Given that we live in the age of self-indulgence, atomistic modes, consumerism and hedonism, in a culture of 'I am OK you are OK', thus there is no need for self-reflection or self-improvement, one can expect that the entire society from top politicians and businesspeople to the intelligentsia would continue to stroke themselves on the back as essentially the 'other chosen people' chased by a global structure that is the enemy.

This is not to suggest that global capitalism is not responsible for systemic fluctuations, including austerity policies, in smaller countries with public debt problems. On the contrary, capitalism as a world system prevails over nation-states. The issue remains how to manage the national political economy within the larger world-system, and in that respect we have many models from the social-democratic Norwegian to the nationalist Argentinian, from the corporate welfare US system to the quasi-statist Chinese system. The political economy and national institutions a society builds are a reflection of that society's values, aspirations and vision of the future as well as a reflection of the past. In the case of Greece amid a tumultuous period where bankruptcy is a reality, the elites remain steeped in myths of 'traditionalism' dragging with them most of the population, looking backwards instead of forward, because it serves their immediate interests and retains their privileges.

Saturday, 21 April 2012

CORRUPTION, ECONOMIC GROWTH and SOCIETY

Corruption, illegal and/or unethical conduct involving public and private sector transactions, has been a reality since the creation of institutions and the formation of government. Studying Medieval society in the Latin West, one can see that the entire feudal-manorial structure was predicated on a system of legalized corruption, or something akin to modern day mafia or powerful narcotics gangs. The very nature of institutional structure, both public and private, lends itself to corruption because those in positions of power and authority deem themselves above mechanisms of accountability that they would apply to all others.

Even movements, secular and religious, that start out with an agenda against corruption and abuse of power wind up victims of corruption once they become institutionalized. This is a point that German theologian Martin Luther made in the 16th century about the rampant corruption of the Catholic Church that had become so intertwined with the secular world, it was difficult to discern the lines of power separation. Naturally, whether in the case of the Catholic Church during the Protestant Reformation, or today with banks and multinational corporations, the ultimate goal of corruption is wealth and power. In short, public, private sector, religious, education, or any other type of corruption is catalytic to maintaining societal elitism and a necessary component toward that goal.

With the advent of mass politics - everything from Communism, parliamentary democracy to Fascism/Nazism -  in the 20th century, institutional corruption became more pronounced, not because it was any worse than in the 16th century, but because there was the promise of public accountability behind government and institutions. Given the increasing dependence of business on the state, public and private sector corruption intertwined, especially in the past half century in the era of welfare capitalism. Naturally, the advanced capitalist countries stress that corruption in the public and private sectors is something mainly confined to semi-developed and underdeveloped nations.

A closer look at the sources of corruption, however, indicates that in many cases the advanced countries invariably are the sources for corruption in the rest of the world. This is certainly the case with weapons sales made mostly by the advanced countries to semi-developed and underdeveloped nations. Not just Germany with its submarines sales, but France with its aircraft sales and other advanced countries are notorious in corruption schemes that filter down to semi and less developed nations where politicians, business people, trade union bosses, journalists and public opinion makers are easily bribed so that the weapons exporter can make the sale, while adding on the cost of the bribes.

While some from the West may feel that corruption is the necessary grease for the slow wheels of bureaucracy, most would not publicly make such a claim for it would be 'undemocratic'. Nevertheless, when it comes to making a deal with a government, labor union, or company, there is no hesitation to grease the wheels so the job can be completed. In the non-Western World, especially in the Middle East, the issue of baksheesh is one of feudal tradition where a person shows their appreciation for a favor.

A person in Norway would not think of bribing everyone from the tax collection agency to the surgeon operating on a relative to the university professor and local politician, whereas such was and remains the reality in Greece as well as other periphery European countries and the Middle East. Clearly, tradition, history, education and cultural values play a role with regard to levels of corruption and the degree that it is tolerated by society. The cultural aspect of corruption is deeply ingrained in society and it would take decades to eliminate it, though one must keep in mind that the issue of corruption is not merely about teaching high moral standards, but having mechanisms of rewards and punishment in place to prevent it.

Regardless of culture, bribery is and remains a way of doing business under the capitalist system because it means making the sale in cases when it may or may not be necessarily useful for the country purchasing it. In a recent posting entitled "Defense Spending and Declining Economy", I mentioned that 40% of illegal activities on the planet are related to weapons production/sales. Equally noteworthy that corrupt practices account for approximately ten percent of the world's GDP and of that amount 40% is from defense-related corruption/illegal activities. This is especially significant given that governments have convinced the public that defense equals patriotism, and opposition is tantamount to treason.

Local corruption like the old 'machine politics' Chicago, and other US cities, mafia-style corruption that has characterized Southern Italy, endemic local corruption as evident in Chinese provinces, urban mobster corruption rampant in Russia, or any other type that may involve everything from protection payoffs to bribes to officials for transit of human trafficking to narcotics invariably retards the legitimate or official economy as it entails transfer of capital that could have been invested in the productive economy. However, as bad as such corruption may appear, it does not compare with the damage to the economy that legal practices have caused and led to the global recession of 2008-present. Such legal practices included everything from HDC and hedge funds to corrupt banking practices that acted to legally weaken the regulatory mechanisms and permit banks and brokerage firms to nearly destroy the mainstream economy.

The global recession of 2008-present, combined with the massive banking scandals in the US and EU, followed by the Arab Spring uprisings against corrupt dictators, convinced many scholars that corruption impedes sociopolitical and economic progress. In short, if there were no corruption either in the public or private sector, society would be relatively free of such dire problems. Naturally, there are exceptions to this scenario, given that some countries with relatively low level of public sector corruption suffer just as badly in this global recession as the corrupt ones. For example, Iceland and Ireland cannot be compared with Southern or Eastern Europe's public sector corruption. Nor can Belgium, France, and Holland, all showing sings of structural financial weaknesses in 2011 and 2012.

Moreover, if corruption on its own hindered development, how do we explain China's phenomenal economic growth in the last decade, a country that ranks 78 out of 179 countries, much higher in the corruption scale than let us say southern Europe, especially Greece, immersed in official and private sector corruption. There are politicians, journalists and academics that claim corruption is a deterrent to investment. If this were the case, then the BRIC nations - Brazil, Russia, India and China - should not have enjoyed the bulk of the world's foreign investment in the last decade.

In fact, scholarly studies regarding corruption - the nexus between public and private sector - whether in countries pursuing quasi-statist policies like China or neo-liberal models like Southern Europe, indicate that in the short-term corruption actually helps speed up economic growth, while longer term there is a price to be paid in terms of higher costs to the taxpayer and consumer. However, the corruption costs are far higher in countries operating under the neo-liberal model where the state is subordinate to the private sector, than in countries where the state is hegemonic as in the case of China.

Clientist politics usually practiced in many countries, including much of Africa and Middle East  under undemocratic regimes tend to stand out as egregious cases of corruption. The reason is that the West has convinced the public through the media that 'bourgeois parliamentary democracy' entails public accountability, thus less or no corruption. A very interesting aspect of corruption is how governments use it to manipulate public opinion. For example, the US, UK, France and to a lesser degree the rest of EU used the issue of corruption against Libya in spring 2011 to forcibly remove Muamar Qaddhafi from power. Granted he was a corrupt dictator that used government to amass personal/family wealth. But was the goal of the US, UK, and France to end corruption Libya or to take over the markets in Libya and secure energy contracts?

Another key question is whether Libya under a corrupt dictator was detrimental to the welfare of the majority people, any more than Bahrain or Lebanon. Corruption is probably much higher in Bahrain and Lebanon than it was in Libya, but there is no noise made about either of them. Lebanon is a transit point - from Russia and Eurasia, Europe, Africa and Middle East - for all sorts of money laundering operations. It is a country with offshore companies doing business with shady businesses in Panama, Virgin Islands, and of course the world's legal money shelter, Switzerland. Lebanon does rank 13th among 17 Middle East countries in the corruption index and 134th in the world, but that hardly makes it Finland.

Although there are economists who argue that corruption can contribute to economic growth, in general it is viewed as a reflection of backwardness and lack of efficient and professional institutions, at least in theory. No politician or public official can possibly go before the public and offer a positive case for corruption and economic growth, no matter what they believe privately. That corruption is almost a given, one way or the other, is the unspoken truth. The question is to what degree is public welfare advanced and to what degree is it harmed by corruption in the private and public sectors and to what degree is it a political issue used by one government against the other?
 
Corruption is used as a political issue to weaken or remove regimes, as a pretext for the structural problems of capitalism that is headed toward unbridled a corporate welfare state, a pretext for the fact that finance capitalism has weakened the system and it is looking to apportion blame. This is not to suggest that corruption does not add to obstacles to development, nor that it does not add to production costs and parasitic capitalism, instead of productive enterprises intended to generate greater economic growth.

If the entire economic system is based on a corrupt - bribery, money laundering, illegal movement of capital, tax evasion, etc. - it is still possible to achieve growth, but not the kind of growth that would be achievable if such activities were at a minimum. However, capitalists and bourgeois politicians operate under a model of corruption in order to preserve the system that is falling apart. Worse than institutionalized private and public sector corruption are the policies that have legalized social injustice under the guise of 'democracy'. Finally, if we lived in a world free of corruption, but all else staying exactly the same, would there be any less poverty, gross socioeconomic inequality, political and environmental injustice?

Monday, 16 April 2012

GLOBAL DIVISION and REVOLUTION: NATIONAL vs. COMPRADOR BOURGEOISIE

 There are very clear signs that structurally the world is moving increasingly toward further consolidation of the polarizing model that divides the world geographically - rich or developed, semi-developed, and poor or underdeveloped countries - and socioeconomically. This polarizing model, in existence since the evolution of the market economy in the 16th century, rests today on the massive influence of financial institutions - banks, brokerage firms, and insurance companies - over the state. However, the model also rests on large corporate influences and the phenomenon of comprador bourgeois political and socioeconomic class.

What is COMPRADOR bourgeois class? This class of middlemen emerged during the era of European colonialism when the colonizers needed local operatives as middlemen to function, whether in Africa, India, China, or Latin America. The fortunes of the comprador socioeconomic class were totally dependent on the colonial economic system that also gave rise to a comprador political class when decolonization took place in the 20th century, especially after WWII. Through the formation of such a class, the Great Powers were able to reduce the dependent country's economic system into an extension of the mother country under the imperial system as we can see by examining the global operations of the European colonial powers since the 16th century as well as US after the Spanish-American War.

This is not to suggest that the market economy has not rested since its inception on uneven development, uneven terms of trade, and preponderate influence of market forces on state policy. As the cradle of capitalism, northwest Europe became the core of a world economy that began to integrate the rest of the world into its system, an integration process that usually entailed colonization, or division of markets into spheres of influence. The process of integration into the world economic system means that the local and national economies would be subservient to the international one. In the absence of a local and national cooperation by middlemen - comprador class whose fortunes depended on the foreign capitalist system - the process of integration would not be possible.

It would not be possible for England to operate in 19th century China without comprador bourgeoisie any more than it would be for the US to operate in Latin America after the Spanish-American War. Both puppet bourgeois class and puppet regimes were and are necessary for the operation of the polarizing global system. Comprador economics necessarily created a comprador political class. Without the political class advancing policies intended to promote thorough economic integration of the national economy with the international economic system where the large corporations enjoy clear dominance integration would not be possible. In fact, where there is no colonial structure, the comprador political class is a precondition to the creation of comprador socioeconomic class. This means that while capitalism operates under a more representative model in the advanced countries, there is considerably less representation and less sovereignty in the countries under the comprador political and socioeconomic class. This is evident not just in underdeveloped nations, but in much of Southern and Eastern Europe.

In the early 21st century, we have many examples of this process not just in Africa, but also in Latin America and Europe as well. This became evident when Hungarian Premier Viktor Orban blatantly stated in a Budapest rally that: "We will not be a colony. We will not be second class citizens". Orban made these comments to more than 100,000 cheering Hungarians on the anniversary of the Revolution of 1848, a revolution that swept across Europe and marked the publication of the Communist Manifesto by Marx and Engels. Similar speeches have been made by politicians in Spain, Portugal, Greece, Ireland, and East European countries that are under the economic hegemony of northwest Europe; a northwest Europe dominated by Germany operating as a patron over client member EU states.While Southern and Eastern Europe undergo austerity measures that in essence entail weakening the middle class and national bourgeoisie, the beneficiaries short and longer-term are international capital concentrated in Germany and Northwest Europe.

In the early 21st century, governments of the Great Powers (G-8) struggle to strengthen the national capitalist class by providing varieties of assistance, ranging from diplomatic and other ministerial services such as Commerce and Trade departments provide, to pouring money in the national capitalist class through the fiscal system. The same holds true for nations pursuing quasi-statist policies, including China, India, Russia and Brazil; all nations that endeavor to escape the fate of having the Great Powers impose their hegemony by using the integrative market system, namely, globalization under neoliberalism.

Within the Great Powers there is global competition for market share and the way to achieve the goal is by having a strong state structure while endeavoring to weaken the state structure of 'dependent societies'. Whether it is the UK, US, or Germany, the goal is the same, given that the state - mainstream political parties in power -  is the pillar of the economic system whose backbone is banking and the ultimate goal is capital accumulation concentrated in core nations where there is a strong national bourgeoisie. Naturally, without the state behind it, the national bourgeoisie would be unable to survive, just as the comprador bourgeoisie would be equally unable to survive in the absence of the state supporting it.

In the case of the weaker countries, the bottom 180 nations that collectively own 20% of the world's assets owing to the economic system rooted in grossly uneven distribution of wealth, the struggle is to opt for development by following the rules of dependent capitalism - comprador politics and economics - that the Great Powers impose, or to deviate from those rules by trying to strengthen national capitalism.

In mid-April 2012, Argentina announced nationalization of YPF, the oil and gas company that was part of Spanish energy giant REPSOL company since 1999 when Argentina was undergoing very serious financial and economic problems operating under IMF austerity. Considering that US-led sanctions on Iran have meant that the Islamic Republic recently decided to cut off oil supplies to Spain's REPSOL, the YPF expropriation is more bad news for debt-ridden Spain, which has replaced some of the lost Iranian supply with Saudi oil.

Not just Spain, but the entire EU argued that Argentina's move signals a violation of the rules of international free enterprise economic system; a system that has always worked to keep dependent capitalist countries like Argentina from having a strong national economy that caters to internal needs of society. By making the bold move to nationalize a privately-owned oil company under foreign ownership, Argentina asserted state-supported economic nationalism, a long-standing tradition in Latin America, and one that is not associated with Mexico in the 1930s or Cuba in the 1960s, but more recently with Venezuela, Bolivia and other republics.

Argentina has been on the path of national capitalism for about a decade when it decided to throw out the IMF and try its fate with a different policy mix that would afford it greater control over the economy and society. National capitalism is antithetical to the neo-liberal ideology and to globalization that helps to strengthen multinational corporations and international finance capitalism intended to transfer wealth from the bottom 180 nations of the world to the top 20 nations.

The Argentinian example is the one that the Great Powers, along with the WTO, IMF and World Bank do not want other countries to follow, for it would mean the undermining of international capitalism benefiting the core nations. While the Great Powers and the IMF encourage privatizing public enterprises and deregulating the economy while making assets cheaper for foreign ownership, Argentina is trying to go the opposite direction as a means to gain control of its assets. Note that one reason for the expropriation of YPF is that new oil and natural gas reserves would fall under national control instead of going to foreign-owned REPSOL.

Comprador politics and economics is not merely a question of economic and political dependency as we see in the case of hegemonic US over some Latin American countries or northwest Europe (mainly Germany) over Southern and Eastern Europe, but it is also a question of national sovereignty. The issue of national sovereignty was at the root of Arab uprisings, although the US and northwest Europe made sure that they were involved in the opposition so they can integrated those economies into the international market system once the dust settled. The global division between strong national sovereign countries limited to the G-20 and within those the G-8, on the one hand, and the weak comprador nations as represented by the bottom 180 poses a major question of whether democracy can exist in societies whose destiny rests in the hands of the Great Powers.

The most significant question is whether the model of a divided world between national and comprador bourgeoisie, strong national state structures confined mainly to the G-8 vs. weak ones for all others can yield global economic development, and social harmony that is essential to political stability. The signs we have so far from the situations in the Arab Spring uprisings, in the European grassroots movements and other popular protests from Russia to Chile is that the global model of concentrated capitalism that divides the world geographically and politically results in lack of development and lack of stability. One solution on the part of the Great Powers to impose the polarizing world order is to wage war and use military means combined with or independently of economic sanctions.

There are of course limits to military solutions - judging by results in Iraq and Afghanistan - and the question still remains whether growth and development on a sustainable basis can be achieved under the polarizing model of national vs. comprador bourgeoisie. Now that China has opted for an imperial expansionist economic model so it can compete with Japan, EU and US, the global division becomes even more intense. How long will the waning middle and lower classes endure exploitation before they take to the streets to overthrow a system of socioeconomic and political inequality?

Revolution may be inevitable in the 21st century, and as was the case in the 20th century, it will come from countries where the state is weak and dependent and society operates under a comprador political economic model. The comprador societal model was the root cause of revolutions in Russia, China, Vietnam, Cuba, and it will be so again in this century. More than Communist revolutions, these were anti-imperialist-nationalist revolts intended to take back the national sovereignty from the Great Powers.

This is not to suggest that early 20th century Communist regimes would be making a comeback in the 21st century. Nor is this to suggest that in the absence of policies and institutions based on social justice, national sovereignty by itself is just fine for society. Nor is this to say that national capitalists are any less exploitative than international ones supported by comprador bourgeoisie and politicians.However, given that the nation-state structure remains strong, no matter the efforts of the globalized market economy to erase it, national sovereignty remains at the core of the social contract as many people in pluralistic societies understand it; and its absence entails not only surrendering the right to have a society that caters to its own population first, but it means surrendering rights that are fundamental to any concept of democracy.

We are at the beginning of a new era of revolution in the early 21st century, a  revolution that can be prevented if the global polarizing model is somehow modified to permit for the social contract to accommodate the majority of the people.

Wednesday, 4 April 2012

THE GOBAL LEGACY OF THE FALKLANDS WAR

Introduction:
The legacy of the Falklands War remains of great interest to some citizens of both the UK and Argentina, and to historians of the Western World who see this tiny conflict as significant in its symbolism. There is certainly sufficient interest on this issue by scholars and journalists, considering there are several hundred books and articles published on the issue from every conceivable perspective. The story still draws emotional reactions among nationalists in Argentina, anti-imperialists throughout the world, nationalists as well as old-style imperialists who believe that Britain did the right thing to reclaim the islands. Those who have recollection or have read about this war know the empirical aspects of it, but they may not agree on the interpretation.

On 2 April 1982, the military dictatorship of Argentina sent forces to the Falklands and South Georgia, prompting the UK to launch an official war to retake the islands by mid-June. The entire affair was televised and it drew attention largely because the Reagan administration was not united on the issue. Those on the State Department side believed that US number one responsibility was to support NATO and its members, while some on the far right argued that the US had an obligation to support the Organization of American States and be faithful to its inter-American Treaty obligations regarding hemispheric solidarity. Ultimately, the US backed the UK, much to the alienation of Latin Americans who once again saw their northern neighbor as a supporter of imperialism.

As much in 1982 as today, Argentina claims that the islands are part of its national sovereign soil and not 'dependent territory', which is tantamount to a colony as far as Argentinians and Latin Americans are concerned. In 1989 the two countries restored normal relations, but the underlying hostility remains, as Argentina uses the Falklands to reminds its citizens of Western imperialism undermining national sovereignty, while in the the UK the conflict is not as significant largely because England prevailed in the war.

Outlining a brief synopsis will help before I point out that this war has many dimensions that include the following:

1. Foreign Politics:
British, US, Argentinian, Latin American, and EU foreign policies with an entangled UN where the US representative was at odds with the US secretary of state Alexander Haig. It was a bold move for British foreign policy to focus on a tiny island mostly of symbolic significance and to go to war against a right-wing military dictatorship that had cooperated with the US. It was even more remarkable to sell the idea to the world that somehow the Argentine government posed a threat to UK national security and to the Falklands.

 That China, the USSR, and Spain voted against the UN Security Council Resolution 502 was a reflection of international alliances and interests as well as the absurdity that two Communist countries voted in essence to support a right-wing military dictatorship, and against British imperialism. The rhetoric and UN vote aside, Moscow, Beijing and Madrid did not help Argentina, for it would have meant compromising their interests with both the UK and US.

With US assistance that included military supplies, the UK managed to effectively block Argentina from securing weapons, except from Libya and some minor help from Peru by way of Israel that was only interested in making weapons sales. With the US on its side, the UK had made certain that Argentina and all of Latin America would be taught a lesson about submitting to the Great Powers.

Despite some important economic interests in Lain America, and despite the history of British economic hegemony in Latin America until the Great War, British foreign policy was not concerned with the Western Hemisphere, because it was the US sphere of influence. The 'smallness' of the Falklands War and its manufactured causes seemed absurd, given that the issue was not energy sources and Argentina was not a security threat to anyone.

Yet, three decades later, the war remains deeply ingrained as a matter of 'sovereignty' for many Brits and supporters. For many Argentinians and Latin Americans the war remains one of imperialism. Both sides used the war to stir nationalism, much more so the Argentinians who lost than the Brits who won. Although the conflict is not so significant now, it will not seem so minor if oil is discovered in the area around the Falklands. In this case, one can expect Brazil, now a very strong international player, and the rest of Latin American republics to line up behind Argentina in a way that they have not in the last thirty years.

2. Domestic Politics:
British and Argentinian domestic politics, far more significant than foreign policy. Most wars are a reflection of domestic politics, and they are intended to serve a domestic political agenda and to have people rally around the flag at a time that there is national division. Although London posed the issue as one of national security, it was in essence about securing Tory political preeminence and distracting the citizens of the UK from the economic contraction of the early 1980s and the social program cuts via privatization that Thatcher imposed.

In short, the war was an integral part of 'Thatcherism' at a time that people were stunned by the kind of neo-liberal policies the government was imposing. Strong defense and corporate sector at the expense of social welfare became part of the British bipartisan goal from Thatcher to the present, as it has in much of the Western World. That both the Conservative and Labor parties have followed domestic and foreign policies that are hardly distinguishable in the last thirty years is a tribute to Thatcher and her clever use of foreign policy that reflected a domestic political agenda.

In Argentina's case, the Falklands War erupted at a time that the regime was faced with massive popular opposition owing to repression as well as economic contraction that was sweeping across the Western World. Even the most ardent anti-dictatorship opponents had to reject British intervention, rally around the flag, and denounce Western imperialism. After all, if Communist China and Russia vote in the UN against the UK, why would leftists be generous toward Britain in a case that forces people and nations to one or the other side without any middle ground that appears non-existent. This is the trap that the right-wing set for the centrists and leftists and it worked, although only until the end of the war. Throughout history it is common for a right wing regime to use war as a means of unifying the country and silence dissent. This became true both in Britain and Argentina during the war.

Given Argentina's political history in the last thirty years, nationalism remained strong but in constructive ways as the political class proved in 2001 when the IMF was leading the country toward ruinous neo-liberalism to strengthen foreign finance capital (international capitalism). The response from Argentina was to strengthen national capitalism, no matter the short-term sacrifices that entailed an estimated 45% poverty rate. That Argentina rejected international capitalism under IMF austerity with a prescription for neo-liberal style policies is partly due to its historical experience with Britain and US during the Falklands when it found itself almost completely isolated. Naturally, Argentina has always been unique in Latin America with strong nationalist politics dating back to the 1930s. The Falklands matter only reinforced existing nationalist tendencies.

3.Military Politics:
British and Argentinian military prestige, as well as NATO and OAS politics became part of a larger debate about regional military blocs and the US role in them. Clearly, the prestige of the UK rested on this operation, given that some analysts were not sure of the outcome and what the US would actually do, no matter what the State Department said at the time. That the US Defense Department was helping the UK spoke much louder than rhetoric intended to appease Latin American nationalists who felt the US was betraying its neighbors.

The British insisted that the military operation intended to protect the people in the Falklands and to guarantee self-determination. The threat emanated from the Argentinian invasion staged by the desperate generals. While that was true, there is the question of whether the British invasion itself constituted a protection or a threat to self-determination, of whether the British invasion constituted treaty violation as much as the Argentinian, whether the issue could have been resolved through diplomacy instead of force.

Non-interested parties analyzing the invasion saw a British PM interested in strengthening her position at home and abroad by going to war against a nation that could not possibly prevail in the absence of total or at least partial hemispheric solidarity in which the US would honor its treaty obligations with Latin America. 
For its part, the Argentinian military dictatorship placed all hope on the operation, knowing that success meant staying in power and failure entailed a return to elected government. Beyond the prestige factor and obvious strong overtones of nationalism, there was the issue of the globalization of NATO that the US had decided was far more significant that the OAS in order to finish off the USSR and the Communist bloc. This could be one way to interpret Britain's determination to secure the Falklands as a military base, as NATO was gradually converted into an organization securing the imperial interests of its strongest or core members.

4. International Symbolism:
The Cold War was on its last leg when the Falkland War took place and Britain as the most pro-US NATO ally decided to start a war in violation of several treaties that the US had signed with its southern neighbors protecting the Western Hemisphere from extra-continental powers. However, the treaties were signed with the USSR in  mind and to be used as a pretext to allow for hemispheric solidarity in case of a Communist threat from outside and within the region. In short, to prevent another Cuba from becoming a reality in the Hemisphere.

The Falklands War was a precedent-setting local war that became the first of a series military interventions directed at non-Communist country in which the UK would be involved - Gulf War, Kosovo, Sierra Leone, Afghanistan, Iraq, Libya. In retrospect, the Falkland War makes perfect sense, given that the US supporting the UK would be in the forefront of such operations with its EU junior partners falling in line. In short, the Falkland War was a new type of operation on the part of an old imperialist country to pursue intervention without using the justification of 'Communist threat', but of fighting for freedom and democracy against a Third World dictatorship. 

5. Imperialism justified in the name of democracy.
British military intervention with the mission to 'bring democracy' to a country under a dictatorship had a universal appeal in the West. How does an old imperialist country like the UK secure a military base of operations and make its claim in the old 'spheres of influence' sense if the country targeted for attack has right-wing politics?

The Falklands War resulted in increased acceptance of military intervention as a political solution to diplomatic conflict between a great power and a weaker nation, as well as increased acceptance of imperialism on the part of apologists of intervention. No matter the vacuous rhetoric about freedom, democracy, and sovereignty, most people are not blind to the reality of specific interests ranging from political, economic and military. The Falkland Islands may never amount to any conflict in the future and it may never concern the international community again, unless energy hydrocarbons are discovered. At that juncture one should expect the UN to become involved, as it will be very difficult for the UK an d US to convince Russia, China and Latin America not to side with Argentina.