18th Inter­national Meet­ing of Com­mun­ist and Workers’ Parties

Hanoi, October 2016

  

Eddie Glackin 

National Executive Committee, Communist Party of Ireland

Comrades,

This year marks a notable anniversary in the history of our people’s struggle against imperialism: the Centenary of the 1916 Rising in Dublin. In the middle of the first Imperialist World War the Rising, at the heart of what was at that time the greatest empire the world had seen, sent shock waves throughout the empire “on which the sun never set” (or, as the more cynical have said, “on which the blood never dried”). A year later the Bolshevik Revolution broke the chain of imperialism at its weakest link and marked the onset of the general crisis of capitalism.

The world has changed greatly in that past century: we witnessed the victory of the first socialist revolution, the rise and subsequent defeat of fascism and Japanese militarism, the development of the national liberation movement, and the victory of socialist revolutions in Europe, Asia, and America. The defeat of socialism in the Soviet Union and Eastern Europe has been a huge and bitter defeat for us. According to the apologists for capitalism, this represented the “end of history”: capitalism had triumphed, and the troubling Spectre of Communism was no more.

Yet within a few short years the crisis of 2007–8 hit and shook capitalism to its core, shattering illusions of endless, crisis-free, growth and development. 
     
Now in 2016 the crisis of the system continues to deepen, and the various “solutions” imposed by monopoly capitalism serve only to intensify the crisis. Each alleged solution creates new problems. Quantitative easing was to have been the solution to the banking crisis, but, as recent developments around Deutsche Bank and the Italian banks have shown, quantitative easing has boosted share prices but has not addressed the economic problems. 
     
The recent EU summit in Bratislava sent a clear signal that working people need to be aware of. The European Council president, Donald Tusk, stated that “all of Europe expects that the EU will again be a guarantee of stability, security and protection—protection in the widest meaning, including social and economic protection.” This is clearly coded language for further and deeper integration and consolidation of power at the centre. Shaken by the vote of the British people in favour of leaving the EU, the response of the major powers, Germany and France, is to accelerate centralisation, further enhancing their power and influence. 
     
They want to tighten fiscal and budgetary control, which can only mean further undermining any notions of democracy and sovereignty at the national level, taking further powers from individual states and weakening the ability of working people to affect “their” government’s policy. This will be felt even more profoundly in the heavily indebted countries at the periphery of Europe, of which Ireland is one. 
     
This theme echoes that of a “resilient Europe” put forward in the new global strategy by the EU’s chief diplomat, Federica Mogherini. Europe needs to pro-actively prepare itself for future shocks and threats rather than just reactively respond when they happen. This means a continuation of the “European project”—a greater concentration of powers in the centre. This trend is already evident, as shown by supervision of fiscal policy to ensure that national governments comply with the rules and dictates of the EU, by the co-ordination of policing with Europol, and by the EU military units. The centralisers want to advance this process towards an EU fiscal policy, an EU police force, and an EU army. 
     
In fact they are quite open about their aims: Mogherini said last month that “defence is one of the great building blocks to relaunch the process of European integration. Europe was built up in waves: the single market came first, then the currency and the freedom of movement. It is now time to lay the foundations of a common defence.” They seek to ensure that every step in this direction is difficult if not impossible to reverse. 
     
Yet there are those on the so-called left, the raggle-taggle army of failed social democracy, who believe that the EU can be reformed, that somehow the mirage of a “Social Europe” can still materialise. And this while the EU is increasingly militarised and interfering openly for example in Ukraine, and whilst the decrepit old imperialist powers of Britain and France try to reassert themselves in Libya and Syria. These social democrats, of the left and right variety, are still in denial that the EU is anything other than an aggressive, reactionary superstate in the making, the reforming of which into a “better, fairer capitalism” would go against the very nature of the beast. As ever, they provide succour to, and a fig leaf, for imperialism and capitalism. 
     
The assault on the working class, and the drive to privatise state enterprises, natural resources and social services in the interests of monopoly capital, have been conducted by national governments in tandem with the EU institutions. The Irish government and the Irish bourgeoisie, North and South, and the Stormont administration in the North of Ireland are willing partners in this process, happy to ally themselves with the imperialist powers, the USA and the EU. 
     
The decision of the people of Britain to leave the European Union is posing great difficulties for the EU and has caused panic in the Irish ruling class. Their subservience to the three centres of power, in London, Brussels, and Washington, has them in a state of extreme confusion. Also the Sinn Féin party, which previously opposed European integration, opportunistically campaigned in the North of Ireland on the “Remain” side, thereby allowing themselves to be co-opted into the strategies of the Irish establishment and the European Union. 
     
Working-class resistance has been, in general, slow to assert itself but now is growing in intensity throughout Europe. In this context it must be recognised that the Greek working class led the way, putting up a heroic resistance at an earlier stage of this assault. It is the task of the Communist Parties to give ideological clarity and direction to this new militancy. 
     
The Irish working class too is now beginning to rediscover its fighting traditions after years of kowtowing to their class enemies through the process of “Social Partnership”—in fact class collaboration. Bus and tram workers have recently won important victories after strike action to restore pay levels and undo pay cuts imposed over the past number of years. Teachers and the police have served notice of industrial action over the next few weeks. It is unprecedented to see the Garda Síochána, the national police force, taking strike action. 
     
Working people have been driven into a campaign of mass resistance by the imposition of a water tax which they see as a prelude to privatisation. The scale of the resistance from trade unions and especially community groups forced the Government to back down on the collection of this unjust tax. The demand is now for a referendum to enshrine the people's ownership and control of our water in the Constitution of the State. This, if carried, would be a major obstacle to the plans of the Irish ruling class, the EU, and TTIP. 
     
These important struggles must be used to help working people understand, especially in this Centenary year of the 1916 Rising, that the fight against imperialism is not something belonging to the past but must be consciously at the heart of their daily struggles. 
     
We have just witnessed in Ireland a scandal involving the giant Apple Corporation, who flushed its global profits through an Irish address to avoid paying taxes; this with the connivance and support of the Irish government. These profits were derived from the super-exploitation of the lowest-paid workers across the globe. 
     
By looking at Apple and at transnational corporations (TNCs) in general we can discern the broader interconnecting trends that are shaping the economics of both the powerful core of imperialist states and the peripheral weaker states. In the periphery we see the super-exploitation of low-waged workers and the capture of imperial rent by means of financial and structured incentives, and tax-dodging, resulting in massive corporate profits. 
     
In the imperialist core we see declining wages, lower nominal taxes on capital, and lower corporate taxes, again resulting in massive corporate profits. 
     
In both cases we see a massive transfer of wealth from the working class to TNCs and the shifting of the tax burden from TNCs onto the shoulders of working people, resulting in the scaling back of socialised public services and their replacement with privatised, commodified services for profit. 
     
According to a recent report of the United Nations Conference on Trade and Development (UNCTAD), there has been a global decline in wage share from 64 per cent in 1980 to 54 per cent in 2008, signifying a huge transfer of money from workers, communities and society at large to the owners of capital, this amounting to the staggering figure of $7 trillion in 2013. 
     
The report also shows that the assets held by foreign affiliates of transnational corporations rose from $3.9 trillion in 1990 to $102 trillion in 2014. Global sales by foreign affiliates of transnationals rose from $4.7 trillion in 1990 to $36.4 trillion in 2014. In 2013 UNCTAD estimated that 80 per cent of global trade took place between and within transnational corporations, i.e. affiliate companies conducting business with one another within a corporate conglomerate. This is one of the means that TNCs use to dodge tax. 
     
Since the 1970s we have witnessed a new international division of labour, seeing corporations move production from high-wage to low-wage economies in order to lower production costs and increase profits. These developments are part of a global neo-liberal programme of accelerated policies, with capitalist states around the world pursuing strategies of deregulation, liberalisation, and privatisation. 
     
The secret negotiations by the EU with Canada and the United States on CETA and TTIP will, if ratified, further increase the dependence of individual states on both the EU and TNCs, with the power of national governments to conduct trade deals and to enact legislation being severely curtailed. Under the terms of these proposed treaties, TNCs will be able to sue states through private courts, administered by corporate lawyers. The threat of these courts will curtail any action by governments to improve the lot of their people, including minimum wages, health and safety, the environment, and financial regulation. Indeed the pursuit of profit will formally and legally take precedence over any consideration of the well-being of the people. 
     
The three interlinked characteristics that define this period of capitalism—neo- liberalism, financialisation, and global labour arbitrage—are shaping the 21st-century form of imperialism. Imperialist hegemony is entrenched in the core capitalist economies, while it is extending into regions where it has previously not been as strong. Trade agreements such as NAFTA, CETA, TTP, TTIP and TISA have been designed to copperfasten that hegemony and to further centralise economic and political control in the imperialist core and away from peripheral states. 
     
The worst excesses of monopoly capitalism are played out in the global periphery. High levels of unemployment, greater precariousness in employment, wage reductions, higher and more taxes, the loss of public services, increasing inequality and massive transfers of wealth from workers to the capitalist class are the main features. 
     
Capitalism is by its nature polarising and imperialist. Uneven development is one of the laws of capitalism. Many peripheral economies have become partially industrialised, but these economies are subordinated to the interests of the core imperialist economies. The methods of production, componentisation of production, contract production and monopolistic control over distribution and retail networks, in tandem with the huge burdens of increasing national and personal debt, militate against the ability of the peripheral economies to emerge from the shadow of the imperialist centre and become fully capitalist economies in their own right. 
     
Imperialism itself has become centralised. Although dominated by the United States, the imperialist core of North America, Europe and Japan are no longer in serious dispute with each other. They have developed global management tools, such as the World Trade Organization, the World Bank, NATO, the IMF, the OECD, and G8, as a means of ensuring continued imperialist hegemony and managing inter-imperialist rivalry, thereby preventing the possibility of most peripheral economies breaking out of the imperialist orbit. Even China, with its massive economy, is vulnerable and is under attack through the Trans-Pacific Partnership (TPP). 
     
How are we to challenge this capitalist onslaught? It is necessary to go beyond reacting to each cut and each outrage: we must go beyond defensive reactions, which leaves the initiative with the capitalist class. Our struggles must be framed within a purposeful strategy of breaking with capitalism. 
     
Despite the claims of bourgeois sociologists that there is no longer a working class, the working class in fact is growing and now is also globalised. More nations are proletarianised, more women have joined the work force; the proletariat more closely resembles the face of humanity than ever before. The challenge facing the Communist movement is to unite the struggles of the working people and all anti-imperialist forces on a global scale and organise them for the defeat of capital and for socialism.

Spinning Liberal Tales

Zoltan Zigedy

It comes as no surprise that The Nation magazine endorses Hillary Clinton for President (10-24-16). As the leading left-liberal publication, The Nation huffs and puffs high-minded principles before surrendering to the Democratic Party establishment. Nonetheless, it’s always interesting to see how they arrive at their submission.

Of course, it’s all about Trump. He’s not on our side. As a statement of the obvious, that conviction is unmatched. But is Clinton on our side?

The Nation’s editors assemble a tortured list of Clinton positives and Trump negatives that stretch the truth, shrug off uncomfortable facts, and hail irrelevancies. She exhibits “grace under pressure,” they tell us. She has been a “forceful advocate of health-care reform” since 1992. And for wild-eyed fantasy: She “is running on the most progressive platform in the modern history of the Democratic Party.” 

Trump’s charge that the elections are “rigged,” on the other hand, is “an assault on the very basis of democratic governance itself.” So the elections are not rigged in favor of the rich, white, and powerful?

With amazing audacity, the editors simply dismiss Clinton’s obscene bond with corporations and foreign tyrants, a bond that is sealed with tens of millions of dollars of barely-concealed quid pro quos. They assert that “progressives will have to continue to push her” away from these rich and powerful benefactors.

As for her super-hawk foreign policy, The Nationconcedes that Clinton is wrong on everything from Palestine to Russia and Syria. Though she is seemingly “intent on deepening a New Cold War,” we are invited to “break her hawkish habits,” as though her role in killing tens of thousands is akin to curbing a smoking habit or losing weight.

Presidential candidate Jill Stein is the fly in The Nation’s ointment. She is all the progressive things that Ms. Clinton is not. She stands against the corporate, war-mongering tide and not with it. Here, The Nation engages in a remarkably clumsy dance around the Stein option, laying alleged failings of the Green Party at her feet: “...her cause has not been helped by the Green Party’s reluctance, or inability, to seek, share, and build power, with all the messy compromise this often entails. Instead of the patient-- and Sisyphean-- task of building an authentic grassroots alternative, the Greens offer a top-down vehicle for protest.”

But isn’t building an “authentic grassroots alternative” exactly what the Stein candidacy is all about? Isn’t Stein reaching out to The Nation readers, Sisyphus, or anyone else interested in changing the bankrupt political scene in order to build precisely the power that the editors claim to want to see? The apparent truth is that The Nation would like Jill Stein to go away and take her principled positions with her, clearing the way for a heavy dose of lesser-of-two-evil scare tactics.

The most-tenured Nation columnist, Katha Pollitt, bats clean-up on the magazine’s Hillary team. She relishes the opportunity, entitling her column The Case for Hillary. In offering her brief, she gives a list of 12 reasons, beginning with reproductive rights: “I’m putting this first because they’re crucial to everything you care about…” [my italics]. Everything we care about? As important as reproductive rights are, does Pollitt really believe that reproductive rights trump all concerns? Did she consider African American mothers whose sons have been murdered by police? Did she even weigh the daily slaughter of hundreds if not thousands throughout the world at the hands of US weapons or the weapons of its surrogates? Does poverty, lack of health care, and inferior education count in her reproductive-rights calculus?

Pollitt, like far too many upper-middle class white liberals, is blind to class and race. Those from other classes or races are not part of “us,” and the concerns of the “other,” though real, are not significant barriers to the “simple human happiness” that she argues flows from reproductive rights. Like the Evangelicals standing on the other side of the abortion barricades, she is incapable of imagining anything more important to others than that battle. She, like the right-wing fanatics, trivializes all other wrongs.

Against the Big Lie

Pollitt’s defense of Ms. Clinton reaches disturbing dimensions when she raises oft-repeated lies about Communist sectarianism leading to the empowerment of Hitler. She references a supposed moment when “...German communists scorned the weak-tea socialists in the 1932 election with the slogan ‘After Hitler, us.’” Like other similar red-baiting slanders that circulate on the left in every election cycle, this one bears little or no relation to the truth. Defenders of lesser-of-two-evilism assert that the German Communists stood in the way of working class anti-fascist unity, that they welcomed Hitler’s rise, that they spurned joint action. These charges are meant to apply supposed lessons from history to the politics of our time, suggesting that independent militancy and principles stand in the way of unity against the specter of extremism. If disaffected voters would throw their votes at the feet of the slightly-lesser-evil, like the German Communists should have done, we could avoid the specter of a greater evil.

While there are many for-hire historians who will affirm these claims, they are based on fiction.

The “1932 election” that Pollitt cites was, in fact, five critical elections: a first-round presidential election in March, the second and final round, the important Prussian Landtag election in April, a Reichstag election in July, and another-- the last relatively legitimate Reichstag election-- in November.

One surely unimpeachable perspective on these elections was that of journalist Carl von Ossietzky. Ossietzky was a prominent and respected left-wing commentator associated with the left wing of social democracy and often critical of the Communists (KPD). From a family of fallen aristocrats, Ossietzky’s anti-fascist credentials and integrity were impeccable-- he received the Nobel Prize in 1935 and died in a Gestapo prison hospital in 1938.

In his newspaper columns in Die Weltbühne, Ossietzky tells a story far removed from the fantastic anti-Communist narrative. In the lead-up to the first round of the Presidential elections, the Social Democratic Party, despite being Germany’s largest party at the time, chose not to run a candidate against both the reactionary incumbent President, von Hindenburg, and Adolf Hitler. It argued that the party’s stance was not pro-Hindenburg, but anti-fascist, a splitting of hairs that did not impress Ossietzky: “It is not that fascism is winning, but that the others are adapting it… A passing insult tossed by the demagogues of the Berlin Sports Palast jerks ten Socialist deputies from their seats, and forces them to prove themselves as fatherland-lovers… the initiative lies with the right.” Ossietzky writes: “Readers continually ask me for whom one should vote on March 13th. Is there really nothing better, they ask, than pursuing this fateful and discouraging policy of the ‘lesser evil’?”

He goes on:

As a non-party man of the left I would have been happy to vote for an acceptable Social Democrat… Since there is no Social Democratic candidate then I will have to vote for the Communist… It must be emphasized that a vote for Thälmann means neither a vote of confidence for the Communist Party, nor major expectations. To make left-wing politics it is necessary to concentrate strength where a man of the left stands in the battle. Thälmann is the only one; all the others are various shades of reaction. That makes the choice easier.

The Social Democrats say: “Hindenburg means struggle against fascism.” From which source do the gentlemen draw this knowledge?

It is nonsense to describe Thälmann’s candidature as simply a gain of numbers. Thälmann will probably receive a surprisingly high number of votes… The better that Thälmann does, the clearer it will be what a success could have been won with a united socialist candidate…

Within a week of his election, Hindenburg-- designated the “anti-fascist” candidate by the Social Democrats-- called for the banning of all left-wing party-affiliated mass organizations. Before nine months passed, the Reich President had appointed Adolf Hitler Chancellor and handed rule to the Nazis. Ossietzky knew at that time what a colossal mistake it was for the Social Democrats to refuse to run a candidate, to support Hindenburg, and to refuse to support Thälmann: “Invisible hands are at work in the web and woof of official policy, trying to bring Hitler, thrown out through the front door, in again up the back stairs.”

In January of 1933, immediately after von Schleicher was deposed as Chancellor and prior to Hindenburg appointing Hitler, the German Communists suggested a united general strike; the Social Democrats rejected the offer to collaborate.

Ossietzky urged unity between Communists and Social Democrats as early as April of 1932. After the Nazis made major gains in the important Prussian Landtag election, Ossietzky saw only two effective responses: either the Social Democrats invite the KPD into the existing Prussian government (something that they had refused to do) or the two parties form a united front. The KPD had already raised the second option one day after the election. The Central Committee called for “mass meetings of the workers in every factory and every mine… in all trade unions…[to] compile a list of joint demands, elect action committees and strike committees composed of Communist, Social Democratic, Christian, and non-party workers…”  

Despite the negative portrait painted of KPD tactics by liberal commentators, the German people showed their growing confidence in the KPD in the two Reichstag elections. Of the three major parties, only the KPD made gains in both elections, adding nearly 30% to its deputies while the SPD lost nearly 16%. Clearly, the KPD’s militant anti-fascism was growing in popularity with the working class.

It is probably too much to hope that liberals will retire the red-baiting canard of Communism ushering in fascism, any more than there is hope that partisan Democrats will cease blaming Ralph Nader for their pathetic surrender to the right in the 2000 election.

Clearly, the lesser-of-two-evils approach will not go away anytime soon, though it has failed to halt the many decades of the rightward drift of the political center. Could it be that those who own the two parties are sponsoring this persistent shift to the right in order to gauge just how long liberals, labor, and the left will tolerate it without making a break with the Democratic Party establishment?

One would do well to put aside Cold War textbooks and liberal smugness and take a long look at the dynamics of oppositional politics in the Weimar era leading up to Hitler’s ascension to power. There are lessons from that period beyond desperately collaborating with bourgeois and reactionary parties. The severe economic crisis of that time was only answered by a demagogic and extreme nationalist movement and by the militantly anti-capitalist, revolutionary movement. 

The Social Democratic Party chose a different path: it sought to manage capitalism along with its bourgeois parliamentary counterparts. They failed. Disaster ensued.

Organize a European referendum, and you'll see that the Walloons are not alone

Bert De Belder

In the story about the Walloons blocking the free trade agreement with Canada, the so-called Ceta, several analysts are discussing the role of the emerging PTB-PVDA (Workers' Party of Belgium). We asked the chairman of the left party how he sees things.

PTB-PVDA Chairman Peter Mertens on the free trade agreement with Canada (Ceta)

Peter Mertens. “The European Union was already preparing to sign the free trade agreement with Canada with much fanfare. While this agreement would have far-reaching consequences for Europe, for its people and for the climate, the European establishment was not really planning to mince many words on the treaty. Until the government of the Walloon Region spoiled the party. A debate was held there, and immediately the international media touched down in Namur (the seat of the Walloon government) and Brussels. Belgium in the eye of the storm, with at its helm the social-democratic prime minister Paul Magnette.”
“This tells a lot about how the European Union functions. At first months of secret negotiations, then in a hurry and top-down a take-it-or-leave-it agreement, and finally blackmail and political pressure. For what fundamental debate did we get in Flanders (another Belgian region) on this treaty? None at all. Neither in other countries. We should be glad that the Walloon regional government sounded the alarm, and by doing so rendered a democratic debate possible.”
“The fear of the establishment parties for this debate is apparent. They want to impose an economic herd behaviour: 'because they are all doing it, it means it must be good'. Not so. From the very beginning thousands of NGOs, trade unions, consumers and environment organizations have put serious criticisms on the table. Throughout Europe, millions have demonstrated against Ceta and its big brother TTIP, the free trade treaty with the United States. And because today suddenly a real debate is on the table, as a result of the Walloon blockade, the establishment is crying foul.”

How do you evaluate this political blockade?

Peter Mertens. “The position of the Walloon regional government is correct and courageous. Our PTB representatives in the Walloon parliament support this resistance and the essential criticisms on the Ceta treaty. Minister President Magnette and the Walloon regional government are now insulted and put under pressure by the puppets of big industry from Belgium, the entire European Union and Canada. This is a mockery of a democratic process. Flemish nationalists have always pleaded for more powers to be accorded to the regions. But once a region uses those powers, they don't like it either. They shouldn't complain. Among the population, there is no support base for this agreement, not in Wallonia, not in the rest of the country, and neither in Europe.”

In other countries though, a political agreement on the free trade deal has been reached.

Peter Mertens. “Indeed, among the political caste. There you have a large unity of thought. But this unity of thought is confined within the four walls of some parliaments. That does not mean there is one among the people, of course. That's an error of judgment we should avoid. In fact, a European referendum should be organized whenever agreements with such an impact are concerned. But they don't. Instead they engage in arm-twisting and other attacks against the Walloon government. The disrespect of regional and national democratic processes in Europe is enormous. We had observed this earlier already, when the French 'no' against the European Constitution was simply relegated to the trash can. The constitution was imposed anyhow, be it with another name. We likewise observed this in Greece, that was in no way allowed to make its own choices for its economy. Ultimately, they even decided to starve the Greek banks in order to push through the absurd austerity and privatization policies. Now they want to do the same with Wallonia. They are already pondering an 'interpretative declaration' to be attached to the treaty. Yeah, great, they will have a good laugh with that in the headquarters of big industry. Such a declaration has no legal value whatsoever, all experts in international law and trade agree on this. Over the next hours and days, we may expect more of the same type of fake solutions to offer Magnette a fake way out.”

In Belgium your party is surging, in the country's three regions, but mainly in Wallonia. Foreign Minister Didier Reynders of the neo-liberal MR says without hesitation that the PTB's increase in the polls is the reason behind the resistance of the Parti Socialiste (PS) against Ceta. This would force the PS to position itself more to the Left. Is that so?

Peter Mertens. “Certain political commentators like to draw a picture of Wallonia as a big exception in Europe. The Flemish parties in government cry foul and describe it as harassment against the Rightist federal government, in which the PS is not represented. But again: let a European referendum be held. Let the people speak out. In September 2016 in Germany, 320,000 people demonstrated against the free trade agreements with the US (TTIP) and Canada (Ceta), in Brussels on 20 September there were 10,000. The majority of French are of the opinion that the TTIP negotiations should be stopped. Apart from the Walloon and Brussels regional governments and the government of the French community in Belgium, also the Irish Senate gave its government the advice to vote against Ceta. And in Austria, Slovenia, Poland and Germany, no final green light has yet been given. A Europe-wide petition gathered more than 3 million signatures, a European record.”

The question was whether your party is the reason behind the Walloon 'no' against Ceta.

Peter Mertens. “No, we are not the reason. The protest movement against Ceta and TTIP in our country is very broad: mutual social insurance organizations, North-South solidarity movements, trade unions, consumer groups, small and medium enterprises, peasants, women's movements, climate activists, judges, you name it. Of course with the PTB-PVDA we have always supported the resistance, as has done the group of the GUE/NGL (European United Left/Nordic Green Left) in the European Parliament.
And of course you cannot deny the particular situation in Wallonia and in Brussels where our party, according to the latest opinion polls, could become the third party, in Wallonia even reaching 16 percent. This naturally influences the positioning of the Parti Socialiste, having a hard time to play a dual role. For the previous federal government, led by this same PS, didn't have any problem giving our country a mandate for negotiations on free trade deals with the US and Canada. Prime Minister Di Rupo himself attached his signature to it. This the Socialist Party cannot do today, which may be partly because of the pressure from the PTB. But more essential is that the resistance has a broad basis. Pressure is coming bottom-up, which is of course very well.”

Why should we reject free trade agreements such as Ceta (Comprehensive Economic and Trade Agreement) and TTIP (Transatlantic Trade and Investment Partnership, between the European Union and the United States)?

Peter Mertens. “They will not help us overcome the European crisis. That's an illusion, a fake solution, a wild rush forward. One of the major elements in the European crisis is the policy of low salaries and austerity that is being implemented everywhere in Europe, as demanded by Germany. The result is a catastrophe. Who can seriously think that we will solve the problem with a free trade agreement with Canada? The American Tufts University did research into the consequences of Ceta on jobs, and found a loss of 200,000 jobs. The phenomenon of social dumping, which we are already observing in Europe, will increase. Instead of harmonizing norms and rules upwards, to protect workers, health and the environment, we risk to slip further down the slope. Canadian civil movements and trade unions are warning us for such risks, as they have experienced those themselves, when they concluded a free trade agreement with the United States and Mexico, the so-called Nafta. The results: closures, restructurings, lower wages and worse working conditions. The downward spiral. The Canadian Caterpillar plant was closed and moved to the US, where lower wages were paid. Next: yet another closure and a move to Mexico, with yet lower wages. Without any hindrance. Is that what we want? The same goes for the standards we apply regarding the environment and health. Behind these treaties, you'll find the harsh logic of competition, something that cannot be denied by neoliberals as (former EU Trade Commissioner) De Gucht. This means that all standards will be pushed downwards instead of upwards.”

The campaign against Ceta and TTIP also warns for the special court system that is part of the agreements ('Investment Court System' for Ceta, Investor State Dispute Settlement for TTIP).

Peter Mertens. “Transnational corporations can sue a country before a special court when national laws are considered to harm the big industry's interests. On the basis of similar trade treaties, the Egyptian government got sued by the multinational Veolia for having introduced a minimum wage. The Swedish company Vattenfall demanded from Germany a compensation of 4.7 billion euro because the Germans had decided to exit from nuclear energy, after the Fukushima nuclear disaster. And the US company Ethyl Corporation sued the Canadian government because it wanted to prohibit the use of the toxic additive MMT in gasoline. All in all, worldwide we have already seen some 700 court cases in which a company sued a government, costing the latter billions of euros in legal expenses and tenfold that amount in compensation payments for the corporations. Special courts for big industry are courts of exception, and they don't have their place in a democracy. You cannot give in one inch on this issue, unless of course you want common people not to have any say at all anymore.”

Biting into a rotten Apple

Eoghan M. Ó Néill There has been a bit of an outcry over the EU’s decision to rule against the Government’s sweetheart deal with Apple, which if upheld will mean Apple paying €13 billion, with interest, into the Irish exchequer.      The greatest portion of this was generated by super-exploited labour in the global south and rightfully belongs to them.      Both Apple and the Government are appealing the EU decision, much to the derision of the Irish left, and indeed the Irish people, who see the €13 billion and change as a windfall that could be used to pay for social projects such as housing, job creation, etc., thereby to some extent assuaging the damage done to the working class after eight years of austerity and the crippling criminal debt burden of European bankers imposed on the Irish people.      Of course it will do nothing of the kind.      This fracture within the capitalist camp bears further examination and with even a cursory analysis exposes a number of areas of imperialist exploitation.      Whether or not Apple pays the €13 billion, it is the duty of the left to pull apart this fracture and to emphasise the extent of exploitation perpetrated by Apple and all transnational corporations. We need to go further than just populist posturing over how we might spend this windfall and dig down to expose the roots of Apple’s super-profits, how Apple and other transnational corporations accumulate such profits, and who are the real generators of such wealth.      We need to expose the super-exploitation of our comrades in the global south and demonstrate that Apple is not a one-off: such super-exploitation is endemic to the operation of all transnational corporations.      Neither is the Irish sweetheart deal unique to Apple. The Irish corporate tax rate of 12½ per cent is more myth than real. We need also to expose the many ways by which TNCs use Ireland to support their super-exploitation of global labour and to deny states their rightful taxes.      This rift between the EU, Ireland and Apple uncovers the dependence of the Irish economy on transnational corporations, revealing the imperialist grip on the Irish state, raising questions about our sovereignty and democracy. It further reveals the shifting of the tax burden from transnational corporations to the working class, and the huge transfers of wealth from those without to the top 1 per cent.      Nor is the EU an innocent in this. The action of the EU Commission in declaring against Ireland and Apple must also be subjected to analysis. The EU is not concerned with Apple’s super-exploitation of workers, only with the dividing up of the imperialist rent (in the form of taxes).      This falling out between capitalists has opened a small chink in the armour of imperialism. The left has to be careful that it does not get sidetracked into concentrating all its attention and energy on the issue of the €13 billion, attractive as that is, but must use this opportunity to expose the extent of imperialist subjugation of the international working class.      The politicians and the media would have us concentrate on the €13 billion, encouraging us to dream of what we could do with it, and to argue over the rights and wrongs of whether we should accept it or not. It is our purpose instead to expose the fault lines that are emanating from this tiny chink, and in that exposure to contribute to the raising of the consciousness of our class.      The debacle over Irish Water, the debt burden, austerity, the growing shelter crisis and the imposing of exploitative trade agreements are all helping to lift the scales from the eyes of the Irish working class. This self-inflicted wound of capitalism can help further move those scales, but only if we are capable of seeing beyond the captivating aura of the robbers’ gold. Dependence and the transnational corporations Apple is not the only transnational corporation in Ireland. Nor is it the only one with some kind of sweetheart deal with the Government. Google, Dell, Metronic, Pfizer, Actaris, Oracle and CRH are only a few of the thousand-plus transnational corporations based in Ireland. They dominate our export trade, pay 40 per cent of corporate taxes, and have created a dependence among many of Ireland’s indigenous industries.      The Government is also dependent upon them. As a comprador government, it seeks to disguise this dependence behind a screen of easy job-creation options, showing that the employees of TNCs pay taxes and are consumers. While TNCs pay only a small portion of the corporation tax they are supposed to pay, at the same time they artificially inflate Ireland’s GDP and growth figures, making the economy appear wealthier than it really is. This plays into the Government’s illusion of Ireland having a wealthy economy.      The Government would have us believe that TNCs are attracted to Ireland because we have a young, well-educated population with direct access to Europe. Until Brexit, Britain offered all these, only more so.      So what else has Ireland to offer? Natural resources?—not unless you count magnificent scenic views as a natural resource. What Ireland does have is the lowest corporate tax rate in the EU.      The Matheson Ormsby Prentice index of foreign direct investment states: “Ireland scored the best when it came to corporate tax rates, corporate tax regime, interest rates, government incentives, physical infrastructure and IT environment and access to a pool of local skilled labour at appropriate levels.”      Access to Continental Europe and English-speaking workers were also in there; but the incentive to TNCs locating in Ireland was more economically grounded than the demographic of Ireland’s young population. Not satisfied with the lowest level of corporation tax in the EU, TNCs have sought sweetheart deals whereby they pay corporation tax as low as 2.2 per cent. Last year Apple paid only 0.005 per cent, or €50 for every million of profit.      TNCs do not even have to produce anything in Ireland. Dell, for example, ceased production in Ireland in 2009, with the loss of 1,900 jobs, and moved production to Poland. However, the corporation retained an office in Ireland, and profits produced in Poland and elsewhere were trafficked through here in order to benefit from Irish tax laws.      Big Pharma, some of which do still produce some products in Ireland, also set up here to benefit from Ireland’s tax laws, making super-profits by locating patents in Ireland. Writing on the pharmaceutical TNCs based in Ireland, Chris van Egeraat and Frank Barry, in their report “The Irish Pharmaceutical Industry over the Boom Period and Beyond,” stated: “Apart from the import of raw and intermediate materials, all of Ireland’s foreign-owned manufacturing sectors make substantial payments to their overseas parent companies in the form of royalties and licence fees and payments for miscellaneous business services.”      These internal licence fees, royalties and payments for miscellaneous services are a tactic employed by all TNCs to further reduce their tax liability. Data from the US Bureau of Economic Analysis demonstrates that, on average, American TNCs make an annual profit of $970,000 from each of their Irish employees, while they paid corporation tax in Ireland of only about $25,000. Apple, for example, with income of a little less than €200 billion, employs only 5,000 people in Ireland.      At present, TNCs make up only 9.4 per cent of the Irish manufacturing sector but account for 83.4 per cent of value added. It is a similar tale in the services sector, where TNCs represent only 1.9 per cent of the sector yet command 42.9 per cent of the value added. Furthermore—depending on the statistics you use—TNCs control between 75 and 90 per cent of Irish exports. Either figure is a serious cause for concern.      These figures are an indication of the level of dependence that the Irish economy has on TNCs. This is worrying, for two reasons. Firstly, TNCs are very fluid. They come and, when it is more profitable to move elsewhere, they go. One of the reasons the Government has given for challenging the EU Commission’s decision on Apple is the fear that Apple and other TNCs might leave for more compliant countries, and that others would be deterred from setting up here. Turkey has already invited Apple to set up there, promising that in doing so Apple would not be disturbed by interference from the EU. Foreign direct investment The second concern is the shift from inward foreign direct investment to contract production. Inward FDI is declining, not only in Ireland but in the EU. The Government recognised this in its Policy Statement on Foreign Direct Investment (July 2014). In this statement it notes the “substantial reduction” in FDI into Ireland and the EU. In 2007, FDI stood at a record $859 billion, which fell to $286 billion in 2013. Inward FDI to the EU has fallen to just over a quarter of what it was a mere six years earlier.      This is a worrying trend for a small open economy such as Ireland’s, which is so heavily dependent upon inward FDI. It is difficult to be certain, because the data is not there, but the assumption is that a good portion of the missing FDI can be accounted for by the movement by TNCs away from FDI towards contract production, a relatively recent phenomenon that John Smith describes in his book Imperialism in the 21st Century as becoming increasingly important to TNCs.      The example of Dell above is one demonstration of how contract production works. Contract production is most prominent in the pharmaceutical and technology sectors.      In the 2016 edition of Pharmaceutical Manufacturing the magazine states that global contract pharmaceutical manufacturing (contract production) would grow to $79.24 billion by 2019, from a base of $54.54 billion in 2013. Given that pharmaceutical TNCs account for 58 per cent of Irish exports, this is not good news for the Irish economy.      Such is the extent of TNC contract production that the Government’s Fiscal Advisory Council reported that it accounts for 43 per cent of Irish GDP in 2014. In other words, 43 per cent of the country’s GDP was not based on solid trade produced in Ireland but on the repatriated profits moving through Ireland. This fact alone illustrates the precariousness of the Irish economy in its dependence on TNCs.      As TNCs move from FDI to contract production, this will have a detrimental effect on the Irish economy, resulting in job losses. Most of the indigenous industries that rely on TNCs’ production in Ireland will be sacrificed. Consumption will drop, as will revenue in the form of PRSI and VAT.      Those special deals with TNCs that the Government has been engaging in since 2007 are a last-ditch effort to retain some form of TNC presence in Ireland. Having failed to develop a strong base for indigenous industries and instead becoming increasingly dependent upon TNCs, the Government is bereft of ideas for planning a sustainable indigenous industrial base.      Apple is the biggest of the TNCs in Ireland. Its rise embodies the global rise of all TNCs. An analysis of Apple will expose the capitalising of the super-exploitation of workers in the global south, the tax havens, such as Ireland, and the accumulation of record profits and cash reserves. As with all TNCs, the beneficiaries are the company’s management and shareholders. Indeed never before have TNCs been awash with so much cash. The rest of the world, the workers who create the wealth, citizens and even national governments hardly get a look in.      Essentially, Apple’s and the other TNCs’ massive accumulation of wealth is based on two interconnected strategies: the exploitation of workers, and dodging tax.      This massive accumulation of wealth by TNCs has a flip side, with trends in high unemployment, the increasing precariousness of labour, increasing inequality, fiscal austerity, increasing taxes (often in the form of new taxes), reduced public services and the privatisation of those same services, lower wages, and consumption fuelled by debt. This is unsustainable. On one side, TNCs continue to make profits they cannot reinvest in the real economy, so instead they inflate the financial sector; on the other side, there is rising public and personal debt.      We have been here before, and the outcome will differ only in its intensity and devastation.      By looking at Apple and at TNCs in general we can discern the broader interconnecting trends that are shaping the economics of both the global north and the global south. In the global south we see (1) the super-exploitation of low-waged workers and (2) the capture of imperial rent by means of financial and structured incentives, and tax-dodging, resulting in massive corporate profits.      In the global north we see (1) declining wages, (2) lower nominal taxes on capital, and (3) lower corporate taxes, again resulting in massive corporate profits.      In both cases we see (1) a massive transfer of wealth from the working class to TNCs and (2) the movement of the tax burden from TNCs onto the shoulders of the working class, resulting in the scaling back of socialised public services and their replacement with privatised, commodified services for profit.      According to the United Nations Conference on Trade and Development there has been a global decline in wage share from 64 per cent in 1980 to 54 per cent in 2008, signifying a huge transfer of money from workers, communities and societies at large to the owners of capital amounting to $7 trillion in 2013.      The report also shows that the assets held by foreign affiliates of transnational corporations rose from $3.9 trillion in 1990 to $102 trillion in 2014. Global sales by foreign affiliates of transnationals rose from $4.7 trillion in 1990 to $36.4 trillion in 2014. In 2013 UNCTAD estimated that 80 per cent of global trade took place between and within transnational corporations, i.e. affiliate companies conducting business with one another within a corporate conglomerate. This is one of the means that TNCs use to dodge tax.      Since the 1970s we have witnessed a new international division of labour, seeing corporations move production from high-wage to low-wage economies in order to lower production costs and increase profits. These developments are part of a global neo-liberal programme of accelerated policies, with states around the world enacting policies of deregulation, liberalisation, and privatisation. The European Union The EU appears to be quite upset with Ireland and Apple. It claims that Ireland gave Apple a deal that is not available to other TNCs and therefore breaches the EU rules on competition and state aid.      This is a dubious concern of the EU. Ireland has separate deals with a number of the thousand and more TNCs established here. The Government allows them to repatriate profits produced in Ireland, to channel profits from contract production through Ireland, and likewise with profits from patents located in Ireland and other means, such as transfer-pricing, by which TNCs can dodge paying taxes due in other countries, and indeed in Ireland.      But Ireland is not the only EU state to do this. The Netherlands and Luxembourg also have deals with Apple whereby little or no tax is paid. France, which has a stated corporation tax of over 30 per cent, has deals whereby TNCs pay only 8 per cent. So what is behind the EU problem with Apple’s Irish deal?      Basically, the EU is an imperialist entity, largely controlled by Germany and France. For some time it has wanted to extend its control over member-states, particularly in the economic arena. Centralised fiscal policies have been on the agenda since the Lisbon Treaty of 2009. The EU already exercises some control over VAT, and tariffs for external trade; and there is the Stability and Growth Pact, which restricts the amount a member-state can borrow to spend on social policies.      The EU summit in Bratislava in September 2016 has on its agenda proposals for greater economic and fiscal centralisation. Could perhaps the hue and cry over Apple be a mere coincidence, given that the Commission’s decision came immediately before the Bratislava summit and has forced the issue onto the summit’s agenda? The centralisation of tax, and in particular corporation tax, will be discussed in Bratislava. The debacle over Ireland and Apple will set the tone of the debate—no doubt strengthening the hands of the central European powers of Germany and France.      The secret negotiations by the EU with Canada and the United States on CETA and TTIP will, if ratified, further increase the dependence of EU national states on both the EU and TNCs, with the power of national governments to conduct trade deals and to enact legislation being severely curtailed. National parliaments will be reduced to grandiose county councils. Even the national judiciary will be sidestepped, with TNCs being able to sue states through private courts, administered by corporate lawyers. The threat of these courts will curtail any action by governments to improve the lot of their people, including minimum wages, health and safety, the environment, and financial regulation. Indeed the pursuit of profit will take precedence over the well-being of the people.      A question that has to be addressed is, Is this dispute between Ireland and Apple on one side the EU on the other part of a power play between the imperial powers of the United States and the EU? Conclusion The questions surrounding Ireland and Apple are not simply about EU rules, or the repayment of €13 billion. They are about the nature of global monopoly capitalism, about TNCs’ production processes and financialisation and their monopolistic control of the markets; they are about the manoeuvres of the imperialist triad of North America, Europe and Japan for hegemonic control; they are about the economic and political sovereignty of states; and they are about the accumulation of wealth and the exploitation of workers.      The three interlinked characteristics that define this period of capitalism—neo-liberalism, financialisation, and globalisation—have shaped the 21st-century form of imperialism. Imperial hegemony is becoming entrenched in the core capitalist economies, while it is extending into regions where it has previously not been as strong. Trade agreements such as NAFTA, CETA, TTP, TTIP and TISA have been designed to copperfasten that hegemony and to further centralise economic and political control in the imperialist core and away from peripheral states.      We are seeing the results of this imperial strategy unfold before us: the concentration of wealth in fewer hands. In Apple we see the massive accumulation of wealth by TNCs and the growing subjugation of national economies to the interests of TNCs in their pursuit of greater profit.      This dichotomy is particularly seen in the peripheral states. The worst excesses of monopoly capitalism are played out in the periphery. We are witnessing high levels of unemployment, greater precariousness in employment, wage reductions, higher and more taxes, the loss of public services, increasing inequality, and massive transfers of wealth from workers to the capitalist class.      How are we to challenge this capitalist onslaught? It is necessary to go beyond reacting to each cut and each outrage: we must go beyond defensive reactions, which leaves the initiative with the capitalist class. Our struggles must be framed within a purposeful strategy of breaking the link with capitalism.      Capitalism is by its nature polarising and imperialist. This must raise the question whether peripheral countries can catch up. Can peripheral economies become fully capitalist? If not, this in turn raises the question whether globalised monopoly capitalism has shut off the possibility of peripheral economies becoming fully capitalist as a stage towards socialism.      Many peripheral economies have become industrialised and some financialised, but these economies are subordinated to the interests of the core imperialist economies. The methods of production, componentisation of production, contract production and monopolistic control over distribution and retail networks, in tandem with the huge burdens of increasing national and personal debt, militate against the ability of the peripheral economies to emerge from the shadow of the imperialist centre and become fully capitalist economies in their own right.      Imperialism itself has become centralised. Although dominated by the United States, the imperialist core of North America, Europe and Japan are no longer in serious dispute with each other. They have developed global management tools, such as the World Trade Organization, the World Bank, NATO, the IMF, the OECD, and G8, as a means of ensuring continued imperialist hegemony, thereby preventing the possibility of most peripheral economies going it alone. Even China, with its massive economy, is vulnerable and is under attack through the Trans-Pacific Partnership (TTP).      Modern capitalism is a globalised system. It is no longer a number of independent capitalist systems living side by side and in constant competition with each other. As John Smith stresses in his book Imperialism in the 21st Century, the capitalist core is no longer in competition within itself. Instead it encourages competition between peripheral economies, both as a means of lowering production costs and as a means of control.      The Marxist economist Samir Amin argues that it will take the concerted effort of workers in both the global north and the global south to make the break with capitalism. That much is self-evident. Amin also argues for the de-linking of peripheral states from capitalism. His argument is that underdeveloped peripheral economies cannot progress under capitalism, let alone catch up. Monopolistic control of the markets by TNCs, increasing government and personal debt, along with downward pressure on wages and the marginalisation of national governments in the economic sphere, prevent emerging economies from catching up. Nor is it in the interests of the imperialist core that they do so.      Peripheral states in Europe may be more developed economically, at least on the surface. However, economies such as those of Ireland, Portugal, Spain, Greece and Italy are in hock to the TNCs. Wages are depressed, debt is increasing, and the ability of national governments to control their economies has been eroded by the EU, the fear of not satisfying the interests of TNCs, and the proposed trade agreement of CETA, TTIP, and TISA.      We need look no further than recent history to see what happens to peripheral economies that try to fight back while remaining within the capitalist fold: the destruction of Greek democracy and economy, the technocratic government put into Italy, and the dictating of Ireland’s economy, even to the point of placing the lion’s share of private bankers’ debt onto the shoulders of the Irish working class.      The economic policies of the EU peripheral states are increasingly being dictated by the EU, the ECB, the EU Commission, and international capitalist tools of dominance: the IMF, the World Bank, and of course the TNCs. As long as the peripheral states remain in the EU and the capitalist camp they will remain as appendages to the imperialist core. De-linking from the EU and from capitalism and pursuing a socialist path is the only option.      De-linking is both a national and an international struggle. It requires fighting on the home front while building international alliances with comrades in other states. It means building a shared programme for de-linking. Such a programme is not a vision but the cold application of the tools of Marxist analysis. We need to build the economic and political models that de-linking would entail.      Inward foreign direct investment to Europe is falling as TNCs move towards contract production, and exports are dominated by TNCs that repatriate the profits. Overall, the future for European peripheral economies is not bright. They will stagnate before collapsing. One thing they will not do is progress.      The Apple model of extracting massive surplus value while dodging taxes will continue to weaken economies as debt increases and consumption falls. Such a model is unsustainable. The only solution is socialism. The de-linking of the European peripheral economies from the EU and from capitalism offers an alternative of a new core of socialised economies, designed on need rather than on profit.      Such a project would challenge the myth of the capitalist “end of history” and forge new links among the international working class.

Source: Rodrigo Fernandez and Reijer Hendrikse, Rich Corporations, Poor Societies: The Financialization of Apple.

How Apple works In their report “The Financialization of Apple,” Rodrigo Fernandez and Reijer Hendrikse state: “Besides offshoring production to low-wage countries to minimize costs, the accounting behind Apple’s global product sales, profits and cash reserves has been reorganized to minimize the company’s tax returns. Apple’s Irish operations located in Cork initially included production, but since the late-1990s reorganization of Apple this is no longer the case.”      Ireland is the centre for Apple’s financialisation (see the attached graph). It has two companies registered at the same Cork address: Apple Operations International and Apple Sales International. According to the US Senate, AOI “has not declared tax residency in Ireland and has not paid any corporate tax to any national government in the past five years.”      Apple has in effect used AOI to exploit a difference between US and Irish residence rules to avoid paying tax. To complicate things, AOI does not employ any staff: it is in fact managed by another Apple subsidiary, Braeburn Capital, based in Reno, Nevada. Nevada has 0 per cent corporation tax.      “Apple has assigned partial ownership of its Irish subsidiaries to Baldwin Holdings Unlimited in the British Virgin Islands, a tax haven, according to documents filed there and in Ireland. Baldwin Holdings has no listed offices or telephone number, and its only listed director is Peter Oppenheimer, Apple’s chief financial officer, who lives and works in Cupertino.”      The second Apple affiliate in Ireland, Apple Sales International, is a subsidiary of Apple Operations Europe, which is owned by AOI—a circle that begins and ends in Ireland. ASI also operates without being tax-resident (see the graph). Between 2009 and 2012 ASI accumulated $74 billion, paying little or no tax.      As with AOI, ASI did not employ anyone, at least until 2012, when 250 employees of AOE were assigned to ASI. Apple continues to claim that ASI is managed outside Ireland, and that it is not tax-resident in either Ireland or the United States.      Commenting on Apple’s labyrinthine tax-dodging, the US Senate states: “In addition to shielding income from taxation by declining to declare tax residency in any country, Apple Inc.’s Irish affiliates have also helped Apple to avoid U.S. taxes in another way, through utilization of a cost-sharing agreement and related transfer-pricing practices.”      Of course Apple has other affiliates in Europe and throughout the world, including the Netherlands, Luxembourg, and Singapore—not counting its worldwide network of retail affiliates. However, as Apple transfers its economic rights in Apple products to Ireland, many countries are seeing little if any tax returns from the company. For example, in 2011 Apple recorded 84 per cent of its non-US operating income through ASI in Ireland, resulting in a tax liability of nil for Apple’s French and German retail affiliates.      John Smith in Imperialism in the 21st Century argues that contract production hides the wealth that is being extracted from workers in the global south. All Apple’s production is done through contract production, in numerous factories in numerous countries. In some cases these are subcontracted by European affiliates to industries in the global south, adding another layer to the Apple labyrinth. This surplus value is trafficked through Ireland, hiding the level of exploitation and allowing Apple to dodge tax in the counties of production and minimise tax paid in Ireland.

Washington’s Global Economic Wars

Washington’s Global Economic Wars

James Petras

Introduction

            During most of the past two decades Washington has aggressively launched military and economic wars against at least nine countries, either directly or through its military aid to regional allies and proxies.  US air and ground troops have bombed or invaded Afghanistan, Iraq, Pakistan, Libya, Somalia, Syria, Yemen and Lebanon.

            More recently Washington has escalated its global economic war against major economic rivals as well as against weaker countries.  The US no longer confines its aggressive impulses to peripheral economic countries in the Middle East, Latin America and Southern Asia:  It has declared trade wars against world powers in Asia, Eastern and Central Europe and the Gulf states.

            The targets of the US economic aggression include economic powerhouses like Russia, China, Germany, Iran and Saudi Arabia, as well as Syria, Yemen, Venezuela, Cuba and the Donbas region of Ukraine.

            There is an increasingly thinner distinction between military and economic warfare, as the US has frequently moved from one to the other, particularly when economic aggression has not resulted in ‘regime change’ – as in the case of the sanctions campaign against Iraq leading up to the devastating invasion and destruction.

            In this essay, we propose to examine the strategies and tactics underlying Washington’s economic warfare, their successes and failures, and the political and economic consequences to target nations and to world stability.

Washington’s Economic Warfare and Global Power

            The US has used different tactical weapons as it pursues its economic campaigns against targeted adversaries and even against its long-time allies. 

            Two supposed allies, Germany and Saudi Arabia, have been attacked by the Obama Administration and US Congress via ‘legal’ manipulations aimed at their financial systems and overseas holdings.  This level of aggression against sovereign powers is remarkable and reckless.  In 2016 the US Justice Department slapped a $14 billion dollar penalty on Germany’s leading international bank, Deutsche Bank, throwing the German stock market into chaos, driving the bank’s shares down 40% and destabilizing  Germany’s financial system.  This unprecedented attack on an ally’s major bank was in direct retaliation for Germany’s support of the European Commission’s $13 billion tax levy against the US-tax evading Apple Corporation for its notorious financial shenanigans in Ireland.  German political and business leaders immediately dismissed Washington’s legalistic rhetoric for what it was: the Obama Administration’s retaliation in order to protect America’s tax evading and money laundering multinationals.

            The chairman of the German parliament’s economic committee stated that the gross US attempt to extort Deutsche Bank had  all the elements of an economic war.   He noted that Washington had a “long tradition of using every available opportunity to wage what amounted to a  trade war if it benefits their own economy” and the “extortionate damages claim” against Deutsche Bank were a punitive example.  US economic sanctions against some of Germany’s major trade partners, like Russia, China and Iran, constitute another tactic to undermine Germany’s huge export economy.  Ironically, Germany is still considered “a valued ally” when it comes to the US wars against Syria, Afghanistan and Iraq, which have driven millions of refugees to Europe creating havoc with Germany’s political, economic and social system and threatening to overthrow the government of ‘ally’ Angela Merkel.

            The US Congress launched an economic-judicial war against its closest ally in the Gulf region when it approved legislation granting US victims of Islamist terrorism, especially related to the attacks on September 11, 2001,the right  to sue the government of Saudi Arabia and seize its overseas assets.  This included the Kingdom’s immense ‘sovereign funds’ and constitutes an arbitrary and blatant violation of Saudi sovereignty.  This opens the Pandora’s Box of economic warfare by allowing victims to sue any government for sponsoring terrorism, including the United States!   Saudi leaders immediately reacted by threatening to withdraw billions of dollars of assets in US Treasuries and investments. 

            The US economic sanctions against Russia are designed to strengthen its stranglehold on the economies of Europe which rely on trade with Russia.  These have especially weakened German and Polish trade relations with Russia, a major market for German industrial exports and Polish agriculture products.   Originally, the US-imposed economic sanctions against Moscow were supposed to harm Russian consumers, provoke political unrest and lead to ‘regime change’.   In reality, the unrest it provoked has been mainly among European exporters, whose contracts with Russia were shredded and billions of Euros were lost.  Furthermore, the political and diplomatic climate between Europe and Russia has deteriorated while Washington has ‘pivoted’ toward a more militaristic approach.

            Results in Asia have been even more questionable:  Washington’s economic campaign against China has moved awkwardly in two directions:  Prejudicial trade deals with Asian-Pacific countries and a growing US military encirclement of China’s maritime trade routes.

            The Obama regime dispatched Treasury Secretary Jack Lew to promote the Trans- Pacific Partnership (TPP) among a dozen regional governments, which would blatantly exclude China, Asia’s largest economic power.   In a slap to the outgoing Obama Administration, the US Congress rejected his showpiece economic weapon against China, the TPP. 

Meanwhile, Obama ‘encouraged’ his erstwhile ‘allies’ in the Philippines and Vietnam to sue China for maritime violations over the disputed ‘Spratly Islands’ before the Permanent Court of Arbitration.   Japan and Australia signed military pacts and base agreements with the Pentagon aimed at disrupting China’s trade routes.  Obama’s so-called ‘Pivot to Asia’ is a transparent campaign to block China from its markets and trading partners in Southeast Asia and Pacific countries of Latin American.  Washington’s flagrant economic warfare resulted in slapping harsh import tariffs on Chinese industrial exports, especially steel and tires.  The US also sent a ‘beefed up’ air and sea armada for ‘joint exercises’ along China’s regional trade routes and its access to critical Persian Gulf oil, setting off a ‘war of tension’.

             In response to Washington’s ham-fisted aggression, the Chinese government deftly rolled out the Asian Infrastructure Investment Bank (AIIB) with over fifty countries eagerly signing on for lucrative trade and investment deals with Beijing.  The AIIB’s startling success does not bode well for Obama’s ‘Pivot to Pacific Hegemony’.

            The so-called US-EU-Iran accord did not end Washington’s trade war against Teheran.  Despite Iran’s agreement to dismantle its peaceful uranium enrichment and nuclear research programs, Washington has blocked  investors and tried to undermine trade relations, while still holding billions of dollars of Iranian state assets, frozen since the overthrow of the Shah in  1979.  Nevertheless, a German trade mission signed on a three billion trade agreement with Iran in early October 2016 and called on the US to fulfill its side of the agreement with Teheran – so far to no avail.

            The US stands alone in sending its nuclear naval armada to the Persian Gulf and threatens commercial relations. Even the Kingdom of Saudi Arabia, the longstanding enemy of the Iranian Islamic Republic, has agreed to a cooperative oil production arrangement at a recent OPEC meeting.

             

            Washington’s declaration of economic warfare against two of its most strategic powerful allies, Germany and Saudi Arabia and three rising competitor world powers, has eroded US economic competitiveness, undermined its access to lucrative markets and increased its reliance on aggressive military strategies over diplomacy.

            What is striking and perplexing about Washington’s style of economic warfare is how costly this has been for the US economy and for US allies, with so little concrete benefit.

            US oil companies have lost billions in joint exploitation deals with Russia because of Obama’s sanctions.  US bankers, agro-exporters, high-tech companies are missing out on lucrative sales just to ‘punish’ Russia over the incredibly corrupt and bankrupt US coup regime in Ukraine.

            US multi-national corporations, especially those involved in Pacific Coast transport and shipyards, Silicon Valley high tech industry and Washington State’s agro-export producers are threatened by the US trade agreements that exclude China.

            Iran’s billion dollar market is looking for everything from commercial airplanes to mining machinery.  Huge trade deals have has been lost to US companies because Obama continues to impose de facto sanctions.  Meanwhile, European and Asian competitors are signing contracts.

            Despite Washington’s dependence on German technical knowhow and Saudi petro-dollar investments as key to its global ambitions, Obama’s irrational policies continue to undermine US trade. 

            Washington has engaged in economic warfare against ‘lesser economic powers’ that nevertheless play significant political roles in their regions.  The US retains the economic boycott of Cuba; it wages economic aggression against Venezuela and imposes economic sanctions against Syria, Yemen and the Donbas region in eastern Ukraine.  While these countries are not costly in terms of economic loss to US business interests, they exercise significant political and ideological influence in their regions, which undermine US ambitions.

Conclusion

            Washington’s resort to economic warfare complements its military fueled empire building.

            But economic and military warfare are losing propositions.  While the US may extract a few billion dollars from Deutsch Bank, it will have lost much more in long-term, large-scale relations with German industrialists, politicians and financiers.  This is critical because Germany plays the key role in shaping economic policy in the European Union.  The practice of US multi-national corporations seeking off-shore tax havens in the EU may come to a grinding halt when the European Commission finishes its current investigations.  The Germans may not be too sympathetic to their American competitors.  

Obama’s Trans-Pacific Partnership (TPP) has not only collapse, it has compelled China to open new avenues for trade and cooperation with Asian-Pacific nations – exactly the opposite of its original goal of isolating Beijing.  China’s Asia Infrastructure and Investment Bank (AIIB) has attracted 4 time more participants than Washington’s TPP and massive infrastructure projects are being financed to further bind ASEAN countries to China.  China’s economic growth at 6.7% more than three times that of the US at 2%.  Worse, for the Obama Administration, Washington has alienated its historically most reliable allies, as China, deepens economic ties and cooperation agreements with Thailand, Philippines, Pakistan, Cambodia and Laos.

            Iran, despite US sanctions, is gaining markets and trade with Germany, Russia, China and the EU.

            The Saudi-US conflict has yet to play-out but any escalation of law suits against the kingdom will result in the flight of hundreds of billions of investment dollars from the US.

            In effect, Obama’s campaign of economic warfare may lead to the infinitely more costly military warfare and the massive loss of jobs and profits for the US economy.   Washington is increasingly isolated. The only allies supporting its campaign of economic sanctions are second and third rate powers, like Poland and current corrupt parasites in Ukraine.  As long as the Poles and Ukrainians can ‘mooch’ off of the IMF and grab EU and US ‘loans’, they will cheerlead Obama’s charge against Russia.  Israel, as long as it can gobble up an additional $38 billion dollars in ‘aid’ from Washington, remains  the biggest advocate for war against Iran.

            Washington spends billions of US tax-payer dollars on its military bases in Japan, Philippines and Australia to maintain its hegemony in the Asia-Pacific region.   Its allies, though, are salivating at the prospect for greater trade and infrastructure investment  deals with China.

            Economic warfare doesn’t work for the Washington because the US economy cannot compete, especially when it attacks its own allies and traditional partners.  Its regional allies are keen to join the ‘forbidden’ markets and share in major investment projects funded by China.  Asian leaders increasingly view Washington, with its ‘pivot to militarism’ as politically unreliable, unstable and dangerous.  After the Philippine government economic mission to China, expect more to ‘jump ship’.

            Economic warfare against declared adversaries can only succeed if the US is committed to free trade with its allies, ends punitive sanctions and stops pushing for exclusive trade treaties that undermine its allies’ economies.   Furthermore, Washington should stop catering to the whims of special domestic interests.  Absent these changes, its losing campaign of economic warfare can only turn into military warfare – a prospect devastating to the US economy and to world peace.