Friday, 30 November 2007

How the super-rich just get richer

By Helen Williamson
BBC Money Programme

Britain has more rich people than ever before, and it is not just footballers like David Beckham and Wayne Rooney.

With a global economy, successful people in all sorts of professions can now command global-scale pay packets.

The mega-successful at the top of their profession are taking advantage of a phenomenon known as the "Superstar Premium".

Advances in multi-media technology mean that today's superstars operate in a global marketplace.

By being the best in their field, they attract a disproportionate amount of business compared to less successful competitors.

Global exposure

Economist Sherwin Rosen developed the idea of the Superstar Premium in the early 1980's to explain why some musicians were earning so much money.

Before recording technology, even the most popular artists had their earnings limited by the number of people who could hear them perform live.

When I was about seven, I said to my mother 'how much money do I have to earn to be able to eat caviar every day?'
Vanessa Mae

But with the advent of records, CDs and now the internet, the most popular artists can reach a much wider audience, and therefore earn much more money from doing the same amount of work.

Vanessa-Mae is the world's most popular violinist, but unlike violinists 50 years ago, she has a global fan base.

She has been able to take advantage of the Superstar Premium and is aware how the life of a musician has changed.

"The exposure that you get around the world is only thanks to technology," she says.

"If I had to flog my albums 50 years ago by taking a boat, I mean, it would have taken me five years to promote one album."

It has allowed her to sell more than 10 million records world-wide and has subsidised the super-rich lifestyle she dreamed of as a child.

"When I was about seven, I said to my mother 'how much money do I have to earn to be able to eat caviar every day?'"

Television means that today's top footballers are also economic superstars.

When England captain Bobby Moore lifted the World Cup in 1966 he earned £100 a week.

Today's England captain, John Terry, holds the same position, but reportedly earns over £130,000 a week.

As economist Prof Danny Quah, from the London School of Economics points out the English Premier League is "a global franchise".

"It is watched by half a billion people in the world, more people than we've lifted out of poverty in the last 20 years," he says.

And the top players don't just get huge salaries for their performance on the pitch. Their famous faces are found on advertising billboards across the globe - adding even more to their incomes.

David Beckham earned over £11m from endorsements alone last year.

It is not just the famous who are affected by the superstar premium.

Demand for luxury

Technology has enabled humble bookies to become financial superstars.

By setting up an online betting agency, the founders of Betfair serve punters around the world and co-founder Edward Wray is aware of the superstar premium:

"It's very important for us to be number one," he says. "I mean, ours is a model that in many ways the bigger you are, the more efficient the model becomes."

And because they are number one they pull in the most punters - earning Wray and his partner Andrew Black superstar fortunes.

With personal fortunes of tens and sometimes hundreds of millions of pounds, economic superstars have plenty of cash to splash.

Superstars are boosting the luxury goods market, with worldwide sales in the sector topping £75bn last year.

"Aston Martin has gone from a cottage industry to a global one. We've gone from selling 200 cars a year to 7,000" says Craig Davison, from Broughton's Aston Martin in Cheltenham.

Similarly, private jet firm NetJets, whose cheapest deal is £85,000 for 25 hours flying time, has seen its business expand rapidly.

"Five years ago we had 18 aircraft and 89 customers, whereas today we have 135 aircraft and 1500 customers," says its marketing executive Robert Dranitzke.

"If you compare us to the airlines, we have the 7th largest fleet in Europe and we're growing faster than anybody else."

'Trickling down?'

But what is the impact of all this wealth on the rest us?

Not all of these fortunes are being spent or invested in Britain, says Peter Charrington, head of Citi's UK private banking arm.

"Although these are people who will clearly have significant interests here in the UK and invest here in the UK, they're also looking to place their money around the world," he says.

Mr Charrington says the super-rich are looking for opportunities in China, India and Latin America "whether that be in private equity or hedge fund businesses".

In the US, 1% of the population control almost 40% of wealth

"That's particularly important to our types of clients."

There are some who think the Superstar Premium does benefit society thanks to the "trickle down effect".

"Big spenders will have to spend their money on the things that the rest of society provides," says Professor Quah.

"So almost mechanically, the marketplace disseminates that wealth."

So whether we love them or hate them, the fortunes of the superstars are only set to increase as the opportunities of the global marketplace grow and grow.

Money Programme: "Superstar, Super-rich": Friday 30 November at 7pm on BBC2
Story from BBC NEWS:

Saturday, 24 November 2007

The Cancer Of Economic Growth



By Gustavo Esteva

23 Novembe, 2007
La Jorna

It has become possible, only after tragedies such as the one that took place in Tabasco, to publicly debate a central precept of the dominant religion: the goal of accelerated economic growth. Fifty years of propaganda have converted the economists' dogma into a general prejudice. Without discussion, we accept that accelerated economic growth is desirable. Now the time has come to abandon this pernicious obsession.

To get as much growth as possible from the economy as well as growth in population appears to be a common sense principle. But it is not. Many things should grow until they reach their correct proportion: plants, animals, people. When something reaches its correct size, and then continues to grow, the resulting protuberance is called a cancer. Much of what increases when formal economy continues to grow is a type of social cancer. Speculation grows, irrational or destructive production grows, corruption and waste grow – all at the cost of what really should increase: social justice and the well-being of the majority.

In every country there are things that have grown too much, things which should be made smaller – and others that have not grown enough or need to continue growing for the greater good. A high rate of economic growth, measured through the gross national product, habitually reflects a growth in what is already large, an authentic social cancer, and a diminishing of what should continue growing.

Economic growth produces the opposite of what it promises. It does not imply greater well-being or employment for the people, or greater efficiency in the use of resources. Quite the opposite: it generates poverty, inefficiency and injustice. There is an abundant historical record to support this argument. To continue to propose a high rate of economic growth as a social goal is pure nonsense. It can only be attributed to the ignorance of a simple soul, cynicism or a combination of the two.

Almost forty years ago, Paul Streeten rigorously documented for the ILO the perverse connection between economic growth and injustice. He demonstrated that greater growth corresponded to greater poverty, and that there is a relation of cause and effect between one and the other. He demonstrated as well that the famous "trickle down effect" – the idea that concentrated riches spill out onto the majority generating well-being in their wake – is a perverse and unfounded illusion.

To concentrate social efforts on economic growth disguises the real goal: greater opulence for a few, at the expense of generalized poverty and the destruction of the natural patrimony. This result is hardly logical, as the economist's obsession does nothing more than apply to the whole of society a strict capital necessity that applies only to him: capital that does not grow, dies; and so it follows indefinitely. For this reason, cultivating the obsession implies writing a blank check to the market leaders or the State, so that they do their thing in the name of the well-being of the majority, a well-being that doesn't appear, and following that path, will never appear.

We need to recover a sense of proportion that is simply another form of common sense: that sense that exists in community. To struggle against a culture of waste, disposability, destruction and injustice, and the culture that has produced global warming to which disasters caused by irresponsibility are now attributed, we can reclaim the sensible and responsible rejection of what is unnecessary in the name of socially viable goals, and discard forever the idolatry of economic growth.

The time has arrived to seriously propose the advantages of a negative growth rate, clearly specifying what we would continue to stimulate. For example, the support of highly efficient, productive and sensible sectors, such as those that make up the majority of the persecuted "informal sector." This will imply a focus on strengthening the productive capacity of the majority, instead of supporting the inefficient giants. The economists' nightmare, a drop in the gross national product, could be a blessing for the majority.

It is time to stop the dominant insanity. Some things need to grow, and others need to contract. Let our capacity to sustain ourselves and our vital autonomy grow. Let our expressions and spaces for exercising liberty and initiative grow. Let the opportunities for a good life multiply, according to the way in which each individual and culture defines that good life. And, to make that possible, let us reduce the weight of a formal economy that oppresses us and wears us down, through everything that contradicts a good life for everyone or destroys nature.

Gustavo Esteva is a grassroots activist and deprofessionalized intelectual. He received the National Award of Economics in 1978, the Mexican Pulitzer in 2006, as well as an honorary degree, honoris causa, from the University of Vermont. He was Chairman of the Board of the United Nations Research Institute for Social Development and advisor to the Zapatistas. Author of more than 30 books and many essays. He can be contacted at

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Wednesday, 21 November 2007

A French lesson about the poverty of rich countries


Mark Steel: 

Published: 21 November 2007

One impact of these strikes in France is that it's confused some of the people who write about such events. Which is why you get articles that seem to go "In a modern globalised economy, old-fashioned militancy simply has no power. That's what these train drivers must realise as they bring the entire country to a stand-still, their powerless union wrecking the economy, not just of France but of Europe and most of outer space. And now loads of other workforces are coming out on strike as well! Haven't they read my book explaining how this can't happen any more? So now, because of them, to get to my lecture entitled, 'The utter futile pointlessness of ever imagining a strike these days could have the tiddliest impact' I've got to bloody well walk!"
Also, being French, the strikes have been carried off with a certain panache. For example, opera singers joined in the dispute, which must have made for the most imaginative picket lines, the soprano and alto alternating lines of "You are a scaaaaab" – "I'm going to work" – "You are a scaaaaaaab" – "I'm going to work" – "Then I must cast this rubble at your face, sir."
And now, in protest at the proposed closure of 200 courts, the legal profession and even judges have voted to strike. Perhaps the judges will have a demonstration, where they shout "What do we want?" – "In answering that chant I want you to consider carefully the evidence provided."
The case against the strikes is the genuinely old-fashioned one, that the workforces involved are defending privileges, such as pensions after 30 years of work, which can no longer be afforded. So an economics lecture supporting the French government would say, "It was one thing having these pensions back in the 1960s when we were much poorer, but now society is much richer they'll have to be scrapped. Because as everyone knows, the richer you get, the less you can afford things."
This is why lottery winners, as soon as they collect their cheque, sell all their records and turn the heating off, aware they'll no longer be able to wallow in their old privileges. And it's well known that when the plough was invented, all the peasants were gathered together and told, "This little beauty will do the work in half the time. And that's marvellous because it means now we've all got to work five hours extra every day".
The argument to scrap these "privileges" goes on to explain that they cripple the economy, making everyone worse off. So presumably the French should be more like the British, because we've been far-sighted enough to have much worse pension schemes, and our working week is on average 2.63 hours longer than the French one. So obviously that makes us better off. But even we're lagging behind truly modern economies, like Burma, where there are no pensions and people are forced to work all day and night or be whacked with a stick. They're rolling in it, the jammy bastards.
Seeing as the new government in France is determined to smash the culture of unearned privilege, Nicolas Sarkozy must be familiar with the characters at the top of the French rich-list. The No.1 spot in this list is a surprise, as you would imagine it must be occupied by a train driver from Lille with lots of stubble, but it turns out that it's Bernard Arnault, chairman of Christian d'Or, who's worth $21bn. He must be in a really outdated union.
It can appear to be a miracle that anyone in France could get that rich, because the place is often presented as a basket-case in which businessmen can't set up the slightest project without provoking a demonstration involving 10,000 burning pigs being dumped in their garden. But the French economy has grown at a similar rate to the rest of the Western world over the last 10 years, with one main difference, that the richest one per cent haven't become three times richer in real terms over the last 10 years, as they have in America and Britain.
This boom for the super-wealthy might be connected to the attitude of Labour's John McFall, chairman of the Treasury Select Committee, who was asked this week whether Northern Rock should be nationalised. And he replied: "I've spoken to no one in the City who feels that's the way to go." So that's how economic decisions are taken. The Government rings up the City and says, "Who do you think should pay for this latest crisis? Should it be you, who caused it, or everyone else, who didn't cause it? I see – everyone else it is then. Thanks for your expert analysis."
Sarkozy represents the frustrated wing of French business that wants their country to be handed to the same City types, their one per cent. Whereas some of the strikers appear to have grasped that when a government proposes cutting pensions, closing 200 courts, cutting 11,000 primary school teachers and privatising parts of the university system, these aren't random flights of madness but part of a pattern. And surely any policy that says, "The way we run our railways is outdated – let's run them more like the system they have in Britain", can't be allowed to succeed.

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Tuesday, 20 November 2007

Chavez and Venezuela

Johann Hari: Chavez must avoid the trap of dictatorship
Venezuela's leader has transformed his country for the better. But he can't afford to feed his enemies' prejudices
Published: 19 November 2007

Hugo Chavez touches down in London this week, to a blaze of slander and lies about his record so far. The Venezuelan President will be dubbed "a military dictator", a "caudillo", a "murderer" and worse. Ah well – at least on this trip Elizabeth Windsor is unlikely to tell him to "shut up", as the Spanish king did during a summit in Chile last week.

So before the misrepresentations begin, let's establish some facts. Before Chavez was elected president in 1998, the country's oil wealth was used exclusively to enrich a tiny white-skinned elite. The forgotten, darker-skinned majority were left to fester in barrios made of mud and rusting tin in the high hills that ring Venezuela's cities. They could only peer down at a marble-white world they would never enter, except as cleaners and skivvies.

Chavez ran for office promising to spend the petro-dollars on them – and he kept his promise. In 2003, two distinguished consulting firms conducted the most detailed study of economic change under Chavez in Venezuela. The results were astonishing. The poorest half of the country has seen their incomes soar by 130 per cent after inflation. Access to clean water is up from 79 per cent to 91 per cent. Access to medical care is at unprecedented levels. In 1998, there were 1,628 primary care doctors in the country. Today, there are 19,571 – an increase by a factor of 10.

I have seen the human stories that lie behind these sterile-sounding statistics. Last year, in the collapsing old barrios, I met women who had been drinking stale water out of barrels all their lives, and now giggled with glee to have fresh running water in their homes. I went to clean, new clinics where tens of thousands of poor people were seeing a doctor for the first time. I spoke to an old man who had been blind for 20 years. He had been given a cataract operation for free – and now he could see again. The oil wealth was suddenly being used to lift up these people, rather than keep them down – just as they demanded at the ballot box.

That's why Venezuelans think their country has become more democratic under Chavez. According to Latinobarometro, the gold standard for Latin American opinion polling, some 32 per cent of people felt satisfied with their democratic process in 1998. Today, it is 58 per cent – more than 20 points ahead of the Latin American average.

But is there a danger Chavez will play into the hands of his critics, and become dictatorial after all? This suggestion will intensify over the next month, as we approach 2 December – the date on which Venezuelans vote on his new proposals to amend the constitution. There are dozens of clauses: the working week will be shortened to 36 hours, extremely popular in a country where most work is back-breaking and tedious.

There will be legal guarantees that private homes can never be expropriated by the government. Much more power will be devolved to elected local councils. But the most controversial clause is an end to the two-term limits on the presidency. This means that Chavez will be able to run again and again for the presidency, for as long as the people want him. There are cries that this will make him a dictator – but using this logic, Britain, France and Germany are dictatorships too.

So why the persistent claims that Chavez is a strongman? There are many bogus reasons to say this – and a few real reasons to worry. Chavez is in a difficult position for any leader in a democracy: his country contains a vociferously, violently anti-democratic minority who are determined to overturn the will of the majority. Venezuela's white elite have been astonished by their sudden loss of power and privilege. They were accustomed to seeing the country's petro-wealth as their private preserve. They are supported by the US government, who are appalled that their corporations suddenly have been asked by Chavez to pay their fair share – and by his attempts to spread this model abroad. From the moment Chavez was elected, they have fought to topple him.

First, they tried an economic siege: the Venezuelan rich went on strike. They locked the workers out of their factories and firms in an attempt to bring the country's economy crashing down. It failed. So next they tried a recall referendum, gathering millions of signatures to rerun the election. Chavez prevailed again, with a bigger majority.

Then came their most dramatic move. In April 2002, they seized the Presidential Palace and kidnapped Chavez. Backed by the Bush administration, they immediately dissolved the parliament, the constitution, and the supreme court, and declared martial law. But the Venezuelan poor refused to watch their democracy die. They came out on to the streets in their millions – risking being gunned down – to demand Chavez's return. The newspapers and TV channels refused to cover this, because their owners helped plan the coup. But the soldiers holding Chavez felt ashamed, and released him.

What do you do in a democracy when the owners of a free press militate to overthrow the democratic process itself? It's a genuinely difficult question, and I don't know the answer. I do know that if it happened in Britain – if Gordon Brown was kidnapped by a foreign-backed minority determined to end democracy, and ITV and Channel 4 helped plan it – we would react in a much more stringent way than Chavez. He waited two years to deny a terrestrial licence to just one of the channels that backed the coup. Almost none of the coup plotters has been jailed. The newspapers are still free to be violently against Chavez, as they are almost all the time.

And yet ... and yet ... being kidnapped and nearly killed with the support of the US government has indeed had a radicalising influence on Chavez. At his best, Chavez cites social democratic thinkers like J K Galbraith. At his worst, he praises communists like Fidel Castro and Che Guevara. When I met up with Chavez last year, I was alarmed when he told me: "I don't think in Cuba there is a lack of freedom of speech. There is no repression in Cuba ... Is it true that by electing a president or prime minister every five years you have democracy? Is it because you have press and TV channels that you have freedom of speech?"

It wasn't a rousing defence of liberal freedoms. Yet there has been only one hint so far that he could act on these thoughts: last year, he asked the parliament to vote to allow him to rule by decree on a dozen issues, for 18 months. These Castroite instincts plainly struggle within his chest against much more impressive ones.

Up to now, Chavez has offered a shimmering model of pro-poor democratic development, at the tip of the most unequal continent on earth. It would be a tragedy if – after extending real freedom, and saving hundreds of thousands of lives among the poor – Chavez did turn into the dictator that his enemies have painted him as.

Sunday, 18 November 2007

America's Invisible Empire

by David Ludden

The American imperial empire has remained largely invisible: only
very recently have Americans just begun to learn about their imperial
history. But information about empire is fragmented and extensively
filtered and the American public remains by and large unaware of the
reality and costs of empire. Until empire is placed on the public
agenda, it can never be effectively criticised or made an object of
basic policy change.
David Ludden

In the old days of imperialism, before 1945, citizens of imperial
nations learned about their empires in school; they imbibed imperial
anxiety and pride, and discussed and debated empire publicly. It was
never thus in America, where US empire remains mostly invisible.
Americans are just now starting to learn about their imperial
history, amidst its current crisis, but there is pervasive resistance
to such learning, which contradicts patriotic truths about American
national character. Resistance to learning supports a national denial
of reality that keeps Americans ignorant of the empire built,
maintained, and defended in their name. This ignorance helps explain
the cognitive shock - as distinct from the emotional and ethical
horror - of events on September 11, 2001. For most Americans, the
animosity in those planes appeared literally out of nowhere.

National ideology only begins to explain the gap between America's
identity in the world and its self-understanding. In the world of
national states that emerged after 1945, the old meaning of 'empire'
became archaic, because no country could then legitimately administer
another country. In addition, America itself emerged from an
anti-imperial struggle; and it supported national movements
elsewhere, from 19th century Latin America to 20th century Africa,
Asia, and west Asia. Support for nationalist struggles could not
be offered to communists, however; they had to be constructed as
aliens in their own lands, no matter how indigenous their roots, most
notably, in Vietnam, where France and America drew a line between
north and south that made liberation forces in the north seem alien
invaders, while Americans backed 'native' nationalists in the south.
Embracing this kind of ideological history, Americans can never admit
to being imperialists.

After 1945, imperialism acquired a new format under American
leadership. First, the cold war allowed the US to expand military,
economic, and political power around the world, posing as a crusader
against communism, committed to liberal modernisation. In 1989, the
cold war ended; then economic globalisation, global security, and a
war on terrorism came to justify more US expansion. Since 1945, US
power has expanded steadily and dramatically; it now covers the world
of nations, but does not deploy the formal discourse of imperialism.
Rather, the US sees itself as the world's leader. Americans lead
global progress, facing enemies and obstacles everywhere. In this
guise, America uses its power inside international institutions, like
the UN, but strikes on its own when necessary. America refuses to
allow international laws to operate inside US borders unless they
conform to US law. Thus, US power projects itself onto the world, but
the world cannot respond; this imbalance is typical of the imperial
settings, but Americans think of it instead as a natural state for
the 'world's only superpower'.

A flurry of books has appeared recently in America using the term
'empire' to describe US power. The term is beginning to appear
flattering in some circles. The growth of an American empire built on
the old repertoire of 'indirect rule' had been obvious outside
America for decades before 'empire' began to appear in US public
discourse, after the conquest of Iraq without international
legitimacy. Nevertheless, the idea that the US is an imperial power
is not popular among Americans. Journalists, scholars, teachers,
students, analysts, and politicians prefer to depict the US as a
nation pursuing its own interests and ideals. The phrase 'American
empire' will not appear in 2004 election debates, where voters will
focus on domestic and foreign policy issues. The war in Iraq is a
bigger issue with each passing day, not because of Iraqi suffering,
but because of American deaths. Wars come home when bright young
people return dead; and to make matters worse, people do not
understand the war in Iraq, which most people supported out of
patriotic fervour, trusting their president to lead. Now, US
'intelligence' is under scrutiny. Everyone knows Bush lied about
'weapons of mass destruction.' The war in Iraq appears now to have
been a mistake, but the US cannot simply back out, and Kerry along
with all but one US Senator voted for the war, and Kerry says the US
must stay to see the job done.

Living conditions in Iraq are not a political issue in America. Few
people even know what they are. Only bombing and death are in the
news, sometimes called features of 'resistance' to a US occupation
that must seem to most Americans not as popular in Iraq as US
propaganda once portrayed it. No one in the US could now believe that
ordinary Iraqis want Americans there, based on reading or watching
the news. US voters will never see in the news the vast suffering in
Iraq caused by American empire; instead they will see security
threats and policy options. The cost of empire at home is not open
for discussion. The war budget is called a 'defence budget' and
continues to soar, without protest. The empire continues to operate
out of public view. A tiny proportion of decisions that sustain the
empire ever come under public scrutiny.

Fears, Then and Now

This imperial condition contrasts sharply with that of Britain in the
old days. US taxpayers and voters pay the entire cost of the America
empire, and so must be kept in the dark about its operations. The
British people never paid for the empire that so many loved because
it was funded by Asians and Africans. If Americans ever engaged in a
cost-benefit analysis of the US empire, who knows what would happen.
But you can be sure, that will not happen soon, because Americans do
not see their empire; what they see is an ever-more-pressing,
ever-more-expensive need for national security. Global threats to
America must be magnified as much as possible to keep the empire
going despite its rapidly rising cost and surely diminishing returns.
Bill Clinton began scaring Americans about terrorism. But 9/11 was
the biggest gift imaginable for American imperialists: it buried the
empire out of sight under the iconic rubble and dust of the Twin

Once upon a time, Americans believed that Soviets would attack them
with nuclear missiles. In the 1950s, we as school children hid under
our desks for air raid drills once a week. Families built bomb
shelters in their basements. In classrooms, cinema halls, and TV
cartoons, Americans learned that a 'communist menace' roamed the
world and that only strong, brave American soldiers could defend the
world against the 'Soviet threat'. America was like Superman, called
to duty when evil reared its head, and otherwise living as a
'mild-mannered reporter', Clark Kent. The idea that America is
essentially good, caring, innocent, even naïve, like Clark Kent, has
managed to survive inside US popular culture despite virtually
continuous US imperial warfare since 1945.

Not only do Americans wear ideological blinders, they daily imbibe
information filtered and fed by media barons, politicians, scholars,
and educators who collaborate in imperialism for different reasons,
typically unknowingly. Individualism combined with expert
specialisation creates incoherently fragmented images of an imperial
reality that looks like an elephant groped by four blind men: one
feels the feet and calls it a tree; another feels the trunk and calls
it a snake; and each in turn is convinced by his own palpable facts,
but as a group they cannot describe what is there. In the same way,
some Americans focus on Islamic ideology; some, on nuclear threats;
some, on evil rulers; some, on the ghostly al-Qaeda; some, on
military options; and others, on civilian and economic issues. Many
Americans are humanitarians concerned with suffering. But each group
having gathered its own data on its specialised topic, and each
struggling daily with work and family - 'just making a living,' as we
say - their understandings do not add up to a coherent picture.
Empire appears to be a piecemeal scattering of individual facts and
events, never a coherent product of a democratic political system
where many people might oppose empire, if they could, but where
voting against it is not an option.

The ideological composition of American knowledge also leads
Americans into raging debates among blind men, instead of into a
serious search for better information. Foreign information and
opinions are discounted, as in other countries. Non-nationals are
always kept away from the levers of public opinion. Because the US
has such a heavy impact on so many countries, this nationalist
resistance to foreign opinion might be usefully compared to a father
discounting cries of pain from his family and neighbours. A US
national structure of intellectual work and debate sets firm limits
on factual input and applies appropriate filters. Most Americans
never learn anything about any other country except what is deemed
relevant to the American national context by American experts and
defenders. Americans learn a lot about the world, but not what people
in other countries want Americans to learn. Rather, Americans learn
how every country fits into the American scheme. Some fit better than
others, and those that do not fit need fixing. The world appears to
be a collection of countries where people emulate America, and where
people who can migrate come to America to thrive inside an absorbent
American culture that seems to provide a workable model of the world,
a much better model, indeed, than the United Nations. In the American
model, all cultural diversity fits neatly inside a politics of
identity that revolves around the white elites who prescribed the US
constitution, assay US values, and dominate all major US
institutions. Most Americans believe that people everywhere would be
better off adopting the American model of cultural and political
stability and economic progress.

The confidence with which American feminists promoted the
criminalisation of the Taliban and conquest of Afghanistan is a good
indication of how liberal Americans support imperial expansion.
Liberal democrats led the fight against communism at home and abroad.
Liberals and conservatives equally support the US empire, whose name
they dare not speak in public. The empire will not be undone until
its reality and costs become visible to Americans who might think
about dismantling it, if they could only see it. Until empire is on
the public agenda in America, it can never be effectively criticised
or made an object of basic policy change. Effective challenges will
not appear on the battlefield, let alone among the rubble of suicide
bombers; they will begin in newspapers, magazines, books, schools,
email, blogs, chat rooms, drinking halls, churches, and dinner
parties; then they will move into the streets and finally into
election campaigns.

Americans can eventually imbibe the wisdom of the world and engage in
dialogue with people who experience US empire from the other side. It
is critically important to write books based on experience outside
America to sell in America; to get citizens of the world and foreign
students in America to bear witness in public to the US empire at
work in the world at large; and to organise programmes for action
around the world that make sense in America yet change the way
Americans think. Obstacles to all these critical endeavours are
formidable and mounting under the paranoid national security regime
in America today.

© Copyright 2001

Dollar Hegemony Unravels

Averting World War III, Ending Dollar Hegemony And US Imperialism

By Rohini Hensman

17 November , 2007

Introduction (1)

When US President Bush declared in October 2007 that if Iran acquired the knowledge to produce nuclear weapons, we would be plunged into World War III, he was not joking or even exaggerating: he was making his intentions clear. In the same month, Vice-President Dick Cheney repeated the threat that the US would not ‘stand by’ as Iran allegedly pursued a nuclear weapons programme. If the present war in Afghanistan, Iraq and Palestine spreads to Iran, we will indeed have World War III. We have long had circumstantial evidence that the Bush regime was building up to an attack on Iran: the constant allegations (denied by Mohamed El Baradei, chief of the International Atomic Energy Agency [IAEA]) that it was pursuing a nuclear weapons programme, charges (denied by the Iraqi government) that it was sending arms and fighters into Iraq, a US military build-up clearly directed against Iran, the designation of the Islamic Revolutionary Guards Corps of Iran as a terrorist organisation and imposition of sweeping sanctions against Iran.(2) But it has now been revealed by two former high-ranking policy experts from the US National Security Council that war against Iran was planned all along, and nothing that Iran offered to do — including giving up its uranium enrichment programme — could have made a difference.(3)

If the Bush administration has decided to attack Iran militarily, is there any power on earth that can stop it if the people of the US are unable or unwilling to do so? The argument below is that if the USA’s ability to undertake imperial conquests depends on its obvious military supremacy, this in turn is ultimately based on the use of the US dollar as the world’s reserve currency. It is the dominance of the dollar that underpins US financial dominance as a whole as well as the apparently limitless spending power that allows it to keep hundreds of thousands of troops stationed all over the world. Destroy US dollar hegemony, and the “Empire” will collapse.

David Ludden’s article ‘America’s Invisible Empire’(4) sums up the problem of the world’s most recent empire with remarkable clarity. Constituting itself at a time when decolonisation was well under way and other empires were disintegrating, US imperialism could never openly speak its name. Initially, it disguised itself as the defender of democracy against communism; when the Soviet Union ceased to exist, the pretext became the “war against terror”. National security and national interest were invoked as the rationale for global dominance.

Ludden’s description evokes the image of US citizens (and a few others) living in a Truman Show world, a bubble of illusion created by state deception and media complicity that prevents them from being aware of the reality of empire, although everyone outside can see it only too clearly. It sounds quite credible that ‘the empire will not be undone until its reality and costs become visible to Americans’ (p.4777). However, Ludden’s claim that ‘US taxpayers and voters pay the entire cost of the US empire’ (p.4776) is less credible. If that were true, many more Americans would see their empire and oppose it; the Democrats would have put up a principled opposition to the occupation of Iraq and threatened war against Iran, and the overwhelming majority of the US electorate would have supported them. But it is the rest of the world that has been paying for the US empire: that is why it is almost invisible within the US.

The history of dollar hegemony

The core advantage of the US economy, the source of its financial dominance, is the peculiar role of the US currency. It is because the dollar has been for decades the world’s reserve currency that the US is able to maintain its twin deficits (fiscal and trade) and depend on the world’s generosity. It needs capital inflows of almost $4 billion from the rest of the world every working day to keep up its level of spending.(5) Its military superiority is one reason why it is unlikely ever to face an embargo, but more importantly, it has been able to live beyond its means because of US dollar hegemony.

The dollar mechanism has been described extensively elsewhere,(6) this is merely a summary. The strength of the US economy after World War II enabled the US dollar, backed by gold, to become the world’s reserve currency. When the US abandoned the gold standard in 1971, the dollar remained supreme, and its position was further boosted in 1974 when the US came to an agreement with Saudi Arabia that the oil trade would be denominated in dollars.(7) Most countries in the world import oil, and it made sense for them to accumulate dollars in order to guard against oil shocks. Third World countries had even more reason to hoard dollars so as to protect their fragile economies and currencies from sudden collapse. With everyone clamouring for dollars, all the US had to do was print fiat dollars and other countries would accept them in payment for their exports. These dollars then flowed back into the US to be invested in Treasury Bonds and similar instruments, offsetting the outflow. The International Monetary Fund (IMF) and World Bank, headquartered in Washington, reinforced dollar hegemony.

As a reserve currency fulfills world needs in addition to the functions of a domestic currency, the favoured country can build up debt for a protracted period on a scale that would wreck any other country’s currency. But this advantage is a double-edged sword.(8) It allowed the US economy to decline unnoticed, its fiscal and trade deficits to climb steeply: by 2006 the US trade deficit had reached $763.6 billion, the current account deficit $850 billion, the gross national debt around $9 trillion. Globalization destroyed the US as a manufacturing nation; the outsourcing of services means that even this sector is gradually being shifted out of the US.8 Only its pre-eminence in the global financial services industry remains intact.(9) And this is underpinned by US dollar hegemony.

Dollar hegemony is what concealed the costs of its empire, which were effectively being paid for by the rest of the world, from US citizens. Other countries were compelled to accept fiat dollars because they had no choice. It was the world’s only reserve currency.

A “currency” reason for the Iraq war

When the euro came into being, even then the choice was only a potential one, as the euro initially lost value, making it unattractively risky as a reserve currency. The first non-European countries that made a move in its direction did so for political rather than economic reasons. When Saddam Hussein switched to the euro in late 2000 and converted Iraq’s $10 billion reserve fund at the UN to euro, some analysts commented that this political gesture would have a heavy economic cost.(10) But against all expectations, he actually made a profit when the euro staged a recovery.(11) Iran is another country which in 2002 converted more than half its foreign exchange reserves to euros.(12) Both Iraq and Iran being oil-producing countries, the impact of their shifting currency allegiances would be significant. By contrast, North Korea’s official shift to the euro for trade in December 2002(13) was negligible from the standpoint of the world economy, yet it signified a trend that US imperialism had to stop at all costs. Suddenly George Bush’s diatribe against the ‘Axis of Evil’, which seemed so arbitrary and laughable at the time, doesn’t appear quite so funny. Add to this picture the fact that Hugo Chavez — against whom the US supported a coup in April 2002, and who continues to be under attack by the Bush regime — has taken a large part of Venezuela’s oil trade out of the orbit of the US dollar, and the economic compulsions driving US foreign policy become clearer. Military might alone does not seem to be a sufficient basis for sustaining an empire: economic power is crucial. And for the declining US economy, US dollar supremacy is essential for maintaining its economic clout.

Thus, there seems to be good reason to believe that the main purpose of the invasion of Iraq was to change the denomination of its oil sales back to dollars,(14) especially given that one of the first actions of the US occupying forces was to do precisely that. But the action backfired badly. Anti-war protesters immediately began campaigns to boycott the dollar,(15) and the campaign spread, with the call being taken up by the Boycott Bush campaign after the 2004 World Social Forum.(16) Former Prime Minister of Malaysia Mahathir Mohamed took up the call in 2004 and again in 2006, arguing that Israel would not be able to oppress the Palestinians and Lebanese without the financial and military support of the US, which would be put under pressure by a dollar boycott.(17) In December 2006, Iran announced it was going to shift the rest of its foreign exchange reserves from dollars to euro, using the euro for most of its oil deals, and in July 2007 asked the Japanese to pay for their oil in yen.(18)

Habit and inertia might have prevailed against these political initiatives to undermine the dollar as the world’s reserve currency, if continuing US belligerence and mismanagement of its economy had not helped to push the value of the dollar lower. As the dollar steadily lost value due to the massive US debt, George Soros pulled his money out of dollar assets, and other US investors followed suit.(19) An article in China Daily on 28 September 2004 by Jiang Ruiping, the director of International Economics at the China Foreign Affairs University, pointed out that China was already losing due to the dollar slide and would lose even more if it crashed; he recommended moving out of dollars into euros and possibly also yen, as well as using its dollar reserves to stock up on oil.(20) In fact, only about 15 per cent of China’s additional foreign exchange reserves acquired in the first three quarters of 2004 were in US Treasury holdings, and OPEC countries reduced the dollar assets in their reserves from 75 to 60 per cent.(21) In July 2005, the fixed exchange rate of the yuan to the dollar was abandoned, followed closely by the Malaysian ringgit, with both currencies being allowed to float in a tight band against a basket of foreign currencies.(22) The Japanese government indicated it might diversify its reserves portfolio, and the Reserve Bank of India started buying euro-denominated securities.(23) In March 2005, the Bank for International Settlements in Basle announced that Asian central and commercial banks held only 67 per cent of their deposits in dollars in September 2004, compared with 81 per cent three years earlier; Indian banks were down from 68 to 43 per cent, while Chinese dollar holdings were down from 83 to 68 per cent, with the euro and yen being the most popular alternatives.(24) Holdings in more exotic currencies also grew rapidly, albeit from much lower levels: Chinese renminbi (yuan) by 530 per cent, Indonesian rupaiah by 283 per cent, Taiwanese dollars, Korean won and Indian rupees by 129,117 and 114 per cent respectively, presumably on the expectation that they would grow in importance.(25)

By the end of 2005, euro-denominated securities had overtaken dollar-denominated ones as a medium for international investors.(26) In 2006, the Swedish central bank cut its dollar holdings from 37 per cent to 20 percent, the Russian central bank from around two-thirds to 40 per cent, while Italy switched a quarter of its foreign currency reserves from dollars to sterling; Russian President Vladimir Putin also called for a ruble-denominated oil and natural gas exchange in Russia.(27) The Gulf Cooperation Council (GCC), planning to launch a common currency in 2010, was thrown off-course when Kuwait abandoned the dollar peg in May 2007 in order not to continue importing inflation via a devaluing dollar; later, as the subprime mortgage crisis struck in the US, and the Federal Reserve cut interest rates by 0.5 per cent, Oman, Saudi Arabia and Bahrain did not cut their rates in unison, amidst reports that there was an ongoing debate on a more flexible alternative to the dollar peg in all six GCC countries.(28) Data released by the US Federal Reserve showed that between late July and early September 2007, foreign central banks reduced their holdings of US Treasury Bonds by $48 billion.(29) Meanwhile, plans to establish the Banco del Sur by seven Latin American countries (with others likely to join), in order to provide an alternative to US-dominated funds like the IMF, World Bank and Inter-American Development Bank,(30) would be an even greater threat to the dollar if they included the use of a regional currency. An interesting result of the dollar’s declining value is that while the rich turn to euro, the less wealthy, from Russia to the Maldives and Mexico to Vietnam, prefer their local currency to the dollar.(31)

It is easy to agree with Xu Jian, a vice-director of China’s Central Bank, that the dollar is ‘losing its status as the world currency,’(32) especially when the same sentiment is expressed by American analysts.(33) What this means is that the US dollar is no longer the sole world currency; this position is now shared with other currencies. But it is still dominant, for a number of reasons. So long as the oil sales of most countries continue to be denominated in dollars, the US dollar will still be in demand; this could change, of course, if Russia were to launch its ruble-denominated oil and gas exchange. And countries like China and Japan, which between them hold trillions of dollars, would be unwilling to dump them because that would hit the value of their own reserves. Moreover, like other countries that rely heavily on the US market, they would prefer to keep their currencies low against the dollar, even though by November 2007 the yuan had appreciated by 11.6 per cent against the dollar since the peg was dropped, and the yen by 7.7 per cent since the beginning of the year.(34) On the other hand, building up dollar reserves would simply increase their losses as it declined. Other countries with smaller dollar reserves would also face the same dilemma.(35)

The gradual decline in the value of the dollar that is occurring would have been the best option, if not for the urgency of the situation facing us. Millions have died in Iraq and Afghanistan as a result of the US-led occupations, and the carnage continues; meanwhile, the apartheid state of Israel, fully supported by the US, has occupied the whole of historical Palestine, herding the original inhabitants into ghettoes in the West Bank and one big ghetto in Gaza, and subjecting them to ethnic cleansing and daily killings.(36) If Iran is attacked, the conflict would become a nuclear war, at least in the sense that it would involve bombing Iran’s nuclear facilities; but it might also involve nuclear weapons. Apparently ‘The only thing standing in the way of a preemptive attack on Iran’s nuclear facilities is foot-dragging by the US military,’ but there is frightening evidence of attempts by the government to get around this resistance from the US military.(37) Several cruise missiles armed with nuclear warheads were secretly flown across the US in violation of all standard procedures on 29/30 August 2007, and several military personnel who might have known about the incident or been involved in it died under mysterious circumstances shortly before or after it, leading to speculation that the missing nukes incident was connected to US war plans against Iran.(38) It hardly needs to be pointed out that such a war, in which Russia and China might get involved, would be catastrophic, mainly for Iran and West Asia, but also for the rest of the world.

Among the side effects of US military aggression is the expansion of fundamentalist forces; the Taliban has not only made a come-back in Afghanistan, but is now spreading in Pakistan, while Al Qaeda, which had no presence in Iraq under Saddam Hussein’s rule, is now well entrenched there. Democracy in Iran has yet to recover fully from the US-inspired regime change in 1953, and it is likely that a US military attack will set it back by another half-century. But can such an attack be prevented?

What to do: non-violent economic non-cooperation
This brings us back to the dilemma posed by David Ludden. The costs of empire will become apparent to the US public only when they have to pay those costs, and this will happen only when (a) other nations stop colluding in its imperial adventures, and (b) the dollar loses its role as the world’s reserve currency.

For citizens of the world who are opposed to US imperialism, that suggests several possible courses of action. The ‘world’s second super-power’, world public opinion, made a hugely impressive showing prior to the invasion of Iraq, yet it failed to stop the invasion itself; stronger action is required. But the armed struggle taking place in Iraq is killing and maiming hundreds of thousands of Iraqis and thousands of Americans, most of them from poor families; surely this is not desirable. The alternative proposed here is non-violent non-cooperation with the imperial monster. For example:

1) We should put pressure on all other governments not to participate in the occupation of Iraq and Afghanistan, or any attack on Iran or sanctions against it, and/or vote out candidates who are colluding in this aggression and vote in alternatives. This will leave the burden of running their empire fairly and squarely on the shoulders of the US administration.

2) We should refuse to use the US dollar except within the US itself. Given the current weakness of the dollar, this could undermine its reserve currency role even if it is done on an individual basis. For example, large numbers of people from developing countries cross international borders every day, for work, business, tourism, pilgrimages or to visit relations; since their own currencies are not accepted internationally, they have to buy ‘hard’ currencies, and if they were to refuse to use the US dollar in this capacity, it would certainly make an impact. Economic actors like the fair trade movement should also shift to other currencies for their international trade. Both academics and activists should stop using dollar equivalents to measure incomes and GDP; for the moment, the euro can be used as a standard. Mass action of this sort played a major role in ending British rule in India and thus the British empire; employed on a much wider scale, it can help to end the US empire.

3) People in Third World countries should put pressure on their governments to shift foreign currency assets out of dollars, and to create regional currencies to strengthen regional commercial and economic ties. This would not only be a gesture of solidarity to the beleaguered peoples of Afghanistan, Iraq, Palestine, Iran and others oppressed or threatened by the US empire, but would also make good economic sense. The dollar is sliding, and developing countries which hold all or most of their foreign exchange reserves in dollars are losing money as it loses value. If it crashes, their reserves could be wiped out.

4) We should appeal to governments in oil-producing countries not to denominate their oil trade in US dollars. This does not necessarily involve a wholesale shift to the euro. Venezuela has concluded several barter deals with other Latin American countries including Cuba, giving them oil in exchange for goods and services,(39) and this is a pattern other oil-producing countries could consider; if a regional currency is established by the Banco del Sur, that too could be used for oil sales. Russia could denominate its oil sales in rubles, and the GCC countries in their new currency, which would enable the remittances of hundreds of thousands of migrant workers from South and Southeast Asia in Gulf countries to be used directly for oil imports. Barter deals which do not involve oil could also be concluded between developing countries.

5) World trading patterns would also need to change. If the dollar sinks drastically with world trade unchanged, many countries which now rely on exports to the US will be affected adversely by its inability to import their goods with a weakened dollar. A reorientation of trade away from the US would therefore be necessary. For example, plans to constitute the South Asia Free Trade Area as a regional bloc free of tariff and immigration barriers should be pursued at greater speed, and trade with other countries promoted at the same time. MERCOSUR in Latin America has the potential to develop into an institution similar to the European Union. China and Japan, the biggest creditors of the US, suffer most from the decline of the dollar, and would have to work out alternative trade patterns to safeguard their economies.

6) For many Third World countries, including India and China, expanding domestic mass markets would be an important component of any strategy. This would involve campaigning nationally and internationally for policies of employment creation, protection of workers’ rights, shorter working hours, and enforced payment of minimum wages that are adequate to support a decent standard of living. Such a redistribution of resources from militarism and wasteful consumption of the rich and powerful to productive consumption of working people would play a positive economic role, not only in Third World countries but also in Europe and North America.

7) In addition to these economic measures, ending US imperialism would require pressing for the development and implementation of international humanitarian law, international law and multilateral treaties (such as the Geneva Conventions, Rome Treaty of the International Criminal Court, Chemical Weapons Convention, Biological Weapons Convention, Comprehensive Test Ban Treaty, Land Mine Treaty, ILO Core Conventions, CEDAW and the Kyoto Protocol), and the strengthening and democratization of multilateral institutions (like the UN, ILO and WTO).

8) It must be emphasized that none of these actions are aimed at ordinary US citizens, a large and growing number of whom are opposed to US imperialism, and all of whom are affected adversely by it, whether they realize it or not. On the contrary, it is an open secret that the US Treasury and Federal Reserve are encouraging the decline of the dollar because it is seen as the best cure for the ailing US economy, since it slashes the foreign debt and makes American products more competitive.40 A cheaper dollar would expand employment and increase the bargaining power of workers, enabling them to fight against the current policies of tax cuts for the rich, wage and welfare cuts for workers and the poor. Taxpayers would also regain power as their contributions to government spending increased in importance; the war could continue indefinitely so long as foreigners fund it, but once tax-payers are funding it, a tax strike could bring the troops home.

Even if all possible adjustments are made, there is no doubt that the decline and fall of the dollar as the sole world currency will cause pain, both within and outside the US. But the alternative is incomparably worse. The world order cannot much longer survive having a heavily armed rogue state on the rampage in violation of all international law and multilateral treaties. The world economy cannot afford to depend on the currency of a bankrupt nation with a colossal military budget. And the earth itself is put at risk by a country which devours massive quantities of fossil fuels and spews out greenhouse gases at a catastrophic rate.

US imperialism would not be able to pursue its destructive policies without the unlimited supply of blank cheques extended to it by the rest of the world, so it is the responsibility of the rest of the world to withdraw that source of funding. The beast has to be killed by attacking it at the point where it is most vulnerable. Meanwhile, if enough people in the US work to ensure that the next elections install a president and representatives who undertake to abandon the pursuit of Empire and instead seek to reintegrate the US into the international community as a law-abiding, fiscally-responsible, non-polluting member, the result will be a far safer and more stable global order, world economy and environment.

1 In this article I have incorporated sentences and paragraphs from the article I wrote with Marinella Correggia after the 2004 World Social Forum in Bombay, entitled ‘US Dollar Hegemony: the Soft Underbelly of Empire (and What Can Be Done to Use It!). #

2 See Peter Symonds, ‘Stepped Up US Preparations for War Against Iran,’ 2 February 2007 and Abbas Edalat and Mehrnaz Shahabi, ‘Turning Truth on its Head,’ 29 October 2007. #

3 John H.Richardson, ‘The Secret History of the Impending War With Iran that the White House Doesn’t Want You to Know,’ Esquire, 18 October 2007. #

4 David Ludden, ‘America’s Invisible Empire,’ Economic and Political Weekly Vol.XXXIX No.44, Bombay, 30 October 2004, pp.4776-77. #

5 C.Fred Bergsten, ‘The Current Account Deficit and the US Economy,’ Testimony before the Budget Committee of the United States Senate February 1, 2007. #

6 See Henry C.K.Liu, ‘US dollar hegemony has got to go,’ Asia Times, 11 April 2002 and Rohini Hensman, ‘A Strategy to Stop the War, Economic and Political Weekly, Vol.38 No.16, 19 April 2003, pp.1556-1561. #

7 David E.Spiro, The Hidden Hand of American Hegemony: Petrodollar Recycling and International Markets, Cornell University Press, 1999. #

8 Paul Craig Roberts, ‘The coming currency shock,’ Counterpunch, 16 November 2004. # #

9 Lawrence G.Franko, ‘US Competitiveness in the Global Financial Services Industry,’ October 2004. #

10 See for example Charles Recknagel, ‘Iraq: Baghdad Moves to Euro,’ Radio Free Europe, 1 November 2000. #

11 Faisal Islam, ‘Iraq nets handsome profit by dumping dollar for euro,’ The Observer, 16 February 2003. #

12 ‘Forex Fund Shifting to Euro’, Iran Financial News, 25 August 2002. #

13 Caroline Gluck, ‘North Korea embraces the euro,’ BBC News, 1 December 2002. #

14 William Clarke in particular makes an impressive case, with a great deal of evidence, in his web-based essay ‘Revisited: The Real Reasons for the Upcoming War With Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth’ (January 2004), which is a revised version, with addenda, of his original essay of January 2003. Many of the references in this article are taken from him. See also Gavin R.Putland, ‘The War to Save the US Dollar,’ 18 April 2003. #

15 See Rohini Hensman, ‘Boycott the Dollar to Stop the War!’ 27 March 2003, and Dave Emory, ‘For the Record #407’ 21 April 2004, quoting Robert Block, ‘Some Muslims Advocate Dumping the Dollar for the Euro,’ Wall Street Journal, 15 April 2003: In Nigeria, anti-war demonstrators shouted “Euro yes! Dollar No!’ #

16 See #

17 ‘Dr M Tells World to Use Dollar Weapon to Pressure Washington,’ 29 July 2006. #

18 ‘Dollar dropped in Iran asset move,’ 18 December 2006, and ‘Iran demands Japan’s oil payments in yen, not US dollars,’ 14 July 2007. #

19 Jennifer Hughes, ‘Dollar gets sinking feeling as investor confidence fades,’ Business Standard, 24-25 May 2003; ‘US appetite for foreign stock takes toll on $,’ Economic Times, 20 December 2004. #

20 Gary North, ‘Asian doubts regarding the dollar’, 1 October 2004. #

21 A.V.Rajwade, ‘Asia’s dollar dilemma,’ Business Standard, 20 December 2004. #

22 Peter S.Goodman, ‘China ends fixed-rate currency,’ Washington Post, 22 July 2005; ‘Malaysia too ends dollar peg,’ Dawn, 22 July 2005. #

23 ‘RBI may diversify into Chinese yuan,’ Economic Times, 12 March 2005. #

24 Steve Johnson, ‘Asian banks cut exposure to dollar,’ Economic Times, 11 March 2005. #

25 Gayatri Nayak, ‘Dragon raises its head in the forex market too,’ Economic Times, 28 March 2005. #

26 Francis Cripps, John Eatwell and Alex Izurieta, ‘Financial Imbalances in the World Economy,’ Economic and Political Weekly, Vol.XL No.52, 24 December 2005, pp.5453-56. #

27 Ambrose Evans-Pritchard, ‘Bank of Italy slashes dollar holdings in favour of UK pound,’ 3 August 2006; Julian D.W.Phillips, ‘Russian Rouble to attack the $ - Exchange Controls in the US?’ 16 May 2006. #

28 ‘Gulf could unite to drop dollar peg,’ 31 October 2007. #

29 Ambrose Evans-Pritchard, ‘Is China quietly dumping US Treasuries?’ 6 September 2007. #

30 Jeb Blount, ‘South American Countries Agree to Found Banco Del Sur (Update6),’ 8 October 2007. #

31 ‘Demising US dollar gives way to euro cash in Russia,’ Pravda, 17 February 2005; William Pesek, ‘Dollar’s Demise Can Be Seen Even in the Maldives,’, 29 October, 2007. #

32 Agnes Lovasz and Stanley White, ‘Dollar Slumps to Record on China’s Plans to Diversify Reserves,’, 7 November 2007. #

33 Paul Craig Roberts, ‘The End Is Near! – Gisele Bundchen Dumps Dollar,’, 8 November 2007; Mike Whitney, ‘Plummeting Dollar, Credit Crunch…,’, 15 September 2007. #

34 Belinda Cao, ‘Yuan Heads for Biggest Weekly Advance Since July 2005,’, 12 November 2007; Stanley White and David McIntire, ‘Yen Rises to 1 ½ Year High Against Dollar on Risk Reduction,’, 12 November 2007. #

35 See, for example, Mike Dolan, ‘Dollar fall will come at a price for all,’ 21 November 2004 and Ila Patnaik, ‘Day of the declining dollar – How should India be responding to this trend?’ Indian Express, 18 December 2004. #

36 See Gideon Polya, ‘Two Million Iraq Deaths, Eight Million Bush Asian Holocaust Deaths and Media Holocaust Denial,’, 7 October 2007. #

37 Ray McGovern, ‘Attacking Iran for Israel?’, 1 November 2007. #

38 Mahdi Darius Nazemroaya, ‘Missing Nukes: Treason of the Highest Order,’ Global Research, 29 October 2007. #

39 Hazel Henderson, ‘Beyond Bush’s Unilateralism: Another Bi-polar World or a New Era of Win-Win?’ InterPress Service,June 2002. #

40 ‘Dollars, Debt and the Trade Gap, Thoughts on the Dropping Dollar,’ Wall Street Journal Online, 19 December 2006. #

Rohini Hensman is an an idependent scholar, writer and activist based in India and Sri Lanka. Rohini can be reached at:

Thursday, 15 November 2007

Divisions In Our World Are Not The Result of Religion

By Karen Armstrong & Andrea Bistrich

14 November, 2007

Karen Armstrong was a Catholic nun for seven years before leaving her order and going to Oxford. Today, she is amongst the most renowned theologians and has written numerous bestsellers on the great religions and their founders. She is one of the 18 leading group members of the Alliance of Civilizations, an initiative of the former UN General Secretary, Kofi Anan, whose purpose is to fight extremism and further dialogue between the western and Islamic worlds. She talks here to the German journalist, Andrea Bistrich, about politics, religion, extremism and commonalities.

ANDREA BISTRICH: 9/11 has become the symbol of major, insurmountable hostilities between Islam and the West. After the attacks many Americans asked: "Why do they hate us?" And experts in numerous round-table talks debated if Islam is an inherently violent religion. Is this so?

KAREN ARMSTRONG: Certainly not. There is far more violence in the Bible than in the Qur'an; the idea that Islam imposed itself by the sword is a Western fiction, fabricated during the time of the Crusades when, in fact, it was Western Christians who were fighting brutal holy wars against Islam. The Qur'an forbids aggressive warfare and permits war only in self-defence; the moment the enemy sues for peace, the Qur'an insists that Muslims must lay down their arms and accept whatever terms are offered, even if they are disadvantageous. Later, Muslim law forbade Muslims to attack a country where Muslims were permitted to practice their faith freely; the killing of civilians was prohibited, as were the destruction of property and the use of fire in warfare.

The sense of polarization has been sharpened by recent controversies — the Danish cartoons of the Prophet Muhammad, over the Pope's remarks about Islam, over whether face-veils hinder integration. All these things have set relations between Islam and the West on edge. Harvard-Professor Samuel Huntington introduced the theory of a "clash of civilizations" we are witnessing today. Does such a fundamental incompatibility between the "Christian West" and the "Muslim World" indeed exist?

The divisions in our world are not the result of religion or of culture, but are politically based. There is an imbalance of power in the world, and the powerless are beginning to challenge the hegemony of the Great Powers, declaring their independence of them-often using religious language to do so. A lot of what we call "fundamentalism" can often be seen as a religious form of nationalism, an assertion of identity. The old 19th-century European nationalist ideal has become tarnished and has always been foreign to the Middle East. In the Muslim world people are redefining themselves according to their religion in an attempt to return to their roots after the great colonialist disruption.

What has made Fundamentalism, seemingly, so predominant today?

The militant piety that we call "fundamentalism" erupted in every single major world faith in the course of the twentieth century. There is fundamentalist Buddhism, Christianity, Judaism, Sikhism, Hinduism and Confucianism, as well as fundamentalist Islam. Of the three monotheistic religions-Judaism, Christianity and Islam-Islam was the last to develop a fundamentalist strain during the 1960s.

Fundamentalism represents a revolt against secular modern society, which separates religion and politics. Wherever a Western secularist government is established, a religious counterculturalist protest movement rises up alongside it in conscious rejection. Fundamentalists want to bring God/religion from the sidelines to which they have been relegated in modern culture and back to centre stage. All fundamentalism is rooted in a profound fear of annihilation: whether Jewish, Christian or Muslim, fundamentalists are convinced that secular or liberal society wants to wipe them out. This is not paranoia: Jewish fundamentalism took two major strides forward, one after the Nazi Holocaust, the second after the Yom Kippur War of 1973. In some parts of the Middle East, secularism was established so rapidly and aggressively that it was experienced as a lethal assault.

The fact that fundamentalism is also a phenomenon in politics was stressed only recently by former US president Jimmy Carter when he voiced his concerns over the increasing merging of religion and state in the Bush administration, and the element of fundamentalism in the White House. Carter sees that traits of religious fundamentalists are also applicable to neo-conservatives. There seems to be a major controversy between, on the one hand, so called hard-liners or conservatives and, on the other, the progressives. Is this a typical phenomenon of today's world?

The United States is not alone in this. Yes, there is a new intolerance and aggression in Europe too as well as in Muslim countries and the Middle East. Culture is always-and has always been-contested. There are always people who have a different view of their country and are ready to fight for it. American Christian fundamentalists are not in favour of democracy; and it is true that many of the Neo-Cons, many of whom incline towards this fundamentalism, have very hard-line, limited views. These are dangerous and difficult times and when people are frightened they tend to retreat into ideological ghettos and build new barriers against the "other". Democracy is really what religious people call "a state of grace." It is an ideal that is rarely achieved, that has constantly to be reaffirmed, lest it be lost. And it is very difficult to fulfil. We are all-Americans and Europeans-falling short of the democratic ideal during the so called "war against terror."

Could you specify the political reasons that you identified as the chief causes of the growing divide between Muslim and Western societies?

In the Middle East, modernization has been impeded by the Arab/Israeli conflict, which has become symbolic to Christian, Jewish and Muslim fundamentalists and is the bleeding heart of the problem. Unless a just political solution can be found that is satisfactory to everybody¸ there is no hope of peace. There is also the problem of oil, which has made some of these countries the target of Western greed. In the West, in order to preserve our strategic position and cheap oil supply, we have often supported rulers-such as the shahs of Iran, the Saudis and, initially, Saddam Hussein-who have established dictatorial regimes which suppressed any normal opposition. The only place where people felt free to express their distress has been the mosque.

The modern world has been very violent. Between 1914 and 1945, seventy million people died in Europe as a result of war. We should not be surprised that modern religion has become violent too; it often mimics the violence preached by secular politicians. Most of the violence and terror that concerns us in the Muslim world has grown up in regions where warfare, displacement and conflict have been traumatic and have even become chronic: the Middle East, Palestine, Afghanistan, Pakistan, Kashmir.

In regard to the Arab-Israeli-conflict you have said that for Muslims it has become, "a symbol of their impotence in the modern world." What does that really mean?

The Arab-Israeli conflict began, on both sides, as a purely secular conflict about a land. Zionism began as a rebellion against religious Judaism and at the outset most Orthodox rabbis condemned Zionism as a blasphemous secularization of the Land of Israel, one of the most sacred symbols of Judaism. Similarly the ideology of the PLO was secular-many of the Palestinians, of course, are Christian. But unfortunately the conflict was allowed to fester; on both sides the conflict became sacralized and, therefore, far more difficult to sort out.

In most fundamentalist movements, certain issues acquire symbolic value and come to represent everything that is wrong with modernity. In Judaism, the secular state of Israel has inspired every single fundamentalist movement, because it represents so graphically the penetration of the secular ethos into Jewish religious life. Some Jewish fundamentalists are passionately for the state of Israel and see it as sacred and holy; involvement in Israeli politics is a sacred act of tikkun, restoration of the world; making a settlement in the occupied territories is also an act of tikkun and some believe that it will hasten the coming of the Messiah. But the ultra-Orthodox Jews are often against the state of Israel: some see it as an evil abomination (Jews are supposed to wait for the Messiah to restore a religious state in the Holy Land) and others regard it as purely neutral and hold aloof from it as far as they can. Many Jews too see Israel as a phoenix rising out of the ashes of Auschwitz-and have found it a way of coping with the Shoah.

But for many Muslims the plight of the Palestinians represents everything that is wrong with the modern world. The fact that in 1948, 750,000 Palestinians could lose their homes with the apparent approval of the world symbolizes the impotence of Islam in the modern world vis-à-vis the West. The Qur'an teaches that if Muslims live justly and decently, their societies will prosper because they will be in tune with the fundamental laws of the universe. Islam was always a religion of success, going from one triumph to another, but Muslims have been able to make no headway against the secular West and the plight of the Palestinians epitomizes this impotence. Jerusalem is also the third holiest place in the Islamic world, and when Muslims see their sacred shrines on the Haram al-Sharif [the Noble Sanctuary, also known as Temple Mount]-surrounded by the towering Israeli settlements and feel that their holy city is slipping daily from their grasp, this symbolizes their beleaguered identity. However it is important to note that the Palestinians only adopted a religiously articulated ideology relatively late-long after Islamic fundamentalism had become a force in countries such as Egypt or Pakistan. Their resistance movement remained secular in ethos until the first intifada in 1987. And it is also important to note that Hamas, for example, is very different from a movement like al-Qaeda, which has global ambitions. Hamas is a resistance movement; it does not attack Americans or British but concentrates on attacking the occupying power. It is yet another instance of "fundamentalism" as a religious form of nationalism.

The Arab Israeli conflict has also become pivotal to Christian fundamentalists in the United States. The Christian Right believes that unless the Jews are in their land, fulfilling the ancient prophecies, Christ cannot return in glory in the Second Coming. So they are passionate Zionists; but this ideology is also anti-Semitic, because in the Last Days they believe that the Antichrist will massacre the Jews in the Holy Land if they do not accept baptism.

Do you think the West has some responsibility for what is happening in Palestine?

Western people have a responsibility for everybody who is suffering in the world. We are among the richest and most powerful countries and cannot morally or religiously stand by and witness poverty, dispossession or injustice, whether that is happening in Palestine, Kashmir, Chechnya or Africa. But Western people have a particular responsibility for the Arab-Israeli situation. In the Balfour Declaration (1917), Britain approved of a Jewish homeland in Palestine and ignored the aspirations and plight of the native Palestinians. And today the United States supports Israel economically and politically and also tends to ignore the plight of the Palestinians. This is dangerous, because the Palestinians are not going to go away, and unless a solution is found that promises security to the Israelis and gives political independence and security to the dispossessed Palestinians, there is no hope for world peace.

In addition, you have stressed the importance of a "triple vision"-the ability to view the conflict from the perspective of the Islamic, Jewish and Christian communities. Could you explain this view?

The three religions of Abraham -- Judaism, Christianity and Islam -- can and should be viewed as one religious tradition that went in three different directions. I have always tried to see them in this way; none is superior to any of the others. Each has its own particular genius; each its own particular flaws. Jews, Christians and Muslims worship the same God and share the same moral values. In the book A History of God, I tried to show that throughout their history, Jews, Christians and Muslims have asked the same kind of questions about God and have reached remarkably similar solutions-so that there are Jewish and Muslim versions of the incarnation, for example, and very similar notions of prophecy. In The Battle for God, I tried to show how similar the fundamentalist movements are in all three faiths.

Jews, however, have always found it difficult to accept the later faiths of Christianity and Islam; Christianity has always had an uneasy relationship with Judaism, the parent faith, and has seen Islam as a blasphemous imitation of revelation. The Qur'an, however, has a positive view of both Judaism and Christianity and constantly asserts that Muhammad did not come to cancel out the faiths of "the People of the Book": you cannot be a Muslim unless you also revere the prophets Abraham, David, Noah, Moses and Jesus-whom the Muslims regard as prophets-as in fact do many of the New Testament writers. Luke's gospel calls Jesus a prophet from start to finish; the idea that Jesus was divine was a later development, often misunderstood by Christians.

Unfortunately, however, religious people like to see themselves as having a monopoly on truth; they see that they alone are the one true faith. But this is egotism and has nothing to do with true religion, which is about the abandonment of the ego.

Too often it seems that religious people are not necessarily more compassionate, more tolerant, more peaceful or more spiritual than others. America, for example, is a very religious country, and at the same time it is the most unequal socially and economically. What does this say about the purpose of religion?

The world religions all insist that the one, single test of any type of religiosity is that it must issue in practical compassion. They have nearly all developed a version of the Golden Rule: "Do not do to others what you would not have done to you." This demands that we look into our own hearts, discover what it is that gives us pain and then refuse, under any circumstances, to inflict that pain on anybody else. Compassion demands that we "feel with" the other; that we dethrone ourselves from the centre of our world and put another there. This is the bedrock message of the Qur'an, of the New Testament ("I can have faith that moves mountains," says St. Paul, "but if I lack charity it profits me nothing."). Rabbi Hillel, the older contemporary of Jesus, defined the Golden Rule as the essence of Judaism: everything else, he said, was "commentary." We have exactly the same teaching in Confucianism, Daoism, Hinduism and Buddhism. I have tried to show this in one of my most recent books, The Great Transformation.

The traditions all insist that it is not enough simply to show compassion to your own group. You must have what the Chinese call jian ai, concern for everybody. Or as Jewish law puts it: "Honour the stranger." "Love your enemies," said Jesus: if you simply love your own kind, this is purely self-interest and a form of group egotism. The traditions also insist that it is the daily, hourly practice of compassion -not the adoption of the correct "beliefs" or the correct sexuality- that will bring us into the presence of what is called God, Nirvana, Brahman or the Dao. Religion is thus inseparable from altruism.

So why aren't religious people compassionate? What does that say about them? Compassion is not a popular virtue. Many religious people prefer to be right rather than compassionate. They don't want to give up their egos. They want religion to give them a little mild uplift once a week so that they can return to their ordinary selfish lives, unscathed by the demands of their tradition. Religion is hard work; not many people do it well. But are secularists any better? Many secularists would subscribe to the compassionate ideal but are just as selfish as religious people. The failure of religious people to be compassionate doesn't tell us something about religion, but about human nature. Religion is a method: you have to put it into practice to discover its truth. But, unfortunately, not many people do.

Islam and the West

Discussing Western ideas of justice and democracy in the Middle East, British foreign correspondent of The Independent, Robert Fisk, says: "We keep on saying that Arabs ... would like some of our shiny, brittle democracy, that they'd like freedom from the secret police and freedom from the dictators-who we largely put there. But they would also like freedom from us. And they want justice, which is sometimes more important than 'democracy'". Does the West need to realize that Muslims can run a modern state, but it is perhaps not the kind of democracy we want to see?

As Muslim intellectuals made clear, Islam is quite compatible with democracy, but unfortunately democracy has acquired a bad name in many Muslim countries. It seems that the West has said consistently: we believe in freedom and democracy, but you have to be ruled by dictators like the shahs or Saddam Hussein. There seems to have been a double standard. Robert Fisk is right: when I was in Pakistan recently and quoted Mr Bush-"They hate our freedom!"-the whole audience roared with laughter.

Democracy cannot be imposed by armies and tanks and coercion. The modern spirit has two essential ingredients; if these are not present, no matter how many fighter jets, computers or sky scrapers you have, your country is not really "modern".

The first of these is independence. The modernization of Europe from 16th to the 20th century was punctuated by declarations of independence on all fronts: religious, intellectual, political, economic. People demanded freedom to think, invent, and create as they chose.

The second quality is innovation as we modernized in the West: we were always creating something new; there was a dynamism and excitement to the process, even though it was often traumatic.

But in the Muslim world, modernity did not come with independence but with colonial subjugation; and still Muslims are not free, because the Western powers are often controlling their politics behind the scenes to secure the oil supply etc. Instead of independence there has been an unhealthy dependence and loss of freedom. Unless people feel free, any "democracy" is going to be superficial and flawed. And modernity did not come with innovation to the Muslims: because we were so far ahead, they could only copy us. So instead of innovation you have imitation.

We also know in our own lives that it is difficult-even impossible-to be creative when we feel under attack. Muslims often feel on the defensive and that makes it difficult to modernize and democratize creatively-especially when there are troops, tanks and occupying forces on the streets.

Do you see any common ground between Western world and Islam?

This will only be possible if the political issues are resolved. There is great common ground between the ideals of Islam and the modern Western ideal, and many Muslims have long realized this. At the beginning of the twentieth century, almost every single Muslim intellectual was in love with the West and wanted their countries to look just like Britain and France. Some even said that the West was more "Islamic" than the unmodernized Muslim countries, because in their modern economies they were able to come closer to the essential teaching of the Koran, which preaches the importance of social justice and equity. At this time, Muslims recognized the modern, democratic West as deeply congenial. In 1906, Muslim clerics campaigned alongside secularist intellectuals in Iran for representational government and constitutional rule. When they achieved their goal, the grand ayatollah said that the new constitution was the next best thing to the coming of the Shiite Messiah, because it would limit the tyranny of the shah and that was a project worthy of every Muslim. Unfortunately the British then discovered oil in Iran and never let the new parliament function freely. Muslims became disenchanted with the West as a result of Western foreign policy: Suez, Israel/Palestine, Western support of corrupt regimes, and so on.

What is needed from a very practical point of view to bridge the gap? What would you advise our leaders-our politicians and governments?

A revised foreign policy. A solution in Israel/Palestine that gives security to the Israelis and justice and autonomy to the Palestinians. No more support of corrupt, dictatorial regimes. A just solution to the unfolding horror in Iraq, which has been a "wonderful" help to groups like Al-Qaeda, playing right into their hands. No more situations like Abu Ghraib or Guantanamo Bay. Money poured into Afghanistan and Palestine. A solution to Kashmir. No more short-term solutions for cheap oil. In Iraq and in Lebanon last summer we saw that our big armies are no longer viable against guerrilla and terror attacks. Diplomacy is essential. But suspicion of the West is now so entrenched that it may be too late.

ANDREA BISTRICH is a journalist based in Munich, Germany.

Sunday, 11 November 2007

Does Anything Matter?

Does Anything Matter?

By Tarun Tejpal
10 November, 2007

The last time we broke a story that rumbled the jungle that is Delhi's power elite, we were condemned to a three-year walk over burning coals. The story, peration West End, an exposé of the rampant corruption in arms procurements, was first aired in March 2001, and almost immediately two things happened. The first was a groundswell of public applause and affection that did not abate for a long time. The second, fairly predictable — though not in its ferocity and longevity — was an immoral and unconstitutional assault on our work and lives. That too did not abate for a long time — not till the state's entire ammunition was spent, and there was nothing more to throw at us.
At the time, six years ago, we were, in succession, accused of being Congress stooges, agents of Dawood Ibrahim, on the payroll of the Hindujas, connected to the ISI of Pakistan, responsible for crashing the stock market, and in possession of hundreds of crores in payoffs. The estimates varied from twenty to two hundred. Narendra Modi — yes the same one — was at the time I think a general secretary in the BJP, and I will never forget a television interview in which both of us were doing phone-ins and he was spewing lies with the stentorian voice of a Supreme Court judge. A day later he was to issue printed pamphlets with ten facts about me. The first and most crucial was that I was the son of a contractor who was a close aide of veteran Congress leader Arjun Singh from Madhya Pradesh.
Delhi's perennially skewed elite — a relic of the Mughal durbar, pathologically fixated on its positioning on the social and power chessboard — relished every floating accusation and relayed it with embellishments. Even friends and acquaintances whispered. They had never seen anyone do anything but for a sweet personal reason. It was fair to assume that, similarly, we had many or at least one. Now that the state was hunting us with all its hounds it was only a matter of time before the truth was out. Having said that — a great job still, much needed, and most courageous!
As it were I had never met any of the Hindujas.
As it were I had never bought or sold a single share on the stock market.
As it were I'd never had anything to do with the Congress, never having been a political reporter in my career. (For record's sake let it be said TEHELKA must be the only company in India which has three CBI cases — all trumped up and lodged during the time of the NDA government — still going on against it, three years after the UPA came to power. We routinely go to court to seek bail on them.)
As it were we were not in possession of a single illicit rupee, else the hounds of the state that were panting after us around the clock would have locked us up and thrown away the keys. At the time there were just four of us left, down from 120, officed in a small borrowed room in the village behind South Extension. The money we borrowed then, running into tens of lakhs, to wage our legal and public battle, much of it from luminous Indian names, is still being repayed.
And of course, as it were — despite our exposé on cricket matchfixing, which badly hurt the underworld — none of us had ever met Dawood Ibrahim or any of the star-struck bhais.
Illustration: Anand Naorem

More absurdly still, leave alone my father I too had never met Arjun Singh at the time. Not to add that my father far from being a contractor had spent his life in the Indian army, wearing olive, and fighting in the two Indo-Pak wars of 1965 and 1971. Yet Modi had thought nothing of throwing a blatant untruth into the public space, amid all the others listed above that were being flung about. And the media — more giddy than the Sensex — had refused to clarify and rebut.

And unrebutted and unclarified lies — like an unpoliced Sensex — have the ability to swell to dangerous proportions, deforming reality and ushering in chaos. The core fascist axiom is a cliché: the whisper campaign of lies that soon becomes the truth or at least drowns it out. We saw that in 1984 as the Sikhs were put to the sword, and we saw it in 2002 as Gujarat was set to burn with a mishmash of false information and ill-intent. Mostly the media relayed unchecked versions, but sometimes it unearthed the truth. But truth by then had ceased to be a factor. The strategy of those exposed was to ratchet up the public noise till everything was drowned — good, bad, true, false. With our present exposé it has been: but why have you left out Godhra? Whereas the truth is we haven't. In fact 30 pages of our issue were devoted only to the Godhra investigation!
Noise as strategy when faced with serious charges may be smart if deplorable political tactics, but what is mystifying is the Indian elite's penchant for the conspiracy theory. It smacks of a self-serving culture where the greater good is seen as no motive at all. Over the years I have had the bizarre and nauseating experience of the well-heeled casting aspersions on the financial integrity of fantastic public warriors like Medha Patkar and Arundhati Roy. To differ in thought is one thing, but to automatically assume corruption of those who take up public causes says grim things about the kind of people we are. Some of this deformity may have to do with our colonial past: the desperate urge to please the white master engendering corrosive emotions of envy, cunning, plotting, backbiting and betrayal.
This time — with our investigation into the Gujarat pogrom of 2002 — the conspiracy-seekers scaled new heights. While the BJP attacked us for working for the Congress, the Congress spread the word that we were working for the BJP! Clearly we were doing something right. In all this the battle for the idea of India was left to Laloo Yadav, Mayawati and the Left. The Congress one presumes knows the phrase — since its forebears literally coined it — but they can't anymore seem to remember what it means.
It's extraordinary that more than a week after the Gujarat massacre exposé, the prime minister and the home minister had not made a single statement. For the first time in the history of journalism, mass murderers were on camera telling us how they killed, why they killed, and with whose permission they did it. Nor were these just petty criminals; these were fanatics, ideologically driven, working the most dangerous faultline of the subcontinent, revealing the truth of a perilous rupture fully capable of tearing this country apart. But that was clearly not enough for the good man of Race Course Road. Had the CII burped loudly, the PMO would have issued a clarification. Had they then organised a seminar on the untimely burp, the prime minister would have addressed it.
It may be unfair to pillory the prime minister, a man given responsibility without power, the honest man sitting atop a dishonest hillock. Let us then look at the grand strategists of the Congress who cannot win an election themselves but know the secret of winning elections for the many. On their perverse abacus, exposing Modi's hand in bestial murders and rapes was designed to convince the Gujarati Hindu that this is precisely the kind of leadership it wanted! It never struck them that they could use the evidence of violence to shape a stirring dialogue against it.
THE FACT is the Congress is today run by petty strategists who no longer know what it is to do the right thing. They possess neither the illuminations of history, nor a vision for the future. They fail to see that once great men sutured a hundred fault-lines — of caste, religion, race, language, class — to create the idea of India out of a diverse, colonised, feudal subcontinent. Foolishly they preside over the reopening of these fault-lines, unable to see the chaos that will ensue. They do not know how to wield morality as a weapon in politics, and they lack the courage to walk any high road. At best they are vote accountants who waver between the profit and the loss of various elections.
The present Congress brings grief to the liberal, secular, democratic Indian who needs a political umbrella under which to wage the civilisational battle for India's soul. By not saying the right thing, by not doing the right thing, it weakens the resolve of the decent Indian, who lacks the stomach for conflict and seeks affirmation of his decency. The vacated space is then colonised by poisonous ideologies based on exclusion and a garbled — pseudo-religious, pseudo-historic — hunt for identity.
And all this is happening while the elite Indian behaves like the elite American during the gilded age, the 1920s — glitz, glam, champagne times — even as the ground shifts beneath its feet. The latest statistics show the numbers living in abject poverty are actually growing in five major states. In 30 percent of India's districts Naxalite insurrections, rising from crushing poverty, are on the upswing. Can Manhattan and sub-Saharan Africa exist in the same space endlessly without some resulting cataclysm? The fact is India needs not just economic tinkering but great political vision. And there are no signs of it. The apathy of Gujarat tells us that the most complex country in the world faces its most complex challenges ever.

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