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Showing posts with label Clinton. Show all posts
Showing posts with label Clinton. Show all posts

Sunday 10 February 2013

US control is diminishing, but it still thinks it owns the world


The United States has long assumed the right to use violence to achieve its aims, but it is now less able to implement its policies
US soldier pointing gun at Iraqis
'We "stabilise" countries when we invade them and destroy them.' Photograph: Olivier Laban-Mattei/AFP/Getty Images
 
This piece is adapted from Uprisings, a chapter in Power Systems: Conversations on Global Democratic Uprisings and the New Challenges to US Empire, Noam Chomsky's new book of interviews with David Barsamian (with thanks to the publisher, Metropolitan Books). The questions are Barsamian's, the answers Chomsky's.

Does the United States still have the same level of control over the energy resources of the Middle East as it once had?

The major energy-producing countries are still firmly under the control of the western-backed dictatorships. So, actually, the progress made by the Arab spring is limited, but it's not insignificant. The western-controlled dictatorial system is being eroded. In fact, it's been being eroded for some time. So, for example, if you go back 50 years, the energy resources – the main concern of US planners – have been mostly nationalised. There are constantly attempts to reverse that, but they have not succeeded.

Take the US invasion of Iraq, for example. To everyone except a dedicated ideologue, it was pretty obvious that we invaded Iraq not because of our love of democracy but because it's maybe the second- or third-largest source of oil in the world, and is right in the middle of the major energy-producing region. You're not supposed to say this. It's considered a conspiracy theory.
The United States was seriously defeated in Iraq by Iraqi nationalism – mostly by nonviolent resistance. The United States could kill the insurgents, but they couldn't deal with half a million people demonstrating in the streets. Step by step, Iraq was able to dismantle the controls put in place by the occupying forces. By November 2007, it was becoming pretty clear that it was going to be very hard to reach US goals. And at that point, interestingly, those goals were explicitly stated. So in November 2007 the Bush II administration came out with an official declaration about what any future arrangement with Iraq would have to be. It had two major requirements: one, that the United States must be free to carry out combat operations from its military bases, which it will retain; and, two, "encouraging the flow of foreign investments to Iraq, especially American investments". In January 2008, Bush made this clear in one of his signing statements. A couple of months later, in the face of Iraqi resistance, the United States had to give that up. Control of Iraq is now disappearing before their eyes.

Iraq was an attempt to reinstitute by force something like the old system of control, but it was beaten back. In general, I think, US policies remain constant, going back to the second world war. But the capacity to implement them is declining.

Declining because of economic weakness?

Partly because the world is just becoming more diverse. It has more diverse power centres. At the end of the second world war, the United States was absolutely at the peak of its power. It had half the world's wealth, and every one of its competitors was seriously damaged or destroyed. It had a position of unimaginable security and developed plans to essentially run the world – not unrealistically at the time.

This was called "grand area" planning?

Yes. Right after the second world war, George Kennan, head of the US state department policy planning staff, and others sketched out the details, and then they were implemented. What's happening now in the Middle East and north Africa, to an extent, and in South America substantially goes all the way back to the late 1940s. The first major successful resistance to US hegemony was in 1949. That's when an event took place that, interestingly, is called "the loss of China". It's a very interesting phrase, never challenged. There was a lot of discussion about who is responsible for the loss of China. It became a huge domestic issue. But it's a very interesting phrase. You can only lose something if you own it. It was just taken for granted: we possess China – and, if they move toward independence, we've lost China. Later came concerns about "the loss of Latin America", "the loss of the Middle East", "the loss of" certain countries, all based on the premise that we own the world and anything that weakens our control is a loss to us and we wonder how to recover it.

Today, if you read, say, foreign policy journals or, in a farcical form, listen to the Republican debates, they're asking, "How do we prevent further losses?"

On the other hand, the capacity to preserve control has sharply declined. By 1970, the world was already what was called tripolar economically, with a US-based North American industrial centre, a German-based European centre, roughly comparable in size, and a Japan-based east Asian centre, which was then the most dynamic growth region in the world. Since then, the global economic order has become much more diverse. So it's harder to carry out our policies, but the underlying principles have not changed much.

Take the Clinton doctrine. The Clinton doctrine was that the United States was entitled to resort to unilateral force to ensure "uninhibited access to key markets, energy supplies and strategic resources". That goes beyond anything that George W Bush said. But it was quiet and it wasn't arrogant and abrasive, so it didn't cause much of an uproar. The belief in that entitlement continues right to the present. It's also part of the intellectual culture.

Right after the assassination of Osama bin Laden, amid all the cheers and applause, there were a few critical comments questioning the legality of the act. Centuries ago, there used to be something called presumption of innocence. If you apprehend a suspect, he's a suspect until proven guilty. He should be brought to trial. It's a core part of American law. You can trace it back to Magna Carta. So there were a couple of voices saying maybe we shouldn't throw out the whole basis of Anglo-American law. That led to a lot of very angry and infuriated reactions, but the most interesting ones were, as usual, on the left-liberal end of the spectrum. Matthew Yglesias, a well-known and highly respected left-liberal commentator, wrote an article in which he ridiculed these views. He said they were "amazingly naive" and silly. Then he explained the reason. He said: "One of the main functions of the international institutional order is precisely to legitimate the use of deadly military force by western powers." Of course, he didn't mean Norway. He meant the United States. So the principle on which the international system is based is that the US is entitled to use force at will. To talk about the US violating international law or something like that is amazingly naive, completely silly. Incidentally, I was the target of those remarks, and I'm happy to confess my guilt. I do think that Magna Carta and international law are worth paying some attention to.

I merely mention that to illustrate that, in the intellectual culture, even at what's called the left-liberal end of the political spectrum, the core principles haven't changed very much. But the capacity to implement them has been sharply reduced. That's why you get all this talk about American decline. Take a look at the year-end issue of Foreign Affairs, the main establishment journal. Its big front-page cover asks, in bold face, "Is America Over?" It's a standard complaint of those who believe they should have everything. If you believe you should have everything and anything gets away from you, it's a tragedy, and the world is collapsing. So is America over? A long time ago we "lost" China, we've lost southeast Asia, we've lost South America. Maybe we'll lose the Middle East and north African countries. Is America over? It's a kind of paranoia, but it's the paranoia of the super-rich and the super-powerful. If you don't have everything, it's a disaster.

The New York Times describes the "defining policy quandary of the Arab spring as how to square contradictory US impulses, including support for democratic change, a desire for stability, and wariness of Islamists who have become a potent political force". The Times identifies three US goals. What do you make of them?

Two of them are accurate. The United States is in favour of stability. But you have to remember what stability means. Stability means conformity to US orders. So, for example, one of the charges against Iran, the big foreign policy threat, is that it is destabilising Iraq and Afghanistan. How? By trying to expand its influence into neighbouring countries. On the other hand, we "stabilise" countries when we invade them and destroy them.

I've occasionally quoted one of my favourite illustrations of this, which is from a well-known, very good liberal foreign policy analyst, James Chace, a former editor of Foreign Affairs. Writing about the overthrow of the Salvador Allende regime and the imposition of the dictatorship of Augusto Pinochet in 1973, he said that we had to "destabilise" Chile in the interests of "stability". That's not perceived to be a contradiction – and it isn't. We had to destroy the parliamentary system in order to gain stability, meaning that they do what we say. So yes, we are in favour of stability in this technical sense.

Concern about political Islam is just like concern about any independent development. Anything that's independent you have to have concern about, because it may undermine you. In fact, it's a little paradoxical, because traditionally the United States and Britain have by and large strongly supported radical Islamic fundamentalism, not political Islam, as a force to block secular nationalism, the real concern. So, for example, Saudi Arabia is the most extreme fundamentalist state in the world, a radical Islamic state. It has missionary zeal, is spreading radical Islam to Pakistan and funding terror. But it's the bastion of US and British policy. They've consistently supported it against the threat of secular nationalism from Gamal Abdel Nasser's Egypt and Abd al-Karim Qasim's Iraq, among many others. But they don't like political Islam because it may become independent.

The first of the three points, our yearning for democracy, that's about on the level of Joseph Stalin talking about the Russian commitment to freedom, democracy and liberty for the world. It's the kind of statement you laugh about when you hear it from commissars or Iranian clerics, but you nod politely, and maybe even with awe, when you hear it from their western counterparts.

If you look at the record, the yearning for democracy is a bad joke. That's even recognised by leading scholars, though they don't put it this way. One of the major scholars on so-called democracy promotion is Thomas Carothers, who is pretty conservative and highly regarded – a neo-Reaganite, not a flaming liberal. He worked in Reagan's state department and has several books reviewing the course of democracy promotion, which he takes very seriously. He says, yes, this is a deep-seated American ideal, but it has a funny history. The history is that every US administration is "schizophrenic". They support democracy only if it conforms to certain strategic and economic interests. He describes this as a strange pathology, as if the United States needed psychiatric treatment or something. Of course, there's another interpretation, but one that can't come to mind if you're a well-educated, properly behaved intellectual.

Within several months of the toppling of [President Hosni] Mubarak in Egypt, he was in the dock facing criminal charges and prosecution. It's inconceivable that US leaders will ever be held to account for their crimes in Iraq or beyond. Is that going to change anytime soon?

That's basically the Yglesias principle: the very foundation of the international order is that the United States has the right to use violence at will. So how can you charge anybody?

And no one else has that right?

Of course not. Well, maybe our clients do. If Israel invades Lebanon and kills 1,000 people and destroys half the country, OK, that's all right. It's interesting. Barack Obama was a senator before he was president. He didn't do much as a senator, but he did a couple of things, including one he was particularly proud of. In fact, if you looked at his website before the primaries, he highlighted the fact that, during the Israeli invasion of Lebanon in 2006, he co-sponsored a Senate resolution demanding that the United States do nothing to impede Israel's military actions until they had achieved their objectives, and censuring Iran and Syria because they were supporting resistance to Israel's destruction of southern Lebanon, incidentally, for the fifth time in 25 years. So they inherit the right. Other clients do, too.

But the rights really reside in Washington. That's what it means to own the world. It's like the air you breathe. You can't question it. The main founder of contemporary IR [international relations] theory, Hans Morgenthau, was really quite a decent person, one of the very few political scientists and international affairs specialists to criticise the Vietnam war on moral, not tactical, grounds. Very rare. He wrote a book called The Purpose of American Politics. You already know what's coming. Other countries don't have purposes. The purpose of America, on the other hand, is "transcendent" – to bring freedom and justice to the rest of the world. But he's a good scholar, like Carothers. So he went through the records. He said that, when you studied the record, it looked as if the United States hadn't lived up to its transcendent purpose. But then he says that to criticise our transcendent purpose "is to fall into the error of atheism, which denies the validity of religion on similar grounds" – which is a good comparison. It's a deeply entrenched religious belief. It's so deep that it's going to be hard to disentangle it. And if anyone questions that, it leads to near-hysteria and often to charges of anti-Americanism or "hating America" – interesting concepts that don't exist in democratic societies, only in totalitarian societies and here, where they're just taken for granted.

Saturday 4 February 2012

Who to blame for the Great Recession?

In 2000 it was the $164bn (£103bn) AOL takeover of Time Warner in America. In 2007 it was the-then Sir Fred Goodwin's £49bn acquisition of ABN Amro that signalled that the markets had peaked and were about to crumble.

Every financial crisis has its totemic moment; a decision that even at the time seems to defy logic and in retrospect is seen as an act of gross stupidity. Yet it takes more than one individual banker, no matter how powerful, to make a crisis and when the historians come to chronicle the Great Recession of 2008-09 the list of guilty men and women will include more than one former knight of the realm.
Here, then, is a (far from exhaustive) list of those who might be considered most culpable – who caused, exacerbated or failed to prevent the worst downturn in the global economy since the 1930s.

Alan Greenspan

Laughably given an honorary knighthood in 2002 for his "contribution to global economic stability", Greenspan's responsibility for the crash cannot be underestimated.

A fanatical believer in the self-righting qualities of financial markets, he was the bubble king who allowed the dotcom boom of the late 1990s to get out of hand and then, when plummeting share prices pushed the economy into recession, started the whole process off again, this time in the housing market.

As chairman of the Federal Reserve, he cut interest rates and left them at rock-bottom levels for two years.

Cheap borrowing costs encouraged Americans to load up on debt to buy homes, even when they had no savings, no income and no job prospects.

These so-called sub-prime borrowers were the cannon fodder for the biggest boom-bust in US history. The housing collapse brought the global economy to its knees.

Sir Mervyn King

Britain was mini-me to the US in the days of grand illusion before the crash, having its debt-fuelled party where growth was concentrated in the speculative sectors of housing and finance.

King became Bank of England governor in 2003, and while he has subsequently been one of the most pro-active central bankers with a refreshingly robust approach to the banks, the case against him is that he failed to "lean against the wind" during the economic upswing, leaving interest rates too low, and then waited too long when the economy was nosediving into its most severe postwar recession before cutting bank rate.

Under the government's tripartite system of regulation, the Old Lady was supposed to ensure developments in the City did not pose a systemic risk to the economy. It failed in that task.

Gordon Brown

We have abolished Tory boom and bust, Brown said repeatedly in his 10 years as chancellor of the exchequer. He hadn't.

His last big speech before becoming prime minister, made at the Mansion House in June 2007 just as the financial crisis was about to break, praised the bankers for their remarkable achievements and predicted "the beginning of a new golden age for the City of London". It wasn't.

Brown presided over the loss of a million manufacturing jobs and an ever-widening trade deficit while cosying up to the City. He used to quip that there were two types of chancellors: those who failed and those who got out in time. He got that one right.

Bill Clinton

One Democratic president, Franklin Roosevelt, put a cage round Wall Street after its excesses in the 20s led to the Wall Street crash and the Great Depression. Another Democrat, Bill Clinton, gave Wall Street the cage keys.

After a fierce lobbying campaign, Clinton agreed to repeal the Glass-Steagall Act, which ensured a complete separation between investment and retail banks. The move heralded the coming of superbanks, huge behemoths that took in retail deposits and used them to take highly-leveraged punts in the markets.

To make matters worse, Clinton beefed up Jimmy Carter's 1977 Community Reinvestment Act to force lenders to take a more relaxed approach to disadvantaged borrowers. Liberalised banks plus millions of new sub-prime customers equalled one big problem.

Eugene Fama

The economics profession failed to cover itself in glory in the run-up to 2007. Not only did economists fail to spot that financial institutions were loading themselves up with vast quantities of toxic sub-prime debt, most of them thought it was theoretically impossible for a crisis to happen.
In large part, responsibility for that lies with Fama, a Chicago University economics professor who in the 70s came up with the efficient markets hypothesis (EMH), which stated that financial markets price assets at their true worth based on all the publicly available information, encouraging the belief that the best thing to do was to pile in when prices were rising. Bubble-think, in other words.

Ronald Reagan and Margaret Thatcher

Just as many trends in modern popular music can be traced back to the Beatles, so politics was shaped by the activities of Reagan and Thatcher, the Lennon and McCartney of deregulation, market forces and trickle-down economics.

The changes pushed through in the US and the UK in the 80s removed constraints on bankers, made finance more important at the expense of manufacturing and reduced union power, making it harder for employees to secure as big a share of the national economic cake as they had in previous decades.
The flipside of rising corporate profits and higher rewards for the top 1% of earners was stagnating wages for ordinary Americans and Britons, and a higher propensity to get into debt.

Hank Paulson

The US treasury secretary in 2008, Paulson was the Sir Anthony Eden of the financial crisis. He had all the necessary credentials a Republican president would consider necessary for the job – chief executive of Goldman Sachs with an MBA from Harvard. He was considered the brightest and best of his generation. Like Eden over Suez, he was faced with a monumental challenge. And he blew it.
Paulson's big mistake was to put Freddie Mac and Fannie Mae into conservatorship, wiping out the stakes of those who had invested $20bn in the two government-backed mortgage lenders over the previous 12 months.

Unsurprisingly, there was no great rush among private investors to rescue Lehman Brothers when it ran into trouble the following week, and when the US treasury allowed the investment bank to go bust every financial institution in the world was seen as at risk.

Fred the Shred destroyed a bank; Paulson triggered the biggest economic downturn since the Great Depression.

Kathleen Corbet

No rogues' gallery of the crisis would be complete without a representative of the credit rating agencies. These were the bodies that took fees from the banks while giving the top AAA rating to collateralised debt obligations, the hugely complex financial instruments that bundled together the toxic sub-prime mortgages with the sound home loans.

Corbet was CEO of Standard & Poor's, the biggest of the rating agencies, and she left her post in a "long-planned" move in August 2007 just as the financial markets were shutting down.

The justification for the top-notch ratings was that the poor-quality loans would be lost in the mix, but when the crisis broke the reality was more like a food scare, in which supermarkets know there are a few dodgy ready-made meals on their shelves but must bin the lot as they are not sure which ones they are.

Phil Gramm

"Some people look at sub-prime lending and see evil," said this senator in a debate on Capitol Hill in 2001. "I look at sub-prime lending and I see the American dream in action."

Gramm, who thinks Wall Street a "holy place", was the main cheerleader in Congress for financial deregulation, putting pressure on the Clinton administration to ease restrictions – not that it needed much persuading.

The fact that he had been the biggest recipient of campaign fund donations from commercial banks and in the top five for donations from Wall Street from 1989 to 2002 was, of course, entirely coincidental.

The bankers

Was it Fred Goodwin at RBS or Adam Applegarth at Northern Rock – the first UK high street bank to suffer a full-scale run on its branches since the 1860s? Was it Dick Fuld, the man in charge at Lehman Brothers when it went belly-up? Jimmy Cayne, who spent the first month of the crisis playing bridge rather than running Bear Stearns?

Or Stan O'Neal, whose attempts to rid Merrill Lynch of its fuddy-duddy image saddled the bank with $8bn of bad debts?

How about Andy Hornby, the whizzkid running HBOS? Or perhaps the man chosen by Gordon Brown to be HBOS's white knight – Sir Victor Blank, chairman of Lloyds?

Choose any one from a very long list.