Showing posts with label hegemony. Show all posts
Showing posts with label hegemony. Show all posts
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Currency warrior: why Trump is weaponising the dollar
Businesses in countries such as Russia are testing the power of the reserve currency but it could benefit from any global instability writes Sam Fleming in The FT
In an industry long dominated by the dollar, it was a move that carried obvious symbolic weight.
Last summer Russian diamond miner Alrosa tested a new system for selling its rocks in roubles to clients in countries such as China and India, as an alternative to the US currency.
Since then the company has conducted about 50 transactions under the mechanism, using a range of currencies, says Evgeny Agureev, Alrosa’s director of sales, who says avoiding dollar conversion allows transactions to be conducted more speedily.
“The number and volume of these transactions is relatively small . . . but we think it is valuable for our clients to have a variety of options for settlement to choose from,” he says in an email, adding that the “world changes and we need to respond”.
Though under consideration for several years, the initiative by the partly state-owned miner is a sign of a growing appetite to find ways of shaking off the stranglehold the US dollar has long held on global commerce and finance. Those efforts have taken on high urgency given Donald Trump’s increasingly aggressive use of US economic and financial weaponry to get his way in foreign affairs.
The president has thus far engaged in minimal military conflict, but he has proved an unusually pugnacious currency warrior, as he pairs a tendency to talk down the dollar’s value in his quest for a smaller trade deficit with an unusual willingness to use the currency’s global heft as a tool of foreign policy.
Critically, sanctions, which can block foreign officials or corporations from accessing vast swaths of dollar-dominated commerce and finance, are being deployed against Russia, Iran, North Korea, Venezuela and a host of other countries, alongside tariffs and other restrictions on key companies such as telecoms manufacturer Huawei. As a result, economies including China and Russia are examining mechanisms to curtail their reliance on the dollar, while European capitals are seeking ways of circumventing America’s new barriers on dealings with Iran.
To date the initiatives amount to less than a pinprick in the US currency’s hegemonic status, as underscored by the modest scale of Alrosa’s foreign exchange innovation. But Mr Trump’s unilateralist approach has unquestionably unleashed a phase of experimentation elsewhere, prompting some analysts to ask whether, in the longer term, the US dollar’s supreme position in the global financial system could be shaken as other nations revolt against what they see as Mr Trump’s arbitrary use of American power.
Adam M Smith, a former Treasury and White House official who is now a partner at law firm Gibson, Dunn & Crutcher, says the manner in which Mr Trump is wielding America’s economic power is unprecedented, as he uses sanctions, tariffs, trade negotiations and export controls interchangeably.
“He is using the importance and attractiveness of the US market to the rest of the world as a coercive tool to get others to bend to his will,” says Mr Smith. “Does the very aggressive use of these economic tools make it more urgent for countries to find ways to avoid the US market? Probably. However, the urgency may not mean that most countries will be successful in finding effective workarounds.”
America has long enjoyed a singular economic arsenal thanks to the ubiquity of the dollar and the centrality of its economy and financial system to global commerce. Although America’s share of global gross domestic product may have declined, its currency still accounts for over 60 per cent of international debt, according to a speech by European Central Bank official Benoît Cœuré in February, and leads the euro both as a global payment currency and in foreign exchange turnover. It dominates pricing of commodities such as oil and metals and accounts for about 40 per cent of cross-border financial transactions.
The dollar’s share of global foreign exchange reserves has slipped in the 10 years since the financial crisis, but at 62 per cent of the total it still dwarfs all rivals. The euro has lost greater ground over the same time, now standing at just over 20 per cent. The Chinese renminbi is just a few per cent of global reserves, and a mere 2 per cent of international payments, according to the global transfer network, Swift.
This unique place at the heart of the global economic system gives the US government enormous power. Using the dollar almost invariably means touching a US financial institution, says Eswar Prasad, a professor of economics at Cornell University. This immediately puts you within the reach of US government and regulators.
The US toolkit is particularly potent thanks to the use of “secondary” sanctions. Normal US sanctions aim to prevent American citizens from dealing with a given country or party, but secondary measures allow the government to penalise third parties that do business with a sanctioned country.
The consequences for non-US institutions of failing to comply with US rules can be severe. In 2014, for example, BNP Paribas was hit by a penalty of nearly $9bn by the US authorities in connection with sanctions violations, as well as being forced to temporarily suspend part of its US dollar clearing work.
While Washington’s use of sanctions has been on the rise for decades, Mr Trump has emerged as a particular enthusiast. Data compiled by Gibson Dunn show 1,474 entities were subject to sanctions designations in 2018 — 50 per cent higher than in any previous year for which it has kept records.
The power of these tools has been felt across markets. The Treasury’s decision to sanction metal groups Rusal and parent company En+ led to a surge in aluminium prices, before it agreed to ease its stance if its major shareholder, Oleg Deripaska, gave up control. Sanctions were lifted in January.
Last August Turkey was plunged into a currency crisis as the US imposed swingeing tariffs on its steel and aluminium exports, on top of sanctions on senior ministers.
The US Congress has equally been aggressive in pushing sanctions. In April a cross-party group of senators led by Republican Marco Rubio and Democrat Bob Menendez demanded sanctions against senior Chinese Communist party officials in response to alleged human rights abuses against Uighurs and other Muslim minorities in the northwestern province of Xinjiang.
This month senators demanded the more rigorous enforcement of US regulations against Chinese companies that seek access to US markets. Hawks such as Mr Rubio want to take matters further and more closely examine China’s ready access to US finance.
“China poses the greatest long-term threat to US national and economic security. At a minimum, American investors should be aware of where their money is going when it comes to Chinese investments,” said Mr Rubio.
The Trump administration’s aggressive use of sanctions carries multiple risks. It is not only rivals who are upset: the US has at times also incensed close allies, which for decades have viewed Washington as a reliable steward of orderly global markets.
In the longer term it could accelerate a trend in which other countries wish to reduce their reliance on the dollar for its main three purposes — as a store of value, a unit of account and a medium of global exchange. In the very long run, some specialists fear the US dollar’s totemic status at the centre of the global economy could be eroded, or even supplanted, just as the British pound was by the dollar during the interwar period.
Richard Nephew, a former US government sanctions specialist who is now programme director at Columbia University’s Center on Global Energy Policy, says that for at least the next five to 10 years the world is locked into the dollar as the default currency.
But he argues there will be an evolution towards a system where the US is not the sole significant trading currency. US policy today “will increase the speed with which that transition takes place”.
A recent report from the Center for a New American Security think-tank argues that a host of factors could conspire to weaken the impact of America’s economic policy arsenal over the longer term. Critically, it says that if the US attempts to reduce its economic, financial and trading connections with key overseas economies, “over time US coercive economic leverage over those economies will diminish”.
Russia has been at the forefront of attempts to de-dollarise, spurred on by the punishing impact of US sanctions on its economy. “We are not ditching the dollar, the dollar is ditching us,” Russia’s president Vladimir Putin said late last year. “The instability of dollar payments is creating a desire for many global economies to find alternative reserve currencies and create settlement systems independent of the dollar.”
Russia’s central bank last spring sold $101bn worth of dollars from its reserves, shifting the holdings into renminbi, euros and yen, according to official data published in January with a six-month delay. Fifteen per cent of Russia’s reserves were in the Chinese currency last summer, the data showed, three times the proportion at the end of the first quarter of 2018.
For its part, China has experimented with denominating oil futures in its currency as well as working on its own international payments system.
In June Russia agreed with China at a summit between Xi Jinping and Mr Putin to do more trade in their respective currencies. The rouble and renminbi’s share of Chinese imports into Russia edged up from 17 per cent in 2017 to 24 per cent in 2018, according to economist Dmitry Dolgin of ING.
Yet for all the political attention, the two countries’ attempts to reduce the dollar’s role remain in their infancy. For example, China and Russia set up a non-dollar direct settlement plan to help with their gas pipeline deals around 2015. However, in practice, the Chinese side uses it as little as possible, in part because of the risk of rouble volatility.
China has also harboured aspirations to turn its Belt and Road Initiative into a platform for boosting the international use of the renminbi. But it would in practice have to dramatically liberalise its capital controls to gain widespread acceptance as a reserve currency.
In Europe, frustrations have been growing at the continent’s faltering attempts to boost the euro’s global role alongside the dollar. Top French officials including François Villeroy de Galhau, governor of the Banque de France, have called for greater use of the euro in international transactions in a bid to challenge the dollar’s dominance. European Commission president Jean-Claude Juncker last year said it was an “aberration” that the EU paid for more than 80 per cent of its energy imports in dollars despite only 2 per cent of imports coming from the US.
Yet the pattern since the financial crisis has if anything been a decline in the euro’s international role. Gita Gopinath, the IMF’s chief economist, points to a reduction in euro invoicing and international financial transactions. “The dollar on the other hand has gained relative to the euro in the last 10 years,” she says.
Meanwhile progress on a high-profile mechanism backed by major European countries that aims to sustain trade with Iran despite newly imposed US sanctions has been painfully slow.
Sigal Mandelker, the Treasury official in charge of enforcing sanctions, points out that despite European efforts to keep their businesses invested in Iran following Mr Trump’s withdrawal from the nuclear deal, the companies “got out in droves”.
“There are people out there who argue we have overused the tool,” says Ms Mandelker, “[but] if you look at our objectives and how we are using the tool, you will see that what we have been doing systemically is to change behaviour, to disrupt the flow of bad money, and to go after entities and individuals who pose national security and illicit finance risk.”
For all the warnings that the US will undermine its own currency by being so aggressive, there is little sign of any diminished appetite for using the greenback. Kevin Hassett, the outgoing chairman of Mr Trump’s Council of Economic Advisers, says: “If you thought that the Trump policies were imperilling the status of the dollar, then your case would be stronger if you showed that the dollar had collapsed a lot under Trump policies . . . But the move in the dollar has been kind of the opposite of that.”
Ms Gopinath is sceptical about the chances of near-term change. “You are hearing more noise right now for other currencies to become truly global currencies. But the data do not show a more forceful dynamic in this direction and it would take a lot more than what we’re seeing now for there to be a switch.”
Indeed, the irony is that if the president ends up triggering global instability via his policies, investors may end up flocking all the more enthusiastically towards dollar assets. That was after all the phenomenon during the financial crisis, when a mortgage meltdown that was made in the US prompted global investors to scamper for the safety of government bonds, and it has been the same story more recently as Mr Trump’s trade wars drove down US bond yields.
“Anything Trump creates to foment uncertainty and instability will only end up strengthening the dollar,” says Mr Prasad. Over time, other countries will indeed get tired of this and shift away from the dollar as a unit of account and a medium of exchange, he adds, but “in the foreseeable and longer future the dollar’s role as the dominant store of value is unlikely to be challenged.”
In an industry long dominated by the dollar, it was a move that carried obvious symbolic weight.
Last summer Russian diamond miner Alrosa tested a new system for selling its rocks in roubles to clients in countries such as China and India, as an alternative to the US currency.
Since then the company has conducted about 50 transactions under the mechanism, using a range of currencies, says Evgeny Agureev, Alrosa’s director of sales, who says avoiding dollar conversion allows transactions to be conducted more speedily.
“The number and volume of these transactions is relatively small . . . but we think it is valuable for our clients to have a variety of options for settlement to choose from,” he says in an email, adding that the “world changes and we need to respond”.
Though under consideration for several years, the initiative by the partly state-owned miner is a sign of a growing appetite to find ways of shaking off the stranglehold the US dollar has long held on global commerce and finance. Those efforts have taken on high urgency given Donald Trump’s increasingly aggressive use of US economic and financial weaponry to get his way in foreign affairs.
The president has thus far engaged in minimal military conflict, but he has proved an unusually pugnacious currency warrior, as he pairs a tendency to talk down the dollar’s value in his quest for a smaller trade deficit with an unusual willingness to use the currency’s global heft as a tool of foreign policy.
Critically, sanctions, which can block foreign officials or corporations from accessing vast swaths of dollar-dominated commerce and finance, are being deployed against Russia, Iran, North Korea, Venezuela and a host of other countries, alongside tariffs and other restrictions on key companies such as telecoms manufacturer Huawei. As a result, economies including China and Russia are examining mechanisms to curtail their reliance on the dollar, while European capitals are seeking ways of circumventing America’s new barriers on dealings with Iran.
To date the initiatives amount to less than a pinprick in the US currency’s hegemonic status, as underscored by the modest scale of Alrosa’s foreign exchange innovation. But Mr Trump’s unilateralist approach has unquestionably unleashed a phase of experimentation elsewhere, prompting some analysts to ask whether, in the longer term, the US dollar’s supreme position in the global financial system could be shaken as other nations revolt against what they see as Mr Trump’s arbitrary use of American power.
Adam M Smith, a former Treasury and White House official who is now a partner at law firm Gibson, Dunn & Crutcher, says the manner in which Mr Trump is wielding America’s economic power is unprecedented, as he uses sanctions, tariffs, trade negotiations and export controls interchangeably.
“He is using the importance and attractiveness of the US market to the rest of the world as a coercive tool to get others to bend to his will,” says Mr Smith. “Does the very aggressive use of these economic tools make it more urgent for countries to find ways to avoid the US market? Probably. However, the urgency may not mean that most countries will be successful in finding effective workarounds.”
America has long enjoyed a singular economic arsenal thanks to the ubiquity of the dollar and the centrality of its economy and financial system to global commerce. Although America’s share of global gross domestic product may have declined, its currency still accounts for over 60 per cent of international debt, according to a speech by European Central Bank official Benoît Cœuré in February, and leads the euro both as a global payment currency and in foreign exchange turnover. It dominates pricing of commodities such as oil and metals and accounts for about 40 per cent of cross-border financial transactions.
The dollar’s share of global foreign exchange reserves has slipped in the 10 years since the financial crisis, but at 62 per cent of the total it still dwarfs all rivals. The euro has lost greater ground over the same time, now standing at just over 20 per cent. The Chinese renminbi is just a few per cent of global reserves, and a mere 2 per cent of international payments, according to the global transfer network, Swift.
This unique place at the heart of the global economic system gives the US government enormous power. Using the dollar almost invariably means touching a US financial institution, says Eswar Prasad, a professor of economics at Cornell University. This immediately puts you within the reach of US government and regulators.
The US toolkit is particularly potent thanks to the use of “secondary” sanctions. Normal US sanctions aim to prevent American citizens from dealing with a given country or party, but secondary measures allow the government to penalise third parties that do business with a sanctioned country.
The consequences for non-US institutions of failing to comply with US rules can be severe. In 2014, for example, BNP Paribas was hit by a penalty of nearly $9bn by the US authorities in connection with sanctions violations, as well as being forced to temporarily suspend part of its US dollar clearing work.
While Washington’s use of sanctions has been on the rise for decades, Mr Trump has emerged as a particular enthusiast. Data compiled by Gibson Dunn show 1,474 entities were subject to sanctions designations in 2018 — 50 per cent higher than in any previous year for which it has kept records.
The power of these tools has been felt across markets. The Treasury’s decision to sanction metal groups Rusal and parent company En+ led to a surge in aluminium prices, before it agreed to ease its stance if its major shareholder, Oleg Deripaska, gave up control. Sanctions were lifted in January.
Last August Turkey was plunged into a currency crisis as the US imposed swingeing tariffs on its steel and aluminium exports, on top of sanctions on senior ministers.
The US Congress has equally been aggressive in pushing sanctions. In April a cross-party group of senators led by Republican Marco Rubio and Democrat Bob Menendez demanded sanctions against senior Chinese Communist party officials in response to alleged human rights abuses against Uighurs and other Muslim minorities in the northwestern province of Xinjiang.
This month senators demanded the more rigorous enforcement of US regulations against Chinese companies that seek access to US markets. Hawks such as Mr Rubio want to take matters further and more closely examine China’s ready access to US finance.
“China poses the greatest long-term threat to US national and economic security. At a minimum, American investors should be aware of where their money is going when it comes to Chinese investments,” said Mr Rubio.
The Trump administration’s aggressive use of sanctions carries multiple risks. It is not only rivals who are upset: the US has at times also incensed close allies, which for decades have viewed Washington as a reliable steward of orderly global markets.
In the longer term it could accelerate a trend in which other countries wish to reduce their reliance on the dollar for its main three purposes — as a store of value, a unit of account and a medium of global exchange. In the very long run, some specialists fear the US dollar’s totemic status at the centre of the global economy could be eroded, or even supplanted, just as the British pound was by the dollar during the interwar period.
Richard Nephew, a former US government sanctions specialist who is now programme director at Columbia University’s Center on Global Energy Policy, says that for at least the next five to 10 years the world is locked into the dollar as the default currency.
But he argues there will be an evolution towards a system where the US is not the sole significant trading currency. US policy today “will increase the speed with which that transition takes place”.
A recent report from the Center for a New American Security think-tank argues that a host of factors could conspire to weaken the impact of America’s economic policy arsenal over the longer term. Critically, it says that if the US attempts to reduce its economic, financial and trading connections with key overseas economies, “over time US coercive economic leverage over those economies will diminish”.
Russia has been at the forefront of attempts to de-dollarise, spurred on by the punishing impact of US sanctions on its economy. “We are not ditching the dollar, the dollar is ditching us,” Russia’s president Vladimir Putin said late last year. “The instability of dollar payments is creating a desire for many global economies to find alternative reserve currencies and create settlement systems independent of the dollar.”
Russia’s central bank last spring sold $101bn worth of dollars from its reserves, shifting the holdings into renminbi, euros and yen, according to official data published in January with a six-month delay. Fifteen per cent of Russia’s reserves were in the Chinese currency last summer, the data showed, three times the proportion at the end of the first quarter of 2018.
For its part, China has experimented with denominating oil futures in its currency as well as working on its own international payments system.
In June Russia agreed with China at a summit between Xi Jinping and Mr Putin to do more trade in their respective currencies. The rouble and renminbi’s share of Chinese imports into Russia edged up from 17 per cent in 2017 to 24 per cent in 2018, according to economist Dmitry Dolgin of ING.
Yet for all the political attention, the two countries’ attempts to reduce the dollar’s role remain in their infancy. For example, China and Russia set up a non-dollar direct settlement plan to help with their gas pipeline deals around 2015. However, in practice, the Chinese side uses it as little as possible, in part because of the risk of rouble volatility.
China has also harboured aspirations to turn its Belt and Road Initiative into a platform for boosting the international use of the renminbi. But it would in practice have to dramatically liberalise its capital controls to gain widespread acceptance as a reserve currency.
In Europe, frustrations have been growing at the continent’s faltering attempts to boost the euro’s global role alongside the dollar. Top French officials including François Villeroy de Galhau, governor of the Banque de France, have called for greater use of the euro in international transactions in a bid to challenge the dollar’s dominance. European Commission president Jean-Claude Juncker last year said it was an “aberration” that the EU paid for more than 80 per cent of its energy imports in dollars despite only 2 per cent of imports coming from the US.
Yet the pattern since the financial crisis has if anything been a decline in the euro’s international role. Gita Gopinath, the IMF’s chief economist, points to a reduction in euro invoicing and international financial transactions. “The dollar on the other hand has gained relative to the euro in the last 10 years,” she says.
Meanwhile progress on a high-profile mechanism backed by major European countries that aims to sustain trade with Iran despite newly imposed US sanctions has been painfully slow.
Sigal Mandelker, the Treasury official in charge of enforcing sanctions, points out that despite European efforts to keep their businesses invested in Iran following Mr Trump’s withdrawal from the nuclear deal, the companies “got out in droves”.
“There are people out there who argue we have overused the tool,” says Ms Mandelker, “[but] if you look at our objectives and how we are using the tool, you will see that what we have been doing systemically is to change behaviour, to disrupt the flow of bad money, and to go after entities and individuals who pose national security and illicit finance risk.”
For all the warnings that the US will undermine its own currency by being so aggressive, there is little sign of any diminished appetite for using the greenback. Kevin Hassett, the outgoing chairman of Mr Trump’s Council of Economic Advisers, says: “If you thought that the Trump policies were imperilling the status of the dollar, then your case would be stronger if you showed that the dollar had collapsed a lot under Trump policies . . . But the move in the dollar has been kind of the opposite of that.”
Ms Gopinath is sceptical about the chances of near-term change. “You are hearing more noise right now for other currencies to become truly global currencies. But the data do not show a more forceful dynamic in this direction and it would take a lot more than what we’re seeing now for there to be a switch.”
Indeed, the irony is that if the president ends up triggering global instability via his policies, investors may end up flocking all the more enthusiastically towards dollar assets. That was after all the phenomenon during the financial crisis, when a mortgage meltdown that was made in the US prompted global investors to scamper for the safety of government bonds, and it has been the same story more recently as Mr Trump’s trade wars drove down US bond yields.
“Anything Trump creates to foment uncertainty and instability will only end up strengthening the dollar,” says Mr Prasad. Over time, other countries will indeed get tired of this and shift away from the dollar as a unit of account and a medium of exchange, he adds, but “in the foreseeable and longer future the dollar’s role as the dominant store of value is unlikely to be challenged.”
Tuesday 5 June 2018
The Marwari hegemony of Indian Media
Jawed Naqvi in The Dawn
A FRESH Cobrapost sting operation has shown a number of big media outfits accepting money to spread fake news and whip up religious hysteria to boost the BJP’s chances in the 2019 elections. The Cobrapost is held in high regard and its exposés in the past have helped the interests of Indian democracy. This one, however, has left one a bit confused. Did we need to bribe Goebbels to do what he was already good at doing and was likely to do anyway?
Another way of seeing the matter is through the ideological affinity and collusion that exists between most media houses and Hindutva, which makes them predisposed ideologically to align with the BJP. Congress has elements the coterie can support, mainly with regard to business leeway. Otherwise, Indira Gandhi’s nationalisation of the banks, which they owned, and her initial flirtation with the left in a Nehruvian romance won her the clique’s disapproval. Even Rajiv Gandhi went for their jugular when he exhorted Congress workers to shake the moneybags off their backs. The business clique’s preference for a non-Gandhi Congress leader makes eminent sense.
A straight reading of Akshaya Mukul’s well-documented book Gita Press and the Making of Hindu India, for example, would nudge the reader to see the Cobrapost’s media sting — available on its website — from a different perspective. A key question flows from the operation. Would the media barons not work for the BJP or, worse, work against it, if they were not offered huge sums? One is not excluding the mercenary angle in the projection of a political idea and there are good arguments to see Hindutva as a business investment too, but more of that another time.
Mukul’s book is about India’s business community of Marwaris — who happen to own much, possibly most of the so-called mainstream newspapers and TV channels — and the coming about of the Gita Press in Gorakhpur. The right-wing press was to become the fountainhead of reactionary Hindu political and communal discourse and also a platform for mobilisation 1926 onwards against India’s Dalits, assorted minorities, but chiefly targeting the Muslims. The book also prompts an unintended question as an aside. Why is it that nearly all the exposés involving Marwari business houses are carried out in the form of books?
The answer lies in another question. Who owns the press? Consider the fact that William Caxton’s induction of the printing press in England in the 15th century was put to use in subsequent eras by capitalists, communists and evangelists alike. It served the purposes of colonialism via Macaulay and it also fashioned a mode of anti-colonial upsurge. Muslim and Hindu communalists harnessed the technology to vend their own venomous messages.
Interestingly, the first challenge to the Marwari hold on news dissemination came from a leftist public-minded intellectual, one Debjyoti Burman, in 1950 in the form of a book. He wrote the Mystery of the Birla House as an exposé on the Calcutta-based business group. But the Birlas reportedly bought all three editions and eventually the copyrights of the book.
Mr Burman, however, presented his book to Purushottam Das Tandon, president of the Nasik session of Congress. In the foreword, he expressed the hope that Mr Tandon “will hear the tears falling and throw his weight on the side of the masses to save the country from ruthless exploitation”.
Burman told Tandon that “the health, wealth and happiness of our people are being butchered” by the business group. A copy of the disappeared vignette exists in the ‘rare textbooks’ section of the Nehru Memorial Library in Delhi. Other books on Marwari business houses have been made to disappear mysteriously. In fact, in his quest for material on the Gita Press, Mukul found that copies of a rival journal that wrote detailed profiles of Indian communities were available for most groups but not the one that covered the Marwaris. He retrieved it anyhow with the help of a private archivist.
While the books that have either disappeared or failed to find vendors dealt mostly with financial exposés and the dark backstage of businesses, Mukul’s work deals with the Marwari pursuit of a religious and cultural platform to propagate their worldview, which invariably waded into politics, usually of a scurrilous kind.
“I wanted one of the issues of the journal Chand, which used to come out in the early 1920s — a particular issue on Marwaris, which was banned in that period,” Mukul has been quoted as saying in an interview. “Chand was taking on all castes. It brought out issues on Kayasths too so it was an equal opportunity offender. They did it to everyone; they were quite a gang. I was looking for this ‘Marwari Ank’ but all the libraries in Allahabad and Banaras had all the issues of Chand but not that one because it was banned at that time and the community had bought up all the issues and destroyed them. But one antiquarian in Banaras dug up this copy of ‘Marwari Ank’ for me! So there are people who helped a lot outside the archives.”
There was a time when Marwari-owned newspapers ran professional outfits with editors valued for their integrity. That seems to have been more of an enforced discipline to conform to the political climate of secularism firmly tethered to a mixed economy driven by socially driven five-year plans.
The Cobrapost’s revelations are important to palpably feel the extent of the rot in the Indian media. But any suggestion that the newspapers and TV channels owned by the Gita Press-minded businesses were driven by the profit motive alone is to stretch the point.
“The idea [behind the Marwari publication] was that Hinduism should speak in one voice just like Islam does,” says Mukul. “According to them, Hindus were in big trouble because they didn’t speak in one voice.”
A FRESH Cobrapost sting operation has shown a number of big media outfits accepting money to spread fake news and whip up religious hysteria to boost the BJP’s chances in the 2019 elections. The Cobrapost is held in high regard and its exposés in the past have helped the interests of Indian democracy. This one, however, has left one a bit confused. Did we need to bribe Goebbels to do what he was already good at doing and was likely to do anyway?
Another way of seeing the matter is through the ideological affinity and collusion that exists between most media houses and Hindutva, which makes them predisposed ideologically to align with the BJP. Congress has elements the coterie can support, mainly with regard to business leeway. Otherwise, Indira Gandhi’s nationalisation of the banks, which they owned, and her initial flirtation with the left in a Nehruvian romance won her the clique’s disapproval. Even Rajiv Gandhi went for their jugular when he exhorted Congress workers to shake the moneybags off their backs. The business clique’s preference for a non-Gandhi Congress leader makes eminent sense.
A straight reading of Akshaya Mukul’s well-documented book Gita Press and the Making of Hindu India, for example, would nudge the reader to see the Cobrapost’s media sting — available on its website — from a different perspective. A key question flows from the operation. Would the media barons not work for the BJP or, worse, work against it, if they were not offered huge sums? One is not excluding the mercenary angle in the projection of a political idea and there are good arguments to see Hindutva as a business investment too, but more of that another time.
Mukul’s book is about India’s business community of Marwaris — who happen to own much, possibly most of the so-called mainstream newspapers and TV channels — and the coming about of the Gita Press in Gorakhpur. The right-wing press was to become the fountainhead of reactionary Hindu political and communal discourse and also a platform for mobilisation 1926 onwards against India’s Dalits, assorted minorities, but chiefly targeting the Muslims. The book also prompts an unintended question as an aside. Why is it that nearly all the exposés involving Marwari business houses are carried out in the form of books?
The answer lies in another question. Who owns the press? Consider the fact that William Caxton’s induction of the printing press in England in the 15th century was put to use in subsequent eras by capitalists, communists and evangelists alike. It served the purposes of colonialism via Macaulay and it also fashioned a mode of anti-colonial upsurge. Muslim and Hindu communalists harnessed the technology to vend their own venomous messages.
Interestingly, the first challenge to the Marwari hold on news dissemination came from a leftist public-minded intellectual, one Debjyoti Burman, in 1950 in the form of a book. He wrote the Mystery of the Birla House as an exposé on the Calcutta-based business group. But the Birlas reportedly bought all three editions and eventually the copyrights of the book.
Mr Burman, however, presented his book to Purushottam Das Tandon, president of the Nasik session of Congress. In the foreword, he expressed the hope that Mr Tandon “will hear the tears falling and throw his weight on the side of the masses to save the country from ruthless exploitation”.
Burman told Tandon that “the health, wealth and happiness of our people are being butchered” by the business group. A copy of the disappeared vignette exists in the ‘rare textbooks’ section of the Nehru Memorial Library in Delhi. Other books on Marwari business houses have been made to disappear mysteriously. In fact, in his quest for material on the Gita Press, Mukul found that copies of a rival journal that wrote detailed profiles of Indian communities were available for most groups but not the one that covered the Marwaris. He retrieved it anyhow with the help of a private archivist.
While the books that have either disappeared or failed to find vendors dealt mostly with financial exposés and the dark backstage of businesses, Mukul’s work deals with the Marwari pursuit of a religious and cultural platform to propagate their worldview, which invariably waded into politics, usually of a scurrilous kind.
“I wanted one of the issues of the journal Chand, which used to come out in the early 1920s — a particular issue on Marwaris, which was banned in that period,” Mukul has been quoted as saying in an interview. “Chand was taking on all castes. It brought out issues on Kayasths too so it was an equal opportunity offender. They did it to everyone; they were quite a gang. I was looking for this ‘Marwari Ank’ but all the libraries in Allahabad and Banaras had all the issues of Chand but not that one because it was banned at that time and the community had bought up all the issues and destroyed them. But one antiquarian in Banaras dug up this copy of ‘Marwari Ank’ for me! So there are people who helped a lot outside the archives.”
There was a time when Marwari-owned newspapers ran professional outfits with editors valued for their integrity. That seems to have been more of an enforced discipline to conform to the political climate of secularism firmly tethered to a mixed economy driven by socially driven five-year plans.
The Cobrapost’s revelations are important to palpably feel the extent of the rot in the Indian media. But any suggestion that the newspapers and TV channels owned by the Gita Press-minded businesses were driven by the profit motive alone is to stretch the point.
“The idea [behind the Marwari publication] was that Hinduism should speak in one voice just like Islam does,” says Mukul. “According to them, Hindus were in big trouble because they didn’t speak in one voice.”
Sunday 21 August 2016
The death of neoliberalism and the crisis in western politics
Martin Jacques in The Guardian
The western financial crisis of 2007-8 was the worst since 1931, yet its immediate repercussions were surprisingly modest. The crisis challenged the foundation stones of the long-dominant neoliberal ideology but it seemed to emerge largely unscathed. The banks were bailed out; hardly any bankers on either side of the Atlantic were prosecuted for their crimes; and the price of their behaviour was duly paid by the taxpayer. Subsequent economic policy, especially in the Anglo-Saxon world, has relied overwhelmingly on monetary policy, especially quantitative easing. It has failed. The western economy has stagnated and is now approaching its lost decade, with no end in sight.
After almost nine years, we are finally beginning to reap the political whirlwind of the financial crisis. But how did neoliberalism manage to survive virtually unscathed for so long? Although it failed the test of the real world, bequeathing the worst economic disaster for seven decades, politically and intellectually it remained the only show in town. Parties of the right, centre and left had all bought into its philosophy, New Labour a classic in point. They knew no other way of thinking or doing: it had become the common sense. It was, as Antonio Gramsci put it, hegemonic. But that hegemony cannot and will not survive the test of the real world.
The first inkling of the wider political consequences was evident in the turn in public opinion against the banks, bankers and business leaders. For decades, they could do no wrong: they were feted as the role models of our age, the default troubleshooters of choice in education, health and seemingly everything else. Now, though, their star was in steep descent, along with that of the political class. The effect of the financial crisis was to undermine faith and trust in the competence of the governing elites. It marked the beginnings of a wider political crisis.
But the causes of this political crisis, glaringly evident on both sides of the Atlantic, are much deeper than simply the financial crisis and the virtually stillborn recovery of the last decade. They go to the heart of the neoliberal project that dates from the late 70s and the political rise of Reagan and Thatcher, and embraced at its core the idea of a global free market in goods, services and capital. The depression-era system of bank regulation was dismantled, in the US in the 1990s and in Britain in 1986, thereby creating the conditions for the 2008 crisis. Equality was scorned, the idea of trickle-down economics lauded, government condemned as a fetter on the market and duly downsized, immigration encouraged, regulation cut to a minimum, taxes reduced and a blind eye turned to corporate evasion.
It should be noted that, by historical standards, the neoliberal era has not had a particularly good track record. The most dynamic period of postwar western growth was that between the end of the war and the early 70s, the era of welfare capitalism and Keynesianism, when the growth rate was double that of the neoliberal period from 1980 to the present.
Ronald Reagan and Margaret Thatcher, pictured in 1984, ushered in the era of neoliberalism. Photograph: Bettmann Archive
But by far the most disastrous feature of the neoliberal period has been the huge growth in inequality. Until very recently, this had been virtually ignored. With extraordinary speed, however, it has emerged as one of, if not the most important political issue on both sides of the Atlantic, most dramatically in the US. It is, bar none, the issue that is driving the political discontent that is now engulfing the west. Given the statistical evidence, it is puzzling, shocking even, that it has been disregarded for so long; the explanation can only lie in the sheer extent of the hegemony of neoliberalism and its values.
But now reality has upset the doctrinal apple cart. In the period 1948-1972, every section of the American population experienced very similar and sizable increases in their standard of living; between 1972-2013, the bottom 10% experienced falling real income while the top 10% did far better than everyone else. In the US, the median real income for full-time male workers is now lower than it was four decades ago: the income of the bottom 90% of the population hasstagnated for over 30 years.
A not so dissimilar picture is true of the UK. And the problem has grown more serious since the financial crisis. On average, between 65-70% of households in 25 high-income economies experienced stagnant or falling real incomes between 2005 and 2014.
The reasons are not difficult to explain. The hyper-globalisation era has been systematically stacked in favour of capital against labour: international trading agreements, drawn up in great secrecy, with business on the inside and the unions and citizens excluded, the Trans-Pacific Partnership (TPP) and theTransatlantic Trade and Investment Partnership (TTIP) being but the latest examples; the politico-legal attack on the unions; the encouragement of large-scale immigration in both the US and Europe that helped to undermine the bargaining power of the domestic workforce; and the failure to retrain displaced workers in any meaningful way.
As Thomas Piketty has shown, in the absence of countervailing pressures, capitalism naturally gravitates towards increasing inequality. In the period between 1945 and the late 70s, Cold War competition was arguably the biggest such constraint. Since the collapse of the Soviet Union, there have been none. As the popular backlash grows increasingly irresistible, however, such a winner-takes-all regime becomes politically unsustainable.
Large sections of the population in both the US and the UK are now in revolt against their lot, as graphically illustrated by the support for Trump and Sanders in the US and the Brexit vote in the UK. This popular revolt is often described, in a somewhat denigratory and dismissive fashion, as populism. Or, as Francis Fukuyama writes in a recent excellent essay in Foreign Affairs: “‘Populism’ is the label that political elites attach to policies supported by ordinary citizens that they don’t like.” Populism is a movement against the status quo. It represents the beginnings of something new, though it is generally much clearer about what it is against than what it is for. It can be progressive or reactionary, but more usually both.
Brexit is a classic example of such populism. It has overturned a fundamental cornerstone of UK policy since the early 1970s. Though ostensibly about Europe, it was in fact about much more: a cri de coeur from those who feel they have lost out and been left behind, whose living standards have stagnated or worse since the 1980s, who feel dislocated by large-scale immigration over which they have no control and who face an increasingly insecure and casualised labour market. Their revolt has paralysed the governing elite, already claimed one prime minister, and left the latest one fumbling around in the dark looking for divine inspiration.
Brexit was the marker of a working-class revolt. Photograph: Alamy
The wave of populism marks the return of class as a central agency in politics, both in the UK and the US. This is particularly remarkable in the US. For many decades, the idea of the “working class” was marginal to American political discourse. Most Americans described themselves as middle class, a reflection of the aspirational pulse at the heart of American society. According to a Gallup poll, in 2000 only 33% of Americans called themselves working class; by 2015 the figure was 48%, almost half the population.
Brexit, too, was primarily a working-class revolt. Hitherto, on both sides of the Atlantic, the agency of class has been in retreat in the face of the emergence of a new range of identities and issues from gender and race to sexual orientation and the environment. The return of class, because of its sheer reach, has the potential, like no other issue, to redefine the political landscape.
The working class belongs to no one: its orientation, far from predetermined, is a function of politics
The re-emergence of class should not be confused with the labour movement. They are not synonymous: this is obvious in the US and increasingly the case in the UK. Indeed, over the last half-century, there has been a growing separation between the two in Britain. The re-emergence of the working class as a political voice in Britain, most notably in the Brexit vote, can best be described as an inchoate expression of resentment and protest, with only a very weak sense of belonging to the labour movement.
Indeed, Ukip has been as important – in the form of immigration and Europe – in shaping its current attitudes as the Labour party. In the United States, both Trump and Sanders have given expression to the working-class revolt, the latter almost as much as the former. The working class belongs to no one: its orientation, far from predetermined, as the left liked to think, is a function of politics.
The neoliberal era is being undermined from two directions. First, if its record of economic growth has never been particularly strong, it is now dismal. Europe is barely larger than it was on the eve of the financial crisis in 2007; the United States has done better but even its growth has been anaemic. Economists such as Larry Summers believe that the prospect for the future is most likely one ofsecular stagnation.
Worse, because the recovery has been so weak and fragile, there is a widespread belief that another financial crisis may well beckon. In other words, the neoliberal era has delivered the west back into the kind of crisis-ridden world that we last experienced in the 1930s. With this background, it is hardly surprising that a majority in the west now believe their children will be worse off than they were. Second, those who have lost out in the neoliberal era are no longer prepared to acquiesce in their fate – they are increasingly in open revolt. We are witnessing the end of the neoliberal era. It is not dead, but it is in its early death throes, just as the social-democratic era was during the 1970s.
A sure sign of the declining influence of neoliberalism is the rising chorus of intellectual voices raised against it. From the mid-70s through the 80s, the economic debate was increasingly dominated by monetarists and free marketeers. But since the western financial crisis, the centre of gravity of the intellectual debate has shifted profoundly. This is most obvious in the United States, with economists such as Joseph Stiglitz, Paul Krugman, Dani Rodrik and Jeffrey Sachs becoming increasingly influential. Thomas Piketty’s Capital in the Twenty-First Century has been a massive seller. His work and that of Tony Atkinson and Angus Deaton have pushed the question of the inequality to the top of the political agenda. In the UK, Ha-Joon Chang, for long isolated within the economics profession, has gained a following far greater than those who think economics is a branch of mathematics.
‘Virtually no one foresaw the triumph of Jeremy Corbyn’, pictured at rally in north London last week. Photograph: Daniel Leal-Olivas/AFP/Getty Images
Meanwhile, some of those who were previously strong advocates of a neoliberal approach, such as Larry Summers and the Financial Times’s Martin Wolf, have become extremely critical. The wind is in the sails of the critics of neoliberalism; the neoliberals and monetarists are in retreat. In the UK, the media and political worlds are well behind the curve. Few recognise that we are at the end of an era. Old attitudes and assumptions still predominate, whether on the BBC’s Todayprogramme, in the rightwing press or the parliamentary Labour party.
Following Ed Miliband’s resignation as Labour leader, virtually no one foresaw the triumph of Jeremy Corbyn in the subsequent leadership election. The assumption had been more of the same, a Blairite or a halfway house like Miliband, certainly not anyone like Corbyn. But the zeitgeist had changed. The membership, especially the young who had joined the party on an unprecedented scale, wanted a complete break with New Labour. One of the reasons why the left has failed to emerge as the leader of the new mood of working-class disillusionment is that most social democratic parties became, in varying degrees, disciples of neoliberalism and uber-globalisation. The most extreme forms of this phenomenon were New Labour and the Democrats, who in the late 90s and 00s became its advance guard, personified by Tony Blair and Bill Clinton, triangulation and the third way.
But as David Marquand observed in a review for the New Statesman, what is the point of a social democratic party if it doesn’t represent the less fortunate, the underprivileged and the losers? New Labour deserted those who needed them, who historically they were supposed to represent. Is it surprising that large sections have now deserted the party who deserted them? Blair, in his reincarnation as a money-obsessed consultant to a shady bunch of presidents and dictators, is a fitting testament to the demise of New Labour.
The rival contenders – Burnham, Cooper and Kendall – represented continuity. They were swept away by Corbyn, who won nearly 60% of the votes. New Labour was over, as dead as Monty Python’s parrot. Few grasped the meaning of what had happened. A Guardian leader welcomed the surge in membership and then, lo and behold, urged support for Yvette Cooper, the very antithesis of the reason for the enthusiasm. The PLP refused to accept the result and ever since has tried might and main to remove Corbyn.
Just as the Labour party took far too long to come to terms with the rise of Thatcherism and the birth of a new era at the end of the 70s, now it could not grasp that the Thatcherite paradigm, which they eventually came to embrace in the form of New Labour, had finally run its course. Labour, like everyone else, is obliged to think anew. The membership in their antipathy to New Labour turned to someone who had never accepted the latter, who was the polar opposite in almost every respect of Blair, and embodying an authenticity and decency which Blair patently did not.
Corbyn is not a product of the new times, he is a throwback to the late 70s and early 80s. That is both his strength and also his weakness. He is uncontaminated by the New Labour legacy because he has never accepted it. But nor, it would seem, does he understand the nature of the new era. The danger is that he is possessed of feet of clay in what is a highly fluid and unpredictable political environment, devoid of any certainties of almost any kind, in which Labour finds itself dangerously divided and weakened.
Labour may be in intensive care, but the condition of the Conservatives is not a great deal better. David Cameron was guilty of a huge and irresponsible miscalculation over Brexit. He was forced to resign in the most ignominious of circumstances. The party is hopelessly divided. It has no idea in which direction to move after Brexit. The Brexiters painted an optimistic picture of turning away from the declining European market and embracing the expanding markets of the world, albeit barely mentioning by name which countries it had in mind. It looks as if the new prime minister may have an anachronistic hostility towards China and a willingness to undo the good work of George Osborne. If the government turns its back on China, by far the fastest growing market in the world, where are they going to turn?
Brexit has left the country fragmented and deeply divided, with the very real prospect that Scotland might choose independence. Meanwhile, the Conservatives seem to have little understanding that the neoliberal era is in its death throes.
‘Put America first’: Donald Trump in Cleveland last month. Photograph: Joe Raedle/Getty Images
Dramatic as events have been in the UK, they cannot compare with those in the United States. Almost from nowhere, Donald Trump rose to capture the Republican nomination and confound virtually all the pundits and not least his own party. His message was straightforwardly anti-globalisation. He believes that the interests of the working class have been sacrificed in favour of the big corporations that have been encouraged to invest around the world and thereby deprive American workers of their jobs. Further, he argues that large-scale immigration has weakened the bargaining power of American workers and served to lower their wages.
He proposes that US corporations should be required to invest their cash reserves in the US. He believes that the North American Free Trade Agreement (Nafta) has had the effect of exporting American jobs to Mexico. On similar grounds, he is opposed to the TPP and the TTIP. And he also accuses China of stealing American jobs, threatening to impose a 45% tariff on Chinese imports.
To globalisation Trump counterposes economic nationalism: “Put America first”. His appeal, above all, is to the white working class who, until Trump’s (and Bernie Sander’s) arrival on the political scene, had been ignored and largely unrepresented since the 1980s. Given that their wages have been falling for most of the last 40 years, it is extraordinary how their interests have been neglected by the political class. Increasingly, they have voted Republican, but the Republicans have long been captured by the super-rich and Wall Street, whose interests, as hyper-globalisers, have run directly counter to those of the white working class. With the arrival of Trump they finally found a representative: they won Trump the Republican nomination.
The economic nationalist argument has also been vigorously pursued by Bernie Sanders, who ran Hillary Clinton extremely close for the Democratic nomination and would probably have won but for more than 700 so-called super-delegates, who were effectively chosen by the Democratic machine and overwhelmingly supported Clinton. As in the case of the Republicans, the Democrats have long supported a neoliberal, pro-globalisation strategy, notwithstanding the concerns of its trade union base. Both the Republicans and the Democrats now find themselves deeply polarised between the pro- and anti-globalisers, an entirely new development not witnessed since the shift towards neoliberalism under Reagan almost 40 years ago.
Another plank of Trump’s nationalist appeal – “Make America great again” – is his position on foreign policy. He believes that America’s pursuit of great power status has squandered the nation’s resources. He argues that the country’s alliance system is unfair, with America bearing most of the cost and its allies contributing far too little. He points to Japan and South Korea, and Nato’s European members as prime examples.He seeks to rebalance these relationships and, failing that, to exit from them.
As a country in decline, he argues that America can no longer afford to carry this kind of financial burden. Rather than putting the world to rights, he believes the money should be invested at home, pointing to the dilapidated state of America’s infrastructure. Trump’s position represents a major critique of America as the world’s hegemon. His arguments mark a radical break with the neoliberal, hyper-globalisation ideology that has reigned since the early 1980s and with the foreign policy orthodoxy of most of the postwar period. These arguments must be taken seriously. They should not be lightly dismissed just because of their authorship. But Trump is no man of the left. He is a populist of the right. He has launched a racist and xenophobic attack on Muslims and on Mexicans. Trump’s appeal is to a white working class that feels it has been cheated by the big corporations, undermined by Hispanic immigration, and often resentful towards African-Americans who for long too many have viewed as their inferior.
A Trump America would mark a descent into authoritarianism characterised by abuse, scapegoating, discrimination, racism, arbitrariness and violence; America would become a deeply polarised and divided society. His threat to impose 45% tariffs on China, if implemented, would certainly provoke retaliation by the Chinese and herald the beginnings of a new era of protectionism.
Trump may well lose the presidential election just as Sanders failed in his bid for the Democrat nomination. But this does not mean that the forces opposed to hyper-globalisation – unrestricted immigration, TPP and TTIP, the free movement of capital and much else – will have lost the argument and are set to decline. In little more than 12 months, Trump and Sanders have transformed the nature and terms of the argument. Far from being on the wane, the arguments of the critics of hyper-globalisation are steadily gaining ground. Roughly two-thirds of Americans agree that “we should not think so much in international terms but concentrate more on our own national problems”. And, above all else, what will continue to drive opposition to the hyper-globalisers is inequality.
The western financial crisis of 2007-8 was the worst since 1931, yet its immediate repercussions were surprisingly modest. The crisis challenged the foundation stones of the long-dominant neoliberal ideology but it seemed to emerge largely unscathed. The banks were bailed out; hardly any bankers on either side of the Atlantic were prosecuted for their crimes; and the price of their behaviour was duly paid by the taxpayer. Subsequent economic policy, especially in the Anglo-Saxon world, has relied overwhelmingly on monetary policy, especially quantitative easing. It has failed. The western economy has stagnated and is now approaching its lost decade, with no end in sight.
After almost nine years, we are finally beginning to reap the political whirlwind of the financial crisis. But how did neoliberalism manage to survive virtually unscathed for so long? Although it failed the test of the real world, bequeathing the worst economic disaster for seven decades, politically and intellectually it remained the only show in town. Parties of the right, centre and left had all bought into its philosophy, New Labour a classic in point. They knew no other way of thinking or doing: it had become the common sense. It was, as Antonio Gramsci put it, hegemonic. But that hegemony cannot and will not survive the test of the real world.
The first inkling of the wider political consequences was evident in the turn in public opinion against the banks, bankers and business leaders. For decades, they could do no wrong: they were feted as the role models of our age, the default troubleshooters of choice in education, health and seemingly everything else. Now, though, their star was in steep descent, along with that of the political class. The effect of the financial crisis was to undermine faith and trust in the competence of the governing elites. It marked the beginnings of a wider political crisis.
But the causes of this political crisis, glaringly evident on both sides of the Atlantic, are much deeper than simply the financial crisis and the virtually stillborn recovery of the last decade. They go to the heart of the neoliberal project that dates from the late 70s and the political rise of Reagan and Thatcher, and embraced at its core the idea of a global free market in goods, services and capital. The depression-era system of bank regulation was dismantled, in the US in the 1990s and in Britain in 1986, thereby creating the conditions for the 2008 crisis. Equality was scorned, the idea of trickle-down economics lauded, government condemned as a fetter on the market and duly downsized, immigration encouraged, regulation cut to a minimum, taxes reduced and a blind eye turned to corporate evasion.
It should be noted that, by historical standards, the neoliberal era has not had a particularly good track record. The most dynamic period of postwar western growth was that between the end of the war and the early 70s, the era of welfare capitalism and Keynesianism, when the growth rate was double that of the neoliberal period from 1980 to the present.
Ronald Reagan and Margaret Thatcher, pictured in 1984, ushered in the era of neoliberalism. Photograph: Bettmann Archive
But by far the most disastrous feature of the neoliberal period has been the huge growth in inequality. Until very recently, this had been virtually ignored. With extraordinary speed, however, it has emerged as one of, if not the most important political issue on both sides of the Atlantic, most dramatically in the US. It is, bar none, the issue that is driving the political discontent that is now engulfing the west. Given the statistical evidence, it is puzzling, shocking even, that it has been disregarded for so long; the explanation can only lie in the sheer extent of the hegemony of neoliberalism and its values.
But now reality has upset the doctrinal apple cart. In the period 1948-1972, every section of the American population experienced very similar and sizable increases in their standard of living; between 1972-2013, the bottom 10% experienced falling real income while the top 10% did far better than everyone else. In the US, the median real income for full-time male workers is now lower than it was four decades ago: the income of the bottom 90% of the population hasstagnated for over 30 years.
A not so dissimilar picture is true of the UK. And the problem has grown more serious since the financial crisis. On average, between 65-70% of households in 25 high-income economies experienced stagnant or falling real incomes between 2005 and 2014.
The reasons are not difficult to explain. The hyper-globalisation era has been systematically stacked in favour of capital against labour: international trading agreements, drawn up in great secrecy, with business on the inside and the unions and citizens excluded, the Trans-Pacific Partnership (TPP) and theTransatlantic Trade and Investment Partnership (TTIP) being but the latest examples; the politico-legal attack on the unions; the encouragement of large-scale immigration in both the US and Europe that helped to undermine the bargaining power of the domestic workforce; and the failure to retrain displaced workers in any meaningful way.
As Thomas Piketty has shown, in the absence of countervailing pressures, capitalism naturally gravitates towards increasing inequality. In the period between 1945 and the late 70s, Cold War competition was arguably the biggest such constraint. Since the collapse of the Soviet Union, there have been none. As the popular backlash grows increasingly irresistible, however, such a winner-takes-all regime becomes politically unsustainable.
Large sections of the population in both the US and the UK are now in revolt against their lot, as graphically illustrated by the support for Trump and Sanders in the US and the Brexit vote in the UK. This popular revolt is often described, in a somewhat denigratory and dismissive fashion, as populism. Or, as Francis Fukuyama writes in a recent excellent essay in Foreign Affairs: “‘Populism’ is the label that political elites attach to policies supported by ordinary citizens that they don’t like.” Populism is a movement against the status quo. It represents the beginnings of something new, though it is generally much clearer about what it is against than what it is for. It can be progressive or reactionary, but more usually both.
Brexit is a classic example of such populism. It has overturned a fundamental cornerstone of UK policy since the early 1970s. Though ostensibly about Europe, it was in fact about much more: a cri de coeur from those who feel they have lost out and been left behind, whose living standards have stagnated or worse since the 1980s, who feel dislocated by large-scale immigration over which they have no control and who face an increasingly insecure and casualised labour market. Their revolt has paralysed the governing elite, already claimed one prime minister, and left the latest one fumbling around in the dark looking for divine inspiration.
Brexit was the marker of a working-class revolt. Photograph: Alamy
The wave of populism marks the return of class as a central agency in politics, both in the UK and the US. This is particularly remarkable in the US. For many decades, the idea of the “working class” was marginal to American political discourse. Most Americans described themselves as middle class, a reflection of the aspirational pulse at the heart of American society. According to a Gallup poll, in 2000 only 33% of Americans called themselves working class; by 2015 the figure was 48%, almost half the population.
Brexit, too, was primarily a working-class revolt. Hitherto, on both sides of the Atlantic, the agency of class has been in retreat in the face of the emergence of a new range of identities and issues from gender and race to sexual orientation and the environment. The return of class, because of its sheer reach, has the potential, like no other issue, to redefine the political landscape.
The working class belongs to no one: its orientation, far from predetermined, is a function of politics
The re-emergence of class should not be confused with the labour movement. They are not synonymous: this is obvious in the US and increasingly the case in the UK. Indeed, over the last half-century, there has been a growing separation between the two in Britain. The re-emergence of the working class as a political voice in Britain, most notably in the Brexit vote, can best be described as an inchoate expression of resentment and protest, with only a very weak sense of belonging to the labour movement.
Indeed, Ukip has been as important – in the form of immigration and Europe – in shaping its current attitudes as the Labour party. In the United States, both Trump and Sanders have given expression to the working-class revolt, the latter almost as much as the former. The working class belongs to no one: its orientation, far from predetermined, as the left liked to think, is a function of politics.
The neoliberal era is being undermined from two directions. First, if its record of economic growth has never been particularly strong, it is now dismal. Europe is barely larger than it was on the eve of the financial crisis in 2007; the United States has done better but even its growth has been anaemic. Economists such as Larry Summers believe that the prospect for the future is most likely one ofsecular stagnation.
Worse, because the recovery has been so weak and fragile, there is a widespread belief that another financial crisis may well beckon. In other words, the neoliberal era has delivered the west back into the kind of crisis-ridden world that we last experienced in the 1930s. With this background, it is hardly surprising that a majority in the west now believe their children will be worse off than they were. Second, those who have lost out in the neoliberal era are no longer prepared to acquiesce in their fate – they are increasingly in open revolt. We are witnessing the end of the neoliberal era. It is not dead, but it is in its early death throes, just as the social-democratic era was during the 1970s.
A sure sign of the declining influence of neoliberalism is the rising chorus of intellectual voices raised against it. From the mid-70s through the 80s, the economic debate was increasingly dominated by monetarists and free marketeers. But since the western financial crisis, the centre of gravity of the intellectual debate has shifted profoundly. This is most obvious in the United States, with economists such as Joseph Stiglitz, Paul Krugman, Dani Rodrik and Jeffrey Sachs becoming increasingly influential. Thomas Piketty’s Capital in the Twenty-First Century has been a massive seller. His work and that of Tony Atkinson and Angus Deaton have pushed the question of the inequality to the top of the political agenda. In the UK, Ha-Joon Chang, for long isolated within the economics profession, has gained a following far greater than those who think economics is a branch of mathematics.
‘Virtually no one foresaw the triumph of Jeremy Corbyn’, pictured at rally in north London last week. Photograph: Daniel Leal-Olivas/AFP/Getty Images
Meanwhile, some of those who were previously strong advocates of a neoliberal approach, such as Larry Summers and the Financial Times’s Martin Wolf, have become extremely critical. The wind is in the sails of the critics of neoliberalism; the neoliberals and monetarists are in retreat. In the UK, the media and political worlds are well behind the curve. Few recognise that we are at the end of an era. Old attitudes and assumptions still predominate, whether on the BBC’s Todayprogramme, in the rightwing press or the parliamentary Labour party.
Following Ed Miliband’s resignation as Labour leader, virtually no one foresaw the triumph of Jeremy Corbyn in the subsequent leadership election. The assumption had been more of the same, a Blairite or a halfway house like Miliband, certainly not anyone like Corbyn. But the zeitgeist had changed. The membership, especially the young who had joined the party on an unprecedented scale, wanted a complete break with New Labour. One of the reasons why the left has failed to emerge as the leader of the new mood of working-class disillusionment is that most social democratic parties became, in varying degrees, disciples of neoliberalism and uber-globalisation. The most extreme forms of this phenomenon were New Labour and the Democrats, who in the late 90s and 00s became its advance guard, personified by Tony Blair and Bill Clinton, triangulation and the third way.
But as David Marquand observed in a review for the New Statesman, what is the point of a social democratic party if it doesn’t represent the less fortunate, the underprivileged and the losers? New Labour deserted those who needed them, who historically they were supposed to represent. Is it surprising that large sections have now deserted the party who deserted them? Blair, in his reincarnation as a money-obsessed consultant to a shady bunch of presidents and dictators, is a fitting testament to the demise of New Labour.
The rival contenders – Burnham, Cooper and Kendall – represented continuity. They were swept away by Corbyn, who won nearly 60% of the votes. New Labour was over, as dead as Monty Python’s parrot. Few grasped the meaning of what had happened. A Guardian leader welcomed the surge in membership and then, lo and behold, urged support for Yvette Cooper, the very antithesis of the reason for the enthusiasm. The PLP refused to accept the result and ever since has tried might and main to remove Corbyn.
Just as the Labour party took far too long to come to terms with the rise of Thatcherism and the birth of a new era at the end of the 70s, now it could not grasp that the Thatcherite paradigm, which they eventually came to embrace in the form of New Labour, had finally run its course. Labour, like everyone else, is obliged to think anew. The membership in their antipathy to New Labour turned to someone who had never accepted the latter, who was the polar opposite in almost every respect of Blair, and embodying an authenticity and decency which Blair patently did not.
Corbyn is not a product of the new times, he is a throwback to the late 70s and early 80s. That is both his strength and also his weakness. He is uncontaminated by the New Labour legacy because he has never accepted it. But nor, it would seem, does he understand the nature of the new era. The danger is that he is possessed of feet of clay in what is a highly fluid and unpredictable political environment, devoid of any certainties of almost any kind, in which Labour finds itself dangerously divided and weakened.
Labour may be in intensive care, but the condition of the Conservatives is not a great deal better. David Cameron was guilty of a huge and irresponsible miscalculation over Brexit. He was forced to resign in the most ignominious of circumstances. The party is hopelessly divided. It has no idea in which direction to move after Brexit. The Brexiters painted an optimistic picture of turning away from the declining European market and embracing the expanding markets of the world, albeit barely mentioning by name which countries it had in mind. It looks as if the new prime minister may have an anachronistic hostility towards China and a willingness to undo the good work of George Osborne. If the government turns its back on China, by far the fastest growing market in the world, where are they going to turn?
Brexit has left the country fragmented and deeply divided, with the very real prospect that Scotland might choose independence. Meanwhile, the Conservatives seem to have little understanding that the neoliberal era is in its death throes.
‘Put America first’: Donald Trump in Cleveland last month. Photograph: Joe Raedle/Getty Images
Dramatic as events have been in the UK, they cannot compare with those in the United States. Almost from nowhere, Donald Trump rose to capture the Republican nomination and confound virtually all the pundits and not least his own party. His message was straightforwardly anti-globalisation. He believes that the interests of the working class have been sacrificed in favour of the big corporations that have been encouraged to invest around the world and thereby deprive American workers of their jobs. Further, he argues that large-scale immigration has weakened the bargaining power of American workers and served to lower their wages.
He proposes that US corporations should be required to invest their cash reserves in the US. He believes that the North American Free Trade Agreement (Nafta) has had the effect of exporting American jobs to Mexico. On similar grounds, he is opposed to the TPP and the TTIP. And he also accuses China of stealing American jobs, threatening to impose a 45% tariff on Chinese imports.
To globalisation Trump counterposes economic nationalism: “Put America first”. His appeal, above all, is to the white working class who, until Trump’s (and Bernie Sander’s) arrival on the political scene, had been ignored and largely unrepresented since the 1980s. Given that their wages have been falling for most of the last 40 years, it is extraordinary how their interests have been neglected by the political class. Increasingly, they have voted Republican, but the Republicans have long been captured by the super-rich and Wall Street, whose interests, as hyper-globalisers, have run directly counter to those of the white working class. With the arrival of Trump they finally found a representative: they won Trump the Republican nomination.
The economic nationalist argument has also been vigorously pursued by Bernie Sanders, who ran Hillary Clinton extremely close for the Democratic nomination and would probably have won but for more than 700 so-called super-delegates, who were effectively chosen by the Democratic machine and overwhelmingly supported Clinton. As in the case of the Republicans, the Democrats have long supported a neoliberal, pro-globalisation strategy, notwithstanding the concerns of its trade union base. Both the Republicans and the Democrats now find themselves deeply polarised between the pro- and anti-globalisers, an entirely new development not witnessed since the shift towards neoliberalism under Reagan almost 40 years ago.
Another plank of Trump’s nationalist appeal – “Make America great again” – is his position on foreign policy. He believes that America’s pursuit of great power status has squandered the nation’s resources. He argues that the country’s alliance system is unfair, with America bearing most of the cost and its allies contributing far too little. He points to Japan and South Korea, and Nato’s European members as prime examples.He seeks to rebalance these relationships and, failing that, to exit from them.
As a country in decline, he argues that America can no longer afford to carry this kind of financial burden. Rather than putting the world to rights, he believes the money should be invested at home, pointing to the dilapidated state of America’s infrastructure. Trump’s position represents a major critique of America as the world’s hegemon. His arguments mark a radical break with the neoliberal, hyper-globalisation ideology that has reigned since the early 1980s and with the foreign policy orthodoxy of most of the postwar period. These arguments must be taken seriously. They should not be lightly dismissed just because of their authorship. But Trump is no man of the left. He is a populist of the right. He has launched a racist and xenophobic attack on Muslims and on Mexicans. Trump’s appeal is to a white working class that feels it has been cheated by the big corporations, undermined by Hispanic immigration, and often resentful towards African-Americans who for long too many have viewed as their inferior.
A Trump America would mark a descent into authoritarianism characterised by abuse, scapegoating, discrimination, racism, arbitrariness and violence; America would become a deeply polarised and divided society. His threat to impose 45% tariffs on China, if implemented, would certainly provoke retaliation by the Chinese and herald the beginnings of a new era of protectionism.
Trump may well lose the presidential election just as Sanders failed in his bid for the Democrat nomination. But this does not mean that the forces opposed to hyper-globalisation – unrestricted immigration, TPP and TTIP, the free movement of capital and much else – will have lost the argument and are set to decline. In little more than 12 months, Trump and Sanders have transformed the nature and terms of the argument. Far from being on the wane, the arguments of the critics of hyper-globalisation are steadily gaining ground. Roughly two-thirds of Americans agree that “we should not think so much in international terms but concentrate more on our own national problems”. And, above all else, what will continue to drive opposition to the hyper-globalisers is inequality.
Saturday 23 May 2015
Black academic claims he was denied university job over his plans to 'put white hegemony under the microscope'
Adam Lusher in The Independent
Wednesday 10 April 2013
In this nuclear standoff, it's the US that's the rogue state
The use of threats and isolation against Iran and North Korea is a bizarre, perilous way to conduct foreign relations
'The alleged crises over North Korea and Iran are just not serious enough to warrant the classroom language of shunning and punishment.' Illustration by Belle Mellor
By coincidence two clashes over nuclear issues are hitting the headlines together. North Korea and Iran have both had sanctions imposed by foreign governments, and when they refuse to "behave properly" they are submitted to "isolation" and put in the corner until they are ready to say sorry and change their conduct. If not, corporal punishment will be administered, since they have been given fair warning by the enforcers that "all options are on the table".
It's a bizarre way to run international relations, one we continue to follow at our peril. For one thing, it is riddled with hypocrisy, and not just because states that have hundreds of nuclear weapons are bullying states that have few or none. The hypocrisy is worse than that. If it is offensive for North Korea to talk of launching a nuclear strike at the United States (a threat that is empty because the country has no system to deliver the few nuclear weapons that it has), how is it less offensive for the US to warn Iran that it will be bombed if it fails to stop its nuclear research?
Both states would be resorting to force when dialogue is a long way from being exhausted. They would also be acting against international law. That is patently clear if North Korea ever managed to launch a nuclear strike against South Korea or the US, but the same is true of an altogether more feasible attack on Iran. There is no conceivable scenario under which the United Nations security council would authorise the United States, let alone Israel, to take military action, even if Iran were to tear up its long-standing statement that nuclear bombs are un-Islamic and produce one. So why does Washington go on with its illegal threats?
The underlying cause of most international tension is the unwillingness of powerful states to recognise that we live in a multipolar world. The idea of hegemony, often sanitised as "leadership", is unacceptable. In a post-colonial era there are multiple centres of authority, international influence and soft power, and we should rejoice when new or old states, individually or collectively, have the courage and ability to challenge another state's ambition to be a superpower. States will always make common cause or "coalitions of the willing" on specific issues, but interests fluctuate and priorities change – and we should junk the cold war-style system of military alliances and ideological or sectarian camps.
Let us go further and drop the figment of an "international community", at least in its current western definition as "the United States and its friends". By the same token, let's correct the myopia around isolation. When the leaders of 120 nations travelled to Tehran to ratify Iran's presidency of the Non-Aligned Movement last August, it was risible to hear US officials still talking of Iran being "a rogue state".
In Washington and Whitehall it may seem self-evident that the international community should arm the opposition to Syria's President Assad, but that is not the view of the world's largest democracy, India, or of the most democratic African and Latin American states, South Africa and Brazil. When their leaders convened with Russia and China (in the new Brics coalition) in Durban last month, they "re-affirmed our opposition to any further militarisation of the conflict" and called for a political settlement.
Of course, the non-aligned and Brics summits were barely covered by the US media in its news or comment columns, the normal technique of reality suppression used by American opinion-formers and policy-makers. Rami Khouri, the distinguished US-trained Lebanese writer, calls it "professionally criminal". After a month in the US recently, he found that coverage of Iran was based on "assumptions, fears, concerns, accusations and expectations almost never supported by factual and credible evidence". In as much as these distortions build public support for a military attack on Iran, he finds it as culpable as the media's role in the runup to the attack on Iraq a decade ago.
The alleged crises over North Korea and Iran are just not serious enough to warrant the classroom language of shunning and punishment. Dialogue and respect for other people's positions are the better course. Discuss everything as a package rather than dangle incentives one by one like sweets.
Ironically, it was Iran at the recent talks with security council members that suggested a roadmap with a clear end state: the acceptance of Iran's right to enrich uranium like any other signatory of the non-proliferation treaty. In other words, the issue is primarily a matter of national dignity and sovereignty. Meanwhile, the US declined to promise to lift all sanctions whatever Iran does.
On Korea the best approach is also comprehensive. This would mean trying to reach the full-scale peace treaty that was never concluded when the war ended 60 years ago. North Korea wants a treaty as a sign, like Iran, that the US accepts it as a legitimate state. Steps towards one were agreed in 2007 and a few positive moves followed. But they collapsed when the mentality of suspicion and sanctions revived under the pressure of electoral politics in Seoul and Washington and the arrival of an inexperienced new leader in Pyongyang. It is not too late to drop the self-defeating language of "rogue states" beyond the pale of the "international community" and try again.
Saturday 30 July 2011
Indian win even though they fail at Tebbit's cricket test
Norman Tebbit's cricket test means nothing when you're winning
Combined with its team's prowess on the field, India's economic clout has turned the tables on the old colonial master
The incredible atmosphere at Lord's on Monday was due in part to thousands of British Indians cheering the India cricket team. Photograph: Anthony Devlin/PA
The game of cricket should be thankful that so many British Asians continue to fail Norman Tebbit's "cricket test". In one of his less helpful contributions to social harmony, the old polecat suggested in 1990 that the side that ethnic minorities cheer for – England or their country of origin – should be a barometer of whether they are truly British. But what swells the gates and gives the current Test series against India an atmosphere that rivals the Ashes is the presence, particularly at Lord's on Monday, of thousands of British-based Indians cheering Sachin Tendulkar, Rahul Dravid, VVS Laxman, MS Dhoni and other stars of the visiting team.
Significantly, Tebbit directed his barb at Asians, not at Britons of Caribbean descent. The latter presumably pass his test, most having long ago lost interest in cricket and, like everybody else, become obsessed with those unimpeachably English institutions (not), Manchester United and Chelsea. Black people are now hardly seen at English cricket grounds and the West Indies team, once the game's biggest draw and a source of pride and inspiration to African-Caribbean people, is regarded as poor box-office material, usually invited to play here before sparse crowds on rainswept days in May.
It is not, however, just memories of Tebbit that give this series its political edge. India is currently the master of the game. On the field, it stands at the top of the world rankings, though England hope, in a few weeks, to have usurped that position. More importantly, India increasingly controls how the game is governed and organised. It generates 70% of world cricket revenues and doesn't hesitate to exercise the power and influence that brings. Though the Dubai-based International Cricket Council (ICC) is nominally in charge, it rarely defies Indian wishes, just as it didn't defy the wishes of the English, as expressed through the Marylebone Cricket Club (MCC), in the days when it was based at Lord's and called itself the Imperial Cricket Conference. It has declined, for example, to rule that ball-tracking technology should be used in all Test matches to review umpires' decisions. The Indians, for obscure reasons, don't like it and that, as far as the ICC is concerned, is that.
India's power is most evident through the Indian Premier League, a Twenty20 competition between city-based teams with names such as Delhi Daredevils and Royal Challengers Bangalore, which, for a few weeks annually, attracts nearly all the world's best players by offering previously unimaginable sums of money. Some players no longer bother with longer forms of the game such as Test matches, and concentrate entirely on lucrative IPL contracts. The titled gentlemen of Lord's – who invented Twenty20 to entice English proletarians into cricket grounds and thus rescue ailing county clubs – think this a desecration of cricket's true, Corinthian spirit. But the millions of Mumbai and Chennai, who now rarely turn up to watch Tests, have fallen in love with Twenty20 and, much as the purists may object, that and other short forms of cricket will probably dominate in future.
So, the tables have turned. Just as the English once used cricket to assert the ideology of empire – to play the game honourably, said Lord Harris, governor general of Bombay and a former captain of Kent, "is a moral lesson in itself" – so Indians now use it to assert the brash, go-getting, commercial values of the new, upwardly mobile India. It is not, it must be admitted, a particularly pretty sight, but then nor was the period of English hegemony.
When the Australians were getting uppity in the 1930s, cheekily putting tariffs on British cricket balls and other goods, the English establishment concocted bodyline bowling to teach them a lesson. The Australians responded with accusations of "unsportsmanlike" behaviour – a judgment which, in the MCC's view, it alone was qualified to make – and threats to leave the empire. Without admitting its own culpability, the MCC settled the matter by blaming it all on Harold Larwood, the Nottinghamshire miner who carried out the instruction to bowl fast at Australian bodies. He was driven from the game and ultimately into exile (in Australia, ironically). Even worse was the MCC's record not only of playing all-white South African teams – cricket being racially segregated even before the advent of official apartheid – but of contriving to omit anyone with a non-white skin from English touring teams there.
As the recently released film Fire in Babylon recalls, West Indians once used cricket for black self-assertion. In a Britain that seemed to regard West Indians as nothing but "a problem", recalled the black writer Caryl Phillips, "the West Indies team … appeared as a resolute army, with power and creative genius in equal measure". For 15 years, the West Indies dominated world cricket. But those poor islands lacked the economic muscle to carry their dominance into cricket's corridors of power. India's success, on and off the field, is the most palpable evidence of its rising global status.
Whatever the outcome of the present series, India, unlike the West Indies, will continue to matter. No wonder British Indians don't care about Tebbit's test. They are backing winners.
Wednesday 23 February 2011
This is an Arab 1848. But US hegemony is only dented
With western-backed despots being turfed out politics has changed for ever. So just how far can the revolution spread?
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o guardian.co.uk, Tuesday 22 February 2011 22.59 GMT
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revolutionary murals Tahrir Square protests Revolutionary murals on the walls of newly established toilet facilities for protesters in Cairo's Tahrir Square. Photograph: Ben Curtis/AP
The refusal of the people to kiss or ignore the rod that has chastised them for so many decades has opened a new chapter in the history of the Arab nation. The absurd, if much vaunted, neocon notion that Arabs or Muslims were hostile to democracy has disappeared like parchment in fire.
Those who promoted such ideas appear to the most unhappy: Israel and its lobbyists in Euro-America; the arms industry, hurriedly trying to sell as much while it can (the British prime minister acting as a merchant of death at the Abu Dhabi arms fair); and the beleaguered rulers of Saudi Arabia, wondering whether the disease will spread to their tyrannical kingdom. Until now they have provided refuge to many a despot, but when the time comes where will the royal family seek refuge? They must be aware that their patrons will dump them without ceremony and claim they always favoured democracy.
If there is a comparison to be made with Europe it is 1848, when the revolutionary upheavals left only Britain and Spain untouched – even though Queen Victoria, thinking of the Chartists, feared otherwise. Writing to her besieged nephew on the Belgian throne, she expressing sympathy but wondered whether "we will all be slain in our beds". Uneasy lies the head that wears a crown or bejewelled headgear, and has billions stored in foreign banks.
Like Europeans in 1848 the Arab people are fighting against foreign domination (82% of Egyptians, a recent opinion poll revealed, have a "negative view of the US"); against the violation of their democratic rights; against an elite blinded by its own illegitimate wealth – and in favour of economic justice. This is different from the first wave of Arab nationalism, which was concerned principally with driving the remnants of the British empire out of the region. The Egyptians under Nasser nationalised the Suez canal and were invaded by Britain, France and Israel – but that was without Washington's permission, and the three were thus compelled to withdraw.
Cairo was triumphant. The pro-British monarchy was toppled by the 1958 revolution in Iraq, radicals took power in Damascus, a senior Saudi prince attempted a palace coup and fled to Cairo when it failed, armed struggles erupted in Yemen and Oman, and there was much talk of an Arab nation with three concurrent capitals. One side effect was an eccentric coup in Libya that brought a young, semi-literate officer, Muammar Gaddafi, to power. His Saudi enemies have always insisted that the coup was masterminded by British intelligence, just like the one that propelled Idi Amin to power in Uganda. Gaddafi's professed nationalism, modernism and radicalism were all for show, like his ghosted science-fiction short stories.
It never extended to his own people. Despite the oil wealth he refused to educate Libyans, or provide them with a health service or subsidised housing, squandering money on absurdist projects abroad – one of which was to divert a British plane carrying socialist and communist Sudanese oppositionists and handing them over to fellow dictator Gaafar Nimeiry in Sudan to be hanged, thus wrecking the possibility of any radical change in that country, with dire consequences, as we witness every day. At home he maintained a rigid tribal structure, thinking he could divide and buy tribes to stay in power. But no longer.
Israel's 1967 lightning war and victory sounded the death knell of Arab nationalism. Internecine conflicts in Syria and Iraq led to the victory of rightwing Ba'athists blessed by Washington. After Nasser's death and his successor Saadat's pyrrhic victory against Israel in 1973, Egypt's military elite decided to cut its losses, accepted annual billion-dollar subsidies from the US and do a deal with Tel Aviv. In return its dictator was honoured as a statesman by Euro-America, as was Saddam Hussein for a long time. If only they had left him to be removed by his people instead of by an ugly and destructive war and occupation, over a million dead and 5 million orphaned children.
The Arab revolutions, triggered by the economic crisis, have mobilised mass movements, but not every aspect of life has been called into question. Social, political and religious rights are becoming the subject of fierce controversy in Tunisia, but not elsewhere yet. No new political parties have emerged, an indication that the electoral battles to come will be contests between Arab liberalism and conservatism in the shape of the Muslim Brotherhood, modelling itself on Islamists in power in Turkey and Indonesia, and ensconced in the embrace of the US.
American hegemony in the region has been dented but not destroyed. The post-despot regimes are likely to be more independent, with a democratic system that is fresh and subversive and, hopefully, new constitutions enshrining social and political needs. But the military in Egypt and Tunisia will ensure nothing rash happens. The big worry for Euro-America is Bahrain. If its rulers are removed it will be difficult to prevent a democratic upheaval in Saudi Arabia. Can Washington afford to let that happen? Or will it deploy armed force to keep the Wahhabi kleptocrats in power?
A few decades ago the great Iraqi poet Muddafar al-Nawab, angered by a gathering of despots described as an Arab Summit, lost his cool:
… Mubarik, Mubarik,
Wealth and good health
Fax the news to the UN.
Camp after Camp and David,
Father of all your Camps.
Damn your fathers
Rotten Lot;
The stench of your bodies floods your nostrils …
O Make-Believe Summit
Leaders
May your faces be blackened;
Ugly your drooping bellies
Ugly your fat arses
Why the surprise
That your faces resemble both ...
Summits … summits … summits
Goats and sheep gather,
Farts with a tune
Let the Summit be
Let the Summit not be
Let the Summit decide;
I spit on each and every one of you
Kings … Sheikhs … Lackeys …
Whatever else, Arab summits will not be the same again. The poet has been joined by the people.
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* Tariq Ali
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o Tariq Ali
o guardian.co.uk, Tuesday 22 February 2011 22.59 GMT
o larger | smaller
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revolutionary murals Tahrir Square protests Revolutionary murals on the walls of newly established toilet facilities for protesters in Cairo's Tahrir Square. Photograph: Ben Curtis/AP
The refusal of the people to kiss or ignore the rod that has chastised them for so many decades has opened a new chapter in the history of the Arab nation. The absurd, if much vaunted, neocon notion that Arabs or Muslims were hostile to democracy has disappeared like parchment in fire.
Those who promoted such ideas appear to the most unhappy: Israel and its lobbyists in Euro-America; the arms industry, hurriedly trying to sell as much while it can (the British prime minister acting as a merchant of death at the Abu Dhabi arms fair); and the beleaguered rulers of Saudi Arabia, wondering whether the disease will spread to their tyrannical kingdom. Until now they have provided refuge to many a despot, but when the time comes where will the royal family seek refuge? They must be aware that their patrons will dump them without ceremony and claim they always favoured democracy.
If there is a comparison to be made with Europe it is 1848, when the revolutionary upheavals left only Britain and Spain untouched – even though Queen Victoria, thinking of the Chartists, feared otherwise. Writing to her besieged nephew on the Belgian throne, she expressing sympathy but wondered whether "we will all be slain in our beds". Uneasy lies the head that wears a crown or bejewelled headgear, and has billions stored in foreign banks.
Like Europeans in 1848 the Arab people are fighting against foreign domination (82% of Egyptians, a recent opinion poll revealed, have a "negative view of the US"); against the violation of their democratic rights; against an elite blinded by its own illegitimate wealth – and in favour of economic justice. This is different from the first wave of Arab nationalism, which was concerned principally with driving the remnants of the British empire out of the region. The Egyptians under Nasser nationalised the Suez canal and were invaded by Britain, France and Israel – but that was without Washington's permission, and the three were thus compelled to withdraw.
Cairo was triumphant. The pro-British monarchy was toppled by the 1958 revolution in Iraq, radicals took power in Damascus, a senior Saudi prince attempted a palace coup and fled to Cairo when it failed, armed struggles erupted in Yemen and Oman, and there was much talk of an Arab nation with three concurrent capitals. One side effect was an eccentric coup in Libya that brought a young, semi-literate officer, Muammar Gaddafi, to power. His Saudi enemies have always insisted that the coup was masterminded by British intelligence, just like the one that propelled Idi Amin to power in Uganda. Gaddafi's professed nationalism, modernism and radicalism were all for show, like his ghosted science-fiction short stories.
It never extended to his own people. Despite the oil wealth he refused to educate Libyans, or provide them with a health service or subsidised housing, squandering money on absurdist projects abroad – one of which was to divert a British plane carrying socialist and communist Sudanese oppositionists and handing them over to fellow dictator Gaafar Nimeiry in Sudan to be hanged, thus wrecking the possibility of any radical change in that country, with dire consequences, as we witness every day. At home he maintained a rigid tribal structure, thinking he could divide and buy tribes to stay in power. But no longer.
Israel's 1967 lightning war and victory sounded the death knell of Arab nationalism. Internecine conflicts in Syria and Iraq led to the victory of rightwing Ba'athists blessed by Washington. After Nasser's death and his successor Saadat's pyrrhic victory against Israel in 1973, Egypt's military elite decided to cut its losses, accepted annual billion-dollar subsidies from the US and do a deal with Tel Aviv. In return its dictator was honoured as a statesman by Euro-America, as was Saddam Hussein for a long time. If only they had left him to be removed by his people instead of by an ugly and destructive war and occupation, over a million dead and 5 million orphaned children.
The Arab revolutions, triggered by the economic crisis, have mobilised mass movements, but not every aspect of life has been called into question. Social, political and religious rights are becoming the subject of fierce controversy in Tunisia, but not elsewhere yet. No new political parties have emerged, an indication that the electoral battles to come will be contests between Arab liberalism and conservatism in the shape of the Muslim Brotherhood, modelling itself on Islamists in power in Turkey and Indonesia, and ensconced in the embrace of the US.
American hegemony in the region has been dented but not destroyed. The post-despot regimes are likely to be more independent, with a democratic system that is fresh and subversive and, hopefully, new constitutions enshrining social and political needs. But the military in Egypt and Tunisia will ensure nothing rash happens. The big worry for Euro-America is Bahrain. If its rulers are removed it will be difficult to prevent a democratic upheaval in Saudi Arabia. Can Washington afford to let that happen? Or will it deploy armed force to keep the Wahhabi kleptocrats in power?
A few decades ago the great Iraqi poet Muddafar al-Nawab, angered by a gathering of despots described as an Arab Summit, lost his cool:
… Mubarik, Mubarik,
Wealth and good health
Fax the news to the UN.
Camp after Camp and David,
Father of all your Camps.
Damn your fathers
Rotten Lot;
The stench of your bodies floods your nostrils …
O Make-Believe Summit
Leaders
May your faces be blackened;
Ugly your drooping bellies
Ugly your fat arses
Why the surprise
That your faces resemble both ...
Summits … summits … summits
Goats and sheep gather,
Farts with a tune
Let the Summit be
Let the Summit not be
Let the Summit decide;
I spit on each and every one of you
Kings … Sheikhs … Lackeys …
Whatever else, Arab summits will not be the same again. The poet has been joined by the people.
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