The world in the crossroad of the Great Depression: Eurasia and Latin America
Collection UNIVERSITY
The world in the crossroad of the Great Depression: Eurasia and Latin America DEI Departamento Ecuménico de Investigaciones
EDITORIAL COUNCIL Maryse Brisson Pablo Richard Elsa Tamez José Duque Silvia Regina de Lima Silva Germán Gutiérrez Tirsa Ventura Gabriela Miranda García Mario Zúñiga Anne Stickel Wim Dierckxsens
International Observatory of the Crisis
Organizing Committee of the International Observatory of the Crisis Wim Dierckxsens (Sociologist, economist — Holland) Jorge Beinstein (Economist — Argentina) Antonio Jarquin T. (Physician, Sociologist — Nicaragua) Reinaldo Carcanholo (Economist — Brazil) Paulo Nakatani (Economist — Brazil) Rémy Herrera (Economist — France)
www.observatoriocrisis.org
Correction by: Guillermo Meléndez Set in Monotype by: Lucía M. Picado Gamboa Cover designed by: Olman Bolaños Translated by: Miguel Ángel de Armas Castro Correction by: Isabel Macdonald 338 014c Wim Diercksens. Observatorio Internacional de la Crisis. The world in the crossroad of the Great Depression: Eurasia and Latin America/ Observatorio Internacional de la Crisis. Diercksens, Wim —1a. ed. — San José, Costa Rica: DEI, november 2009; págs.; 21 x 13 cms. (Collection University) ISBN 978-9977-83-159-6 1. Crisis 2. International economic relations 3. Capitalism 4. Latin America I. Title
Contents
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All rights reserved. Partial or complete reproduction of the content of this book is not allowed. ISBN 978-9977-83-159-6 © Departamento Ecuménico de Investigaciones (DEI), edition in English and Spanish , San José, Costa Rica, 2009. Publication of this book has been possible thanks to G. Piccini Foundation Italia. Printed in Costa Rica by: Lara Segura & Asociados (506) 2256-1664 Eventual Requests may be directed to : Asociación Departamento Ecuménico de Investigaciones Apartado Postal 390-2070 Sabanilla San José-Costa Rica Teléfonos (506) 2253-0229 • 2253-9124 Fax (506) 2280-7561 Dirección electrónica:
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Introduction...................................................................................... 7 1. A first approach to the crisis in the US................................ 9 2. The worsening of the crisis, the bursting of new bubbles and a Great Depression as checks to fictitious capital....................................................12 2.1.The structural contradiction of the system ..........14 2.2. Speculation, the housing crisis and the crisis of the real economy...................................15 2.3. The crisis in commercial construction, insolvency and depression.................................................17 2.4. The real economy and employment.......................21 2.5. The Greatest Depression in history and the collapse of the US economy..............................23 3. The threat of disintegration of the International Monetary System...................................26
3.1. Collapse of the dollar and worsening of the crisis.................................................28 3.2. Three new gigantic waves..........................................29 3.3. Neo-fascism in the West vs the struggle for a more endogenous project in Latin America......................................................30 3.4. The protectionism of the great powers..................32 3.5. Disconnection and reconnection in Latin America and the role of migrations.................34 4. Coup d’état in Honduras, the US Fourth Fleet and the military occupation of Colombia: a military offensive against Latin America...........................37 5. US military strategy, strategic rearguard and Latin America....................................................41
“Obama’s Doctrine” in view of the Greatest Depression in History: Military Coup in Honduras, the Threat to Latin America
5.1. The UNASUR Summit and US bases in Colombia...........................................................45 6. The necessary integration of Latin America and the Caribbean in order to survive...................................49 7. The danger of neo-fascism....................................................49 7.1. A civilizing change or barbarism; a history that may repeat itself.........................................51 7.2. The war for natural resources and decadence.....54 7.3. The urgent need of a struggle against the growing threat of a great war....................58
International Observatory of the Crisis*
Introduction For more than a decade, the members of this Observatory and others have been warning on the * Wim Dierckxsens (Netherlands); Antonio Jarquín T. (Nicaragua); Reinaldo Carcanholo (Brazil); Jorge Beinstein (Argentina); Paulo Nakatani (Brazil); Rémy Herrera (France). www.obeservatoriodelacrisis.org
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current crisis – which erupted in the real estate sector of subprime debts in the US in 2008. The governments and elites of the first world, mainly the bankers, were aware of the situation. Meanwhile, they began the preparations to impose their interests by means of the doctrine of permanent war which entails the waging of an extended war in Eurasia (and maybe beyond this geographical area) including the use of nuclear weapons and other weapons of mass destruction. That is the reason why, despite the end of the Cold War, military spending kept on rising, mainly in the US, until it reached its current shocking numbers. A new holocaust for humankind is being prepared with the awareness that the current system of “permanent fraud” is not sustainable. Its objective is to control and recolonize the world, crushing the democratic breakthroughs and imposing a worldwide neo-fascism. Hitler’s idea of a 1000 year Third Reich has turned into the perpetual unipolar control of the world for the new elite of American predominance. An idea which as it was then with Hitler, today also proves to be absurd and unsustainable. The current crisis is the convergence of several crises which have been piling up in the context of larger crises such as the financial crisis, the real economy crisis, the exhaustion of mineral resources and non-renewable sources of energy,the food, ecological, the climate crisis and global warming. In view of its complexity and interconnection, we have stated that instead of a structural crisis of the capitalist system what we are facing is a great crisis of “civilization” which threatens the survival of millions of people around the planet and that of civilization in the form we have understood it up to now. That is why the different aspects of this “crisis of civilization” must be addressed in an complete manner, and not only as isolated economic, financial, political, social, military or ecological aspects. 8
1. A first approach to the crisis in the US In 1957, the US debt was already 186 percent bigger than income, and by 2008 it had risen to 57 trillion dollars; 499 percent of the national income. In other words, there are five dollars of debt for each dollar of net income, with the aggravating factor that an important part of that income is generated in the unproductive sector, such as the Military Industrial Complex and the spheres of speculation, services, commerce, finance, etc. A further analysis of this situation will be made afterwards. It can be noticed, according to the above mentioned data, that the US economy has been technically bankrupt for several decades; a situation that could not be sustained indefinitely. But how is it possible that this country and its ruling elite have managed to sustain this imbalance for so long? A first answer is: By means of the transferences from the South in the form of unequal exchange, foreign debt, issuing money and securities without a backup in production, controlling markets, speculative processes and so on. Summing up, they have managed to sustain this situation by means of a growing subsidy from the South and the poorest sectors of the world organized in the form of the “biggest fraud in history”. Coercion, military power and the development of a great capacity for imposing or destabilizing governments, nations and regions, are used to achieve this goal. This situation is unsustainable in the long run without facing a great worldwide catastrophe which is not only related to the threat of war. The FAO estimates that in 2009, when the depression is just beginning, the amount of hungry people in the world has already increased by 1020 million people, and at least 53 million of them are located in Latin America. 9
Chart No. 1 Total US Debt vs. National Income
This planned plundering was established with the elimination of the gold standard during the Nixon administration, allowing a massive issuing of dollars and “fictitious value” (R. Carcanholo) created out of nowhere and without a backup in real value. It grew out of control since the beginning of the neoliberal globalization in the 1990s with the increase in the creation of the so called “derivative products” which contaminated the finances and the economies of the other nations in the world. This represents a gigantic mass of “parasitic capital” (as Jorge Beinstein calls it). The following chart shows the explosive growth of these “fictitious securities”, which Wall Street calls “derivative products”, compared to the Gross World Product. Chart No. 2 Explosive Growth of Derivative Products
The US owed a total of 57 trillion dollars up to 2008 – the greatest debt in history. That amounts to 186.717 dollars per each man, woman or child; or 746.868 dollar for each family of four. The increase was of 32.104 dollars more per capita compared to the previous year. In 2008 the total debt increased by 3 trillion dollars, eight times faster than the GDP. The interests of its external debt rose 1.2 trillion dollars; 79 percent (45 trillion dollars) created since 1990. Under-financed pensions and medical promises are not included. (Grandfather Economic Reports - updated May 2009). The debt is defined as the total amount of it: federal, state, local government and international debts, private and household debts, business and financial sector debt, federal debt to trust funds (44.2 trillion dollars are private/ household/ business/ financial sector debts, plus 12.8 trillion dollars of federal public and local government debts in inflation-adjusted dollars). 10
According to the Basel Bank, these “derivative products” (papers, shares, public debts, the issuing of money without a backup, fictitious debts, etc.), would amount to some 1000 trillion dollars in 2008: 20 times the Gross World Product (J. Beinstein, “Seven Faces of the Crisis”). 11
In consequence, only one in every twenty dollars in paper money or securities circulating in the world would have a real backup; that is, the remaining 19 dollars would be “fictitious capital” without any kind of backup in value. That is why the rich countries, mainly the US, are buying properties and the wealth in the Third World Countries – these are real values –with huge amounts of “money”. This is the nature of the new recolonization of the so called Third World, imposed with the threat of military fleets and bases in order to transform worthless papers into real wealth. In the case of Latin America it is a sort of new version of the Spanish conquest when the Spaniards used to give the natives mirrors in return for their gold and silver.
2. The worsening of the crisis, the bursting of new bubbles and a Great Depression as checks to fictitious capital Although there is much talk about some signs of recovery, the commentators forget that the crisis is not formed by only one bubble (the housing bubble which has already burst and continues posing threats). Andrew Gavin Marshall states that the crisis has other bubbles whose bursting will be much bigger than that of the housing bubble in 2008. The indicators show that the next possible bursting will be that of the commercial real estate bubble. This category includes apartment buildings, hotels, office buildings and commercial centers. When the residential investment fell 28.9 percent between 2006 and 2007, the investment in commercial real estate increased 24.9 percent. The investment in commercial real estate served as a shock absorber for the fall in real estate investment delaying the bursting 12
of the bubble. Commercial real estate follows the same trends of housing and so will then crisis. However, the main upcoming event is the “bailout debt bubble” and the world debt bubble in general; this would throw the world into a Great Depression whose magnitude is unprecedented in history 1. The only thing the Federal Reserve and the US government have managed to achieve with the “bailout bubble” is postponing the inevitable world crisis. They have injected more liquidity in a bubble that was already inflated. At the end of March, 2009, the US government and the Federal Reserve have already spent, lent or committed 12.8 trillion dollars in the “bailout bubble”; this is almost the US Gross Domestic Product. Some other assessments in July estimated the amount in 25 trillion dollars, that is, almost twice the US Gross Domestic Product. The stock market and the stock market gamblers are rejoicing again after a recovery of 50 percent. It seems they do not want to understand that a loan for trillions of dollars does not generates a real recovery because it does not create anything 2. The bursting of this mega-bubble will mean the end of the boom/bankruptcy cycle in the economic activity of the developed world. When this “bailout bubble” bursts, there will be no fiscal arrangement or monetary policy for inflating another bubble. At this point, it will be understood, as Marshal points out, that the empire could unleash a great war as a last resort.
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See, Andrew Gavin Marshall’s “Entering the Greatest Depression in History: More Bubbles Waiting to Burst”, in www.rebelion.org 2 Bob Chapman, “Collapse in the Wake of the Fed’s Wall Street Bubble?”, in www.globalresearch.ca 13
2.1. The structural contradiction of the system The housing crisis, with its center in the US, is the first great manifestation of a structural contradiction of the capitalist system which entails much more serious consequences than those currently exposed by the media . In view of the lack of profitability in the productive sphere and the real economy, capital moved to the unproductive and speculative sphere since the 1970s and found an adequate solution in a global neoliberal policy, mainly in the core countries. Capital found more profitability in speculation than in production, as a result, an important part of it moved to this sphere. The neoliberal governments favored this policy since 1973, when the US gave up the gold standard allowing the beginning of speculation with currency. All the speculative valorization of assets during the last decades, be it shares, securities or immovable assets, implied a growth in the resources of the owner without being a profit in the real economy. That is, the owner of this kind of asset receives at the end of the year a profit and an increase in his resources as long as the speculation keeps the prices of these overvalued assets. However, there is nothing real to backup these profits; and this happens year after year. Therefore, this is a speculative economy of long tradition which cannot be resolved as easily as the media say 3. The fact of making fictitious profits in a given year by means of speculative capital means that the following year that speculative capital will be bigger and there will be the hope of obtaining equally bigger earnings. At the same time, the gap between productive and unproductive investments will increase. There is 3
Reinaldo Carcanholo, “The Speculation with Money is the Cause of the Crisis”, in Semanario Universidad, Costa Rica, July 2009, pp. 6-7. 14
more and more speculative capital hoping to obtain growing profits compared to the capital that generates profits in the real economy. In fact, investment in the real economy becomes increasingly destimulating. In other words, there is a growing contradiction between the deceleration in the production of wealth and the needs of a growing speculative capital which tries to appropriate this wealth. Carcanholo states that such appropriation is provisionally solved basically by the making of new fictitious profits, because the increase in the level of exploitation of labor (typical of neoliberalism) is not enough to achieve this goal. The result is that together with the upward trend of this unprecedented speculative spiral there is also an upward spiral of fictitious capital. It means that year after year, the same as in the “pyramid game”, it is necessary a bigger total amount of earnings, devising new forms of speculative capital such as “derivative products”. The speculative logic works as a snow ball in a slope; it grows bigger and bigger until it crashes and bursts. A short-term solution implies postponing an increasingly bigger problem for the future. In view of a latent and ever more serious illness, the dose of the medication needed to face the crisis once it appears will also increase significantly. However, as long as the contradiction is not evident and the “snow ball” does not crash, the fictitious profits seem to be a real profit. The illness is not manifested by other signs. This mirage lasts as long as the speculative profits are exchanged for real wealth, but sooner or later the crisis appears.
2.2. Speculation, the housing crisis and the crisis of the real economy For some years, the analysts of the International Observatory of the Crisis have foreseen this crisis. 15
Appearances pointed towards the contrary, but the speculative economy was essentially growing more and more. This speculative spiral could go on for a long time in this neoliberal era due to the involvement of the whole world, and this feature differentiates the present crisis from the Great Depression of the 20th century. Now, after having affected many periphery countries, the system finally collapses at the centre of the empire in its weakest link : the subprime mortgages exploded in the US. As they had been labeled as safe, they were bought by many banks around the world; and when the credit crisis emerged it became immediately an international crisis. The result was a sharp decrease of profit rates. Otherwise, the real estate speculation was a common phenomenon in all the countries of the West and beyond. The crisis in the US was only the trigger of the speculative crisis in the whole world, and that is why it represents its center. Today, it seems as if the housing crisis had been overcome, but it left a crisis in the real economy. Productive investments have fallen throughout the world, mainly in the West, worsening the crisis in the real economy. This also has a repercussion in the commercial-property market which is currently facing serious difficulties in most parts of the world. Commercial properties reach a clearing rate of more than 11 percent in the US. In Europe (London and Paris) the amount reaches 20 percent and in China (Beijing) even 22 percent. As a result of the growing clearance rates, the prices of commercial properties are falling dramatically. Since the peak in October 2007, the US commercial-property prices have fallen 35 percent. In Europe the situation is not any better. The figures available are just from a few cities. In Russia (Moscow) the prices have fallen 63 percent in a year, and this 16
makes it rank third after some districts in London (West End) and Paris 4. Chart No. 3 Sales of Commercial Properties in the US 2006-2009
From The Economist, August 1st, 2009.
2.3. The crisis in commercial construction, insolvency and depression The loans on commercial properties have been linked to complex financial instruments known as Commercial Mortgage Backed Securities (CMBSS). This constitutes another speculative spiral of fictitious capital which will probably reach its limit before the end of the present year. It is as a déjà vu of the housing 4 The Economist, August 1st., 2009, pp. 61-62.
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crisis. The riskiest securities, which were issued in the US between 2005 and 2007, have already faced serious problems due to a growing lack of payment capacity, even of the interests. It is estimated that toward the end of 2009 the lack of payment capacity rate in this sector could reach 12 percent. A crisis of the risk loans in the sphere of commercial construction is added to the problem. This complex situation could generate another banking and financial crisis in the US during the final months of 2009; this would affect above all the smaller banks 5. Will there be the capacity for another banking bailout? Or will it be the last crisis, a crisis that will announce that of the Treasury Bonds, showing a payment default due to the incapacity of the US government itself? We believe the latter will happen. In other words, we are entering the Great Depression of the 21st Century. The US, the UK, the Eurozone and Japan will have a recovery-less recovery, that is, a false recovery. The current recession consists of a credit bankruptcy of such a magnitude that it is proper to a depression period. In fact, the financial system has foundered. The wholesale credit system is stuck. The banking system is insolvent and consumption spending is collapsing. The shares have been rising over the last months just because of the Federal Reserve injections. The big banks are rejoicing with the trillions they have been granted, and they are back in the speculative game, rising the bets again like compulsive gamblers. Thus they are now talking about a recovery. In other words, the “fictitious capital” tries to obtain new “fictitious profits” because it does not invest in the real economy, and this situation has just been the cause of the crisis. Therefore, what we are witnessing is the recovery of fictitious capital heading to a bigger collapse. The 5 The Economist, August 1st. 2009, p. 62.
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parallel with the crisis in the 1930s is amazing. Up to November 1929, the stock market fell 35 percent, almost the same as the fall in October-November 2008. Then, a marked recovery of 155 days, with a rise of 48 percent, occurred. The recovery, starting from March 9th, gives almost the same figures in the same period of time. The correlation of 0.8 is unusually high (see chart below). Chart No. 4 Recovery and Relapse of the US Stock Market 1929-1930 and 2008-2009
Source: David Rosenberg, from Graham Summers, “The Bear Market Is NOT Over, and Stocks Will CRASH This Fall”.
Securing more fictitious capital soothes the anxiousness but increases the problem of investing it, and generates more bubbles. Meanwhile, the tension 19
between the very rich and those who have lost their jobs, houses, and are paying usurious rates of interest for debts they cannot pay, increases. The wealth of the American households has decreased 14 percent since the beginning of the crisis. The price of housing has fallen 41 percent. The collapse of the real estate prices is compelling the families to cut their expenses – this weakens consumption and increases future layoffs. There are more and more people who cannot pay their debts in general and their credit cards in particular. The banks are charging usurious rates of interest but in the real economy the fall of demand continues and new businesses go bankrupt. It is a vicious circle which leads to slowdown of growth. Therefore, the possibilities for a recovery are almost nil. What about the consumption spending which used to represent 70 percent of the economic activity? Where will it come from? According to Mike Whitney there is no chance for recovery 6. The real crisis is not the trillions of dollars in values that vanished. Those were fictitious figures: stock market prices, accounting tricks or financial pyramids. All of these were fictitious profits which vanished into nothing. Shares are bought based on the future profits of the enterprises. These profits are now even smaller than in the 1930s during the Great Depression. The US was already facing recession in 2008, but the profits during the second four-month period of 2009 are 31 percent below that level. As can be seen in the following chart, they have fallen in real terms 98 percent since its peak in 2007.
6 “Why the economy has not bottomed out yet”, in CounterPunch.
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Chart No. 5
Source: Graham Summers, op. cit.
2.4. The real economy and employment The true crisis is the contraction of the real economy, growing unemployment, reduction of income and the precariousness of employment. Currently, the rich fraudsters of Wall Street and London are recovering, and the politicians and the media pay much attention to their prosperity. However, the bailout of the rich will not rescue the real economy because their sumptuous consumption and military spending are not enough to sustain the effective demand. In other words, there will be no economic recovery by rescuing the speculative capital. On the contrary, in the next months we cannot even talk about a jobless recovery, as many experts are trying to make the people believe. The huge layoffs in 21
the US at the beginning of 2009 increased the number of unemployed between 600.000 and 700.000 a month. Over the last months unemployment increased “just” 500.000 a month. Taking into account these figures, the media jump to the conclusion that there are signs of a recovery because the amount of people who receive unemployment benefits is decreasing. The official unemployment rate in the US is almost 10 percent. The truth is that unemployment continues to grow at a much higher rate than what the official statistics reveal. The unemployment benefit only covers half of the American workers. The rest, that is 50 percent, do not have the right to unemployment benefits and many of them do not have a job (mainly the illegal immigrants) and therefore are not registered as unemployed persons by the official statistics. The chronically unemployed with more than 59 weeks without finding a job (the limit for receiving unemployment benefits in the US) were not registered either in the statistics at the right moment when the crisis appeared and the prospects of finding soon another job vanished. If all those people were included in the global rate of unemployment, the US would have an unemployment rate higher than 18 percent, and probably near 20 percent. Official unemployment figures reaching 20 percent of the economically active population are found in Europe (Spain) and Africa (South Africa). The unemployment rate in Latin America is officially below 10 percent, the youth unemployment is clearly over 20 percent and the unemployment due to subemployment could reach more than half of the population. However, the official unemployment rates could double in face of a great depression 7. In that case, it would mean that almost
half of the American economically active population would be unemployed. We can imagine the social and political consequences of such a scenario; the police state is in motion, mainly in the US. This situation represents a political powder keg which the hawks will try to use in order to establish a neo-fascist state. On the other hand, there will be a strong polarization in the US, and it is still time to fight for another political alternative. The social consequences that a depression would have in the periphery countries are well known.
2.5. The Greatest Depression in history and the collapse of the US economy Contrary to the prevailing political and media discourse, the beginning of a recovery cannot be expected in the next 12 months, as it was said in August 2009. A contraction of the real economy and a sharp increase in the unemployment rate will be the common scene in the OECD countries. Reports from the International Monetary Fund (IMF) predict that the Gross World Product will fall 1.3 percent, and the World Bank is more pessimistic in predicting that the fall will be 3 percent, excluding China and India. In other words, the world as a whole, but mainly the West, is entering a great depression. According to figures provided by The Economist 8, during the last four-month period the GDP fell 5.5 percent in the US, 10 percent in the European Union and more than 14 percent in Japan. These figures are corrected months after(for worse)s when the definitive results are known. Then, the real situation is even more serious.
7
Dave Lindorff, “Keeping It Real: This Recession Ain’t Over by a Long Shot”. 22
8 August 1st 2009, p. 81.
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In Latin America the recession is less serious and somewhat diverse. In Mexico (the Latin American country most closely linked to the US economy), the GDP fell more than 21 percent. The reason is that the US let the negative effects of the crisis fall first of all upon Mexico. That way the neighbor from the North is trying to save its domestic economy. The figures are less discouraging in countries with a more endogenous economic project. Brazil, one of the so called emergent countries, although more connected to the financial and speculative sphere, suffered a fall of 3.3 percent in its economic growth rate. Chile, another country loyal to the neoliberal policies faced a fall of 2.4 percent. In the midst of the crisis, Argentina and Venezuela (a country that is trying to distance itself from the neoliberal policies), still showed slightly positive figures 9. The more disconnected a Latin American nation is, the less the impact of the crisis. The above mentioned result will encourage disconnection policies in Latin America during the depression. In view of this recessionary international context, the 8 percent increase of China’s GDP and India’s 6 percent increase are extremely interesting. Industrial production in China increased, according to The Economist (Op. Cit.), more than 10 percent in June 2009; a figure that contrasts strongly with the 14 percent fall of industrial production in the US, 17 percent in the European Union, and 23 percent in Japan. Had it not been for the increase in defense spending during the Obama administration, the American figure would have been much worse. Industrial production in Brazil, Argentina and Mexico fell 11 percent. As a result of the growing protectionism in the West, Chinese exports fell more than 40 percent during the last year. China used to export 40 percent 9 The Economist, August 1st 2009, p. 81.
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of its GDP and therefore it is particularly affected by protectionist measures in the West. Chart No. 6 China’s Trade Balance 2005-2009
Source: Goldman Sachs.
The fact that China’s GDP increases at the same time that its exports fall has two possible interpretations; each of them will explain part of the truth. The Chinese economy could be growing, at least part of it, due to a rise of the fictitious capital which is counted as if it were real during its rise. During the first seven months of 2009 the buying and selling of Chinese properties increased 60 percent. At the same time, the Chinese stock market (SSEB) increased 90 percent (since the end of 2008) while the world stock market index (MSCI) barely rose 14 percent during the same period. Consequently, it 25
can be asserted that China’s speculative economy is in full swing 10. An alternative interpretation is that the Chinese industrial product has been absorbed in a significant proportion by the internal demand. In order to achieve this, China has had to devote international reserves to promote its internal demand and/or stop buying new bonds. The Chinese eagerness to increase its reserves in US Treasury Bonds has decreased drastically since September 2008; the same has happened at a global scale. China had the biggest amount of international reserves (2.13 trillion dollars) and half of it in US Treasury Bonds. It represented twice the reserves Japan had, the second country on the list. China not only has diversified its international reserves buying gold and raw materials, but also has invested them in infrastructure works. As a result of the great investment in the construction of infrastructure works inside the country, the monetary income per capita during the last 12 months increased not only in the urban areas (11.2 percent) but in the rural areas (8.1 percent) as well 11.
is facing problems since the end of 2008, in fact, the Federal Reserve is buying Treasury Bonds offshore (in Bahamas) since September 2008 in order to keep the illusion that there is a sustained foreign demand of bonds. Chart No. 7 Percent of Total US National Debt in Bonds (red plot) and paper money (blue plot), from May 1995 to July 2009
3. The threat of disintegration of the International Monetary System The fact that since September 2008 there is no more international demand of US Treasury Bonds has a repercussion in the US. With its gigantic bailout plans and the unprecedented defense spending, this nation needs foreign credits for some 2 trillion dollars a year. Without these huge injections of credit the US would be in a Great Depression already. The country 10 The Economist, August 1st 2009. 11 See Hedelberto López Blanch, “China, in www.rebelion.org, October 10th 2009.
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against all hurricanes”,
Source: Mark Lundeen; “The 1929 and 2007 bearmarket race”, in www.Gold-Eagle.com
With this “guarantee” the Federal Reserve issues dollars or grants credit without apparent limit. Those “junk dollars” are not invested in the productive sphere, but basically return to the stock market, to war and the Industrial Military Complex. Spreading the idea of a recovery in sight is the way to prolong as much as possible the minimal necessary 27
confidence of the countries which buy US Treasury Bonds and British gilts, preventing them from falling into panic and getting rid of these bonds. Without this confidence, the financial and monetary system would collapse. The result, however, is that the world monetary system is disintegrating more and more.
3.1. Collapse of the dollar and worsening of the crisis
The world economy has been functioning, and continues to function, based on debts, that is, based on bonds. It means that it is necessary to keep confidence at all costs, even with the threat of war. The US debt is bigger that the debt of all other countries together; in consequence it represents the center of the crisis. In view of the inevitable collapse of arrangements to enter the post-dollar era. There is not much time to lose. The US threatens China with war in order to avoid the massive sale of Treasury Bonds by this country, although the US is no longer a strong importer of Chinese products. In view of this threat of war, the Chinese do not dare to massively get rid of the Treasury Bonds, and that is why the US dollar “stays afloat”. In October 2009, however, when the negative performance of the real economy is known, the world will realize that the products made in the US and the UK, in particular, and those made in the West, in general, no longer have a future. Such a situation would create the conditions for another collapse of the stock market 12. For hundreds of millions of people in America, Europe, Asia and Africa, the autumn of 2009 could 12
H. G. Fandrich, LEAP/E2020, “Three Giant Waves”, in www. globalresearch.ca 28
announce a terrible transition toward a long lasting impoverishment of their middle classes resulting from the high rates of unemployment, with no perspective of finding another job in two, three or four years. This, coupled with the disappearance of savings which were directly placed in the stock market, the collapse of pension funds by capitalization, bank deposits tied to the stock market, or due to their investment in enterprises which are obliged to wait desperately for a calm which will not come for a long time.
3.2. Three new gigantic waves
The Great Depression of the 21st century will settle in with all its strength during the next months. The GEAB 36 report predicts that there will be the convergence of three particularly destructive “gigantic waves” from the months of September and October 2009 on. They will reflect the worsening of the crisis originating unprecedented economic, social and political convulsions. In the opinion of the authors, although not all the regions of the planet will be equally affected, all of them, without exception, will face an important deterioration of their situation during the last three months of the year. During September and October 2009, payment capacity of the US and the UK to finance their public deficits (already out of control) will be seriously questioned in an international debate. The suspension of payments by the US and the UK, both at the center of the global system in crisis, will be the first economic, social and political wave which could lead to the final crisis of the US dollar and the pound. Secondly, the GEAB 36 mentions a wave of mass bankruptcies: enterprises, banks, real estate companies, cities and 29
even States. This situation has a huge economic, social and political impact resulting in the third wave: mass unemployment, fall of income, famine, etc. These three waves will not be consecutive, but will be simultaneous, asynchronous and non-parallel – and very destructive therefore. As a result of their impact in the world economy the Great Depression of the 21st century will begin; this could lead to a political climate for a big extended war or a world war 13. According to Nouriel Roubini (American economist and professor at the New York University), we are facing a “double-dip recession” and further rise of oil prices, slowing down even more economic activity. In short, the recovery will be a mirage and relapse is inevitable. A “double-dip recession” would place a brutal brake on activity (…), says Eswar Prasad, professor at Cornell University in the US 14.
The world trade is collapsingChart 8a: Annual evolution of exports in the 15 major exporters (1991-02/2009) Chart 8b: Annual evolution of exports in the 15 major exporters (February 2008-February 2009)
3.3. Neo-fascism in the West vs the struggle for a more endogenous project in Latin America
Since the beginning of the financial crisis at the end of 2008, exports have fallen worldwide, mainly in the top exporting nations. They have fallen 30 percent in the 15 top exporting nations; in some of them such as the case of China, Taiwan and Russia (although not ranked among the first 15) the fall was more than 40 percent. In no single country did exports rise. In Mexico, Brazil and Argentina exports fell 25 percent; that is, a little less
13 See Global Europe Anticipation Bulletin (GEAB), 36. 14 Jeremy Tordjam, Paris (AFP), August 25th, 2009.
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than the mean of the top exporting nations. The relative fall in trade was above the medium of core countries. The exports of France, Germany, Great Britain, and Canada fell 33 percent, and in the case of Japan the fall was almost 40. The fact that American exports fell only 22 percent was probably due to the growing export of military products and services.
The pattern in the fall of exports in the core countries is much sharper than the decrease in the growth of their economies. It is obvious that since the beginning of the crisis the core economies have been more focused on their own countries. They are trying 31
to save their enterprises in order to avoid a bigger fall of their economies. In a globalized economy, the contraction of trade in a big power inevitably leads to contraction in other nations due to the long chains of production built around the world due to globalization. World trade declines markedly due to this domino effect around the globe. At the same time, this process has a new negative impact on trade creating a vicious circle. However, the strong contraction of trade is not related with the pattern seen in the fall of the growth rate. In other words, the fall of international trade is not exclusively caused by the contraction of the core economies. This means that since the economic crisis in 2008 protectionism is on the rise in the world. This tendency was encouraged by the discourse on the uncoupling economy, when it was brought up in the US financial crisis.
3.4. The protectionism of the great powers Protectionism is an “every man for himself” policy in the midst of a world which is crumbling. With neoliberalism in a deep crisis, the core countries turn to more protectionist policies, that is, they reduce their imports. In consequence, the periphery countries have to reduce their exports. The composition of the exports between the core countries and the periphery presents a great contrast. The exports of the core countries have a big component of capital goods while those from the periphery countries are mainly consumer goods and raw materials. The fall in the exports of durable consumer goods, in the emergent countries like China, can be compensated by a rise in the civil domestic demand. The fall of the exports of capital goods in the core countries can only be compensated with a 32
rise in the domestic and foreign “demand” of military products from their Military Industrial Complex. This is clearly the case of the US whose exports fell much less than those from Germany or Japan. The effective demand of the end products of the Military Industrial Complex could rise by means of the thrust of permanent war. With this, the unproductive cost of war can be transferred to other nations; hence the inclination of the US and Great Britain towards war Keynesianism. Such a situation creates in the center of power the appropriate political climate for embarking in wider and more complex military adventure. As a result of the decrease of the possibilities for exporting to the core countries, the periphery economies (whether they want it or not) will be virtually compelled to turn more to their own countries. This situation represents both a threat and an opportunity. The crisis does not only give the chance for a more endogenous project but also generates the need of an uncoupling. The contraction of international trade itself creates a crisis in the annexation policies which are inherent in the process of neoliberal globalization with its free trade agreements. These economic policies were devised to meet the transnational and financial interests and were focused therefore on maximizing economic openness. In other words, as the global crisis gets worse, Latin America will have a better chance for recovering its self determination. This represents a threat to imperial interests and those of national elites connected to transnational interests. In view of the deep crisis, the power centers also tend to implement protectionism with regard to employment and citizens consider they are more entitled to it than the foreigners. In the core countries, the growing unemployment generates more xenophobia; this, in turn, also makes the policy of “every man for himself” 33
a popular, exclusive and extreme-right project. The protectionist project of the corporate powers is based on this. There is a tendency toward nationalization of enterprises facing problems. These are financed or placed under the administration of the state in order to save them from sinking. This financing is conditional on promoting domestic demand. The slogan is: “buy American” or “buy British”, etc. Nationalism is back in the policies of the core countries. It represents the collective national attitude of saving themselves eventually at the expense of the other nations. These protectionist, xenophobic and nationalist tendencies are ingredients for promoting neo-fascism.
3.5. Disconnection and reconnection in Latin America and the role of migrations The consequences for the Latin American countries are completely different. As a result of the crisis and subsequent unemployment, some immigrants return to their countries and the remittances plunge, as can be seen in the chart below. The “American dream”, which represented an individual or family safety valve in face of economic hardships and exclusion, comes to an end. Although neoliberalism caused more unemployment and exclusion, migration worked as an individual or family safety valve. As the immigrant can save himself and his family by means of migration, this fact tends to depoliticize them. But more than that, this safety valve tends to align the (potential) immigrants with the neoliberal system which seems to give them these opportunities. As migration becomes increasingly difficult, however, this “every man for himself”, whether at an individual or family level, comes to an end. When there 34
are immigrants coming back due to the unemployment in the target country and the remittances plunge abruptly, the “American Dream” ends. The crisis marks the end of the economic openness for the immigrants, and with it, the end of their safety valve for solving their economic problems. The new situation requires an endogenous project beyond the individual or family, that is to say, it requires an alternative political project “within my country”. With an increasing generalized crisis, job opportunities begin to vanish, even beyond borders, increasing people’s criticism about neoliberalism and the governments that have implemented it. It is precisely in this juncture that the electoral process in El Salvador took place. The time of the Arena neoliberal party ran out and the political project of the Frente Farabundo Martí, with Mauricio Funes as president, won the elections in March 2009. This project could offer more endogenous alternatives to voters. With the worsening of the economic crisis, more and more Latin American countries require more endogenous political projects, and the on going proces ses tend to get stronger. Before the crisis it was difficult to talk about the nationalization of enterprises, now this practice is in fashion in the very centers of power. Before the crisis it was very difficult to get away from the neoliberal policies; that is to say, disconnection was very difficult. Now, with the worsening of the crisis, the more endogenous projects become a need in face of the sharp fall of international trade and the exportation of the crisis to the South. The impossibility of importing all that is needed leads inevitably to the assessment of which products can be produced locally or regionally in order to replace extra-regional imports. This policy would also protect the local currencies which are threatened by an eventual collapse of the US dollar. The recovery of agricultural 35
Chart 9 Fall in Construction Activity in the US and Remittances to Mexico 2007-2009
From The Economist, August 1st, 2009.
and livestock production capacity in order to reach food sovereignty represents one of the most important priorities in this context. In view of the expected fall of income, employment, exports and familiar remittances (and the expected negative effects of climate change), mass production of food, reforestation, protection of the environment and natural resources become a strategic issue, which cannot be postponed, for the survival within the national and regional boundaries of Latin America and the Caribbean. Likewise, the development of a regional international solidarity system is vital in order to face natural disasters (which are likely to happen as a result of climate change), as 36
well as the promotion of intraregional trade, with the use of local currencies or a single regional currency. The Latin American countries have begun the creation of the Bank of the South, the first step for the creation of the SUCRE as a single currency. 15. As the crisis worsens, the Latin American countries will be compelled to turn to their own countries. Obviously autarchy is not an alternative for the periphery countries in general and the small countries in particular. Therefore, disconnection implies a reconnection with a greater amount of self-determination and sovereignty, and less dependence from the North. In political terms, it means a reconnection, first of all within the subcontinent. As the (smaller) periphery countries depend particularly on external conections, the integration of the Latin American countries becomes a need, and in consequence a political priority in times of crisis.
4. Coup d’état in Honduras, the US Fourth Fleet and the military occupation of Colombia: a military offensive against Latin America The coup in Honduras was carried out right in the moment when the neoliberal crisis was demanding a more endogenous economic and political project. Nevertheless, without entering into an analysis of the overthrown government of Honduras, which is more a matter of internal affairs for the citizens of that 15
This idea was put forward by the members of our Observatory and others in several international meetings: The SEPLA Conference in Montevideo, September 2007; the SERPAJ Conference in Ecuador, February, 2008; The Conference of the World Forum of Alternatives in Caracas, October 2008. 37
country, there are some issues we would like to point out: The liberal president of Honduras, Manuel Zelaya, took office in 2006. His administration coincided with the time when the oil speculation caused a sudden increase in the prices of fuel. As a result, the workers of the transportation guild and the taxi drivers went on a strike. Zelaya was pressed to approach Petrocaribe and Venezuela in order to buy oil at preferential prices to resolve the conflict and the energy crisis of the country. Zelaya’s approach to ALBA affected negatively the contracts with Shell, Texaco and Esso. Under popular pressure and against the wishes of the business elite, Zelaya increased the minimum salary barely to meet the cost of the basic food requirements of the population. After a serious passenger airplane crash in the capital, the president announced the transfer of the civil airport to Palmerola with the financial support of Venezuela. A US military base is located in Palmerola. The president received a hostile response from the transnationals, the local business elite and the Pentagon with the three above mentioned measures. This was enough reason to carry out the coup. The Latin American countries, meeting by then at the OAS, perceived other motives: a military attack against Latin America, beginning in its weakest link, with the aim of pushing back democratic advances, impeding the recovery of sovereignty, and gaining control of all the natural resources of the continent. Indeed, since 2008, during the Bush administration, and simultaneously with the deployment of the US Fourth Fleet in Latin American waters, the coup in Honduras began to be mounted. It is comparable to the Bay of Pigs invasion, which was planned under the Eisenhower administration, and carried out under President Kennedy. Back then the world was at the edge of a nuclear war. Among the people involved 38
(in the coup) and the ones supporting it, there is a group of fanatic neo-conservative anti-Castro CubanAmericans, and high officials formerly linked to Mr. Bush and currently to Obama’s administration, as is the case of John D. Negroponte, Otto Reich and the American ambassadors in Central America. Others include the former Republican presidential candidate at the head of other 17 Republican senators. First of all, they arranged the political isolation of Zelaya in the internal formal representative democracy, which since the Constitution of 1982 promoted neoliberal policies in favor of the business elite. The main mass media in the hands of a very conservative oligarchy displayed campaigns to increasingly discredit the president. Facing progressive isolation, Zelaya chose to get greater popular support through participative democracy and introduced an opinion poll asking the people about a new constituent assembly. With this, the road to a more endogenous, popular and participative political project was paved. Everything seemed to indicate that another Latin American country would move toward a relative disconnection until the day the coup took place. In fact, the current situation has been demanding a greater disconnection from the process of neoliberal globalization in the South in general, and in Latin America in particular. The military coup in Honduras cannot be seen as another traditional coup in a small country, in times of the Cold War. Preceded by the deployment of the US Fourth Fleet in Latin American waters in 2008, by a Colombian military attack to Ecuadorian territory, and simultaneous with the agreement on the installation of 7 US military bases in Colombia, these events cannot be seen as unrelated facts. Therefore, they are considered as a military attack of the US against “Latin America as a whole”. Additionally, these facts must be appreciated 39
and discussed not only in the light of local and regional realities, but also within the global post cold-war strategy of the United States against Eurasia and the rest of the world, and within the current context of grave economic crisis. Under these circumstances, it is not strange that all countries around the world responded immediately, with a single voice, condemning the coup. Governments from the right, the center and the left coincided on this with no exception. In view of such a demonstration of international solidarity, the US cautiously joined the condemnation to avoid isolation from the rest of the world, something that would compromise the political future of the new administration. The coup continued in spite of president Obama’s and Mrs. Clinton’s opposition. Indeed, it is impossible for the military coup to survive without the support of the United States of America. Therefore, the resulting impression was that president Obama and the Secretary of State either lied in their declarations of intent in the previous summit of presidents of the hemisphere held in Trinidad and Tobago or both Obama and Zelaya were victims of the insubordination of their respective subordinates. It would be something like another coup d’état, this time against Obama in his own country, led by a hidden government of neoconservatives inherited from the Bush administration, with perhaps even control of US nuclear weapons. President Obama complained about the “irony” of asking his country not to interfere in the internal affairs of Latin America, whereas simultaneously asking him to intervene in Honduras. The fact is that the President was not asked “to intervene”, but to order “a halt of the United States intervention”, which first planned the coup and backed it up afterwards. President Obama was asked to investigate and punish those American citizens involved in the coup, and at the same time to 40
stop all relationship and military help to the regime, in accordance with US and international law. Meanwhile, the social movements have kept up their resistance for more than three months now. They have increased their demands for the return of President Zelaya, while advancing strategies of popular struggle. In this context, when Washington barely begins to exert pressure on the regime, the popular struggle intensifies and begins to define its own course beyond Zelaya.
5. US military strategy, strategic rearguard and Latin America Currently, more analysts and governments coincide with the idea that the United States, incapable of controlling the economic crisis, prepares itself to wage a great war with a first theater of operations in Eurasia, using Europe and NATO for this purpose. They would besiege Russia and China (both the main threats for the US) using the former members of the Warsaw Pact and the territories of the former Soviet Union. They would occupy the south of Asia and the Middle East in order to make a deep advance into the oil rich areas of the Caspian Sea and Central Asia. Eventually, this project would lead to the separation of Siberia from Russia and the disintegration of this country and China into minor states and second or third class military powers, which will not represent a real threat for the US and its plan of unipolar world dominance. But this road is full of great dangers. One of such dangers is the outbreak of a thermonuclear war at any stage of the above mentioned strategy. The peoples of the world should never follow the US in this adventure. On the contrary, it is a wise policy to declare the neutrality of the entire Latin American region in case of such an eventuality. 41
In such a scenario, the US would need a safe strategic rearguard full of oil, mineral resources, etc. This rearguard – the same as during World War II – is obviously Latin America. The fastest way to assure this is pushing back the democratic advances in the region and imposing new-style military dictatorships obedient to the USA. The Bolivarian states, as the one of President Chávez, are not the only ones that obstruct the plans of the US, but also the centrist and moderate right-wing governments. In consequence, to a certain extent, the coup in Honduras served as a smoke curtain for negotiating the military bases in Colombia. A wise policy is not to allow – in the name of the sovereignty of a particular country – any threat to the sovereignty and vital security of the other Latin American countries. The pretext of waging a war on drug trafficking using the aircraft carriers, destroyers, submarines and ballistic missiles of the US Fourth Fleet, and with the latest and intermediate generation weapons located in Colombia, is really absurd and deceitful. In the opinion of Rick Rozoff, the coup in Honduras, far from being an anachronism, represents a precedent for more coups in the future. In the same way that Afghanistan has become the main war front during the last year (including the 7 months of Obama´s administration), there seem to be plans for military aggression in Latin America; a region which has been relatively far from these conflicts during the last 10 years 16. The geopolitical reason behind this is the eventual extension of the war in the vicinity of China and Russia. In the event of such a war, the US needs a greater security in the supply of oil and other natural resources. In times of war, the navigation and transportation of goods in the oceans is not safe. In other words, the US needs to make sure that they
can control the nearest natural resources; those of Latin America. But, in the midst of the crisis, the Latin American subcontinent began to define more and more its self-determination with regard to these resources. The US wanted to halt this trend; therefore, the coup in the weakest link of the continent took place. In the opinion of James Petras, with the coup, the US is betting on the rollback strategy; that is, forcing elected governments, which are critical of the US, to roll back in order to impose pliable client governments. This strategy is implemented through a multifaceted policy of open military intervention, concealed operations through the “civil society” and an apparently benign diplomatic rhetoric with a subtle persuasive power, depending greatly on mass media propaganda. They thought that the rollback in Central America would serve as a warning to other governments with independent ideas in the region. Today, the centrist, left-wing governments, and even the right-wing elected governments oppose the military coups in all Latin America; and more than that, they reject coups in any part of the world as they consider them a potential threat for their future. From the diplomatic and political point of view the rollback strategy promoted by the US has had a high cost 17. In the opinion of the specialist Ana Esther Ceceña, The attack to Sucumbíos in March 2008 indicated the beginning of a new cycle within the U.S. strategy for the control of its vital space: the American continent. The coup in Honduras… is the first operation for the relaunch of such an escalation. Colombia… grants immunity to the American troops… and allows the installation of 7 new bases, which add to the 6 bases 17
16 Rick Rozoff, “US Escalates War Plans in Latin America”.
42
James Petras, “Obama’s Rollback Strategy: Honduras, Iran, Pakistan, Afghanistan and the Boomerang Effect”. 43
already acknowledged by the Pentagon. Honduras meant… a smoke curtain… (for) the setting up of a regional base for the so-called preventive war in America, just next to the Panama Canal, and… the Amazon basin … A project for the recolonization and disciplining of the whole continent is under way. With the economic security of being next to the oil strip of the Orinoco, equivalent to the oilfields of Saudi Arabia,.. the biggest oilfields in the planet,… 500 years later, the inhabitants of Latin America have to keep combating the plundering, the colonization and the impositions... if we do not stop the militarization and the settling of the US troops in Colombia, the struggles of the last 500 years would have been in vain 18.
In Heinz Dietrich’s opinion (14 of August of 2009), …with the military attack to Ecuador, the reactivation of the Fourth Fleet, the military coup in Honduras, and the iraqization of Colombia (military bases), Washington has reintroduced, with the use of force, the Monroe Doctrine in Latin America.
The military coup backed by the hawks in the US, has confirmed the political and diplomatic isolation of the US in the hemisphere. In fact, it has shown the growing solidarity among the Latin American people and the rest of the world in the struggle against interventionism. It will be difficult that any important region, country or alliance would follow the US in the military occupation of a small periphery country. The fact that the US, through its Secretary of State, had refused to acknowledge the military coup as a “coup” 18
Ana Esther Ceceña, UNAM, México, in Alainet No 447, August 2009. 44
(in order to maintain the “military aid” to the regime in Honduras), has strengthened the conviction among all Latin American countries that Washington is trying to divide them and return to the “old times” of proAmerican military regimes.
5.1. The UNASUR Summit and US bases in Colombia Due to it importance, we refer to the UNASUR Summit held on August 28, 2009, when 12 SouthAmerican countries condemned in different ways or expressed their disagreement with the installation or occupation of US military bases in Colombia. The rejection has been unanimous among all Latin American countries. This military agreement, along with the deployment of the Fourth Fleet and the coup in Honduras, is seen by many people as a strategic attack by the United States on Latin America, within the framework of their global strategy of domination. The record of invasions, coups and interventions by this country is alive in the memory of this continent that struggles for developing a more endogenous project with a more participative democracy. Nobody doubts that this agreement with Colombia may lead to a reversal of democratic advances and to take military control of the natural resources in Latin America, through the reimposition of military dictatorships. Very few people wish that the future of Latin America be the repetition of 20th century socialism with Warsaw Pact style, but they do not wish it either to be the continuation of 20th century capitalism and its bloody past. Both experiences have failed and it is meaningless to repeat them. Nobody fails to recognize the mistakes and even excesses that surely exist and will exist in 45
the search for a better and more just society, but, there are increasingly more and more people, movements and countries that see it linked to the construction of peace, integral democracy, tolerance, mutual respect, freedom and harmony between human beings and the environment, taking into account the geophysical capacities of the planet. We have the experience of a world that during the 20th century was saturated with despotism, exploitation, and authoritarianisms from the right, the center or the left, in the midst of the most destructive wars in history. Nobody wishes to go back to these scenarios. We have pointed out the existence of a global strategy of the elites in the US, which not finding a way out of the crisis, turn to the military ground in order to take possession and control of all the Earth’s natural resources. The continued practices of overconsumption in the rich countries create an unsustainable situation, according to the biophysical potential of the planet. We have indicated Eurasia as a first possible war scenario and consequently Latin America, as this subcontinent is the strategic reserve of the US. For this reason, it is necessary to put an end to local democratic experiences and to install US military bases in the region. This is the first great danger and it has already begun to materialize in Honduras. Besides the above-mentioned danger, there is also the threat that in the eventuality of an extended world war, any country in Latin America that shelters US military bases and their troops and equipment, may become automatically “a target for attack”, even with nuclear weapons or intercontinental ballistic missiles launched by the enemies of the US. In those bases planned for Colombia, French Guiana, Curacao, and Recife in Brazil, the support and supply of the US strategic nuclear bomber fleet bound for South America 46
and Africa has been projected. This is inferred from the accusation made by the Venezuelan president at the UNASUR Summit, based on the so called “White Paper of the Air Mobility Command of the US”. Therefore, it is not a matter of “fighting against drug trafficking” – expressed other heads of state. It would be only a pretext for a geopolitical project with different military purposes framed within a global military strategy. It is obvious that no people or responsible political force in the continent, independently of its ideology, would like to have a military dictatorship or to run the future risk of a devastating retaliatory nuclear attack on any US base in Latin America in times of war. This is the reason for the increasingly radical Latin American rejection of the military bases and intervention by the US. Although the Colombian president used the argument of “sovereignty” to achieve this agreement between his country and the US, this is in fact an issue of “Vital Continental Security”, which is above the sovereignty of any particular country. The Argentinean president argued that “sovereignty must be the sovereignty of all, and there may not be a sovereignty that is imposed on the rest”. All the other heads of state were emphatic in their rejection of the installation of such bases in Colombia. The Final Declaration of the Summit states something that may be the future position of all Latin America and the Caribbean: South America must be a peaceful zone where every country abstains from resorting to threats or the use of force against the territorial integrity of another member state of UNASUR.
It reaffirms that 47
…the presence of foreign military forces may not threaten, with their means and resources intended for their own goals, the sovereignty and integrity of any South American nation, and therefore the peace and security of the region.
It also “instructs the South American Council of Defense to analyze (in the first half of September) the text on ‘South American Strategy, White Paper, Air Mobility Command’ (AMC) (of the US)”… with the aim of “considering courses of action to follow”. The declaration of Latin America and the Caribbean – beyond UNASUR – as a peaceful and neutral zone in times of war would also mark out the “disconnection” of the region from the military adventures of the US. The offensive launched by the US pushes the countries of the region into an arms race that would make them acquire modern conventional weapons or even dissuasive nuclear capacities for their defense, something that will only benefit the businesses of the Industrial Military Complex. On previous occasions we have pointed out that this would be a very serious mistake which Latin America should avoid. We do not want Latin America to be again the victim of despotism, nor to become – due to the Pentagon – the scenario of the greatest Viet Nam in history, nor a war scenario with nuclear weapons. For the same reason, the people of Colombia and of the rest of the continent have the responsibility to impede that the Colombian parliament ratifies the treaty or agreement related to military bases with the US. This is also valid for the rest of the countries. The US has shown great skill in escalating conflicts, but very little ability to decelerate them; and in this need it is important to collaborate with its people. 48
6. The necessary integration of Latin America and the Caribbean in order to survive Since the military coup in Honduras and the ongoing agreement on new US bases in Colombia, integration projects like ALBA, UNASUR, and the new South-South integration beyond the continent, do not only represent an economic opportunity but are also increasingly a political necessity for survival in view of the threat posed by current US policy. In the face of the crisis, the emerging larger economies like China or Brazil have seen the opportunity to obtain greater benefits and leadership within a new world order that could emerge from it. However, the lesson from Honduras and the military occupation of Colombia must be a serious warning. Brazil, as member of the new Latin American integration project with the greatest political and economic influence on the international level, must think carefully, in view of an increasing threat of intervention at the regional level or of a war at the world level, whether they will play the game led by the US or they will contribute to the consolidation of a single Latin American political project in favor of their own survival. Today, the motto “every man for himself” will not save any Latin American nation, not even Brazil. Today, more than ever before, it is urgent for a social struggle that appeals to internationalism, solidarity and integration of the peoples of the entire Latin American subcontinent and beyond, as the only possible way of defense in view of a possible war.
7. The danger of neo-fascism With the crisis of neoliberalism, formal representative democracies become worn out, and in consequence 49
there is more space for the social struggle in favor of more participative democracies, which may allow for reconnection with the people’s interests. If this does not happen, then the danger of a neo-fascist advance is more likely to exist. The former tendency has prevailed in Latin America at present, whereas the latter is developing more and more in the North, mostly in the US. Neo-fascism in Latin America does not seem to be an endogenous process, but gets more space when foreign interventions occur. Sarah Robinson describes the five stages for a nation to end up with neo-fascism, and she points out that the US is already in the third one. In the first stage, a racist, sexist, xenophobic and exclusive movement emerges. It is aimed at achieving a nationalistic renewal that would restore the lost national pride. In the second phase, the fascist movements are consolidated and join political parties showing themselves on the political arena. People on the Right refuse to accept those on the Left as legitimate rulers. The conservative elite work together with the fascists and accept them as a task force to take over the US government even with the use of force. This is the stage at which the US government is at present, and this view makes us understand better the coup that took place in Honduras. The third stage is a transition toward a larger scale fascism with popular support, demanding an iron fist in order to get out of the deep crisis. At present, we are close to this stage. Nowadays, there is no need of great orators in crowded stadiums or public squares full of people in order to manipulate the masses in favor of extremist adventures. Today the mass media are in charge of this demagogic task. We are now at this stage and there is still a chance to stop it, Sarah Robinson points out. After this moment, however, a police state is usually in power, and this may degenerate into a 50
systematic genocide led from the top political power. From this time on, we face the biggest threat of a major war 19.
7.1. A civilizing change or barbarism; a history that may repeat itself For years the productive economy of the US has been stagnant and the weight of manufactures in the composition of its GDP is increasingly less. Even worse, there is a great deficit in its industrial classification, because almost all the supplies of the American end products are foreign. The US has been deindustrialized, and this process continues. An analogous situation takes place in the European Union and even in some sectors in Japan. In the textile industry, automobile production and informatics, their companies are not competitive anymore. The US does not have sufficiently advanced technologies in the automotive industry – nor in many other productive branches – in order to compete with Japan or Germany, and neither does it have a sufficiently cheap manual labor force to compete with the emerging economies. This situation has been further aggravated with the increase in oil prices. At present, after an initial wave of the biofuels between 2005 and 2007, the real business of this sector is finished. Nowadays, the old core countries have bet on the manufacture of electric automobiles, not so much to generate new jobs, nor for achieving a “green recovery” – as the politicians claim – but expecting a new momentum of growth,
19
See, “Is the U.S. on the Brink of Fascism?”. By Sara Robinson, Campaign for America’s Future. Posted August 7, 2009. 51
and therefore, betting on a new stage of sustainable accumulation. This option has not much future. The crisis is not only economic but also ecological. The global economy represents a large pyramid of activities and operations that demand energy and whose supply has gone to its limit with the non-renewable sources of energy (coal, gas and oil, above all). The alternatives and renewable energy sources together are not enough to replace the non-renewable energy sources. This means, not in the very long run, the unsustainability of the Western way of consumption. Consuming less would be the logical alternative. However, it demands a civilizing change. A temporary solution, which has already been discussed in some first world elite circles since Robert McNamara headed the World Bank, is the reduction of the world population. Nuclear weapons of mass destruction, but above all biological weapons, have been considered and developed – today, even pharmaceutical ones. These are capable of triggering the outbreak of pandemics. In this context, it is alarming the announcement (months in advance) that a new fatal epidemic is expected in the northern autumn of 2009. Famine, as a weapon of mass destruction, must also be taken into account. It could reduce a third of the world population at least. A pandemic, together with famine in times of a deep crisis, would have particularly lethal effects in those countries where hunger is common. According to the United Nations, at least 1.02 billion human beings already live in extreme poverty; a figure that will rise with the crisis and the resulting depression. A new pandemic will affect mainly the most vulnerable people in the world. More than a billion people would be at direct risk in the event of such a pandemic. In view of the falling geophysical capacity of the planet, the reduction of the population in the 52
periphery countries is not effective at all because the overexploitation of the earth systems due to the waste takes place in the rich societies. Fifteen percent of the world population uses 80 percent of the natural resources, which are extracted with the corresponding environmental contamination. Then, the replacement of Hitler’s gas chambers by the mass murder of one third of the world population using famine, pandemics or war will not solve the overexploitation of the planet. The only feasible way out is a decreasing economy. It is the only solution to save the life of humankind and nature, but it implies a death sentence for capital. Without sustainable economic growth there is no chance of a sustained accumulation. Therefore, according to the interests of capital, it is necessary to postpone this critical situation as much as possible, although a progressive worsening of the earth’s bio-capacity (the last external limit of capital) takes place. If the emergent countries had the most advanced technology, which is just a matter of time, the competitive capacity of the West in general and that of the US in particular would come to an end. In order to postpone this situation, the imperial policy is to obstruct a broader access to technological advances. In consequence, the Western nations, mainly the US, are trying to keep the intellectual property rights as a real monopoly of knowledge. This monopoly extends to the control of food and its genetic manipulation with the use of transgenic seeds which are controlled by the transnationals of the North. The Western nations in general, and particularly the US, while trying to live unproductively from this income, embark on a wrongly called productive project of “green recovery”, mainly in the automotive industry. This transition, however, is very expensive and a long-term matter. The project is not feasible without a very expensive state intervention. Nevertheless, 53
the American state is already very much indebted. Currently, this industrial transition is being financed with the massive issuing of dollars without a backup. And where is the limit? We ask again.
7.2. The war for natural resources and decadence Meanwhile, the economic growth of the emerging countries is still based on the use of oil and natural resources. As those nations grow, the demand of these commodities tends to rise nonstop. The result is a progressive increase in the prices of these resources. The periphery countries are usually net exporters of natural resources. The core countries, however, with some exceptions as in the case of Canada and Australia, are net importers of natural resources. If the South devotes more natural resources to their domestic development, there will be fewer resources for the West. With this, the economic growth of the real economy in the West will be increasingly difficult. Hence the empire’s urgent effort to snatch the natural resources of the so called third world countries. In view of this situation the Latin American countries must be organized to defend their common wealth. War for the natural resources in the Middle East, Africa and now also in Latin America will intensify more and more. Maybe this course of events could postpone the decadence of the West, but it could not avoid it. There is no chance of sustaining indefinitely the demand of natural resources because their supply is increasingly limited. The peak oil is a fact nowadays, as well as global warming. The supply falls short of demand even in the midst of the current crisis. Although the price of oil plunged as a result of a speculative tide, 54
it doubled again after some months. The future trend will be a smaller proportion of the natural resources for the core countries. As a result, capitalism will wane first in the West. Such a situation will compel humankind to search for a new paradigm. Although we have not reached that point yet, we are not very far from it either 20. Chart 10 Evolution of the prices of commodities, August 2008-July 2009 (Lead, Zinc, Nickel, Copper and Oil)
Source: Mary Anne & Pamela Aden, “The commodity world is growing in strength”, www.gold-eagle.com
At present, Russia and China are discussing the installation of huge gas pipelines from Siberia to China, passing through Xingjian. It will promote a bigger integration of both nations. This unity of Russia 20
Andrew McKillop, “Energy Transition the Long Revolution”, in www.financialsense.com 55
and China involving the Central Asia nations (many of them former Soviet Republics) is the greatest fear of the US. These two emergent nations are at the same time two of three biggest creditors of the US, and the second and third military powers after the US. The Siberian subsoil contains proven reserves of natural gas amounting to 135 quintillion cubic feet – the natural gas just from Kovykta could meet the needs of China for the next ten years. More than that, during the current economic crisis Kazakhstan received from China a credit for 5 billion dollars for the oil and gas sector. The oil pipeline Atasu-Alashankou and the gas pipeline between China and Central Asia are part of a policy for the integration of the Central Asia nations to the Chinese economy. Although Washington will never admit this, the wars of Iraq and Afghanistan, the threats of war on Iran and the recent destabilization in Xingjian represent, as a whole, a single policy to try to avoid what is unavoidable: the progressive integration of the Shanghai Cooperation Organization 21. Besides that, if we consider the relative dependence of the European Union on Russian natural gas, then, in the event of a major international conflict the main ally of the US would be relatively neutralized. The Russo-Georgian war was more of the same; 40 percent of the gas Europe needs goes through Russia. This is why Europe embarked on this adventure supporting the Georgian attack on the pro-Russian territories of South Ossetia and Abkhazia in Georgia. With this they would secure the transportation of oil and gas from the Caspian Sea to Europe. Russia made it clear that it would not allow a further approach 21
F. William Engdahl, “Washington is Playing a Deeper Game with China”, in Global Research. 56
Chart 11 Demand and Supply of Oil 1987-2009
Chart 12 Evolution of the Oil Supply and its Projection 2002-2012
Source (of both charts): Puru Saxena, “Peak Oil-Supply data”, www.gold-eagle.com 57
of NATO to its Southern border, and crushed the Georgian army aiming a gun at the heart of Europe. It was a moment of great tension which could have led to a nuclear conflict in Europe. The US would remain comfortably watching from the other side of the Atlantic while the old continent is destroyed. The architect of the theory of using Europe (with NATO) to encircle Russia with an increasingly tighter siege has been Zbigniew Brezinski, advisor of the Democrats and of president Obama.
7.3. The urgent need of a struggle against the growing threat of a great war The great depression of the 21st century represents a favorable environment for the outbreak of large scale war that could lead to a worldwide tragedy. The US and NATO are making their military arrangements within Ukraine; a country that has 2.300 kilometers of common border with Russia. Other military forces are being developed in the Czech Republic, Poland, the Baltic States, Georgia and Azerbaijan. At the same time they are advancing by sea in two directions: in the north through the Baltic Sea and the Barents Sea, in the south through the Black Sea and the Caspian Sea. The siege threatening Russia is advancing considerably. In the end, the role assigned to Canada seems to be serving as the spearhead for a possible confrontation with Russia in the Artic 22. In Rozoff’s opinion, the North Pole is perhaps the most strategic area for launching ballistic missiles because it allows submarines to reach a given place 22
Rick Rozoff, “Arctic: Canada Leads NATO Confrontation with Russia”. 58
without being detected, and also reduces the necessary time to reach the enemy target. Russia is the only nation (after the US) 23 that has a full nuclear triad; that is: strategic bombers, land-based intercontinental ballistic missiles and submarine-launched ballistic missiles. It means they have the capacity of defense and immediate retaliation in face of a Nuclear First Strike. The aim of having a trifurcated nuclear capability is to significantly reduce the possibility that an enemy could destroy all of a country’s nuclear forces in a nuclear first strike. This retaliation capacity is a credible threat in case of a “nuclear first strike”, and represents the best defense a nation can have in case of a nuclear threat. In the Artic Circle, Russia is assembling its last defense line to face such a threat 24. A large scale international war would only worsen the ecological and economic crises around the world. The human tragedy it entails will demand the solidarity and the struggle of all the peoples against the empire in order to set a limit to the irrationality of capital. The Great Depression of the 21st century alone will challenge the current paradigm; so we can imagine the effect of the outbreak of an expanded war on an international scale. Just as John Maynard Keynes proposed as the “demurrage economy” during the prolonged negative growth of the Great Depression of the 20th century, the urgent need of establishing an economy with negative growth to promote a good life for the majority of the people will be discussed tomorrow, with much more reason and not only in the academic circles but as an international demand of the peoples of the world in struggle. In other words, we are facing a historic moment: either the struggle for a civilizing change 23 Some sources also include China. 24 Rozoff, op cit.
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succeeds or we face barbarism. However, history tells us that the first possibility usually takes place only after the beginning of the second one, that is, in the midst of the second one. It will take a lot of struggle, solidarity and international unity to reverse this logic. UNASUR has taken an important step, but many others will be needed.
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