With 99 percent of the votes counted Wednesday morning in the Israeli election, Tzipi Livni’s centrist Kadima Party was in first place with twenty-eight seats, while Benjamin Netanyahu’s right-wing Likud Party was a close second with twenty-seven seats. They are both claiming victory but would need coalition partners to gather the sixty-one seats needed to form a government in the 120-seat Knesset. For analysis of the election results, we are joined by two guests. Dr. Mustafa Barghouti is an independent Palestinian lawmaker and democracy activist. He joins us from Washington, D.C. And on the line from Beersheba, Israel is Neve Gordon, a professor of politics and government at Ben-Gurion University and the author of Israel’s Occupation.
Guests:
Mustafa Barghouti, independent Palestinian lawmaker and democracy activist.
Neve Gordon, a professor of politics and government at Ben-Gurion University and the author of Israel’s Occupation.
AMY GOODMAN: The leaders of Israel’s two main parties have both claimed victory in an early general election. With 99 percent of the votes counted Wednesday morning, Tzipi Livni’s centrist Kadima Party was in first place with twenty-eight seats, while Benjamin Netanyahu’s right-wing Likud Party was a close second with twenty-seven seats. Both need coalition partners to gather the sixty-one seats needed to form a government in the 120-seat Israeli Knesset.
This puts the ultra-nationalist Yisrael Beiteinu party led by Avigdor Lieberman in a key position, after finishing third with fifteen seats. Meanwhile, the Labor Party, led by Defense Minister Ehud Barak, finished in an unprecedented fourth place.
The election has been dominated by security issues, following Israel’s three-week assault on the Gaza Strip. Final results will come within days, when election officials finish counting soldiers’ votes and other absentee ballots.
Early Wednesday, Tzipi Livni appealed to BB Netanyahu to join a national unity government that she would lead.
TZIPI LIVNI: [translated] In this evening, I’m turning to Benjamin Netanyahu. Before the election date was scheduled, I offered you to join a unity government under my leadership to handle the same challenges that are facing the state of Israel. You refused then. You refused and said that the people will decide, that the people should determine. The people have decided today: Kadima.
AMY GOODMAN: The Israeli newspaper Haaretz reports Netanyahu has a better chance of forging a coalition because of gains by right-wing parties, who are his natural allies. Netanyahu claimed victory Wednesday morning, saying a Likud-led coalition would lead Israel.
BENJAMIN NETANYAHU: [translated] I will turn firstly to our natural partners in the nationalist camp to form a coalition government, as I promised. I’ve spoken with the parties’ heads already this evening, and we scheduled to begin discussions tomorrow morning about founding a new government in the state of Israel.
AMY GOODMAN: Once the final results are in, President Shimon Peres will consult with party leaders to determine who among them stands the best chance of forming a coalition government. He does not have to choose the leader of the largest party. The chosen party leader then has up to forty-two days to form a coalition. If the attempt fails, Peres can ask another leader to assume the task.
Elections were called early, after Livni failed to form a new government following Prime Minister Ehud Olmert’s decision to step down last year amidst a corruption probe against him. Olmert will stay on as caretaker prime minister until a new government is formed.
For analysis on the election results, we’re joined by two guests. Dr. Mustafa Barghouti is an independent Palestinian lawmaker and democracy activist. He happens to be in the United States now. He is joining us from Washington, D.C. We’re also joined on the telephone from Beersheba, Israel, Neve Gordon, professor of politics and government at Ben-Gurion University and the author of Israel’s Occupation.
We welcome you both to Democracy Now! Let us start in Israel first. Professor Gordon, what is your response to what is happening right now?
NEVE GORDON: I think the Israeli political system has been for several years in a crisis mode, and we’ve seen that none of the governments in the past, I think, decade or even more, lasted their full term, because there’s a crisis of representation and so forth.
And when a country is in a crisis, there can be change in basically two directions. There can be a renewal of politics for a more moral, a more accepting politics. And there can be another way, which is more a xenophobic, neo-fascist tendency, is a turn to the right, a blaming of the other for all your faults.
I think what we see in these elections is that the whole political map has turned even further right than it was. We have to remember that Kadima, which basically won the elections by one point, most of its members were Likud members. And so, we have the Likud, and then we have the Likud II, and then we have Yisrael Beiteinu. Together, they form probably close to 80 percent of the electorate. And so, we have an extremely right-wing Knesset now. Some of the parties are with actually neo-fascist tendencies.
And I think the implications internally will be detrimental and even devastating. And I think the implications with Israel’s relations with its neighbors, and particularly the Palestinians, are going to be extremely harsh. And the likelihood that the Israeli government will lead any kind of peace initiative or agree to any kind of peace initiative is slim without external pressure.
AMY GOODMAN: Dr. Mustafa Barghouti, your first response?
DR. MUSTAFA BARGHOUTI: I totally agree with what Neve has just said. This is a very serious shift, but not only to the right; this is a shift to racism. In my opinion, in these elections, Israel has completed the transformation into an apartheid state with an apartheid racist political system.
And this is the outcome of two processes. One is the implantation of fear and hatred in the Israeli society by the Israeli establishment. The army is a big part of that establishment, and the military-industrial complex is a second big part. And the second factor has been the complicity of the international community. The United States administration, previous administration, the European governments, the whole official international community has been complicit with Israeli crimes, war crimes in Gaza and in other places, and silent about forty-one years of occupation. So, basically, people in Israel think they can do what they want. If they violate human rights in such a terrible manner and nobody is objecting, I think they think they can move forward towards racism and an apartheid system, and that is unfortunately the case today.
In addition to what was said about practically the Likud racist approach dominating the whole scene, with Livni and Netanyahu—and here I would agree that there aren’t much differences between the two. Maybe you can say that both of them are racist. Only, Netanyahu is a blunt racist, and Livni is a racist with some makeup. But they both represent the same.
Barak, on the other hand, who was supposed to represent what you call left-centrist party, shocked everybody, in my opinion, by being even more extreme and more racist. When he described Lieberman, who’s clearly a neo-fascist and a very dangerous element, he said—he accused him not of being a fascist, not of being an extreme, but he criticized him for not being tough enough. He said, “This is a lamb in hawk’s clothing. And when did he ever shoot anybody by himself?” So Barak was competing with Lieberman by saying, “I am the man who shot Palestinians. I am the man who executed Palestinians with my own hands.”
And that gives you a very, very simple picture of how tragic the situation is in Israel today. And it puts us all, as Palestinians, in front of a very clear task: we have to struggle against this apartheid system, we have to break this apartheid system. But the challenge now is on the side of the whole international community, which has been either silent or complicit or trying to avoid the issue, when it is very clear.
AMY GOODMAN: We’re going to go to break and then come back to this discussion. I want to ask you, Dr. Mustafa Barghouti, as you sit not far from the Capitol right now in Washington, D.C., if you are meeting with US government officials. And, Neve Gordon, I want to ask you about the rise of Avigdor Lieberman and exact what he represents, for example, calling for loyalty oaths for Israeli Arabs to take if they want to stay in Israel. This is Democracy Now! We’ll be back in a minute.
[break]
AMY GOODMAN: As we talk about the Israeli elections, this is Avigdor Lieberman, leader of the extreme right-wing party Yisrael Beiteinu, which means “Israel, Our Home,” speaking last week.
AVIGDOR LIEBERMAN: [translated] Israel is under combined terror attack from inside and outside the country. Internal terror is more dangerous than the external one, and we should understand that and react accordingly.
AMY GOODMAN: This is an excerpt of a commercial from the Yisrael Beiteinu party.
YISRAEL BEITEINU AD: [translated] Ahmad Tibi said that Hezbollah captures soldiers because of the Israeli foolishness. His salary is 35,000 shekels. Shame and disgrace. No loyalty, no citizenship.
AMY GOODMAN: And this is Hanin Zoubi, the first Palestinian Israeli woman to stand for election. She spoke out against the politics represented by Avigdor Lieberman on Tuesday. Zoubi is running on the Balad ticket, an Arab party in Israel.
HANIN ZOUBI: [translated] Indeed, Lieberman is a natural result of the racist policies in this country for sixty years. Lieberman didn’t bring anything new. All the parties demand loyalty from the Arabs. The right, what’s called the center, what’s called by mistake left or center-left, they all demand loyalty from the Arabs. The new thing by Lieberman is only giving the punishment. The punishment for no loyalty is pulling the citizenship.
AMY GOODMAN: I want to go now to Neve Gordon, who’s head of the Politics Department at Ben-Gurion University in the Negev. He’s author of the book Israel’s Occupation. In fact, his home was under fire from the Hamas rockets, his kids in a bomb shelter. Professor Gordon, your response to Avigdor Lieberman? His rise, were you surprised by it? And exactly what are the policies he represents?
NEVE GORDON: Let me begin by noting that this morning I taught my political theory class, and we were teaching John Stuart Mill’s On Liberty. And what I think John Stuart Mill would say is that Lieberman is more dangerous to Israel than, say, Hamas, because Lieberman can destroy the Israeli political realm more easily than Hamas, because Lieberman does not want to allow any view that is other than his own, any criticism of the government, to enter the Israeli political realm, and that is an anti-democratic and an anti-political message that he’s giving the Israeli citizenship. So I think Lieberman is extremely dangerous. As I mentioned before, I think his party has strong neo-fascist tendencies, and I think that their rise is a manifestation of the direction Israel is going. And I would say it’s an anti-Israeli stance.
I do partially agree with the representative from Balad that we cannot understand this as an island, as something totally new, but rather something that has been building up. What we see in—before the elections, that in all the high schools in Israel, Lieberman was the leading party in [inaudible] votes. So we see that the younger generation is supporting these neo-fascist tendencies. And we cannot blame the schools from it, but we have to blame the whole atmosphere in Israel, which is indeed a racist atmosphere, an anti-Arab atmosphere, anti-Palestinian Arab atmosphere. And Lieberman, what he has learned to do well is to feed on the hatred and the fear of the Arabs, to use a xenophobic method. And this is extremely dangerous. And to tell you the truth, I fear for Israel. I fear for the citizenry in Israel. And I think we are in a watershed moment in Israeli politics.
AMY GOODMAN: But this issue of loyalty oaths, explain what that is.
NEVE GORDON: It’s unclear exactly what it is. And that’s part of its power, is the—it’s whoever is not loyal to the state, according to what Lieberman and his friends believe is loyal, their citizenship can be stripped. What people are saying is that he’s talking about Arabs that are supporting the Palestinian cause for a state and supporting maybe even Hezbollah. They’re not loyal, and therefore their citizenship should be stripped.
Now, history teaches us how these things go. You begin by stripping the loyalty of an Arab that supported the Hezbollah, and then you strip the citizenship of an Arab that supported the Palestinian Authority, and then you start stripping the citizens of certain lefty Jews, and that’s how things go.
So—and what is interesting about all of this is that Netanyahu, the leader of Likud, said that he supports the motion of stripping citizenship to those who are unloyal to the state. But he said the only—“My only problem with Lieberman’s proposal is that Lieberman doesn’t tell us exactly how to enforce it, and it’s very difficult to enforce.” So, conceptually, ideologically, it’s a much broader political spectrum that’s supporting this connection between loyalty and citizenship, and that is extremely dangerous, I think.
AMY GOODMAN: Dr. Mustafa Barghouti, you heard the interview with former President Jimmy Carter. Do you think a two-state solution is still possible in the aftermath of the assault on Gaza? And what is the extent of the settlements now in the West Bank?
DR. MUSTAFA BARGHOUTI: First of all, let me please comment a little bit about Lieberman. I think when he speaks about loyalty, he’s practically speaking about ethnic cleansing, to repeat some acts of ethnic cleansing that took place in Palestine in 1948. But it’s about getting rid of the Arabs who live in Israel and who have Israeli citizenship and who represent 20 percent of the population.
And more than that, when he speaks about loyalty, just to make it clear, it would be anybody who is against war, for instance, that is conducted by Israel, on Gaza or anywhere else, would be considered as an illoyal or unloyal citizen. Anybody who is not supporting occupation would become not loyal to Israel. This is why it’s very dangerous and risky. It is putting the oppressed, which are the Palestinians and the Arabs, who are oppressed from racism and discrimination, in a situation where either they approve of their own oppression by the Israeli government or they become disloyal to the Israeli government and then entitled to losing their citizenship. That is the risk, and that’s why it looks like a very clear neo-fascist approach.
Now, on the issue of settlements, I want to say that since 1967 there hasn’t been any period where there was a real freeze of settlement activities. On the contrary, they have been growing at a much faster rate, especially during the times of the so-called peace process. During Annapolis period, the rate at which settlement continued to expand was forty times more than before Annapolis. And now we are witnessing the creation of even new—whole new settlements. That was under Kadima. That was under the coalition of Labor and Kadima, Livni and Barak, and without Netanyahu. So you can imagine what would be the case.
In my opinion, we have reached a very critical moment, and that’s why these elections are of great importance, because the bringing in of racist tendency in Israel and this whole extreme coalition into the Israeli government, which would be the case, is happening exactly at a moment when we are about to lose the last opportunity of two-state solution, because of the growth of settlements, because of the fragmentation of the West Bank, because of the consolidation of a situation where Palestinians practically live now in bantustans and ghettos. And they’re in a situation where, after fifteen years of the creation of the Palestinian Authority, the only road open for it by Israel is to become only a security sub-agent for occupation and something like Vichy government in a bantustan entity. That is the risk. And that’s why this is dangerous, not only because it is against peace, but also it is like the last hit in the direction of killing the final or the last opportunity of two-day solution.
And this has been a subject that I’ve been discussing here with many people in the United States administration. At the Senate yesterday, I had a very, very good meeting with John Kerry, the head of the Senate Foreign Relations Committee. And I hope. I hope. The only thing that can stop this wave of extremism, this wave against peace, is only a strong United States stance. I don’t know if it will happen. But I can tell you, this is the time of challenge. If the United States does not immediately take steps to stop settlement expansion and if the United States does not immediately take steps to tell Israel enough is enough, I think the two-states option will be lost forever.
AMY GOODMAN: Do you feel, Dr. Mustafa Barghouti, as you come here to Washington—you’ve come here many times—that you’ve come into a new era, a new government? Do you think President Obama represents something different? And what are your thoughts on George Mitchell as his Middle East envoy?
DR. MUSTAFA BARGHOUTI: Absolutely. It is early to say still, because, you know, many appointments have not been filled yet, but so far, from what I have seen from the people I have met with, you can feel the breeze of change in Washington. You can feel it’s a totally different Washington from what we had, for instance, three months ago or two months ago.
And I would like to emphasize here that I believe that the last war on Gaza, plus other things that the Israeli government did jointly with the Bush administration, was nothing but an effort to create a preemptive strike against the Barack Obama administration. That was clear in the Resolution 1850, which tried to restrict the peace process only to the failing Annapolis process. And that was clear in the war and intensification of tension in the region, to prevent, in my opinion, peaceful dialogue with Syria and Iran that Barack Obama wants to have and to obstruct a fast and quick withdrawal from Iraq. But finally, that agreement that was concluded between Livni and Rice, in the very last hours before Rice left her position, was also a preemptive strike against this administration. But I tell you, I feel change. We looked forward to—
AMY GOODMAN: Explain what that—explain what that agreement was.
DR. MUSTAFA BARGHOUTI: That agreement was that the United States and NATO will be providing guarantees to Israel and provide protection to the occupying force, being Israel, and to prevent the resistance of the Palestinian people who are under occupation. So this is the first time in human history where, from one side, the people under occupation in West Bank are supposed, through this huge security apparatus, which is consuming 34 percent of our budget, depriving us from healthcare and education—the Palestinian Authority is supposed to provide protection to its occupiers, and the world community has to provide protection to the occupying force of Gaza, in this case the Israeli occupying force. That is the essence of the—
AMY GOODMAN: And George Mitchell?
DR. MUSTAFA BARGHOUTI: About Mitchell, I think that is a positive—I think the appointment of Senator Mitchell was perceived in the Middle East as a very positive step. I consider it very positive. I know Mitchell. We’ve met before. I know that his stand on settlements was very clear.
And now is the change. I think after coming to the area one or two—two or three times more, it will be clear whether he—that the only recommendation can—he should make immediately is to stop settlement activities. And if that does not happen, then, unfortunately, I think the whole area would go into a complete collapse of the peace process.
I think I feel here in Washington some new trends. First of all, there is more sensitivity to the issue of settlements. I think there is more inclination to accept our view, our point of view, that Palestinians are—should be allowed to have a national unity government, and thirdly, that we should allow Palestinian democracy to be revived. You know that Israel has slaughtered the democratic transformation in Palestine by arresting our members of parliament. And if Israel is entitled to democratic elections, then I think we, as Palestinians, are entitled to that.
I believe this is just a beginning. I hope we will go in the right direction. And maybe these results of elections in Israel will show everybody the time has come for a real change in the American policy. Every value that President Obama spoke about—values of respect of human rights, of democracy, of respect for Geneva Convention, avoiding torture, justice, equality, equal opportunity—every value of those are violated by Israel.
AMY GOODMAN: We’re going to have to leave it there. Dr. Mustafa Barghouti, independent Palestinian lawmaker and democracy activist, ran for president of the Palestinian Authority. Neve Gordon teaches politics, head of the Department of Politics and Government at Ben-Gurion University in the Negev. He is author of Israel’s Occupation.
RT On Air
Wednesday, 11 February 2009
Tuesday, 10 February 2009
Economists are the forgotten guilty men
Academics - and their mad theories - are to blame for the financial crisis. They too deserve to be hauled into the dock
Anatole Kaletsky
In the search for the “guilty men” responsible for the near-collapse of the global economy, one obvious group of scapegoats has escaped blame: the economists.
By “economists” I do not mean the talking heads (myself included) employed by the media and financial institutions to “explain”, usually after the event, why share prices or currencies have gone up or down. Nor do I mean the forecasters whose computers churn out scientific-looking numbers about what will happen to growth or inflation, but whose figures are revised so drastically whenever something “unexpected” happens - as it always does - that their forecasts are really nothing more than backward-looking descriptions of recent events.
What I mean by “economists” are the academic theorists who win Nobel prizes, or dream of winning them.
To see why these seemingly obscure academics deserve to be hauled out of their ivory towers and put in the dock of public opinion, consider why the bankers, politicians, accountants and regulators behaved in the egregious ways that they have. It may be true that all bankers are greedy, all politicians venal, all regulators blind and all accountants stupid. But such personal failings do not explain their behaviour in the past few years. After all, bankers do not like losing money and politicians do not like losing power. All these “guilty men” behaved as they did because they thought it made sense.
And why did these greedy bankers and stupid politicians hold beliefs that, in hindsight, seem so ludicrous and self-destructive? Why, for example, did they think it reasonable for a bank with just $1billion of capital to borrow an extra $99 billion and then buy $100 billion of speculative investments?
The answer was beautifully expressed two generations ago by John Maynard Keynes: “Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”
What the “madmen in authority” were hearing this time was the echo of a debate that consumed academic economists in the 1960s and 1970s - a debate won by the side whose theories turned out to be wrong. This debate was about the “efficiency” of markets and the “rationality” of the investors, consumers and businesses who inhabit them.
On those two dubious adjectives “rational” and “efficient” an enormous theoretical superstructure of models, regulatory prescriptions and computer simulations was built. And without this intellectual framework, the bankers and politicians would never have built the towers of bad debt and bad policy that have come crashing down.
I am not suggesting that the bankers who borrowed 50 times their capital to gamble on mortgage bonds or the regulators who allowed them to do it were consciously following academic theories. As Keynes said, these practical men had no interest in theories, which was why they left so many technical judgments to supposedly expert economists and consultants. What the practical men didn't realise, however, was that the risk management consultants who told them their banks would face no solvency problems and the economists who advised them that financial markets were always right were basing their analyses on two theories that were catastrophically wrong.
These two theories - called “rational expectations” and “the efficient market hypothesis” - essentially assume that the economy is a predictable, comprehensible machine with a defined set of instructions. That in itself may seem preposterous, but the theory goes farther and assumes that every “rational” participant in economic life knows these instructions and assumes that everyone else knows them too. To make matters worse, it is then applied to financial markets so that any economically inexplicable gyrations that do occur are explained a way as purely random, like tossing a coin. This leads to the conclusion that financial prices, although they may fluctuate randomly in the short term, are highly predictable in the long term, in the same way that the takings of a casino are.
Why did these implausible theories defeat more realistic ones? Partly it was the ideological mood of the 1980s and partly the ease with which rational expectations theories could be turned into mathematical models. By using these models, bankers and policymakers could be “blinded with science” - and even better from the standpoint of academic economists, their discipline could be elevated to the scientific status of physics.
The impact on both economics and public policy has been dire. The obvious effect has been the reckless behaviour of bankers and regulators, who were told by reputable-sounding economists that the bankruptcy of Lehman Brothers could be expected only once every billion years or so even though similarly “impossible” events - such as the collapse of the LTCM hedge fund and the 1987 stock market crash - had occurred twice in the previous 15 years.
Equally pernicious has been the stifling of intellectual debate among academic economists, who have spent the past 20 years arguing about the properties of their imaginary mathematical models rather than the behaviour of the real economy these models were supposed to describe.
The question, not only for professional economists but for all those in politics and business who have relied on these ideas, is what will happen to economics now that its fundamental assumptions and mathematical models have been totally discredited by events.
There seem to be only two options. Either the subject has to be abandoned as an academic discipline and becomes a mere appendage of the collection and analysis of statistics. Or it must undergo an intellectual revolution.
The prevailing academic orthodoxy has to be recognised as a blind alley. Economics will have to revert to a genuine competition between diverse intellectual approaches - such as behavioural psychology, sociology, control engineering and the mathematics of chaos theory.
So economics is on the brink of a paradigm shift. We are where astronomy was when Copernicus realised that the Earth revolves around the Sun. The academic economics of the past 20 years is comparable to pre-Copernican astronomy, with its mysterious heavenly cogs, epicycles and wheels within wheels or maybe even astrology, with its faith in star signs.
The academic Establishment will resist such a shift, as it always does. But luckily economists understand incentives. They should now be given a clear choice: embrace new ideas or return their public funding and Nobel prizes, alongside the bankers' bonuses they justified and inspired.
Anatole Kaletsky
In the search for the “guilty men” responsible for the near-collapse of the global economy, one obvious group of scapegoats has escaped blame: the economists.
By “economists” I do not mean the talking heads (myself included) employed by the media and financial institutions to “explain”, usually after the event, why share prices or currencies have gone up or down. Nor do I mean the forecasters whose computers churn out scientific-looking numbers about what will happen to growth or inflation, but whose figures are revised so drastically whenever something “unexpected” happens - as it always does - that their forecasts are really nothing more than backward-looking descriptions of recent events.
What I mean by “economists” are the academic theorists who win Nobel prizes, or dream of winning them.
To see why these seemingly obscure academics deserve to be hauled out of their ivory towers and put in the dock of public opinion, consider why the bankers, politicians, accountants and regulators behaved in the egregious ways that they have. It may be true that all bankers are greedy, all politicians venal, all regulators blind and all accountants stupid. But such personal failings do not explain their behaviour in the past few years. After all, bankers do not like losing money and politicians do not like losing power. All these “guilty men” behaved as they did because they thought it made sense.
And why did these greedy bankers and stupid politicians hold beliefs that, in hindsight, seem so ludicrous and self-destructive? Why, for example, did they think it reasonable for a bank with just $1billion of capital to borrow an extra $99 billion and then buy $100 billion of speculative investments?
The answer was beautifully expressed two generations ago by John Maynard Keynes: “Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”
What the “madmen in authority” were hearing this time was the echo of a debate that consumed academic economists in the 1960s and 1970s - a debate won by the side whose theories turned out to be wrong. This debate was about the “efficiency” of markets and the “rationality” of the investors, consumers and businesses who inhabit them.
On those two dubious adjectives “rational” and “efficient” an enormous theoretical superstructure of models, regulatory prescriptions and computer simulations was built. And without this intellectual framework, the bankers and politicians would never have built the towers of bad debt and bad policy that have come crashing down.
I am not suggesting that the bankers who borrowed 50 times their capital to gamble on mortgage bonds or the regulators who allowed them to do it were consciously following academic theories. As Keynes said, these practical men had no interest in theories, which was why they left so many technical judgments to supposedly expert economists and consultants. What the practical men didn't realise, however, was that the risk management consultants who told them their banks would face no solvency problems and the economists who advised them that financial markets were always right were basing their analyses on two theories that were catastrophically wrong.
These two theories - called “rational expectations” and “the efficient market hypothesis” - essentially assume that the economy is a predictable, comprehensible machine with a defined set of instructions. That in itself may seem preposterous, but the theory goes farther and assumes that every “rational” participant in economic life knows these instructions and assumes that everyone else knows them too. To make matters worse, it is then applied to financial markets so that any economically inexplicable gyrations that do occur are explained a way as purely random, like tossing a coin. This leads to the conclusion that financial prices, although they may fluctuate randomly in the short term, are highly predictable in the long term, in the same way that the takings of a casino are.
Why did these implausible theories defeat more realistic ones? Partly it was the ideological mood of the 1980s and partly the ease with which rational expectations theories could be turned into mathematical models. By using these models, bankers and policymakers could be “blinded with science” - and even better from the standpoint of academic economists, their discipline could be elevated to the scientific status of physics.
The impact on both economics and public policy has been dire. The obvious effect has been the reckless behaviour of bankers and regulators, who were told by reputable-sounding economists that the bankruptcy of Lehman Brothers could be expected only once every billion years or so even though similarly “impossible” events - such as the collapse of the LTCM hedge fund and the 1987 stock market crash - had occurred twice in the previous 15 years.
Equally pernicious has been the stifling of intellectual debate among academic economists, who have spent the past 20 years arguing about the properties of their imaginary mathematical models rather than the behaviour of the real economy these models were supposed to describe.
The question, not only for professional economists but for all those in politics and business who have relied on these ideas, is what will happen to economics now that its fundamental assumptions and mathematical models have been totally discredited by events.
There seem to be only two options. Either the subject has to be abandoned as an academic discipline and becomes a mere appendage of the collection and analysis of statistics. Or it must undergo an intellectual revolution.
The prevailing academic orthodoxy has to be recognised as a blind alley. Economics will have to revert to a genuine competition between diverse intellectual approaches - such as behavioural psychology, sociology, control engineering and the mathematics of chaos theory.
So economics is on the brink of a paradigm shift. We are where astronomy was when Copernicus realised that the Earth revolves around the Sun. The academic economics of the past 20 years is comparable to pre-Copernican astronomy, with its mysterious heavenly cogs, epicycles and wheels within wheels or maybe even astrology, with its faith in star signs.
The academic Establishment will resist such a shift, as it always does. But luckily economists understand incentives. They should now be given a clear choice: embrace new ideas or return their public funding and Nobel prizes, alongside the bankers' bonuses they justified and inspired.
Chomsky: Understanding the Crisis — Markets, the State and Hypocrisy
Noam Chomsky is a noted linguist, author, and foreign policy expert. Sameer Dossani interviewed him about the global economic crisis and its roots.
SAMEER DOSSANI: In any first year economics class, we are taught that markets have their ups and downs, so the current recession is perhaps nothing out of the ordinary. But this particular downturn is interesting for two reasons: First, market deregulation in the 1980s and 1990s made the boom periods artificially high, so the bust period will be deeper than it would otherwise. Secondly, despite an economy that's boomed since 1980, the majority of working class U.S. residents have seen their incomes stagnate — while the rich have done well most of the country hasn't moved forward at all. Given the situation, my guess is that economic planners are likely to go back to some form of Keynesianism, perhaps not unlike the Bretton Woods system that was in place from 1948-1971. What are your thoughts?
NOAM CHOMSKY: Well I basically agree with your picture. In my view, the breakdown of the Bretton Woods system in the early 1970s is probably the major international event since 1945, much more significant in its implications than the collapse of the Soviet Union.
From roughly 1950 until the early 1970s there was a period of unprecedented economic growth and egalitarian economic growth. So the lowest quintile did as well — in fact they even did a little bit better — than the highest quintile. It was also a period of some limited but real form of benefits for the population. And in fact social indicators, measurements of the health of society, they very closely tracked growth. As growth went up social indicators went up, as you'd expect. Many economists called it the golden age of modern capitalism — they should call it state capitalism because government spending was a major engine of growth and development.
In the mid 1970s that changed. Bretton Woods restrictions on finance were dismantled, finance was freed, speculation boomed, huge amounts of capital started going into speculation against currencies and other paper manipulations, and the entire economy became financialized. The power of the economy shifted to the financial institutions, away from manufacturing. And since then, the majority of the population has had a very tough time; in fact it may be a unique period in American history. There's no other period where real wages — wages adjusted for inflation — have more or less stagnated for so long for a majority of the population and where living standards have stagnated or declined. If you look at social indicators, they track growth pretty closely until 1975, and at that point they started to decline, so much so that now we're pretty much back to the level of 1960. There was growth, but it was highly inegalitarian — it went into a very small number of pockets. There have been brief periods in which this shifted, so during the tech bubble, which was a bubble in the late Clinton years, wages improved and unemployment went down, but these are slight deviations in a steady tendency of stagnation and decline for the majority of the population.
Financial crises have increased during this period, as predicted by a number of international economists. Once financial markets were freed up, there was expected to be an increase in financial crises, and that's happened. This crisis happens to be exploding in the rich countries, so people are talking about it, but it's been happening regularly around the world — some of them very serious — and not only are they increasing in frequency but they're getting deeper. And it's been predicted and discussed and there are good reasons for it.
About 10 years ago there was an important book called Global Finance at Risk, by two well-known economists John Eatwell and Lance Taylor. In it they refer to the well-known fact that there are basic inefficiencies intrinsic to markets. In the case of financial markets, they under-price risk. They don't count in systemic risk — general social costs. So for example if you sell me a car, you and I may make a good bargain, but we don't count in the costs to the society — pollution, congestion and so on. In financial markets, this means that risks are under-priced, so there are more risks taken than would happen in an efficient system. And that of course leads to crashes. If you had adequate regulation, you could control and prevent market inefficiencies. If you deregulate, you're going to maximize market inefficiency.
This is pretty elementary economics. They happen to discuss it in this book; others have discussed it too. And that's what's happening. Risks were under-priced, therefore more risks were taken than should have been, and sooner or later it was going to crash. Nobody predicted exactly when, and the depth of the crash is a little surprising. That's in part because of the creation of exotic financial instruments which were deregulated, meaning that nobody really knew who owed what to whom. It was all split up in crazy ways. So the depth of the crisis is pretty severe — we're not to the bottom yet — and the architects of this are the people who are now designing Obama's economic policies.
Dean Baker, one of the few economists who saw what was coming all along, pointed out that it's almost like appointing Osama bin Laden to run the so-called war on terror. Robert Rubin and Lawrence Summers, Clinton's treasury secretaries, are among the main architects of the crisis. Summers intervened strongly to prevent any regulation of derivatives and other exotic instruments. Rubin, who preceded him, was right in the lead of undermining the Glass-Steagall act, all of which is pretty ironic. The Glass-Steagall Act protected commercial banks from risky investment firms, insurance firms, and so on, which kind of protected the core of the economy. That was broken up in 1999 largely under Rubin's influence. He immediately left the treasury department and became a director of Citigroup, which benefited from the breakdown of Glass-Steagall by expanding and becoming a "financial supermarket" as they called it. Just to increase the irony (or the tragedy if you like) Citigroup is now getting huge taxpayer subsidies to try to keep it together and just in the last few weeks announced that it's breaking up. It's going back to trying to protect its commercial banking from risky side investments. Rubin resigned in disgrace — he's largely responsible for this. But he's one of Obama's major economic advisors, Summers is another one; Summer's protégé Tim Geithner is the Treasury Secretary.
None of this is really unanticipated. There were very good economists like say David Felix, an international economist who's been writing about this for years. And the reasons are known: markets are inefficient; they under-price social costs. And financial institutions underprice systemic risk. So say you're a CEO of Goldman Sachs. If you're doing your job correctly, when you make a loan you ensure that the risk to you is low. So if it collapses, you'll be able to handle it. You do care about the risk to yourself, you price that in. But you don't price in systemic risk, the risk that the whole financial system will erode. That's not part of your calculation.
Well that's intrinsic to markets — they're inefficient. Robin Hahnel had a couple of very good articles about this recently in economics journals. But this is first year economics course stuff — markets are inefficient; these are some of their inefficiencies; there are many others. They can be controlled by some degree of regulation, but that was dismantled under religious fanaticism about efficient markets, which lacked empirical support and theoretical basis; it was just based on religious fanaticism. So now it's collapsing.
People talk about a return to Keynesianism, but that's because of a systematic refusal to pay attention to the way the economy works. There's a lot of wailing now about "socializing" the economy by bailing out financial institutions. Yeah, in a way we are, but that's icing on the cake. The whole economy's been socialized since — well actually forever, but certainly since the Second World War. This mythology that the economy is based on entrepreneurial initiative and consumer choice, well ok, to an extent it is. For example at the marketing end, you can choose one electronic device and not another. But the core of the economy relies very heavily on the state sector, and transparently so. So for example to take the last economic boom which was based on information technology — where did that come from? Computers and the Internet. Computers and the Internet were almost entirely within the state system for about 30 years — research, development, procurement, other devices — before they were finally handed over to private enterprise for profit-making. It wasn't an instantaneous switch, but that's roughly the picture. And that's the picture pretty much for the core of the economy.
The state sector is innovative and dynamic. It's true across the board from electronics to pharmaceuticals to the new biology-based industries. The idea is that the public is supposed to pay the costs and take the risks, and ultimately if there is any profit, you hand it over to private tyrannies, corporations. If you had to encapsulate the economy in one sentence, that would be the main theme. When you look at the details of course it's a more complex picture, but that's the major theme. So yes, socialization of risk and cost (but not profit) is partially new for the financial institutions, but it's just added on to what's been happening all along.
Double Standard
DOSSANI: As we consider the picture of the collapse of some of these major financial institutions we would do well to remember that some of these same market fundamentalist policies have already been exported around the globe. Specifically, the International Monetary Fund has forced an export-oriented growth model onto many countries, meaning that the current slowdown in U.S. consumption is going to have major impacts in other countries. At the same time, some regions of the world, particularly the Southern Cone region of South America, are working to repudiate the IMF's market fundamentalist policies and build up alternatives. Can you talk a little about the international implications of the financial crisis? And how is it that some of the institutions responsible for this mess, like the IMF, are using this as an opportunity to regain credibility on the world stage?
CHOMSKY: It's rather striking to notice that the consensus on how to deal with the crisis in the rich countries is almost the opposite of the consensus on how the poor countries should deal with similar economic crises. So when so-called developing countries have a financial crisis, the IMF rules are: raise interest rates, cut down economic growth, tighten the belt, pay off your debts (to us), privatize, and so on. That's the opposite of what's prescribed here. What's prescribed here is lower interest rates, pour government money into stimulating the economy, nationalize (but don't use the word), and so on. So yes, there's one set of rules for the weak and a different set of rules for the powerful. There's nothing novel about that.
As for the IMF, it is not an independent institution. It's pretty much a branch of the U.S. Treasury Department — not officially, but that's pretty much the way it functions. The IMF was accurately described by a U.S. Executive Director as "the credit community's enforcer." If a loan or an investment from a rich country to a poor country goes bad, the IMF makes sure that the lenders will not suffer. If you had a capitalist system, which of course the wealthy and their protectors don't want, it wouldn't work like that.
For example, suppose I lend you money, and I know that you may not be able to pay it back. Therefore I impose very high interest rates, so that at least I'll get that in case you crash. Then suppose at some point you can't pay the debt. Well in a capitalist system it would be my problem. I made a risky loan, I made a lot of money from it by high interest rates and now you can't pay it back? Ok, tough for me. That's a capitalist system. But that's not the way our system works. If investors make risky loans to say Argentina and get high interest rates and then Argentina can't pay it back, well that's when the IMF steps in, the credit community's enforcer, and says that the people of Argentina, they have to pay it back. Now if you can't pay back a loan to me, I don't say that your neighbors have to pay it back. But that's what the IMF says. The IMF says the people of the country have to pay back the debt which they had nothing to do with, it was usually given to dictators, or rich elites, who sent it off to Switzerland or someplace, but you guys, the poor folks living in the country, you have to pay it back. And furthermore, if I lend money to you and you can't pay it back, in a capitalist system I can't ask my neighbors to pay me, but the IMF does, namely the US taxpayer. They help make sure that the lenders and investors are protected. So yes it's the credit community's enforcer. It's a radical attack on basic capitalist principles, just as the whole functioning of the economy based on the state sector is, but that doesn't change the rhetoric. It's kind of hidden in the woodwork.
What you said about the Southern Cone is exactly right. For the last several years they've been trying to extricate themselves from this whole neoliberal disaster. One of the ways was, for example Argentina simply didn't pay back its debts, or rather restructured them and bought some of it back. And folks like the President of Argentina said that "we're going to rid ourselves of the IMF" through these measures. Well, what was happening to the IMF? The IMF was in trouble. It was losing capital and losing borrowers, and therefore losing its ability to function as the credit community's enforcer. But this crisis is being used to restructure it and revitalize it.
It's also true that countries are driven to commodity export; that's the mode of development that's designed for them. Then they will be in trouble if commodity prices fall. It's not 100% the case, but in the Southern Cone, the countries that have been doing reasonably well do rely very heavily on commodity export, actually raw material export. That's even true of the most successful of them, Chile, which is considered the darling. The Chilean economy has been based very heavily on copper exports. The biggest copper company in the world is CODELCO, the nationalized copper company — nationalized by President Salvador Allende and nobody has tried to privatize it fully since because it's such a cash cow. It has been undermined, so it controls less of the copper export than it has in the past, but it still provides a large part of the tax base of the Chilean economy and is also a large income producer. It's an efficiently run nationalized copper company. But reliance on copper export means you're vulnerable to a decline in the price of commodities. The other Chilean exports like say, fruit and vegetables which are adapted to the U.S. market because of the seasonal differences — that's also vulnerable. And they haven't really done much in developing the economy beyond reliance on raw materials exports — a little, but not much. The same can be said for the other currently successful countries. You look at growth rates in Peru and Brazil, they're heavily dependent on soy and other agricultural exports or minerals; it's not a solid base for an economy.
One major exception to this is South Korea and Taiwan. They were very poor countries. South Korea in the late 1950s was probably about the level of Ghana today. But they developed by following the Japanese model – violating all the rules of the IMF and Western economists and developing pretty much the way the Western countries had developed, by substantial direction and involvement of the state sector. So South Korea, for example built a major steel industry, one of the most efficient in the world, by flatly violating the advice of the IMF and the World Bank, who said it was impossible. But they did it through state intervention, directing of resources, and also by restricting capital flight. Capital flight is a major problem for a developing country, and also for democracy. Capital flight could be controlled under Bretton Woods rules, but it was opened up in the last 30 years. In South Korea, you could get the death penalty for capital flight. So yes, they developed a pretty solid economy, as did Taiwan. China is a separate story, but they also radically violated the rules, and it's a complex story of how it's ending up. But these are major phenomena in the international economy.
Government Investment
DOSSANI: Do you think the current crisis will offer other countries the opportunity to follow the example of South Korean and Taiwan?
CHOMSKY: Well, you could say the example of the United States. During its major period of growth – late 19th century and early 20th century – the United States was probably the most protectionist country in the world. We had very high protective barriers, and it drew in investment, but private investment played only a supporting role. Take the steel industry. Andrew Carnegie built the first billion-dollar corporation by feeding off the state sector — building naval vessels and so on — this is Carnegie the great pacifist. The sharpest period of economic growth in U.S. history was during the Second World War, which was basically a semi-command economy and industrial production more than tripled. That model pulled us out of the depression, after which we became far and away the major economy in the world. After the Second World War, the substantial period of economic growth which I mentioned (1948-1971) was very largely based on the dynamic state sector and that remains true.
Let's take my own institution, MIT. I've been here since the 1950s, and you can see it first hand. In the 1950s and 1960s, MIT was largely financed by the Pentagon. There were labs that did classified war work, but the campus itself wasn't doing war work. It was developing the basis of the modern electronic economy: computers, the Internet, microelectronics, and so on. It was all developed under a Pentagon cover. IBM was here learning how to shift from punch-cards to electronic computers. It did get to a point by the 1960s that IBM was able to produce its own computers, but they were so expensive that nobody could buy them so therefore the government bought them. In fact, procurement is a major form of government intervention in the economy to develop the fundamental structure that will ultimately lead to profit. There have been good technical studies on this. From the 1970s until today, the funding of MIT has been shifting away from the Pentagon and toward the National Institute of Health and related government institutions. Why? Because the cutting edge of the economy is shifting from an electronics base to a biology base. So now the public has to pay the costs of the next phase of the economy through other state institutions. Now again, this is not the whole story, but it's a substantial part.
There will be a shift towards more regulation because of the current catastrophe, and how long they can maintain the paying off banks and financial institutions is not very clear. There will be more infrastructure spending, surely, because no matter where you are in the economic spectrum you realize that it's absolutely necessary. There will have to be some adjustment in the trade deficit, which is dramatic, meaning less consumption here, more export, and less borrowing.
And there's going to have to be some way to deal with the elephant in the closet, one of the major threats to the American economy, the increase in healthcare costs. That's often masked as "entitlements" so that they can wrap in Social Security, as part of an effort to undermine Social Security. But in fact Social Security is pretty sound; probably as sound as its ever been, and what problems there are could probably be addressed with small fixes. But Medicare is huge, and its costs are going way up, and that's primarily because of the privatized healthcare system which is highly inefficient. It's very costly and it has very poor outcomes. The U.S. has twice the per capita costs of other industrialized countries and it has some of the worst outcomes. The major difference between the U.S. system and others is that this one is so heavily privatized, leading to huge administrative costs, bureaucratization, surveillance costs and so on. Now that's going to have to be dealt with somehow because it's a growing burden on the economy and its huge; it'll dwarf the federal budget if current tendencies persist.
South America
DOSSANI: Will the current crisis open up space for other countries to follow more meaningful development goals?
CHOMSKY: Well, it's been happening. One of the most exciting areas of the world is South America. For the last 10 years there have been quite interesting and significant moves towards independence, for the first time since the Spanish and Portuguese conquests. That includes steps towards unification, which is crucially important, and also beginning to address their huge internal problems. There's a new Bank of the South, based in Caracas, which hasn't really taken off yet, but it has prospects and is supported by other countries as well. MERCOSUR is a trading zone of the Southern cone. Just recently, six or eight months ago, a new integrated organization has developed, UNASUR, the Union of South American Republics, and it's already been effective. So effective that it's not reported in the United States, presumably because it's too dangerous.
So when the U.S. and the traditional ruling elites in Bolivia started moving towards a kind of secessionist movement to try to undermine the democratic revolution that's taken place there, and when it turned violent, as it did, there was a meeting of UNASUR last September in Santiago, where it issued a strong statement defending the elected president, Evo Morales, and condemning the violence and the efforts to undermine the democratic system. Morales responded thanking them for their support and also saying that this is the first time in 500 years that South America's beginning to take its fate into its own hands. That's significant; so significant that I don't even think it was reported here. Just how far these developments can go, both dealing with the internal problems and also the problems of unification and integration, we don't know, but the developments are taking place. There are also South-South relations developing, for example between Brazil and South Africa. This again breaks the imperial monopoly, the monopoly of U.S. and Western domination. China's a new element on the scene. Trade and investment are increasing, and this gives more options and possibilities to South America. The current financial crisis might offer opportunities for increasing this, but also it might go the other way. The financial crisis is of course harming — it must harm — the poor in the weaker countries and it may reduce their options. These are really matters which will depend on whether popular movements can take control of their own fate, to borrow Morales' phrase. If they can, yes there are opportunities.Sameer Dossani, a Foreign Policy In Focus contributor, is the director of 50 Years is Enough and blogs at shirinandsameer.blogspot.com.
Monday, 9 February 2009
The Risk of Military Keynesianism
The global economy is taking a beating from the latest crisis. The United States, EU, and Japan expect growth of only 1.5% or so in 2009. The International Labor Organization forecasts a "global jobs crisis" that will add 50 million people to the ranks of the unemployed and cast 200 million workers into extreme poverty in 2009.
With government budgets shrinking and the economic crisis putting greater pressure on social welfare programs, a shift of money from military budgets to human needs would appear to be a no-brainer. But don't expect a large-scale beating of swords into ploughshares. In fact, if early signs are any indication, governments will largely shelter their military budgets from the current economic crisis.
Call it the new military Keynesianism: the use of military spending to stimulate the economy and pull the country out of recession. Proponents of this approach even enlist FDR on their side by arguing that the United States didn't exit the Great Depression until it shifted to a war footing after Pearl Harbor. Today, the advocates of military Keynesianism are pushing back against the Obama stimulus package — which already includes over $10 billion for the Pentagon and $1 billion for nuclear programs at the Department of Energy — with a proposal to maintain U.S. military spending at 4% of GDP.
The rest of the world isn't immune to these arguments. In East Asia, for example, the major military powers aren't likely to step back from their ambitious plans of modernization. China, the only major country still on track to have substantial growth next year on the order of 8-10%, will likely continue to build on its 18% increase in military spending in 2008. Japan, South Korea, and Russia have all embarked on seemingly recession-proof spending programs.
The countries involved in the Six Party Talks — the United States, the two Koreas, China, Japan, and Russia — are the engine of global military spending. Led by the United States, they are responsible for more than 65% of global military spending. Any successful attempt to challenge the logic of military Keynesianism and shrink the global military-industrial complex must start with these countries.
Obama's Challenge
The Obama administration's first budget figures have not yet been released, so it's difficult to say with certainty what it will allocate to the Pentagon. According to one report, Obama is asking the Joint Chiefs of Staff to cut the Pentagon's 2010 request by 10%. But the Pentagon's initial request for 2010 is for a 13% increase over the last budget under the Bush administration ($584 billion versus $513 billion). So, even if the Obama administration sets a ceiling for the Pentagon at $527 billion, military spending will go up. And that doesn't count the additional supplemental requests for waging war in Iraq and Afghanistan. Meanwhile, the Pentagon has a big wish-list. At the tail end of the Bush administration, it put in a request for an increase in military spending of $450 billion over the next five years.
The rationale for maintaining such high levels of military spending has shifted. Under the Obama administration, talk of a "global war on terror" has receded. With Washington depending on Beijing to help pull the global economy out of recession, the China "threat" no longer has the capacity to pry open government coffers for more military dollars.
The operative word in Washington isn't "terror" or "China." It's "employment." Defense contractors are scrambling to prove that they play an essential role in keeping factories running and workers employed. Lockheed Martin recently ran a full-page ad in The Washington Post that linked its F-22 Raptor — an expensive weapon of dubious utility in today's strategic context — to 95,000 jobs in 44 states. Not to be outdone, the shipbuilding industry lobbied Congress to send a letter to Obama arguing for a doublingof the rate of naval shipbuilding — to preserve 400,000 jobs in 47 states. With the U.S. economy shedding nearly 600,000 jobs in January, these arguments find a receptive audience on Capitol Hill.
The stimulus package discussion has turned into a brawl. The bipartisan crew in the Senate, led by Susan Collins (R-ME) and Ben Nelson (D-NE) are proposing cuts in school construction, Amtrak funding, and scientific research. The military-industrial complex isn't on the chopping block. Indeed, Collins has wanted to add $13 billion more in Pentagon assistance. The same conservatives that expressed horror at the government bailout of the auto companies have no problem with continuing their support of the government bailing out defense contractors.
Meanwhile in Asia
The United States is responsible for nearly half of all global military spending. During the last 10 years, when global military spending increased by 45%, the United States set the pace. Now, during a period of global belt-tightening, the military Keynesianism with which the U.S. government is flirting threatens to establish another pattern for both our allies and competitors.
Consider the situation in Northeast Asia. Ever since they recovered from the Asian financial crisis, the countries in this region have been involved in a serious arms race. Between 1999 and 2006, South Korea raised its defense spending by over 70%, and the government in Seoul plans to increase this figure by 7-8% every year for the next dozen years. Chinese and Russian military spending increases have been even larger over the same period. In its difficult economic straits, North Korea has attempted to keep pace by raising the amount it spends (which is still less than 1/40th the amount South Korea spends). Only Japan has not increased its expenditures over the same period, though an influential group of politicians in the ruling party has been pushing to remove the 1%-of-GDP cap on military spending.
And don't expect much change in this trajectory. "Japan, Taiwan, and South Korea could resist major cuts in defense spending in the short term due to commitments to 'recapitalizing their militaries,'" according to military analyst Richard Bitzinger. China has the indigenous arms production capabilities and a still-expanding economy to justify continued military modernization.
The arms race in East Asia is no mere regional issue. In East Asia, the largest militaries in the world — the United States, China, Russia, and Japan — all face one another. The U.S.-China rivalry threatens to be the Cold War of this century (the Pentagon, at least, seems to be spending money on this assumption).
Northeast Asia is ground zero for the global military industrial complex. If we can somehow reverse the logic that perpetuates the arms race in that region we can begin to shift resources toward the real crises facing the planet: recession, economic inequality, climate change.
Challenging the central thesis of military Keynesianism — that military spending can pull the world out of recession — requires two primary counter-arguments. First, defense spending is not an effective stimulus package. Investments in the civil sector, as several studies have demonstrated, produce more jobs than investments in the military sector. Second, in order to secure sufficient funds to address economic recession and climate change — without saddling future generations with crippling debt — governments must begin to shift military spending toward human needs. No other large pot of money exists.
And that's where the Pacific Freeze comes in.
Military Freeze
To address the new arms race in Asia and press the governments concerned to change their budget priorities, activists from the peace and Asian-American communities have proposed a Pacific Freeze campaign. Modeled after Randall Forsberg's Nuclear Weapons Freeze campaign of the 1980s, the Pacific Freeze calls on the governments in the Six Party Talks to freeze their military spending and then reduce their budgets on an equitable basis — with the United States leading the way — as a first step in demilitarizing the region. Like Forsberg's earlier campaign, the initial freeze on military spending would be mutual.
The Freeze includes both the United States and Russia, for they are Pacific powers and spend a great deal of money on their military presence in the region. They are also the top two arms exporters in the world. Any attempt to restrain military spending that doesn't include the former Cold War adversaries won't likely succeed. The Freeze also applies to the entirety of the military budgets and not just the portions used in the Pacific region. The United States doesn't spend its entire half-trillion-dollar military budget on its military presence in the Pacific. Nor do Russia and China. However, all three countries can redeploy troops and military hardware to the Pacific region in an emergency. And, since all six countries spend far in excess of their legitimate security needs, freezing the overall budget is a necessary first step in establishing reasonable budget priorities.
The ultimate goal of the campaign is to draw down military budgets and transfer a portion of the savings to a regional Green Energy fund. But the intermediary goal, as with the Nuclear Freeze campaign of the 1980s, is to get people talking about the issue. Right now, military spending is a sacred cow in all six countries. Every government insists that military "modernization" is imperative. Few civic groups have been able to raise the issue in a unilateral context in the sense of urging their government to unilaterally reduce military spending. So, both governments, and to a certain extent civic groups too, are trapped in a security dilemma. Yet this narrow security dilemma is itself set in a much larger human security dilemma. At a time when we urgently need funds for the food crisis, the energy crisis, the climate crisis, the AIDS crisis, and other looming crises — all of which threaten human security — military spending is nowhere near the top of the global agenda.
The Six Party Talks provide a strategic opening for this kind of campaign. The participating governments have all been talking peace but preparing for war. With the Freeze, we call on the governments to put their money where the mouths are. Any progress in the nuclear talks is commendable. But the runaway military budgets exacerbate the many challenges to regional security. Despite booming trade relations, the region faces many threats to stability. A regional security mechanism, one of the working groups within the Six Party framework, could begin to address these threats. But unless such a mechanism deals with the arms race in the region, it will address only surface issues and fail to grapple with a driving force behind insecurity.
Here in the United States, peace activists have tried for years to clip the wings of the Pentagon. We've pushed for military reductions domestically and watched the Pentagon expand like the Blob. We've tried to work at an international level to restrain military spending only to witness the creation of a global military industrial complex. It's time to try something new. Let's leverage the negative impact of the financial crisis and the positive developments of the Six Party Talks to get the issue of military spending on table. The global military industrial complex is eating our planet. A freeze is the first step in chaining this monster and turning to the real problems that confront us.
For more information and to sign the Pacific Freeze Call to Action, please visit: http://www.pacificfreeze.ips-dc.org/
John Feffer is the co-director of Foreign Policy In Focus.
A Short History of the Israeli - Palestinian Conflict: Past Is Prologue
Its roots are from the late 19th century when Theodor Herzl founded modern Zionism at the First Zionist Congress in Basle, Switzerland in 1897.
In his book "Overcoming Zionism," Joel Kovel writes:
Zionism seeks "the restoration of tribalism in the guise of a modern, highly militaralized and aggressive state. (It) cut Jews off from (their) history and led to a fateful identity of interests with antisemitism (becoming) the only thing that united them. (It) fell into the ways of imperialist expansion and militarism, and showed signs of the fascist malignancy."
If you accept "the idea of a Jewish state," you mix its twin notions of "particularism (and) exceptionalism (that are) the actual bane of Judaism (and give) racism an objective, enduring, institutionalized and obdurate character." It turns Israel "into a machine for the manufacture of human rights abuses," and consider three of its former prime ministers. Menachem Begin (1977 - 83), Yitzhak Shamir (1983 - 84 and 1986 - 92), and Ariel Sharon (2001 - 06) were former terrorists who dispelled the illusion of Israeli democracy, morality, and respect for human rights. Kovel's conclusion: "the world would be a far better place without (the corrosive effects of) Zionism."
Inventing a Jewish People - Creating Myths to Justify a Jewish State
Credit Tel Aviv University scholar, Shlomo Zand, for his 2008 book: "When and How Was the Jewish People Invented?" Forget the myths most Jewish children are taught. Biblical nonsense comprising core Zionist beliefs about Jews:
-- expelled by the ancient Romans;
-- the exodus from Egypt;
-- wandering the earth rootless;
-- enslaved, oppressed, and tormented for centuries; and
-- the notion that God bestowed a "Greater Israel" for Jews alone - the idea of "A land without people for a people without land."
Zand's view (shared by others) is that the Romans didn't expel whole nations, just small numbers from their conquered territories. Most Jews remained, converted to Islam when Arabs took over, and became progenitors of today's Palestinians.
According to Israeli journalist Tom Segev:
"There never was a Jewish people, only a Jewish religion, and the exile never happened - hence there was no return." So, if ancient Judaeans weren't expelled en masse, how were Jews scattered globally - the so-called Jewish Diaspora?
Zand believes that some emigrated voluntarily. Many more converted to Judaism. "Contrary to popular belief, Judaism was an evangelical religion that actively sought new adherents during its formative period."
Thus, if Judaism is a "religion," not a "people," how can a "Jewish state" be justified? It's not an ancient idea, according to Zand, but a late 19th century Zionist invention, "an intellectual conspiracy of sorts. It's all fiction and myth....an excuse (to justify) the State of Israel" and vilify Palestinian self-determination as a plot to destroy it.
Segev explained that "Zand did not invent (this) thesis; 30 years before (Israel's) Declaration of Independence, it was espoused by David Ben-Gurion, Yitzhak Ben-Zvi (Israel's second president), and others."
Zand wrote his book for a purpose - to debunk accepted myths, Zionists who advance them, and promote the idea that Israel should be a democratic state for all its people, not just for Jews alone. Why not if Jews and Palestinians share common roots!
Early Zionists had other ideas. Its Program was: "Establishing for the Jewish people a publicly and legally assured home in Eretz Yisrael." It began a process of:
-- settling Jewish agriculturists, artisans, and tradesmen in Palestine;
-- organizing effective action groups in various countries;
-- building Jewish consciousness and a national identity; and
-- beginning a process of gaining worldwide acceptance for a Jewish homeland.
Herzl later wrote: "At Basle, I founded the Jewish state....If not in five years, then certainly in fifty, everyone will realize it." It took 51, but transforming Palestine wasn't simple when Arabs comprised over 90% of the population.
The solution was to transfer or dispossess them, shift them to other Arab countries, deny Palestinians the right to their own land, and create a new Jewish identity, not in the Diaspora but in Palestine - to legitimize Jews as its rightful owner and justify removing indigenous Arabs.
Important also was getting Britain to go along which it did with the November 1917 Balfour Declaration "establishment in Palestine of a national home for the Jewish people...." It also guaranteed one to Arabs as stipulated in the October 1915 McHahon - Hussein Agreement to return Ottoman Turk land to Arab nationals post-WW I in repayment for their help in the war. Britain instead betrayed them and so did America's Woodrow Wilson.
Supreme Court Justice Louis Brandeis convinced him and Secretary of State Robert Lansing to support Zionism and British-French interests under the 1916 Sykes - Picot Agreement that carved up the region after the war.
At the 1919 Paris Peace Conference, the World Zionist Organization (WZO) presented its plan for a Jewish state. It included:
-- all Palestine;
-- South Lebanon up to Sidon and the Litani River;
-- Syria's Golan Heights, Hauran Plain and Deraa; and
-- control of the Hijaz Railway from Deraa to Amman to Maan, Jordan as well as the Gulf of Aqaba.
Other Zionists wanted more - land from the Nile in the West to the Euphrates in the East comprising Palestine, Lebanon, Western Syria and Southern Turkey.
In 1920, WW I allies met in San Remo, Italy, decided to control Ottoman lands, and agreed to a "mandatory" system. The British Mandate over Palestine began in 1920 under a Jewish High Commissioner, Herbert Samuel. He began its transformation by assuring:
-- a liberal Jewish immigration policy;
-- immediate provisional citizenship for Jews;
-- easy Jewish land acquisition at the expense of indigenous Arabs;
-- contiguous settlements to solidify a Jewish presence;
-- employment for Jewish immigrants;
-- favorable customs policies to develop Jewish commerce; and
-- partiality toward Jews overall at the expense of indigenous Arabs.
The World Zionist Organization (WZO) was very much involved. It:
-- founded the Jewish Colonial Trust in 1899 to buy land in Palestine;
-- the Anglo-Palestine (commercial) Bank and investments institute followed in 1902 within the Jewish Colonial Trust;
-- in 1901, the Jewish National Fund was established to buy and develop land;
-- in 1909, the Israel Land Development Company for the same purpose;
-- the 1907-established Eretz Yisrael Bureau assisted the project; in 1921, the Zionist Executive in Eretz Yisrael replaced it;
-- in 1920, the United Israel Appeal was founded to raise funds to finance welfare, health, education, and continued settlement projects;
-- in 1929, the Jewish Agency for Eretz Yisrael was established to represent the WZO in dealings with the British government in administering Palestine; Chaim Weizmann was its first president;
-- in 1942, the WZO's official aim was for a "Jewish Community" in Palestine; the Biltmore Program stated that "Eretz Yisrael will be based as a Jewish (only) community, to be integrated into a new democratic world."
Zionist Divisions
Divisions characterized Zionists from the start. Herzl, Chaim Weizmann (Israel's first president) and Moshe Sharett (prime minister after Ben-Gurion) favored reconciliation with the Arab world. Revisionists, on the other hand, were hard line with Ze'ev Jabotinsky their leader. In 1923, he published an article called "On the Iron Wall" in which he argued that Arab nationalists opposed a Jewish state in Palestine and wouldn't accept one. Thus peaceful coexistence was unattainable, and Jews must build "an iron wall of (superior) Jewish military force."
The idea was to discourage Arab hopes of destroying Israel followed by a second stage - a negotiated settlement in which Israel had the upper hand and could dictate terms.
Ben-Gurion sided with Jabotinsky, chose a military option, and winning the War of Independence was his vindication. Ever since, Israel stayed hard line politically and militarily. It fights and negotiates from strength, not weakness. Confrontation, not diplomacy is its strategy. It believes Arabs only understand violence, so military threats and intimidation are its options. Generals become future leaders. The cycle is mostly repeated. Washington, the West, and most Arab states go along, and military aggression is called self-defense - hence the Israel Defense Forces much like America's Department of Defense.
In a recent article, Middle East expert Joseph Massad put it this way:
"The logic goes as follows: Israel has the right to occupy Palestinian land, lay siege to (its) populations in Bantustans surrounded by an apartheid wall, starve the population, cut them off from fuel and electricity (and all else), uproot their trees and crops, and launch periodic raids and targeted assassinations against them and their elected leadership, and if (resistance is encountered, Israel is entitled to slaughter) them en masse (because it's just) 'defending' itself as it must and should."
Naked aggression is called self-defense. Civilians are legitimate targets. Heroic freedom fighters are "terrorists," and if Arabs don't understand, the process is repeated until they do. Further, international humanitarian and other laws don't apply. Victims aren't entitled to the same rights as Jews because Arabs are inferior and don't warrant them. In addition:
"Israel has the right to oppress the Palestinians and does so to defend itself (its right to exist), but were the Palestinians to defend themselves against Israel's oppression, (to which it has no right, then) Israel will have the right to defend itself against their legitimate defense" without restraint or regard for the laws of war or humanitarian considerations.
Negotiating with Israel is futile because Tel Aviv demands and doesn't yield. It takes and doesn't give. Peace process hypocrisy offers nothing, and all Palestinians have to show for it is continued occupation, death, destruction, oppression, immiseration, and loss of their land and freedom.
Zionists did it in stages:
-- early arrivals saw themselves as "returning natives" and began a process of displacement;
-- from 1918 - 1947, it advanced as the Jewish population increased;
-- from 1936 - 1939, Arab resistance grew against increasing Jewish encroachment; it was clear that unlimited Jewish immigration, combined with Zionist political and military development, meant the eventual transformation of Palestine to a Jewish state; in 1936, Arabs resisted, called a strike, and reacted violently;
-- Zionists countered with a "compulsory transfer" policy; Jewish sovereignty over all Palestine became a priority; accommodating Arabs was rejected; the Biltmore Program affirmed it;
-- Ben-Gurion had a plan, but WW II intervened;
-- post-war, violence again erupted; Zionists wanted unrestricted immigration; Palestinians saw their country being lost; the war bankrupted Britain; it ended its Mandate over Palestine on May 14, 1948 when the State of Israel was established.
America became the first country to extend recognition when Harry Truman signed the following statement:
"This Government has been informed that a Jewish state has been proclaimed in Palestine, and recognition has been requested by the provisional government thereof.
The United States recognizes the provisional government as the de facto authority of the new State of Israel."
It established an enduring alliance, more firmly in place now than ever - in a strategic part of the world for the mutual benefit of both nations.
Understanding Zionism is fundamental:
-- its reliance on oppression, violence, and dispossession;
-- its belief in exclusivity, privilege, and Jewish exceptionalism;
-- racism at the core of its politics;
-- democracy only for Jews;
-- an ethnically pure state in which half its inhabitants aren't Jewish, are afforded few rights, and none on what matters most.
Zionism justifies a Jewish ethnocracy with built-in structural inequalities. Israeli Arabs may vote, sit in the Knesset, but government rulings aren't "legitimate" without a "Jewish majority." The Law of Return is for Jews alone. All laws are for Jews. On issues of land, housing, education and most everything, Jewish favoritism discriminates against Arabs.
The Citizenship and Entry into Israel Law prohibits Israeli Arab spouses from the West Bank, Gaza or any Arab country from entering Israel and getting residency rights or citizenship. It's to counter a "demographic problem" or the threat that a faster-growing Palestinian population will soon outnumber Jews and change the character of a "Jewish state."
Ideology becomes policy and Arabs suffer with convenient myths for justification:
-- poor Israel; it's a victim fighting to survive against hordes of hostile Arabs;
-- they reject peace, prefer violence, plan Israel's destruction, so conflict is inevitable;
-- the core problem is Palestinian "terrorism;" Israel acts only in self-defense;
-- Gaza and the West Bank are "disputed," not "occupied" Territories;
-- political solutions aren't possible so Israel must maintain total control under "Fortress Israel;"
-- Palestinians are to be relegated to isolated powerless cantons under Israel's control before a "final solution" dispossesses or annihilates them; Israel is for Jews alone; after the 1967 war, the Allon Plan affirmed it - named after deputy prime minister Yigal Allon; his goal:
(1) "maximum land with minimum Arabs;"
(2) annex around 40% of the West Bank and Gaza, taking the choicest parts; and
(3) dispossess Palestinians from land Israel wants for Jews.
In his 2001 book, "The Iron Wall," Avi Shlaim wrote:
After Israel's victory in 1967, Allon (on July 26) "submitted to the cabinet a plan that was to bear his name (The Allon Plan). It called for incorporating in Israel the following areas: a strip of land ten to fifteen kilometers wide along the Jordan River; most of the Judean desert along the Dead Sea; and a substantial area around Greater Jerusalem, including the Latrun salient. Designed to include as few Arabs as possible in the area claimed for Israel, the plan envisaged building permanent settlements and army bases in these areas. Finally, it called for opening negotiations with local leaders on turning the remaining parts of the West Bank into an autonomous region that would be economically linked to Israel. The cabinet discussed Allon's plan but neither adopted nor rejected it."
He also called for defensible borders, creating a Jordanian - Palestinian state, letting Israel maintain a West Bank military presence up to the Jordan River, and be fully in control of a united Jerusalem, perhaps with a Jordanian status in the Old City's Muslim quarter.
The Allon Plan was in Labor Party platforms in 1974, 1977, 1981, 1984, and 1987, and to large degree shaped Israel's settlement policies from 1967 - 1977. Prime minister Begin then offered Palestinian self-administration (the right to be Israel's enforcer) to Egypt's Sadat in 1977. It became part of the 1978 Camp David agreement and 1993 Oslo Accords.
From 1948 to the present:
-- peace, reconciliation, liberation, and a fair and equitable solution to the region's longest and most intractable problem is unconsidered and unwanted; conflict is the chosen option; seizing all of historic Palestine the goal; and eliminating the Palestinian problem and establishing Israeli regional dominance the final aim.
Post-WW II, Palestinians were nearly 70% of the population, Jews around 30% and owned 6% of the land. Yet the November 1947 General Assembly Partition Plan (Resolution 181) gave Jews 56%. Palestinians got 42% with 2% kept under internationalized trusteeship, including Jerusalem. Jews got the best parts, including choice agricultural areas. Palestinians had no air access or harbor and port facilities, except for isolated Jaffa. Nonetheless, David Ben-Gurion wanted 80%. Israel's 1948 War of Independence got 78%. The problem was keeping it for Jews alone.
Israel agreed to UN Resolution 194 (in December 1948) providing for free access to Jerusalem and other holy places as well as granting Palestinian refugees the right of return. In May 1949, UN Resolution 273 gave Israel UN membership conditional on it accepting Resolutions 181 and 194 and "unreservedly (agreeing to honor) the obligations of the United Nations Charter." However, earlier in June 1948, the Israeli cabinet (with no formal vote) barred Palestinian refugees from returning and directed the IDF to stop those trying with live fire. The same policy remains today to assure a Jewish majority and much more.
"Israelification" and "De-Arabization" are policies to preserve a "Jewish character." Pre-1948, Palestinians owned 93% of Palestine. It dropped to 25% after the war, 7.3% by 1962, and is now around 4%. Palestinians are gradually being dispossessed of their land, country, freedom, and futures. This is the Zionist goal, internal oppression and conflict the methodology.
Treat them like "dogs," said Moshe Dayan, so they'll leave. Use "terror, assassination, intimidation, land confiscation," and more was David Ben-Gurion's formula. Today it's unilateral separation, "de-Arabization," isolation, confinement, and destroying the will to resist with intermittent conflict and mass slaughter for reinforcement.
Israel's aim:
-- total control of Palestine;
-- Palestinians are "encouraged" to leave;
-- confining those who don't to isolated, powerless cantons;
-- advancing land seizures;
-- co-opting a quisling Palestinian leadership;
-- using it as enforcers;
-- terrorizing the population relentlessly;
-- denying Palestinians any rights; and
-- purifying Israel as a Jewish state (like the Nazis tried in Germany) by removing its Arab population. This is Israel today, the reason many Jews aren't staying, and why growing numbers won't move there. Nominally it's a democracy, but only for Jews. Arabs are disenfranchised, without rights, and unwanted.
Gaza and the West Bank remain occupied. Pre-Oslo, Middle East expert Sara Roy called Gaza a "Case of Economic De-Development," a condition as true of the West Bank and, in today's environment much harsher than she discovered. Her definition was a "process which undermines or weakens the ability of an economy to grow and expand by preventing it from accessing and utilizing critical inputs needed to promote internal growth beyond a specific structural level." Gaza was to be transformed "into an auxiliary of the state of Israel." So was the West Bank.
It's way beyond that now under Israel's policy of oppression, impoverishment, depopulation, destruction, displacement, and genocide to crush the Palestinian spirit, slaughter its people, and end any hope for a viable Palestinian state.
Gaza is under siege and was ravaged by war. The West Bank is checkmated by isolation, land seizures, walls, checkpoints, home demolitions, a nightmarish bureaucracy, closures, agricultural and free movement restrictions, crop destruction, curfews, permits, economic strangulation, random killings, arrests, imprisonment, torture, and overall security force terror against a civilian population.
Israel has total control, aided by the complicit Fatah under Abbas, but this pattern has persisted for decades. For over a half century, Tel Aviv ignored or abused hundreds of UN resolutions condemning or censuring it for its actions against Palestinians and other Arabs, deploring it for committing them, or demanding, calling on, or urging Israel to end them. UN Resolution 242 alone (November 1967) calls for: "Withdrawal of Israeli armed forces from territories occupied in the recent conflict."
Article 49 of the Fourth Geneva Convention prohibits:
"Individual or mass forcible transfers, as well as deportations of protected persons from occupied territory...." Neither shall "The Occupying Power...deport or transfer parts of its own civilian population into the territory it occupies."
Israeli settlements have "no legal validity" under Security Council Resolutions 446 (March 1979), 452 (July 1979), 465 (March 1980), 471 (June 1980), and 476 (June 1980). In addition, Resolutions 267 (July 1969) and 497 (December 1981) say the annexations of East Jerusalem (267) and Syria's Golan Heights (497) are illegal and call for them to be rescinded. Yet Israel continues settlement expansions and maintains a Kafkaesque "matrix of control" over Palestine in gross violation of international law.
In 1967, Theodor Meron, Israeli foreign ministry's legal council, told prime minister Levi Eshkol that: "My conclusion is that civilian settlement in the administered territories contravenes the explicit provisions of the Fourth Geneva Convention."
In April 1978, US State Department Legal Advisor, Herbert Hansell, told Congress that:
"while Israel may undertake, in the occupied territories, actions necessary to meet its military needs and to provide for orderly government during the occupation, (the) establishment of the civilian settlements in those territories is inconsistent with international law."
Palestinians are isolated and on their own. Few nations anywhere support them. None in the West or the Middle East, except Iran, Syria and Hezbollah in Lebanon. Courage alone sustains them, now powerfully buoyed by a groundswell of world outrage; the global BDS Movement for boycott, divestment and sanctions; calls for criminal prosecutions for Israeli war criminals and expulsion of Israel from the UN System until it fully complies with international law.
In November 2004, law professor Michael Mandel wrote: "Israel's West Bank and Gaza settlements are war crimes in Canada. Under the Canadian Crimes Against Humanity and War Crimes Act 2000, c. 24, Israel's settlements in territories taken in the June 1967 war constitute war crimes punishable in Canada."
Mandel cites Section 8, paragraph 2 of the Rome Statute of the International Criminal Court (ICC) adopted by 120 states in July 1998. Item viii prohibits: "The transfer, directly or indirectly, by the Occupying Power of parts of its own civilian population into the territory it occupies, or the deportation or transfer of all or parts of the population of the occupied territory within or outside this territory."
After initially voting against the Rome Statute, the Clinton administration signed it in December 2000. Then in May 2001, the Bush administration revoked the signature and began a worldwide campaign against the Court.
Israel as well isn't a party to the Rome Statute, but that's irrelevant under Canadian law. Grave breaches of Geneva constitute war crimes. Israel (like America) is criminally liable. Mandel states that although "Israel denies it, there is no question that Israel is an Occupying Power for the purposes of the Geneva Convention, the Rome Statute, and the Canadian Crimes Against Humanity and War Crimes Act." Holding it accountable is essential. It's high time world jurists demanded it.
Stephen Lendman is a Research Associate of the Centre of Research on Globalization. He lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.
Also visit his blog site at sjlendman.blogspot.com and listen to The Global Research News Hour on RepublicBroadcasting.org Monday through Friday US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listening.
http://www.globalresearch.ca/index.php?context=va&aid=12195
In his book "Overcoming Zionism," Joel Kovel writes:
Zionism seeks "the restoration of tribalism in the guise of a modern, highly militaralized and aggressive state. (It) cut Jews off from (their) history and led to a fateful identity of interests with antisemitism (becoming) the only thing that united them. (It) fell into the ways of imperialist expansion and militarism, and showed signs of the fascist malignancy."
If you accept "the idea of a Jewish state," you mix its twin notions of "particularism (and) exceptionalism (that are) the actual bane of Judaism (and give) racism an objective, enduring, institutionalized and obdurate character." It turns Israel "into a machine for the manufacture of human rights abuses," and consider three of its former prime ministers. Menachem Begin (1977 - 83), Yitzhak Shamir (1983 - 84 and 1986 - 92), and Ariel Sharon (2001 - 06) were former terrorists who dispelled the illusion of Israeli democracy, morality, and respect for human rights. Kovel's conclusion: "the world would be a far better place without (the corrosive effects of) Zionism."
Inventing a Jewish People - Creating Myths to Justify a Jewish State
Credit Tel Aviv University scholar, Shlomo Zand, for his 2008 book: "When and How Was the Jewish People Invented?" Forget the myths most Jewish children are taught. Biblical nonsense comprising core Zionist beliefs about Jews:
-- expelled by the ancient Romans;
-- the exodus from Egypt;
-- wandering the earth rootless;
-- enslaved, oppressed, and tormented for centuries; and
-- the notion that God bestowed a "Greater Israel" for Jews alone - the idea of "A land without people for a people without land."
Zand's view (shared by others) is that the Romans didn't expel whole nations, just small numbers from their conquered territories. Most Jews remained, converted to Islam when Arabs took over, and became progenitors of today's Palestinians.
According to Israeli journalist Tom Segev:
"There never was a Jewish people, only a Jewish religion, and the exile never happened - hence there was no return." So, if ancient Judaeans weren't expelled en masse, how were Jews scattered globally - the so-called Jewish Diaspora?
Zand believes that some emigrated voluntarily. Many more converted to Judaism. "Contrary to popular belief, Judaism was an evangelical religion that actively sought new adherents during its formative period."
Thus, if Judaism is a "religion," not a "people," how can a "Jewish state" be justified? It's not an ancient idea, according to Zand, but a late 19th century Zionist invention, "an intellectual conspiracy of sorts. It's all fiction and myth....an excuse (to justify) the State of Israel" and vilify Palestinian self-determination as a plot to destroy it.
Segev explained that "Zand did not invent (this) thesis; 30 years before (Israel's) Declaration of Independence, it was espoused by David Ben-Gurion, Yitzhak Ben-Zvi (Israel's second president), and others."
Zand wrote his book for a purpose - to debunk accepted myths, Zionists who advance them, and promote the idea that Israel should be a democratic state for all its people, not just for Jews alone. Why not if Jews and Palestinians share common roots!
Early Zionists had other ideas. Its Program was: "Establishing for the Jewish people a publicly and legally assured home in Eretz Yisrael." It began a process of:
-- settling Jewish agriculturists, artisans, and tradesmen in Palestine;
-- organizing effective action groups in various countries;
-- building Jewish consciousness and a national identity; and
-- beginning a process of gaining worldwide acceptance for a Jewish homeland.
Herzl later wrote: "At Basle, I founded the Jewish state....If not in five years, then certainly in fifty, everyone will realize it." It took 51, but transforming Palestine wasn't simple when Arabs comprised over 90% of the population.
The solution was to transfer or dispossess them, shift them to other Arab countries, deny Palestinians the right to their own land, and create a new Jewish identity, not in the Diaspora but in Palestine - to legitimize Jews as its rightful owner and justify removing indigenous Arabs.
Important also was getting Britain to go along which it did with the November 1917 Balfour Declaration "establishment in Palestine of a national home for the Jewish people...." It also guaranteed one to Arabs as stipulated in the October 1915 McHahon - Hussein Agreement to return Ottoman Turk land to Arab nationals post-WW I in repayment for their help in the war. Britain instead betrayed them and so did America's Woodrow Wilson.
Supreme Court Justice Louis Brandeis convinced him and Secretary of State Robert Lansing to support Zionism and British-French interests under the 1916 Sykes - Picot Agreement that carved up the region after the war.
At the 1919 Paris Peace Conference, the World Zionist Organization (WZO) presented its plan for a Jewish state. It included:
-- all Palestine;
-- South Lebanon up to Sidon and the Litani River;
-- Syria's Golan Heights, Hauran Plain and Deraa; and
-- control of the Hijaz Railway from Deraa to Amman to Maan, Jordan as well as the Gulf of Aqaba.
Other Zionists wanted more - land from the Nile in the West to the Euphrates in the East comprising Palestine, Lebanon, Western Syria and Southern Turkey.
In 1920, WW I allies met in San Remo, Italy, decided to control Ottoman lands, and agreed to a "mandatory" system. The British Mandate over Palestine began in 1920 under a Jewish High Commissioner, Herbert Samuel. He began its transformation by assuring:
-- a liberal Jewish immigration policy;
-- immediate provisional citizenship for Jews;
-- easy Jewish land acquisition at the expense of indigenous Arabs;
-- contiguous settlements to solidify a Jewish presence;
-- employment for Jewish immigrants;
-- favorable customs policies to develop Jewish commerce; and
-- partiality toward Jews overall at the expense of indigenous Arabs.
The World Zionist Organization (WZO) was very much involved. It:
-- founded the Jewish Colonial Trust in 1899 to buy land in Palestine;
-- the Anglo-Palestine (commercial) Bank and investments institute followed in 1902 within the Jewish Colonial Trust;
-- in 1901, the Jewish National Fund was established to buy and develop land;
-- in 1909, the Israel Land Development Company for the same purpose;
-- the 1907-established Eretz Yisrael Bureau assisted the project; in 1921, the Zionist Executive in Eretz Yisrael replaced it;
-- in 1920, the United Israel Appeal was founded to raise funds to finance welfare, health, education, and continued settlement projects;
-- in 1929, the Jewish Agency for Eretz Yisrael was established to represent the WZO in dealings with the British government in administering Palestine; Chaim Weizmann was its first president;
-- in 1942, the WZO's official aim was for a "Jewish Community" in Palestine; the Biltmore Program stated that "Eretz Yisrael will be based as a Jewish (only) community, to be integrated into a new democratic world."
Zionist Divisions
Divisions characterized Zionists from the start. Herzl, Chaim Weizmann (Israel's first president) and Moshe Sharett (prime minister after Ben-Gurion) favored reconciliation with the Arab world. Revisionists, on the other hand, were hard line with Ze'ev Jabotinsky their leader. In 1923, he published an article called "On the Iron Wall" in which he argued that Arab nationalists opposed a Jewish state in Palestine and wouldn't accept one. Thus peaceful coexistence was unattainable, and Jews must build "an iron wall of (superior) Jewish military force."
The idea was to discourage Arab hopes of destroying Israel followed by a second stage - a negotiated settlement in which Israel had the upper hand and could dictate terms.
Ben-Gurion sided with Jabotinsky, chose a military option, and winning the War of Independence was his vindication. Ever since, Israel stayed hard line politically and militarily. It fights and negotiates from strength, not weakness. Confrontation, not diplomacy is its strategy. It believes Arabs only understand violence, so military threats and intimidation are its options. Generals become future leaders. The cycle is mostly repeated. Washington, the West, and most Arab states go along, and military aggression is called self-defense - hence the Israel Defense Forces much like America's Department of Defense.
In a recent article, Middle East expert Joseph Massad put it this way:
"The logic goes as follows: Israel has the right to occupy Palestinian land, lay siege to (its) populations in Bantustans surrounded by an apartheid wall, starve the population, cut them off from fuel and electricity (and all else), uproot their trees and crops, and launch periodic raids and targeted assassinations against them and their elected leadership, and if (resistance is encountered, Israel is entitled to slaughter) them en masse (because it's just) 'defending' itself as it must and should."
Naked aggression is called self-defense. Civilians are legitimate targets. Heroic freedom fighters are "terrorists," and if Arabs don't understand, the process is repeated until they do. Further, international humanitarian and other laws don't apply. Victims aren't entitled to the same rights as Jews because Arabs are inferior and don't warrant them. In addition:
"Israel has the right to oppress the Palestinians and does so to defend itself (its right to exist), but were the Palestinians to defend themselves against Israel's oppression, (to which it has no right, then) Israel will have the right to defend itself against their legitimate defense" without restraint or regard for the laws of war or humanitarian considerations.
Negotiating with Israel is futile because Tel Aviv demands and doesn't yield. It takes and doesn't give. Peace process hypocrisy offers nothing, and all Palestinians have to show for it is continued occupation, death, destruction, oppression, immiseration, and loss of their land and freedom.
Zionists did it in stages:
-- early arrivals saw themselves as "returning natives" and began a process of displacement;
-- from 1918 - 1947, it advanced as the Jewish population increased;
-- from 1936 - 1939, Arab resistance grew against increasing Jewish encroachment; it was clear that unlimited Jewish immigration, combined with Zionist political and military development, meant the eventual transformation of Palestine to a Jewish state; in 1936, Arabs resisted, called a strike, and reacted violently;
-- Zionists countered with a "compulsory transfer" policy; Jewish sovereignty over all Palestine became a priority; accommodating Arabs was rejected; the Biltmore Program affirmed it;
-- Ben-Gurion had a plan, but WW II intervened;
-- post-war, violence again erupted; Zionists wanted unrestricted immigration; Palestinians saw their country being lost; the war bankrupted Britain; it ended its Mandate over Palestine on May 14, 1948 when the State of Israel was established.
America became the first country to extend recognition when Harry Truman signed the following statement:
"This Government has been informed that a Jewish state has been proclaimed in Palestine, and recognition has been requested by the provisional government thereof.
The United States recognizes the provisional government as the de facto authority of the new State of Israel."
It established an enduring alliance, more firmly in place now than ever - in a strategic part of the world for the mutual benefit of both nations.
Understanding Zionism is fundamental:
-- its reliance on oppression, violence, and dispossession;
-- its belief in exclusivity, privilege, and Jewish exceptionalism;
-- racism at the core of its politics;
-- democracy only for Jews;
-- an ethnically pure state in which half its inhabitants aren't Jewish, are afforded few rights, and none on what matters most.
Zionism justifies a Jewish ethnocracy with built-in structural inequalities. Israeli Arabs may vote, sit in the Knesset, but government rulings aren't "legitimate" without a "Jewish majority." The Law of Return is for Jews alone. All laws are for Jews. On issues of land, housing, education and most everything, Jewish favoritism discriminates against Arabs.
The Citizenship and Entry into Israel Law prohibits Israeli Arab spouses from the West Bank, Gaza or any Arab country from entering Israel and getting residency rights or citizenship. It's to counter a "demographic problem" or the threat that a faster-growing Palestinian population will soon outnumber Jews and change the character of a "Jewish state."
Ideology becomes policy and Arabs suffer with convenient myths for justification:
-- poor Israel; it's a victim fighting to survive against hordes of hostile Arabs;
-- they reject peace, prefer violence, plan Israel's destruction, so conflict is inevitable;
-- the core problem is Palestinian "terrorism;" Israel acts only in self-defense;
-- Gaza and the West Bank are "disputed," not "occupied" Territories;
-- political solutions aren't possible so Israel must maintain total control under "Fortress Israel;"
-- Palestinians are to be relegated to isolated powerless cantons under Israel's control before a "final solution" dispossesses or annihilates them; Israel is for Jews alone; after the 1967 war, the Allon Plan affirmed it - named after deputy prime minister Yigal Allon; his goal:
(1) "maximum land with minimum Arabs;"
(2) annex around 40% of the West Bank and Gaza, taking the choicest parts; and
(3) dispossess Palestinians from land Israel wants for Jews.
In his 2001 book, "The Iron Wall," Avi Shlaim wrote:
After Israel's victory in 1967, Allon (on July 26) "submitted to the cabinet a plan that was to bear his name (The Allon Plan). It called for incorporating in Israel the following areas: a strip of land ten to fifteen kilometers wide along the Jordan River; most of the Judean desert along the Dead Sea; and a substantial area around Greater Jerusalem, including the Latrun salient. Designed to include as few Arabs as possible in the area claimed for Israel, the plan envisaged building permanent settlements and army bases in these areas. Finally, it called for opening negotiations with local leaders on turning the remaining parts of the West Bank into an autonomous region that would be economically linked to Israel. The cabinet discussed Allon's plan but neither adopted nor rejected it."
He also called for defensible borders, creating a Jordanian - Palestinian state, letting Israel maintain a West Bank military presence up to the Jordan River, and be fully in control of a united Jerusalem, perhaps with a Jordanian status in the Old City's Muslim quarter.
The Allon Plan was in Labor Party platforms in 1974, 1977, 1981, 1984, and 1987, and to large degree shaped Israel's settlement policies from 1967 - 1977. Prime minister Begin then offered Palestinian self-administration (the right to be Israel's enforcer) to Egypt's Sadat in 1977. It became part of the 1978 Camp David agreement and 1993 Oslo Accords.
From 1948 to the present:
-- peace, reconciliation, liberation, and a fair and equitable solution to the region's longest and most intractable problem is unconsidered and unwanted; conflict is the chosen option; seizing all of historic Palestine the goal; and eliminating the Palestinian problem and establishing Israeli regional dominance the final aim.
Post-WW II, Palestinians were nearly 70% of the population, Jews around 30% and owned 6% of the land. Yet the November 1947 General Assembly Partition Plan (Resolution 181) gave Jews 56%. Palestinians got 42% with 2% kept under internationalized trusteeship, including Jerusalem. Jews got the best parts, including choice agricultural areas. Palestinians had no air access or harbor and port facilities, except for isolated Jaffa. Nonetheless, David Ben-Gurion wanted 80%. Israel's 1948 War of Independence got 78%. The problem was keeping it for Jews alone.
Israel agreed to UN Resolution 194 (in December 1948) providing for free access to Jerusalem and other holy places as well as granting Palestinian refugees the right of return. In May 1949, UN Resolution 273 gave Israel UN membership conditional on it accepting Resolutions 181 and 194 and "unreservedly (agreeing to honor) the obligations of the United Nations Charter." However, earlier in June 1948, the Israeli cabinet (with no formal vote) barred Palestinian refugees from returning and directed the IDF to stop those trying with live fire. The same policy remains today to assure a Jewish majority and much more.
"Israelification" and "De-Arabization" are policies to preserve a "Jewish character." Pre-1948, Palestinians owned 93% of Palestine. It dropped to 25% after the war, 7.3% by 1962, and is now around 4%. Palestinians are gradually being dispossessed of their land, country, freedom, and futures. This is the Zionist goal, internal oppression and conflict the methodology.
Treat them like "dogs," said Moshe Dayan, so they'll leave. Use "terror, assassination, intimidation, land confiscation," and more was David Ben-Gurion's formula. Today it's unilateral separation, "de-Arabization," isolation, confinement, and destroying the will to resist with intermittent conflict and mass slaughter for reinforcement.
Israel's aim:
-- total control of Palestine;
-- Palestinians are "encouraged" to leave;
-- confining those who don't to isolated, powerless cantons;
-- advancing land seizures;
-- co-opting a quisling Palestinian leadership;
-- using it as enforcers;
-- terrorizing the population relentlessly;
-- denying Palestinians any rights; and
-- purifying Israel as a Jewish state (like the Nazis tried in Germany) by removing its Arab population. This is Israel today, the reason many Jews aren't staying, and why growing numbers won't move there. Nominally it's a democracy, but only for Jews. Arabs are disenfranchised, without rights, and unwanted.
Gaza and the West Bank remain occupied. Pre-Oslo, Middle East expert Sara Roy called Gaza a "Case of Economic De-Development," a condition as true of the West Bank and, in today's environment much harsher than she discovered. Her definition was a "process which undermines or weakens the ability of an economy to grow and expand by preventing it from accessing and utilizing critical inputs needed to promote internal growth beyond a specific structural level." Gaza was to be transformed "into an auxiliary of the state of Israel." So was the West Bank.
It's way beyond that now under Israel's policy of oppression, impoverishment, depopulation, destruction, displacement, and genocide to crush the Palestinian spirit, slaughter its people, and end any hope for a viable Palestinian state.
Gaza is under siege and was ravaged by war. The West Bank is checkmated by isolation, land seizures, walls, checkpoints, home demolitions, a nightmarish bureaucracy, closures, agricultural and free movement restrictions, crop destruction, curfews, permits, economic strangulation, random killings, arrests, imprisonment, torture, and overall security force terror against a civilian population.
Israel has total control, aided by the complicit Fatah under Abbas, but this pattern has persisted for decades. For over a half century, Tel Aviv ignored or abused hundreds of UN resolutions condemning or censuring it for its actions against Palestinians and other Arabs, deploring it for committing them, or demanding, calling on, or urging Israel to end them. UN Resolution 242 alone (November 1967) calls for: "Withdrawal of Israeli armed forces from territories occupied in the recent conflict."
Article 49 of the Fourth Geneva Convention prohibits:
"Individual or mass forcible transfers, as well as deportations of protected persons from occupied territory...." Neither shall "The Occupying Power...deport or transfer parts of its own civilian population into the territory it occupies."
Israeli settlements have "no legal validity" under Security Council Resolutions 446 (March 1979), 452 (July 1979), 465 (March 1980), 471 (June 1980), and 476 (June 1980). In addition, Resolutions 267 (July 1969) and 497 (December 1981) say the annexations of East Jerusalem (267) and Syria's Golan Heights (497) are illegal and call for them to be rescinded. Yet Israel continues settlement expansions and maintains a Kafkaesque "matrix of control" over Palestine in gross violation of international law.
In 1967, Theodor Meron, Israeli foreign ministry's legal council, told prime minister Levi Eshkol that: "My conclusion is that civilian settlement in the administered territories contravenes the explicit provisions of the Fourth Geneva Convention."
In April 1978, US State Department Legal Advisor, Herbert Hansell, told Congress that:
"while Israel may undertake, in the occupied territories, actions necessary to meet its military needs and to provide for orderly government during the occupation, (the) establishment of the civilian settlements in those territories is inconsistent with international law."
Palestinians are isolated and on their own. Few nations anywhere support them. None in the West or the Middle East, except Iran, Syria and Hezbollah in Lebanon. Courage alone sustains them, now powerfully buoyed by a groundswell of world outrage; the global BDS Movement for boycott, divestment and sanctions; calls for criminal prosecutions for Israeli war criminals and expulsion of Israel from the UN System until it fully complies with international law.
In November 2004, law professor Michael Mandel wrote: "Israel's West Bank and Gaza settlements are war crimes in Canada. Under the Canadian Crimes Against Humanity and War Crimes Act 2000, c. 24, Israel's settlements in territories taken in the June 1967 war constitute war crimes punishable in Canada."
Mandel cites Section 8, paragraph 2 of the Rome Statute of the International Criminal Court (ICC) adopted by 120 states in July 1998. Item viii prohibits: "The transfer, directly or indirectly, by the Occupying Power of parts of its own civilian population into the territory it occupies, or the deportation or transfer of all or parts of the population of the occupied territory within or outside this territory."
After initially voting against the Rome Statute, the Clinton administration signed it in December 2000. Then in May 2001, the Bush administration revoked the signature and began a worldwide campaign against the Court.
Israel as well isn't a party to the Rome Statute, but that's irrelevant under Canadian law. Grave breaches of Geneva constitute war crimes. Israel (like America) is criminally liable. Mandel states that although "Israel denies it, there is no question that Israel is an Occupying Power for the purposes of the Geneva Convention, the Rome Statute, and the Canadian Crimes Against Humanity and War Crimes Act." Holding it accountable is essential. It's high time world jurists demanded it.
Stephen Lendman is a Research Associate of the Centre of Research on Globalization. He lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.
Also visit his blog site at sjlendman.blogspot.com and listen to The Global Research News Hour on RepublicBroadcasting.org Monday through Friday US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listening.
http://www.globalresearch.ca/index.php?context=va&aid=12195
The Coming Fury
As goods pile up in wharves from Bangkok to Shanghai, and workers are laid off in record numbers, people in East Asia are beginning to realize they aren't only experiencing an economic downturn but living through the end of an era.
For over 40 years now, the cutting edge of the region's economy has been export-oriented industrialization (EOI). Taiwan and Korea first adopted this strategy of growth in the mid-1960s, with Korean dictator Park Chung-Hee coaxing his country's entrepreneurs to export by, among other measures, cutting off electricity to their factories if they refused to comply.
The success of Korea and Taiwan convinced the World Bank that EOI was the wave of the future. In the mid-1970s, then-Bank President Robert McNamara enshrined it as doctrine, preaching that "special efforts must be made in many countries to turn their manufacturing enterprises away from the relatively small markets associated with import substitution toward the much larger opportunities flowing from export promotion."
EOI became one of the key points of consensus between the Bank and Southeast Asia's governments. Both realized import substitution industrialization could only continue if domestic purchasing power were increased via significant redistribution of income and wealth, and this was simply out of the question for the region's elites. Export markets, especially the relatively open U.S. market, appeared to be a painless substitute.
Japanese Capital Creates an Export Platform
The World Bank endorsed the establishment of export processing zones, where foreign capital could be married to cheap (usually female) labor. It also supported the establishment of tax incentives for exporters and, less successfully, promoted trade liberalization. Not until the mid-1980s, however, did the economies of Southeast Asia take off, and this wasn't so much because of the Bank but because of aggressive U.S. trade policy. In 1985, in what became known as the Plaza Accord, the United States forced the drastic revaluation of the Japanese yen relative to the dollar and other major currencies. By making Japanese imports more expensive to American consumers, Washington hoped to reduce its trade deficit with Tokyo. Production in Japan became prohibitive in terms of labor costs, forcing the Japanese to move the more labor-intensive parts of their manufacturing operations to low-wage areas, in particular to China and Southeast Asia. At least $15 billion worth of Japanese direct investment flowed into Southeast Asia between 1985 and 1990.
The inflow of Japanese capital allowed the Southeast Asian "newly industrializing countries" to escape the credit squeeze of the early 1980s brought on by the Third World debt crisis, surmount the global recession of the mid-1980s, and move onto a path of high-speed growth. The centrality of the endaka, or currency revaluation, was reflected in the ratio of foreign direct investment inflows to gross capital formation, which leaped spectacularly in the late 1980s and 1990s in Indonesia, Malaysia, and Thailand.
The dynamics of foreign-investment-driven growth was best illustrated in Thailand, which received $24 billion worth of investment from capital-rich Japan, Korea, and Taiwan in just five years, between 1987 and 1991. Whatever might have been the Thai government's economic policy preferences — protectionist, mercantilist, or pro-market — this vast amount of East Asian capital coming into Thailand could not but trigger rapid growth. The same was true in the two other favored nations of northeast Asian capital, Malaysia and Indonesia.
It wasn't just the scale of Japanese investment over a five-year period that mattered, however; it was the process. The Japanese government and keiretsu, or conglomerates, planned and cooperated closely in the transfer of corporate industrial facilities to Southeast Asia. One key dimension of this plan was to relocate not just big corporations like Toyota or Matsushita, but also small and medium enterprises that provided their inputs and components. Another was to integrate complementary manufacturing operations that were spread across the region in different countries. The aim was to create an Asia Pacific platform for re-export to Japan and export to third-country markets. This was industrial policy and planning on a grand scale, managed jointly by the Japanese government and corporations and driven by the need to adjust to the post-Plaza Accord world. As one Japanese diplomat put it rather candidly, "Japan is creating an exclusive Japanese market in which Asia Pacific nations are incorporated into the so-called keiretsu [financial-industrial bloc] system."
China Masters the Model
If Taiwan and Korea pioneered the model and Southeast Asia successfully followed in their wake, China perfected the strategy of export-oriented industrialization. With its reserve army of cheap labor unmatched by any country in the world, China became the "workshop of the world," drawing in $50 billion in foreign investment annually by the first half of this decade. To survive, transnational firms had no choice but to transfer their labor-intensive operations to China to take advantage of what came to be known as the "China price," provoking in the process a tremendous crisis in the advanced capitalist countries’ labor forces.
This process depended on the U.S. market. As long as U.S. consumers splurged, the export economies of East Asia could continue in high gear. The low U.S. savings rate was no barrier since credit was available on a grand scale. China and other Asian countries snapped up U.S. treasury bills and loaned massively to U.S. financial institutions, which in turn loaned to consumers and homebuyers. But now the U.S. credit economy has imploded, and the U.S. market is unlikely to serve as the same dynamic source of demand for a long time to come. As a result, Asia's export economies have been marooned.
The Illusion of "Decoupling"
For several years China has seemed to be a dynamic alternative to the U.S. market for Japan and East Asia's smaller economies. Chinese demand, after all, had pulled the Asian economies, including Korea and Japan, from the depths of stagnation and the morass of the Asian financial crisis in the first half of this decade. In 2003, for instance, Japan broke a decade-long stagnation by meeting China's thirst for capital and technology-intensive goods. Japanese exports shot up to record levels. Indeed, China had become by the middle of the decade, "the overwhelming driver of export growth in Taiwan and the Philippines, and the majority buyer of products from Japan, South Korea, Malaysia, and Australia."
Even though China appeared to be a new driver of export-led growth, some analysts still considered the notion of Asia "decoupling" from the U.S. locomotive to be a pipe dream. For instance, research by economists C.P. Chandrasekhar and Jayati Ghosh, underlined that China was indeed importing intermediate goods and parts from Japan, Korea, and ASEAN, but only to put them together mainly for export as finished goods to the United States and Europe, not for its domestic market. Thus, "if demand for Chinese exports from the United States and the EU slow down, as will be likely with a U.S. recession," they asserted, "this will not only affect Chinese manufacturing production, but also Chinese demand for imports from these Asian developing countries."
The collapse of Asia's key market has banished all talk of decoupling. The image of decoupled locomotives — one coming to a halt, the other chugging along on a separate track — no longer applies, if it ever had. Rather, U.S.-East Asia economic relations today resemble a chain-gang linking not only China and the United States but a host of other satellite economies. They are all linked to debt-financed middle-class spending in the United States, which has collapsed.
China's growth in 2008 fell to 9%, from 11% a year earlier. Japan is now in deep recession, its mighty export-oriented consumer goods industries reeling from plummeting sales. South Korea, the hardest hit of Asia's economies so far, has seen its currency collapse by some 30% relative to the dollar. Southeast Asia's growth in 2009 will likely be half that of 2008.
The Coming Fury
The sudden end of the export era is going to have some ugly consequences. In the last three decades, rapid growth reduced the number living below the poverty line in many countries. In practically all countries, however, income and wealth inequality increased. But the expansion of consumer purchasing power took much of the edge off social conflicts. Now, with the era of growth coming to an end, increasing poverty amid great inequalities will be a combustible combination.
In China, about 20 million workers have lost their jobs in the last few months, many of them heading back to the countryside, where they will find little work. The authorities are rightly worried that what they label "mass group incidents," which have been increasing in the last decade, might spin out of control. With the safety valve of foreign demand for Indonesian and Filipino workers shut off, hundreds of thousands of workers are returning home to few jobs and dying farms. Suffering is likely to be accompanied by rising protest, as it already has in Vietnam, where strikes are spreading like wildfire. Korea, with its tradition of militant labor and peasant protest, is a ticking time bomb. Indeed, East Asia may be entering a period of radical protest and social revolution that went out of style when export-oriented industrialization became the fashion three decades ago.
Walden Bello is a Foreign Policy In Focus columnist, a senior analyst at the Bangkok-based Focus on the Global South, president of the Freedom from Debt Coalition, and a professor of sociology at the University of the Philippines.
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