“Not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient.” — Alan Greenspan in 2004
George Soros, the prominent financier, avoids using the financial contracts known as derivatives “because we don’t really understand how they work.” Felix G. Rohatyn, the investment banker who saved New York from financial catastrophe in the 1970s, described derivatives as potential “hydrogen bombs.”
And Warren E. Buffett presciently observed five years ago that derivatives were “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”
One prominent financial figure, however, has long thought otherwise. And his views held the greatest sway in debates about the regulation and use of derivatives — exotic contracts that promised to protect investors from losses, thereby stimulating riskier practices that led to the financial crisis. For more than a decade, the former Federal Reserve Chairman Alan Greenspan has fiercely objected whenever derivatives have come under scrutiny in Congress or on Wall Street. “What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn’t be taking it to those who are willing to and are capable of doing so,” Mr. Greenspan told the Senate Banking Committee in 2003. “We think it would be a mistake” to more deeply regulate the contracts, he added.
Today, with the world caught in an economic tempest that Mr. Greenspan recently described as “the type of wrenching financial crisis that comes along only once in a century,” his faith in derivatives remains unshaken.
The problem is not that the contracts failed, he says. Rather, the people using them got greedy. A lack of integrity spawned the crisis, he argued in a speech a week ago at Georgetown University, intimating that those peddling derivatives were not as reliable as “the pharmacist who fills the prescription ordered by our physician.”
But others hold a starkly different view of how global markets unwound, and the role that Mr. Greenspan played in setting up this unrest.
“Clearly, derivatives are a centerpiece of the crisis, and he was the leading proponent of the deregulation of derivatives,” said Frank Partnoy, a law professor at the University of San Diego and an expert on financial regulation.
The derivatives market is $531 trillion, up from $106 trillion in 2002 and a relative pittance just two decades ago. Theoretically intended to limit risk and ward off financial problems, the contracts instead have stoked uncertainty and actually spread risk amid doubts about how companies value them.
If Mr. Greenspan had acted differently during his tenure as Federal Reserve chairman from 1987 to 2006, many economists say, the current crisis might have been averted or muted.
Over the years, Mr. Greenspan helped enable an ambitious American experiment in letting market forces run free. Now, the nation is confronting the consequences.
Derivatives were created to soften — or in the argot of Wall Street, “hedge” — investment losses. For example, some of the contracts protect debt holders against losses on mortgage securities. (Their name comes from the fact that their value “derives” from underlying assets like stocks, bonds and commodities.) Many individuals own a common derivative: the insurance contract on their homes.
On a grander scale, such contracts allow financial services firms and corporations to take more complex risks that they might otherwise avoid — for example, issuing more mortgages or corporate debt. And the contracts can be traded, further limiting risk but also increasing the number of parties exposed if problems occur.
Throughout the 1990s, some argued that derivatives had become so vast, intertwined and inscrutable that they required federal oversight to protect the financial system. In meetings with federal officials, celebrated appearances on Capitol Hill and heavily attended speeches, Mr. Greenspan banked on the good will of Wall Street to self-regulate as he fended off restrictions.
Ever since housing began to collapse, Mr. Greenspan’s record has been up for revision. Economists from across the ideological spectrum have criticized his decision to let the nation’s real estate market continue to boom with cheap credit, courtesy of low interest rates, rather than snuffing out price increases with higher rates. Others have criticized Mr. Greenspan for not disciplining institutions that lent indiscriminately.
But whatever history ends up saying about those decisions, Mr. Greenspan’s legacy may ultimately rest on a more deeply embedded and much less scrutinized phenomenon: the spectacular boom and calamitous bust in derivatives trading.
Faith in the System
Some analysts say it is unfair to blame Mr. Greenspan because the crisis is so sprawling. “The notion that Greenspan could have generated a totally different outcome is naïve,” said Robert E. Hall, an economist at the conservative Hoover Institution, a research group at Stanford.
Mr. Greenspan declined requests for an interview. His spokeswoman referred questions about his record to his memoir, “The Age of Turbulence,” in which he outlines his beliefs.
“It seems superfluous to constrain trading in some of the newer derivatives and other innovative financial contracts of the past decade,” Mr. Greenspan writes. “The worst have failed; investors no longer fund them and are not likely to in the future.”
In his Georgetown speech, he entertained no talk of regulation, describing the financial turmoil as the failure of Wall Street to behave honorably.
“In a market system based on trust, reputation has a significant economic value,” Mr. Greenspan told the audience. “I am therefore distressed at how far we have let concerns for reputation slip in recent years.”
As the long-serving chairman of the Fed, the nation’s most powerful economic policy maker, Mr. Greenspan preached the transcendent, wealth-creating powers of the market.
A professed libertarian, he counted among his formative influences the novelist Ayn Rand, who portrayed collective power as an evil force set against the enlightened self-interest of individuals. In turn, he showed a resolute faith that those participating in financial markets would act responsibly.
An examination of more than two decades of Mr. Greenspan’s record on financial regulation and derivatives in particular reveals the degree to which he tethered the health of the nation’s economy to that faith.
As the nascent derivatives market took hold in the early 1990s, and in subsequent years, critics denounced an absence of rules forcing institutions to disclose their positions and set aside funds as a reserve against bad bets.
Time and again, Mr. Greenspan — a revered figure affectionately nicknamed the Oracle — proclaimed that risks could be handled by the markets themselves.
“Proposals to bring even minimalist regulation were basically rebuffed by Greenspan and various people in the Treasury,” recalled Alan S. Blinder, a former Federal Reserve board member and an economist at Princeton University. “I think of him as consistently cheerleading on derivatives.”
Arthur Levitt Jr., a former chairman of the Securities and Exchange Commission, says Mr. Greenspan opposes regulating derivatives because of a fundamental disdain for government.
Mr. Levitt said that Mr. Greenspan’s authority and grasp of global finance consistently persuaded less financially sophisticated lawmakers to follow his lead.
“I always felt that the titans of our legislature didn’t want to reveal their own inability to understand some of the concepts that Mr. Greenspan was setting forth,” Mr. Levitt said. “I don’t recall anyone ever saying, ‘What do you mean by that, Alan?’ ”
Still, over a long stretch of time, some did pose questions. In 1992, Edward J. Markey, a Democrat from Massachusetts who led the House subcommittee on telecommunications and finance, asked what was then the General Accounting Office to study derivatives risks.
Two years later, the office released its report, identifying “significant gaps and weaknesses” in the regulatory oversight of derivatives.
“The sudden failure or abrupt withdrawal from trading of any of these large U.S. dealers could cause liquidity problems in the markets and could also pose risks to others, including federally insured banks and the financial system as a whole,” Charles A. Bowsher, head of the accounting office, said when he testified before Mr. Markey’s committee in 1994. “In some cases intervention has and could result in a financial bailout paid for or guaranteed by taxpayers.”
In his testimony at the time, Mr. Greenspan was reassuring. “Risks in financial markets, including derivatives markets, are being regulated by private parties,” he said.
“There is nothing involved in federal regulation per se which makes it superior to market regulation.”
Mr. Greenspan warned that derivatives could amplify crises because they tied together the fortunes of many seemingly independent institutions. “The very efficiency that is involved here means that if a crisis were to occur, that that crisis is transmitted at a far faster pace and with some greater virulence,” he said.
But he called that possibility “extremely remote,” adding that “risk is part of life.”
Later that year, Mr. Markey introduced a bill requiring greater derivatives regulation. It never passed.
Resistance to Warnings
In 1997, the Commodity Futures Trading Commission, a federal agency that regulates options and futures trading, began exploring derivatives regulation. The commission, then led by a lawyer named Brooksley E. Born, invited comments about how best to oversee certain derivatives.
Ms. Born was concerned that unfettered, opaque trading could “threaten our regulated markets or, indeed, our economy without any federal agency knowing about it,” she said in Congressional testimony. She called for greater disclosure of trades and reserves to cushion against losses.
Ms. Born’s views incited fierce opposition from Mr. Greenspan and Robert E. Rubin, the Treasury secretary then. Treasury lawyers concluded that merely discussing new rules threatened the derivatives market. Mr. Greenspan warned that too many rules would damage Wall Street, prompting traders to take their business overseas.
“Greenspan told Brooksley that she essentially didn’t know what she was doing and she’d cause a financial crisis,” said Michael Greenberger, who was a senior director at the commission. “Brooksley was this woman who was not playing tennis with these guys and not having lunch with these guys. There was a little bit of the feeling that this woman was not of Wall Street.”
Ms. Born declined to comment. Mr. Rubin, now a senior executive at the banking giant Citigroup, says that he favored regulating derivatives — particularly increasing potential loss reserves — but that he saw no way of doing so while he was running the Treasury.
“All of the forces in the system were arrayed against it,” he said. “The industry certainly didn’t want any increase in these requirements. There was no potential for mobilizing public opinion.”
Mr. Greenberger asserts that the political climate would have been different had Mr. Rubin called for regulation.
In early 1998, Mr. Rubin’s deputy, Lawrence H. Summers, called Ms. Born and chastised her for taking steps he said would lead to a financial crisis, according to Mr. Greenberger. Mr. Summers said he could not recall the conversation but agreed with Mr. Greenspan and Mr. Rubin that Ms. Born’s proposal was “highly problematic.”
On April 21, 1998, senior federal financial regulators convened in a wood-paneled conference room at the Treasury to discuss Ms. Born’s proposal. Mr. Rubin and Mr. Greenspan implored her to reconsider, according to both Mr. Greenberger and Mr. Levitt.
Ms. Born pushed ahead. On June 5, 1998, Mr. Greenspan, Mr. Rubin and Mr. Levitt called on Congress to prevent Ms. Born from acting until more senior regulators developed their own recommendations. Mr. Levitt says he now regrets that decision. Mr. Greenspan and Mr. Rubin were “joined at the hip on this,” he said. “They were certainly very fiercely opposed to this and persuaded me that this would cause chaos.”
Ms. Born soon gained a potent example. In the fall of 1998, the hedge fund Long Term Capital Management nearly collapsed, dragged down by disastrous bets on, among other things, derivatives. More than a dozen banks pooled $3.6 billion for a private rescue to prevent the fund from slipping into bankruptcy and endangering other firms.
Despite that event, Congress froze the Commodity Futures Trading Commission’s regulatory authority for six months. The following year, Ms. Born departed.
In November 1999, senior regulators — including Mr. Greenspan and Mr. Rubin — recommended that Congress permanently strip the C.F.T.C. of regulatory authority over derivatives.
Mr. Greenspan, according to lawmakers, then used his prestige to make sure Congress followed through. “Alan was held in very high regard,” said Jim Leach, an Iowa Republican who led the House Banking and Financial Services Committee at the time. “You’ve got an area of judgment in which members of Congress have nonexistent expertise.”
As the stock market roared forward on the heels of a historic bull market, the dominant view was that the good times largely stemmed from Mr. Greenspan’s steady hand at the Fed.
“You will go down as the greatest chairman in the history of the Federal Reserve Bank,” declared Senator Phil Gramm, the Texas Republican who was chairman of the Senate Banking Committee when Mr. Greenspan appeared there in February 1999.
Mr. Greenspan’s credentials and confidence reinforced his reputation — helping him to persuade Congress to repeal Depression-era laws that separated commercial and investment banking in order to reduce overall risk in the financial system.
“He had a way of speaking that made you think he knew exactly what he was talking about at all times,” said Senator Tom Harkin, a Democrat from Iowa. “He was able to say things in a way that made people not want to question him on anything, like he knew it all. He was the Oracle, and who were you to question him?”
In 2000, Mr. Harkin asked what might happen if Congress weakened the C.F.T.C.’s authority.
“If you have this exclusion and something unforeseen happens, who does something about it?” he asked Mr. Greenspan in a hearing.
Mr. Greenspan said that Wall Street could be trusted. “There is a very fundamental trade-off of what type of economy you wish to have,” he said. “You can have huge amounts of regulation and I will guarantee nothing will go wrong, but nothing will go right either,” he said.
Later that year, at a Congressional hearing on the merger boom, he argued that Wall Street had tamed risk.
“Aren’t you concerned with such a growing concentration of wealth that if one of these huge institutions fails that it will have a horrendous impact on the national and global economy?” asked Representative Bernard Sanders, an independent from Vermont.
“No, I’m not,” Mr. Greenspan replied. “I believe that the general growth in large institutions have occurred in the context of an underlying structure of markets in which many of the larger risks are dramatically — I should say, fully — hedged.”
The House overwhelmingly passed the bill that kept derivatives clear of C.F.T.C. oversight. Senator Gramm attached a rider limiting the C.F.T.C.’s authority to an 11,000-page appropriations bill. The Senate passed it. President Clinton signed it into law.
Pressing Forward
Still, savvy investors like Mr. Buffett continued to raise alarms about derivatives, as he did in 2003, in his annual letter to shareholders of his company, Berkshire Hathaway.
“Large amounts of risk, particularly credit risk, have become concentrated in the hands of relatively few derivatives dealers,” he wrote. “The troubles of one could quickly infect the others.”
But business continued.
And when Mr. Greenspan began to hear of a housing bubble, he dismissed the threat. Wall Street was using derivatives, he said in a 2004 speech, to share risks with other firms.
Shared risk has since evolved from a source of comfort into a virus. As the housing crisis grew and mortgages went bad, derivatives actually magnified the downturn.
The Wall Street debacle that swallowed firms like Bear Stearns and Lehman Brothers, and imperiled the insurance giant American International Group, has been driven by the fact that they and their customers were linked to one another by derivatives.
In recent months, as the financial crisis has gathered momentum, Mr. Greenspan’s public appearances have become less frequent.
His memoir was released in the middle of 2007, as the disaster was unfolding, and his book tour suddenly became a referendum on his policies. When the paperback version came out this year, Mr. Greenspan wrote an epilogue that offers a rebuttal of sorts.
“Risk management can never achieve perfection,” he wrote. The villains, he wrote, were the bankers whose self-interest he had once bet upon.
“They gambled that they could keep adding to their risky positions and still sell them out before the deluge,” he wrote. “Most were wrong.”
No federal intervention was marshaled to try to stop them, but Mr. Greenspan has no regrets.
“Governments and central banks,” he wrote, “could not have altered the course of the boom.”
fredag den 17. oktober 2008
Oxford Research Group: The Financial Crisis and Sustainable Security
Introduction
Oxford Research Group’s International Security Monthly Briefings focus primarily on issues such as the conflicts in Iraq, Afghanistan and Pakistan, the evolution of western counter-terrorism policies and the development of the al-Qaida movement. On occasions they also cover matters such as energy security, climate change and world food prospects. In view of the serious financial situation that has developed in recent months, this briefing provides an initial analysis of the possible impact of the crisis on security.
This is undertaken in the context of ORG’s work on sustainable security which, in turn, is predicated on an underlying analysis of the security issues that are likely to be most prominent in the next two to three decades. This assesses that there are four main trends that are particularly salient.
Firstly, global socio-economic divisions are widening, with most of the benefits of the past three decades of economic growth being concentrated in the hands of a trans-global elite community of about 1.2 billion people, mainly in the countries of the Atlantic community and the West Pacific, but with elite communities in the tens of millions in countries such as China, India and Brazil. Improvements in education, literacy and communications in recent decades have increased the awareness of many marginalised people of this unjust distribution of wealth. In extreme circumstances this can lead to the rise of violent and extreme social movements such as the Naxalites in India.
Secondly, climate change is expected to have profound effects on that majority of the world’s population living in the tropical and sub-tropical regions but without the economic resources to respond to severe storms, rising sea levels and drastic changes in rainfall distribution. Increased migration and social and political unrest are likely consequences.
Thirdly, resource competition, especially over energy resources in the Persian Gulf region and elsewhere, will, on present trends, be an increasing source of tension and conflict.
Lastly, the strong tendency of powerful elites to maintain security, by military force if necessary, is expected to be counter-productive, as has already been seen by many of the consequences of the war on terror.
Countering such trends involves a fundamental commitment to emancipation and socio-economic justice. This includes fair trade, debt cancellation, assistance for sustainable development, a radical cut in carbon emissions, rapidly increased use of renewable energy resources and the development of conflict prevention and conflict resolution policies that avoid the use of force (see Beyond Terror).
The Financial Crisis and Historical Experience
The current crisis has three main characteristics:
* It is global. While most emphasis was initially on the sub-prime market in the United States, the crisis has spread rapidly through the UK and across Europe, has resulted in a 60% fall in the Shanghai stock market in a year, steep stock market falls across much of Latin America and bank crises in Australia and New Zealand.
* It has initially been a crisis of liquidity and confidence in the financial sector rather than a decline in industrial and retail activities, but it is expected to have a substantial effect on industrial and commercial output as sources of investment finance diminish.
* It is likely to last at least two years, with several more years for recovery.
Prior to the sub-prime issue, the international economy was already affected by rapid oil price rises and a more general bull market of rising prices for primary commodities. One early effect was a substantial increase in food prices that had a particular impact on poorer communities across the world (see the May 2008 briefing, Food Poverty and Security).
The 2008 crisis is not directly comparable to the 1929 Wall Street crash, which was not truly global, nor to the 1987 stock market problems in Europe nor even the widespread Asian downturn of the 1990s, even though these had some global ramifications. The only comparable previous global crisis was that of 1973-74. Then, unilateral moves by Arab oil producers during the Yom Kippur/Ramadan War of October 1973 precipitated a remarkable 450% increase in oil prices within ten months, resulting in an unusual combination of economic stagnation and inflation. A parallel issue was a rapid increase food prices.
The worst excesses of the food crisis were averted partly by a decline in food prices because of the onset of the recession, together with some emergency aid coming from some of the newly-rich oil producers. The experience of stagflation in industrial countries resulted less in a move towards mixed economies with a higher level of state planning, and more to the development of free-market ideas, not least in the form of what was later termed “Reaganomics”.
The 25 years from 1980 saw the rapid development of free market globalisation that stimulated substantial economic growth but with a notable lack of socio-economic justice as wealth-poverty divisions widened. Towards the end of the 2000s, the combination of oil price rises and economic overextension, especially in sub-prime markets, resulted in a transnational banking crisis.
Impacts on Poorer Communities
Some aspects of the current crisis will have relatively little impact on poorer communities. For example, oil prices are unlikely to maintain their current levels as demand falls due to a decline in economic activity. It would be possible for oil producers to act together to maintain higher prices but this is unlikely for two reasons. One is that the Organisation of Petroleum Exporting Countries (OPEC) does not have sufficient political unity to exert control over the market, unlike the 1973-74 period. The second is that sovereign wealth funds and other investment vehicles of some oil-rich states depend on buoyant stock markets in North America, Europe and East Asia. Maintaining very high oil prices would therefore tend to damage such investments.
Lower oil prices will be of some help to poorer countries struggling to meet the higher costs of their oil imports. Furthermore, the oil price decline is also likely to have some impact on food prices, resulting in price decreases that will be of some help to the poorest communities.
These, though, are among the few aspects of the current economic environment that might have some limited advantage for poorer people. In almost every other respect the outcome is less positive. For example, weak economies in major countries that normally attract migrant labour mean that remittances from labourers to their home countries will diminish as jobs become scarcer and wages decline. Such remittances are not just important across South and Southeast Asia but are also important for several Latin American economies. Furthermore, increases in unemployment in countries that are destinations for migrant workers will lead to a reaction against such workers, as has been seen recently in South Africa. This can readily extend to increased support for far-right political parties.
Another early consequence of an economic downturn will be a decline in international tourism and travel. Whatever the damaging impact that tourism can have on poorer communities, it is still the case that there is some monetary transfer involved, and some poorer states depend heavily in such earnings.
More importantly, a decline in economic activity will have a substantial impact on commodity prices, affecting the export earnings for poorer countries for a wide range of commodities including copper, tin, coffee, tea, sugar, cotton and hardwoods. Even now, many southern countries depend on such commodity exports for the substantial majority of all their export earnings. It is here that previous experience is particularly relevant to the current crisis and its effects on the majority world.
A New International Economic Order?
In the early 1970s, a substantial increase in commodity prices put the economies of most industrialised countries under some strain, especially as they were also experiencing the oil price rises. The UN Conference on Trade and Development (UNCTAD) had already been attempting to bring a degree of planning into world commodity markets, encouraging individual commodity agreements for products such as coffee and tin that were designed to provide stability along with some slow but steady increases in prices. Such agreements were seen as helping to alter the terms of trade between third world and industrialised states in a manner that would greatly improve the development prospects of the former.
By early 1974 the wild fluctuations in commodity markets were so marked that industrialised countries such as the US, UK, France and Japan were ready to accept the need for international market planning, and a Declaration on a New International Economic Order was agreed at a special session of the UN General Assembly in April 1974. The core of this proposal was the Integrated Programme for Commodities (IPC) which would bring in a series of linked commodity agreements backed by a Common Fund to finance the setting up of the necessary commodity buffer stocks. At the time many development economists believed that the IPC could provide a really valuable boost to the development prospects of many poorer countries, helping to bring in a new era of fair trade. However, that it was even proposed was mainly due to the temporary problems being faced by the world’s wealthy economies.
In the event, the increase in oil prices resulted in a decrease in industrial activity, a fall in primary commodity prices and, almost immediately, a general loss of interest in the IPC by the major industrial powers. What was eventually established, later in the 1970s, was a pale shadow of the original programme, and this had little impact as the era of the free market unfolded in the 1980s. The loss of that programme is a reminder that, in times of economic downturn, the prospects for poorer communities rarely loom large in the recovery policies of the world’s wealthy states.
Such behaviour has reached almost grotesque proportions in the current crisis, with wealthy states willing to commit more than a trillion dollars to rescue their own banking system in crisis. These are financial outlays that are enormous when compared with those that are being committed to achieving the United Nations Millennium Development Goals.
Responding to the Current Crisis
Although the current crisis does not have direct historical parallels, the marked tendency will therefore be for the most powerful economies to engage primarily in responding to their own problems. Much of this will be at the level of individual states, such as recent US Government intervention in the mortgage and insurance markets and numerous interventions across Europe. There is also likely to be some degree of cooperation between the more wealthy states of the North Atlantic community, drawn mainly from the members of the OECD.
Previous experience indicates that the emphasis will be almost entirely on domestic concerns rather than the wider global community. While this might provide some relief among the poorer sectors of the populations of wealthy states, it will do nothing to help the much larger numbers of impoverished people of the majority world. Moreover, further action to limit third world debt is unlikely and there will almost certainly be pressure on aid budgets. Even key issues such as climate change and the risk of resource conflict are likely to slip down the political agenda.
The implications of this are serious, in that any hindrance to facilitating sustainable development across the countries of the South will increase human insecurity and suffering. Furthermore, any limitation in addressing the urgent issue of climate change will just add to the problems of the South as the damaging effects of climate change increase their impact. Some of the most fragile of the world’s economies, from much of Africa through to Southwest Asia, will suffer most from economic recession and the impact of climate change. More generally, the bitterness that already exists across continents will be reinforced by a perception that the dominant economies have little or no interest in the majority of the world’s people.
Even so, it is just possible that the current crisis will be seen to necessitate a serious reconsideration of how the world economy has evolved in the past three decades. In essence, the nature of the globalised free market is being called into question amidst demands for considerable reforms. The reason for this may well be the manner in which the free market has allowed the current crisis of liquidity and confidence to develop in the wealthy economies, rather than that the free market has increased socio-economic divisions. The extent to which the reforms will be instituted will depend to some extent on the depth and duration of the current crisis but at the time of writing (early October) there are indications that it could well be severe and prolonged.
What could come out of this might be reforms that not only respond to the crisis in the western banking system but also address the deeper global inequalities that have developed in recent years. For that to happen there will need to be a degree of political wisdom on the part of some national governments, accompanied by visionary proposals by intergovernmental agencies, such as some of the specialised agencies of the United Nations. There are notable past examples of this, not least the Prebisch Plan on trade and development in 1963 that prompted UNCTAD’s early work, the UN Environment Programme’s work on ozone depletion in the mid-1980s and recent intergovernmental work on climate change.
However, there is little prospect of effective change if it is left solely to governments and inter-governmental agencies. The richer states will look to their own predicaments, and their influence in intergovernmental organisations may limit new proposals. What is essential is the sustained action of nongovernmental organisations as part of a wider civil society. Responding to the current crisis can either be a process limited to the narrow domestic concerns of the most powerful states or it can be seen as an opportunity for reform of the world’s economic system that will benefit the majority world. The timescale is the next two to five years, the likely duration of the current crisis, and the stakes are high.
Link til pdf-filen.
Oxford Research Group’s International Security Monthly Briefings focus primarily on issues such as the conflicts in Iraq, Afghanistan and Pakistan, the evolution of western counter-terrorism policies and the development of the al-Qaida movement. On occasions they also cover matters such as energy security, climate change and world food prospects. In view of the serious financial situation that has developed in recent months, this briefing provides an initial analysis of the possible impact of the crisis on security.
This is undertaken in the context of ORG’s work on sustainable security which, in turn, is predicated on an underlying analysis of the security issues that are likely to be most prominent in the next two to three decades. This assesses that there are four main trends that are particularly salient.
Firstly, global socio-economic divisions are widening, with most of the benefits of the past three decades of economic growth being concentrated in the hands of a trans-global elite community of about 1.2 billion people, mainly in the countries of the Atlantic community and the West Pacific, but with elite communities in the tens of millions in countries such as China, India and Brazil. Improvements in education, literacy and communications in recent decades have increased the awareness of many marginalised people of this unjust distribution of wealth. In extreme circumstances this can lead to the rise of violent and extreme social movements such as the Naxalites in India.
Secondly, climate change is expected to have profound effects on that majority of the world’s population living in the tropical and sub-tropical regions but without the economic resources to respond to severe storms, rising sea levels and drastic changes in rainfall distribution. Increased migration and social and political unrest are likely consequences.
Thirdly, resource competition, especially over energy resources in the Persian Gulf region and elsewhere, will, on present trends, be an increasing source of tension and conflict.
Lastly, the strong tendency of powerful elites to maintain security, by military force if necessary, is expected to be counter-productive, as has already been seen by many of the consequences of the war on terror.
Countering such trends involves a fundamental commitment to emancipation and socio-economic justice. This includes fair trade, debt cancellation, assistance for sustainable development, a radical cut in carbon emissions, rapidly increased use of renewable energy resources and the development of conflict prevention and conflict resolution policies that avoid the use of force (see Beyond Terror).
The Financial Crisis and Historical Experience
The current crisis has three main characteristics:
* It is global. While most emphasis was initially on the sub-prime market in the United States, the crisis has spread rapidly through the UK and across Europe, has resulted in a 60% fall in the Shanghai stock market in a year, steep stock market falls across much of Latin America and bank crises in Australia and New Zealand.
* It has initially been a crisis of liquidity and confidence in the financial sector rather than a decline in industrial and retail activities, but it is expected to have a substantial effect on industrial and commercial output as sources of investment finance diminish.
* It is likely to last at least two years, with several more years for recovery.
Prior to the sub-prime issue, the international economy was already affected by rapid oil price rises and a more general bull market of rising prices for primary commodities. One early effect was a substantial increase in food prices that had a particular impact on poorer communities across the world (see the May 2008 briefing, Food Poverty and Security).
The 2008 crisis is not directly comparable to the 1929 Wall Street crash, which was not truly global, nor to the 1987 stock market problems in Europe nor even the widespread Asian downturn of the 1990s, even though these had some global ramifications. The only comparable previous global crisis was that of 1973-74. Then, unilateral moves by Arab oil producers during the Yom Kippur/Ramadan War of October 1973 precipitated a remarkable 450% increase in oil prices within ten months, resulting in an unusual combination of economic stagnation and inflation. A parallel issue was a rapid increase food prices.
The worst excesses of the food crisis were averted partly by a decline in food prices because of the onset of the recession, together with some emergency aid coming from some of the newly-rich oil producers. The experience of stagflation in industrial countries resulted less in a move towards mixed economies with a higher level of state planning, and more to the development of free-market ideas, not least in the form of what was later termed “Reaganomics”.
The 25 years from 1980 saw the rapid development of free market globalisation that stimulated substantial economic growth but with a notable lack of socio-economic justice as wealth-poverty divisions widened. Towards the end of the 2000s, the combination of oil price rises and economic overextension, especially in sub-prime markets, resulted in a transnational banking crisis.
Impacts on Poorer Communities
Some aspects of the current crisis will have relatively little impact on poorer communities. For example, oil prices are unlikely to maintain their current levels as demand falls due to a decline in economic activity. It would be possible for oil producers to act together to maintain higher prices but this is unlikely for two reasons. One is that the Organisation of Petroleum Exporting Countries (OPEC) does not have sufficient political unity to exert control over the market, unlike the 1973-74 period. The second is that sovereign wealth funds and other investment vehicles of some oil-rich states depend on buoyant stock markets in North America, Europe and East Asia. Maintaining very high oil prices would therefore tend to damage such investments.
Lower oil prices will be of some help to poorer countries struggling to meet the higher costs of their oil imports. Furthermore, the oil price decline is also likely to have some impact on food prices, resulting in price decreases that will be of some help to the poorest communities.
These, though, are among the few aspects of the current economic environment that might have some limited advantage for poorer people. In almost every other respect the outcome is less positive. For example, weak economies in major countries that normally attract migrant labour mean that remittances from labourers to their home countries will diminish as jobs become scarcer and wages decline. Such remittances are not just important across South and Southeast Asia but are also important for several Latin American economies. Furthermore, increases in unemployment in countries that are destinations for migrant workers will lead to a reaction against such workers, as has been seen recently in South Africa. This can readily extend to increased support for far-right political parties.
Another early consequence of an economic downturn will be a decline in international tourism and travel. Whatever the damaging impact that tourism can have on poorer communities, it is still the case that there is some monetary transfer involved, and some poorer states depend heavily in such earnings.
More importantly, a decline in economic activity will have a substantial impact on commodity prices, affecting the export earnings for poorer countries for a wide range of commodities including copper, tin, coffee, tea, sugar, cotton and hardwoods. Even now, many southern countries depend on such commodity exports for the substantial majority of all their export earnings. It is here that previous experience is particularly relevant to the current crisis and its effects on the majority world.
A New International Economic Order?
In the early 1970s, a substantial increase in commodity prices put the economies of most industrialised countries under some strain, especially as they were also experiencing the oil price rises. The UN Conference on Trade and Development (UNCTAD) had already been attempting to bring a degree of planning into world commodity markets, encouraging individual commodity agreements for products such as coffee and tin that were designed to provide stability along with some slow but steady increases in prices. Such agreements were seen as helping to alter the terms of trade between third world and industrialised states in a manner that would greatly improve the development prospects of the former.
By early 1974 the wild fluctuations in commodity markets were so marked that industrialised countries such as the US, UK, France and Japan were ready to accept the need for international market planning, and a Declaration on a New International Economic Order was agreed at a special session of the UN General Assembly in April 1974. The core of this proposal was the Integrated Programme for Commodities (IPC) which would bring in a series of linked commodity agreements backed by a Common Fund to finance the setting up of the necessary commodity buffer stocks. At the time many development economists believed that the IPC could provide a really valuable boost to the development prospects of many poorer countries, helping to bring in a new era of fair trade. However, that it was even proposed was mainly due to the temporary problems being faced by the world’s wealthy economies.
In the event, the increase in oil prices resulted in a decrease in industrial activity, a fall in primary commodity prices and, almost immediately, a general loss of interest in the IPC by the major industrial powers. What was eventually established, later in the 1970s, was a pale shadow of the original programme, and this had little impact as the era of the free market unfolded in the 1980s. The loss of that programme is a reminder that, in times of economic downturn, the prospects for poorer communities rarely loom large in the recovery policies of the world’s wealthy states.
Such behaviour has reached almost grotesque proportions in the current crisis, with wealthy states willing to commit more than a trillion dollars to rescue their own banking system in crisis. These are financial outlays that are enormous when compared with those that are being committed to achieving the United Nations Millennium Development Goals.
Responding to the Current Crisis
Although the current crisis does not have direct historical parallels, the marked tendency will therefore be for the most powerful economies to engage primarily in responding to their own problems. Much of this will be at the level of individual states, such as recent US Government intervention in the mortgage and insurance markets and numerous interventions across Europe. There is also likely to be some degree of cooperation between the more wealthy states of the North Atlantic community, drawn mainly from the members of the OECD.
Previous experience indicates that the emphasis will be almost entirely on domestic concerns rather than the wider global community. While this might provide some relief among the poorer sectors of the populations of wealthy states, it will do nothing to help the much larger numbers of impoverished people of the majority world. Moreover, further action to limit third world debt is unlikely and there will almost certainly be pressure on aid budgets. Even key issues such as climate change and the risk of resource conflict are likely to slip down the political agenda.
The implications of this are serious, in that any hindrance to facilitating sustainable development across the countries of the South will increase human insecurity and suffering. Furthermore, any limitation in addressing the urgent issue of climate change will just add to the problems of the South as the damaging effects of climate change increase their impact. Some of the most fragile of the world’s economies, from much of Africa through to Southwest Asia, will suffer most from economic recession and the impact of climate change. More generally, the bitterness that already exists across continents will be reinforced by a perception that the dominant economies have little or no interest in the majority of the world’s people.
Even so, it is just possible that the current crisis will be seen to necessitate a serious reconsideration of how the world economy has evolved in the past three decades. In essence, the nature of the globalised free market is being called into question amidst demands for considerable reforms. The reason for this may well be the manner in which the free market has allowed the current crisis of liquidity and confidence to develop in the wealthy economies, rather than that the free market has increased socio-economic divisions. The extent to which the reforms will be instituted will depend to some extent on the depth and duration of the current crisis but at the time of writing (early October) there are indications that it could well be severe and prolonged.
What could come out of this might be reforms that not only respond to the crisis in the western banking system but also address the deeper global inequalities that have developed in recent years. For that to happen there will need to be a degree of political wisdom on the part of some national governments, accompanied by visionary proposals by intergovernmental agencies, such as some of the specialised agencies of the United Nations. There are notable past examples of this, not least the Prebisch Plan on trade and development in 1963 that prompted UNCTAD’s early work, the UN Environment Programme’s work on ozone depletion in the mid-1980s and recent intergovernmental work on climate change.
However, there is little prospect of effective change if it is left solely to governments and inter-governmental agencies. The richer states will look to their own predicaments, and their influence in intergovernmental organisations may limit new proposals. What is essential is the sustained action of nongovernmental organisations as part of a wider civil society. Responding to the current crisis can either be a process limited to the narrow domestic concerns of the most powerful states or it can be seen as an opportunity for reform of the world’s economic system that will benefit the majority world. The timescale is the next two to five years, the likely duration of the current crisis, and the stakes are high.
Link til pdf-filen.
The global economic crisis: An historic opportunity for transformation
An initial response from individuals, social movements and non-governmental organisations in support of a transitional programme for radical economic transformation Beijing, 15 October 2008
Preamble
Taking advantage of the opportunity of so many people from movements gathering in Beijing during the Asia-Europe People’s Forum, the Transnational Institute and Focus on the Global South convened informal nightly meetings between 13 and 15 October 2008. We took stock of the meaning of the unfolding global economic crisis and the opportunity it presents for us to put into the public domain some of the inspiring and feasible alternatives many of us have been working on for decades. This statement represents the collective outcome of our Beijing nights. We, the initial signatories, mean this to be a contribution towards efforts to formulate proposals around which our movements can organise as the basis for a radically different kind of political and economic order. Please sign on to this statement by adding your name in the comments section.
The Crisis
The global financial system is unravelling at great speed. This is happening in the midst of a multiplicity of crises in relation to food, climate and energy. It severely weakens the power of the US and the EU, and the global institutions they dominate, particularly the International Monetary Fund, the World Bank and the World Trade Organisation. Not only is the legitimacy of the neo-liberal paradigm in question, but the very future of capitalism itself.
Such is the chaos in the global financial system that Northern governments have resorted to measures progressive movements have advocated for years, such as nationalisation of banks. These moves are intended, however, as short-term stabilisation measures and once the storm clears, they are likely to return the banks to the private sector. We have a short window of opportunity to mobilise so that they are not.
The challenge and the opportunity
We are entering uncharted terrain with this conjuncture of profound crises – the fall out from the financial crisis will be severe. People are being thrown into a deep sense of insecurity; misery and hardship will increase for many poorer people everywhere. We should not cede this moment to fascist, right wing populist, xenophobic groups, who will surely try to take advantage of people’s fear and anger for reactionary ends.
Powerful movements against neo-liberalism have been built over many decades. This will grow as critical coverage of the crisis enlightens more people, who are already angry at public funds being diverted to pay for problems they are not responsible for creating, and already concerned about the ecological crisis and rising prices – especially of food and energy. The movements will grow further as recession starts to bite and economies start sinking into depression.
There is a new openness to alternatives. To capture people’s attention and support, they must be practical and immediately feasible. We have convincing alternatives that are already underway, and we have many other good ideas attempted in the past, but defeated. Our alternatives put the well-being of people and the planet at their centre. For this, democratic control over financial and economic institutions are required. This is the “red thread” connecting up the proposals presented below.
Proposals for debate, elaboration and action
Finance
* Introduce full-scale socialisation of banks, not just nationalisation of bad assets.
* Create people-based banking institutions and strengthen existing popular forms of lending based on mutuality and solidarity.
* Institutionalise full transparency within the financial system through the opening of the books to the public, to be facilitated by citizen and worker organisations.
* Introduce parliamentary and citizens’ oversight of the existing banking system
* Apply social ( including labour conditions) and environmental criteria to all lending, including for business purposes
* Prioritise lending, at minimum rates of interest, to meet social and environmental needs and to expand the already growing social economy
* Overhaul central banks in line with democratically determined social, environmental and expansionary (to counter the recession) objectives, and make them publicly accountable institutions.
* Safeguard migrant remittances to their families and introduce legislation to restrict charges and taxes on transfers
Taxation
* Close all tax havens
* End tax breaks for fossil fuel and nuclear energy companies
* Apply stringent progressive tax systems
* Introduce a global taxation system to prevent transfer pricing and tax evasion
* Introduce a levy on nationalised bank profits with which to establish citizen investment funds (see below)
* Impose stringent progressive carbon taxes on those with the biggest carbon footprints
* Adopt controls, such as Tobin taxes, on the movements of speculative capital
* Re-introduce tariffs and duties on imports of luxury goods and other goods already produced locally as a means of increasing the state’s fiscal base, as well as a means to support local production and thereby reduce carbon emissions globally
Public Spending and Investment
* Radically reduce military spending
* Redirect government spending from bailing out bankers to guaranteeing basic incomes and social security, and providing universally accessible basic social services such as housing, water, electricity, health, education, child care, and access to the internet and other public communications facilities.
* Use citizen funds (see above) to support very poor communities
* Ensure that people at risk of losing their homes due to defaults on mortgages caused by the crisis are offered renegotiated terms of payment
* Stop privatisations of public services
* Establish public enterprises under the control of parliaments, local communities and/or workers to increase employment
* Improve the performance of public enterprises through democratising management - encourage public service managers, staff, unions and consumer organisations to collaborate to this end
* Introduce participatory budgeting over public finances at all feasible levels
* Invest massively in improved energy efficiency, low carbon emitting public transport, renewable energy and environmental repair
* Control or subsidise the prices of basic commodities
International Trade and Finance
* Introduce a permanent global ban on short-selling of stock and shares
* Ban on trade in derivatives
* Ban all speculation on staple food commodities
* Cancel the debt of all developing countries – debt is mounting as the crisis causes the value of Southern currencies to fall
* Support the United Nations call to be involved in discussions about how the to resolve the crisis, which is going to have a much bigger impact on Southern economies than is currently being acknowledged
* Phase out the World Bank, International Monetary Fund, and World Trade Organisation
* Phase out the US dollar as the international reserve currency
* Establish a people’s inquiry into the mechanisms necessary for a just international monetary system.
* Ensure aid transfers do not fall as a result of the crisis
* Abolish tied aid
* Abolish neo-liberal aid conditionalities
* Phase out the paradigm of export-led development, and refocus sustainable development on production for the local and regional market
* Introduce incentives for products produced for sale closest to the local market
* Cancel all negotiations for bilateral free trade and economic partnership agreements
* Promote regional economic co-operation arrangements, such as UNASUR, the Bolivarian Alternative for the Americas (ALBA), the Trade Treaty of the Peoples and others, that encourage genuine development and an end to poverty.
Environment
* Introduce a global system of compensation for countries which do not exploit fossil fuel reserves in the global interests of limiting effects on the climate, such as Ecuador has proposed.
* Pay reparations to Southern countries for the ecological destruction wrought by the North to assist peoples of the South to deal with climate change and other environmental crises.
* Strictly implement the “precautionary principle” of the UN Declaration on the Right to Development as a condition for all developmental and environmental projects.
* End lending for projects under the Kyoto Protocol’s “Clean Development Mechanism” that are environmentally destructive, such as monoculture plantations of eucalyptus, soya and palm oil.
* Stop the development of carbon trading and other environmentally counter-productive techno-fixes, such as carbon capture and sequestration, agrofuels, nuclear power and ‘clean coal’ technology.
* Adopt strategies to radically reduce consumption in the rich countries, while promoting sustainable development in poorer countries
* Introduce democratic management of all international funding mechanisms for climate change mitigation, with strong participation from Southern countries and civil society.
Agriculture and Industry
* Phase out the pernicious paradigm of industry-led development, where the rural sector is squeezed to provide the resources necessary to support industrialisation and urbanisation
* Promote agricultural strategies aimed at achieving food security, food sovereignty and sustainable farming.
* Promote land reforms and other measures which support small holder agriculture and sustain peasant and indigenous communities
* Stop the spread of socially and environmentally destructive mono-cultural enterprises.
* Stop labour law reforms aimed at extending hours of work and making it easier for employers to fire or retrench workers
* Secure jobs through outlawing precarious low paid work
* Guarantee equal pay for equal work for women – as a basic principle and to help counter the coming recession by increasing workers’ capacity to consume.
* Protect the rights of migrant workers in the event of job losses, ensuring their safe return to and reintegration into their home countries. For those who cannot return, there should be no forced return, their security should be guaranteed, and they should be provided with employment or a basic minimum income.
Conclusion
These are all practical, common sense proposals. Some are initiatives already underway and demonstrably feasible. Their successes need to be publicised and popularised so as to inspire reproduction. Others are unlikely to be implemented on their objective merits alone. Political will is required. By implication, therefore, every proposal is a call to action.
We have written what we see as a living document to be developed and enriched by us all. Please sign on to this statement at the bottom of the page.
A future occasion to come together to work on the actions needed to make these ideas and others a reality will be the World Social Forum in Belem, Brazil at the end of January 2009.
We have the experience and the ideas - let’s meet the challenge of the present ruling disorder and keep the momentum towards an alternative rolling!!
Preamble
Taking advantage of the opportunity of so many people from movements gathering in Beijing during the Asia-Europe People’s Forum, the Transnational Institute and Focus on the Global South convened informal nightly meetings between 13 and 15 October 2008. We took stock of the meaning of the unfolding global economic crisis and the opportunity it presents for us to put into the public domain some of the inspiring and feasible alternatives many of us have been working on for decades. This statement represents the collective outcome of our Beijing nights. We, the initial signatories, mean this to be a contribution towards efforts to formulate proposals around which our movements can organise as the basis for a radically different kind of political and economic order. Please sign on to this statement by adding your name in the comments section.
The Crisis
The global financial system is unravelling at great speed. This is happening in the midst of a multiplicity of crises in relation to food, climate and energy. It severely weakens the power of the US and the EU, and the global institutions they dominate, particularly the International Monetary Fund, the World Bank and the World Trade Organisation. Not only is the legitimacy of the neo-liberal paradigm in question, but the very future of capitalism itself.
Such is the chaos in the global financial system that Northern governments have resorted to measures progressive movements have advocated for years, such as nationalisation of banks. These moves are intended, however, as short-term stabilisation measures and once the storm clears, they are likely to return the banks to the private sector. We have a short window of opportunity to mobilise so that they are not.
The challenge and the opportunity
We are entering uncharted terrain with this conjuncture of profound crises – the fall out from the financial crisis will be severe. People are being thrown into a deep sense of insecurity; misery and hardship will increase for many poorer people everywhere. We should not cede this moment to fascist, right wing populist, xenophobic groups, who will surely try to take advantage of people’s fear and anger for reactionary ends.
Powerful movements against neo-liberalism have been built over many decades. This will grow as critical coverage of the crisis enlightens more people, who are already angry at public funds being diverted to pay for problems they are not responsible for creating, and already concerned about the ecological crisis and rising prices – especially of food and energy. The movements will grow further as recession starts to bite and economies start sinking into depression.
There is a new openness to alternatives. To capture people’s attention and support, they must be practical and immediately feasible. We have convincing alternatives that are already underway, and we have many other good ideas attempted in the past, but defeated. Our alternatives put the well-being of people and the planet at their centre. For this, democratic control over financial and economic institutions are required. This is the “red thread” connecting up the proposals presented below.
Proposals for debate, elaboration and action
Finance
* Introduce full-scale socialisation of banks, not just nationalisation of bad assets.
* Create people-based banking institutions and strengthen existing popular forms of lending based on mutuality and solidarity.
* Institutionalise full transparency within the financial system through the opening of the books to the public, to be facilitated by citizen and worker organisations.
* Introduce parliamentary and citizens’ oversight of the existing banking system
* Apply social ( including labour conditions) and environmental criteria to all lending, including for business purposes
* Prioritise lending, at minimum rates of interest, to meet social and environmental needs and to expand the already growing social economy
* Overhaul central banks in line with democratically determined social, environmental and expansionary (to counter the recession) objectives, and make them publicly accountable institutions.
* Safeguard migrant remittances to their families and introduce legislation to restrict charges and taxes on transfers
Taxation
* Close all tax havens
* End tax breaks for fossil fuel and nuclear energy companies
* Apply stringent progressive tax systems
* Introduce a global taxation system to prevent transfer pricing and tax evasion
* Introduce a levy on nationalised bank profits with which to establish citizen investment funds (see below)
* Impose stringent progressive carbon taxes on those with the biggest carbon footprints
* Adopt controls, such as Tobin taxes, on the movements of speculative capital
* Re-introduce tariffs and duties on imports of luxury goods and other goods already produced locally as a means of increasing the state’s fiscal base, as well as a means to support local production and thereby reduce carbon emissions globally
Public Spending and Investment
* Radically reduce military spending
* Redirect government spending from bailing out bankers to guaranteeing basic incomes and social security, and providing universally accessible basic social services such as housing, water, electricity, health, education, child care, and access to the internet and other public communications facilities.
* Use citizen funds (see above) to support very poor communities
* Ensure that people at risk of losing their homes due to defaults on mortgages caused by the crisis are offered renegotiated terms of payment
* Stop privatisations of public services
* Establish public enterprises under the control of parliaments, local communities and/or workers to increase employment
* Improve the performance of public enterprises through democratising management - encourage public service managers, staff, unions and consumer organisations to collaborate to this end
* Introduce participatory budgeting over public finances at all feasible levels
* Invest massively in improved energy efficiency, low carbon emitting public transport, renewable energy and environmental repair
* Control or subsidise the prices of basic commodities
International Trade and Finance
* Introduce a permanent global ban on short-selling of stock and shares
* Ban on trade in derivatives
* Ban all speculation on staple food commodities
* Cancel the debt of all developing countries – debt is mounting as the crisis causes the value of Southern currencies to fall
* Support the United Nations call to be involved in discussions about how the to resolve the crisis, which is going to have a much bigger impact on Southern economies than is currently being acknowledged
* Phase out the World Bank, International Monetary Fund, and World Trade Organisation
* Phase out the US dollar as the international reserve currency
* Establish a people’s inquiry into the mechanisms necessary for a just international monetary system.
* Ensure aid transfers do not fall as a result of the crisis
* Abolish tied aid
* Abolish neo-liberal aid conditionalities
* Phase out the paradigm of export-led development, and refocus sustainable development on production for the local and regional market
* Introduce incentives for products produced for sale closest to the local market
* Cancel all negotiations for bilateral free trade and economic partnership agreements
* Promote regional economic co-operation arrangements, such as UNASUR, the Bolivarian Alternative for the Americas (ALBA), the Trade Treaty of the Peoples and others, that encourage genuine development and an end to poverty.
Environment
* Introduce a global system of compensation for countries which do not exploit fossil fuel reserves in the global interests of limiting effects on the climate, such as Ecuador has proposed.
* Pay reparations to Southern countries for the ecological destruction wrought by the North to assist peoples of the South to deal with climate change and other environmental crises.
* Strictly implement the “precautionary principle” of the UN Declaration on the Right to Development as a condition for all developmental and environmental projects.
* End lending for projects under the Kyoto Protocol’s “Clean Development Mechanism” that are environmentally destructive, such as monoculture plantations of eucalyptus, soya and palm oil.
* Stop the development of carbon trading and other environmentally counter-productive techno-fixes, such as carbon capture and sequestration, agrofuels, nuclear power and ‘clean coal’ technology.
* Adopt strategies to radically reduce consumption in the rich countries, while promoting sustainable development in poorer countries
* Introduce democratic management of all international funding mechanisms for climate change mitigation, with strong participation from Southern countries and civil society.
Agriculture and Industry
* Phase out the pernicious paradigm of industry-led development, where the rural sector is squeezed to provide the resources necessary to support industrialisation and urbanisation
* Promote agricultural strategies aimed at achieving food security, food sovereignty and sustainable farming.
* Promote land reforms and other measures which support small holder agriculture and sustain peasant and indigenous communities
* Stop the spread of socially and environmentally destructive mono-cultural enterprises.
* Stop labour law reforms aimed at extending hours of work and making it easier for employers to fire or retrench workers
* Secure jobs through outlawing precarious low paid work
* Guarantee equal pay for equal work for women – as a basic principle and to help counter the coming recession by increasing workers’ capacity to consume.
* Protect the rights of migrant workers in the event of job losses, ensuring their safe return to and reintegration into their home countries. For those who cannot return, there should be no forced return, their security should be guaranteed, and they should be provided with employment or a basic minimum income.
Conclusion
These are all practical, common sense proposals. Some are initiatives already underway and demonstrably feasible. Their successes need to be publicised and popularised so as to inspire reproduction. Others are unlikely to be implemented on their objective merits alone. Political will is required. By implication, therefore, every proposal is a call to action.
We have written what we see as a living document to be developed and enriched by us all. Please sign on to this statement at the bottom of the page.
A future occasion to come together to work on the actions needed to make these ideas and others a reality will be the World Social Forum in Belem, Brazil at the end of January 2009.
We have the experience and the ideas - let’s meet the challenge of the present ruling disorder and keep the momentum towards an alternative rolling!!
torsdag den 16. oktober 2008
10 Years of the Pinochet Principle by Philippe Sands
The arrest warrant served on the Chilean head of state in 1998 changed history and has implications for the US government now
On October 16 1998, a magistrate signed a warrant for the arrest of Senator Augusto Pinochet and changed the course of history. The former Chilean head of state was arrested a few hours later, at the request of a Spanish prosecutor who charged him with a raft of international crimes, some dating back to the early 1970s. Over the next 18 months, one dramatic development followed another. The House of Lords rendered three landmark judgments in the space of five months; home secretary Jack Straw defied expectations by giving a green light to the continuation of proceedings that could lead to Pinochet's removal to Madrid; Pinochet made a dramatic appearance in the dock at Belmarsh magistrate's court; and eventually Straw decided that Pinochet was too unhealthy to stand trial and he was returned to Chile in April 2000. For the rest of his life he was dogged by legal proceedings.
One central question lay at the heart of the whole affair: was a former head of state entitled to claim immunity before the English courts, where it was alleged that he had participated in crimes, in violation of international conventions, such as torture? This question had never before been decided. It pitted two competing views of international relations against each other: traditionalists argued that the maintenance of serene relations between states required the courts of one state to refrain from sitting in judgment over the highest officials of another; the modernists argued that no person was above the law where the most serious international crimes were involved, and that the system of human rights laws put in place after the second world war substituted a rule of immunity with a new rule against impunity.
In March 1999, the House of Lords came down strongly in favour of the modernist view. It did so carefully, and in a way that was both reasonable and sustainable. The majority ruled that Pinochet's loss of immunity arose not from some unstated general rule of international law, but rather from the terms of a treaty to which Britain, Chile and Spain were party - the 1984 convention outlawing torture - the terms of which were inconsistent with immunity for a former head of state. It is impossible to overstate the significance of that ruling, which reflected a new balance of global priorities, a shift in favour of principle over pragmatism. It has been followed by international indictments against other former heads of state - Slobodan Milosevic and Charles Taylor - and the coming into force of the international criminal court and possible proceedings against the serving president of Sudan. It has also given rise to criminal proceedings before national courts in other parts of the world. The Pinochet judgment has withstood the test of time. It has not been overruled in the court of international opinion, and it has not brought international relations to a grinding halt.
Nevertheless, it seems that Pinochet's case caused concerns at the highest levels of the Bush administration, as described in a revealing account by a former lawyer in the Bush administration, Jack Goldsmith. He describes how, during 2002, Henry Kissinger found himself on the sharp end of the Pinochet case. Reportedly livid, a rattled Kissinger complained to his old chum Donald Rumsfeld, who was already worrying about "lawfare" (the use of law to achieve operational objectives). Rumsfeld instructed the chief lawyer at the Pentagon, Jim Haynes, to address the problems posed by this "judicialisation of international politics". Haynes passed the assignment on to Goldsmith, whose memo reached the National Security Council, which also worried about the threat of foreign judges. According to Goldsmith, the NSC couldn't work out what to do about the problem.
We now know that while this was going on, Rumsfeld and Haynes and others at the Pentagon were secretly circumventing international laws like the Geneva conventions and the torture convention and removing international constraints on the interrogation of detainees at Guantánamo and in Iraq. Torture and other international crimes followed. So did the Abu Ghraib photos. Amid the welter of legal opinions received by the administration none, it seems, bothered to examine the consequences of the House of Lords judgment for senior US officials.
The legacy of the arrest warrant signed in Hampstead 10 years today, is the Pinochet principle, that no one is above the law. It may one day come to haunt the very people who sought to set it aside. If, that is, they ever dare to set foot outside the United States.
© Guardian News and Media Limited 2008
On October 16 1998, a magistrate signed a warrant for the arrest of Senator Augusto Pinochet and changed the course of history. The former Chilean head of state was arrested a few hours later, at the request of a Spanish prosecutor who charged him with a raft of international crimes, some dating back to the early 1970s. Over the next 18 months, one dramatic development followed another. The House of Lords rendered three landmark judgments in the space of five months; home secretary Jack Straw defied expectations by giving a green light to the continuation of proceedings that could lead to Pinochet's removal to Madrid; Pinochet made a dramatic appearance in the dock at Belmarsh magistrate's court; and eventually Straw decided that Pinochet was too unhealthy to stand trial and he was returned to Chile in April 2000. For the rest of his life he was dogged by legal proceedings.
One central question lay at the heart of the whole affair: was a former head of state entitled to claim immunity before the English courts, where it was alleged that he had participated in crimes, in violation of international conventions, such as torture? This question had never before been decided. It pitted two competing views of international relations against each other: traditionalists argued that the maintenance of serene relations between states required the courts of one state to refrain from sitting in judgment over the highest officials of another; the modernists argued that no person was above the law where the most serious international crimes were involved, and that the system of human rights laws put in place after the second world war substituted a rule of immunity with a new rule against impunity.
In March 1999, the House of Lords came down strongly in favour of the modernist view. It did so carefully, and in a way that was both reasonable and sustainable. The majority ruled that Pinochet's loss of immunity arose not from some unstated general rule of international law, but rather from the terms of a treaty to which Britain, Chile and Spain were party - the 1984 convention outlawing torture - the terms of which were inconsistent with immunity for a former head of state. It is impossible to overstate the significance of that ruling, which reflected a new balance of global priorities, a shift in favour of principle over pragmatism. It has been followed by international indictments against other former heads of state - Slobodan Milosevic and Charles Taylor - and the coming into force of the international criminal court and possible proceedings against the serving president of Sudan. It has also given rise to criminal proceedings before national courts in other parts of the world. The Pinochet judgment has withstood the test of time. It has not been overruled in the court of international opinion, and it has not brought international relations to a grinding halt.
Nevertheless, it seems that Pinochet's case caused concerns at the highest levels of the Bush administration, as described in a revealing account by a former lawyer in the Bush administration, Jack Goldsmith. He describes how, during 2002, Henry Kissinger found himself on the sharp end of the Pinochet case. Reportedly livid, a rattled Kissinger complained to his old chum Donald Rumsfeld, who was already worrying about "lawfare" (the use of law to achieve operational objectives). Rumsfeld instructed the chief lawyer at the Pentagon, Jim Haynes, to address the problems posed by this "judicialisation of international politics". Haynes passed the assignment on to Goldsmith, whose memo reached the National Security Council, which also worried about the threat of foreign judges. According to Goldsmith, the NSC couldn't work out what to do about the problem.
We now know that while this was going on, Rumsfeld and Haynes and others at the Pentagon were secretly circumventing international laws like the Geneva conventions and the torture convention and removing international constraints on the interrogation of detainees at Guantánamo and in Iraq. Torture and other international crimes followed. So did the Abu Ghraib photos. Amid the welter of legal opinions received by the administration none, it seems, bothered to examine the consequences of the House of Lords judgment for senior US officials.
The legacy of the arrest warrant signed in Hampstead 10 years today, is the Pinochet principle, that no one is above the law. It may one day come to haunt the very people who sought to set it aside. If, that is, they ever dare to set foot outside the United States.
© Guardian News and Media Limited 2008
Additional Thoughts on the Bailout
"We hang the petty thieves and appoint the great ones to public office" - Aesop
By Paul Craig Roberts.
Just as the Bush regime’s wars have been used to pour billions of dollars into the pockets of its military-security donor base, the Paulson bailout looks like a Bush regime scheme to incur $700 billion in new public debt in order to transfer the money into the coffers of its financial donor base. The US taxpayers will be left with the interest payments in perpetuity (or inflation if the Fed monetizes the debt), and the number of Wall Street billionaires will grow. As for the US and European governments’ purchases of bank shares, that is just a cover for funneling public money into private hands.
The explanations that have been given for the crisis and its bailout are opaque. The US Treasury estimates that as few as 7% of the mortgages are bad. Why then do the US, UK, Germany, and France need to pour more than $2.1 trillion of public money into private financial institutions?
If, as the government tells us, the crisis stems from subprime mortgage defaults reducing the interest payments to the holders of mortgage backed securities, thus driving down their values and threatening the solvency of the institutions that hold them, why isn’t the bailout money used to address the problem at its source? If the bailout money was used to refinance troubled mortgages and to pay off foreclosed mortgages, the mortgage backed securities would be made whole, and it would be unnecessary to pour huge sums of public money into banks. Instead, the bailout money is being used to inject capital into financial institutions and to purchase from them troubled financial instruments.
It is a strange solution that does not address the problem. As the US economy sinks deeper into recession, the mortgage defaults will rise. Thus, the problem will intensify, necessitating the purchase of yet more troubled instruments.
If credit card debt has also been securitized and sold as investments, as the economy worsens defaults on credit card debt will be a replay of the mortgage defaults. How much debt can the Treasury bail out before its own credit rating sinks?
The contribution of credit default swaps to the financial crisis has not been made clear. These swaps are bets that a designated financial instrument will fail. In exchange for “premium” payments, the seller of a swap protects the buyer of the swap from default by, for example, a company’s bond that the swap buyer might not even own. If these swaps are also securitized and sold as investments, more nebulous assets appear on balance sheets.
Normally, if you and I make a bet, and I welsh on the bet, it doesn’t threaten your solvency. If we place bets with a bookie and the odds go against the bookie, the bookie will fail, as apparently happened to AIG, necessitating an $85 billion bailout of the insurance company, and to Bear Stearns resulting in the demise of the investment bank.
Credit default swaps are a form of unregulated insurance. One danger of the swaps is that they allow speculators to purchase protection against a company defaulting on its bonds, without the speculators having to own the company’s bonds. Speculators can then short the company’s stock, driving down its price and raising questions about the viability of the company’s bonds. This raises the value of the speculators’ swaps which can be sold to holders of the company’s bonds. By ruining a company’s prospects, the speculators make money.
Another danger is that swaps encourage investors to purchase riskier, higher-yielding instruments in the belief that the instruments are insured, but the sellers of swaps have not reserved against them.
Double-counting of assets is also possible if a bank purchases a company’s bonds, for example, then purchases credit default swaps on the bonds, and lists both as assets on its balance sheet.
The $85 billion Treasury bailout of AIG is small compared to the $700 billion for the banks, and the emphasis has been on banks, not insurance companies. According to news reports, the sums associated with credit default swaps are far larger than the subprime mortgage derivatives. Have the swaps yet to become major players in the crisis?
The behavior of the stock market does not necessarily tell us anything about the bailout. The financial crisis disrupted lending and thus comprised a threat to non-financial firms. This threat would reflect in the stock market. However, the stock market is also predicting a recession and declining earnings. Thus, people sell stocks hoping to get out before share prices adjust to the new lower earnings.
The bailout package is a result of panic and threats, not of analysis and understanding. Neither Congress nor the public knows the full story. If the problem is the mortgages, why does the bailout leave the mortgages unaddressed and focus instead on pouring vast amount of public money into private financial institutions?
The purpose of regulation is to restrain greed and to prevent leveraged speculation from threatening the wider society. Congress needs to restore financial regulation, not reward those who caused the crisis.
By Paul Craig Roberts.
Just as the Bush regime’s wars have been used to pour billions of dollars into the pockets of its military-security donor base, the Paulson bailout looks like a Bush regime scheme to incur $700 billion in new public debt in order to transfer the money into the coffers of its financial donor base. The US taxpayers will be left with the interest payments in perpetuity (or inflation if the Fed monetizes the debt), and the number of Wall Street billionaires will grow. As for the US and European governments’ purchases of bank shares, that is just a cover for funneling public money into private hands.
The explanations that have been given for the crisis and its bailout are opaque. The US Treasury estimates that as few as 7% of the mortgages are bad. Why then do the US, UK, Germany, and France need to pour more than $2.1 trillion of public money into private financial institutions?
If, as the government tells us, the crisis stems from subprime mortgage defaults reducing the interest payments to the holders of mortgage backed securities, thus driving down their values and threatening the solvency of the institutions that hold them, why isn’t the bailout money used to address the problem at its source? If the bailout money was used to refinance troubled mortgages and to pay off foreclosed mortgages, the mortgage backed securities would be made whole, and it would be unnecessary to pour huge sums of public money into banks. Instead, the bailout money is being used to inject capital into financial institutions and to purchase from them troubled financial instruments.
It is a strange solution that does not address the problem. As the US economy sinks deeper into recession, the mortgage defaults will rise. Thus, the problem will intensify, necessitating the purchase of yet more troubled instruments.
If credit card debt has also been securitized and sold as investments, as the economy worsens defaults on credit card debt will be a replay of the mortgage defaults. How much debt can the Treasury bail out before its own credit rating sinks?
The contribution of credit default swaps to the financial crisis has not been made clear. These swaps are bets that a designated financial instrument will fail. In exchange for “premium” payments, the seller of a swap protects the buyer of the swap from default by, for example, a company’s bond that the swap buyer might not even own. If these swaps are also securitized and sold as investments, more nebulous assets appear on balance sheets.
Normally, if you and I make a bet, and I welsh on the bet, it doesn’t threaten your solvency. If we place bets with a bookie and the odds go against the bookie, the bookie will fail, as apparently happened to AIG, necessitating an $85 billion bailout of the insurance company, and to Bear Stearns resulting in the demise of the investment bank.
Credit default swaps are a form of unregulated insurance. One danger of the swaps is that they allow speculators to purchase protection against a company defaulting on its bonds, without the speculators having to own the company’s bonds. Speculators can then short the company’s stock, driving down its price and raising questions about the viability of the company’s bonds. This raises the value of the speculators’ swaps which can be sold to holders of the company’s bonds. By ruining a company’s prospects, the speculators make money.
Another danger is that swaps encourage investors to purchase riskier, higher-yielding instruments in the belief that the instruments are insured, but the sellers of swaps have not reserved against them.
Double-counting of assets is also possible if a bank purchases a company’s bonds, for example, then purchases credit default swaps on the bonds, and lists both as assets on its balance sheet.
The $85 billion Treasury bailout of AIG is small compared to the $700 billion for the banks, and the emphasis has been on banks, not insurance companies. According to news reports, the sums associated with credit default swaps are far larger than the subprime mortgage derivatives. Have the swaps yet to become major players in the crisis?
The behavior of the stock market does not necessarily tell us anything about the bailout. The financial crisis disrupted lending and thus comprised a threat to non-financial firms. This threat would reflect in the stock market. However, the stock market is also predicting a recession and declining earnings. Thus, people sell stocks hoping to get out before share prices adjust to the new lower earnings.
The bailout package is a result of panic and threats, not of analysis and understanding. Neither Congress nor the public knows the full story. If the problem is the mortgages, why does the bailout leave the mortgages unaddressed and focus instead on pouring vast amount of public money into private financial institutions?
The purpose of regulation is to restrain greed and to prevent leveraged speculation from threatening the wider society. Congress needs to restore financial regulation, not reward those who caused the crisis.
Top Ex-Diplomats Slam 'Militarisation' of Foreign Policy
While the Pentagon's budget has risen to heights not seen since World War II, U.S. diplomatic and foreign aid assets have largely atrophied and must be quickly rebuilt by any new administration that takes office in January, according to a new report released here this week by former senior foreign service officers.
The report by the American Academy of Diplomacy (AAD) and the Henry L. Stimson Centre is calling for a nearly 50 percent increase in the number of diplomats and aid and development specialists recruited into the foreign service over the next five years. This would cost about three billion dollars -- or approximately what the Pentagon is currently spending every 10 days on military operations in Iraq -- over current budget estimates.
''Since the fall of the Berlin Wall, the diplomatic capacity of the United States has been hollowed out,' according to the 26-page report, 'A Foreign Affairs Budget for the Future'. 'The status quo cannot continue without serious damage to our vital interests.'
The vacuum created by the lack of diplomatic resources -- particularly in comparison to the Pentagon's budget and manpower -- has translated into the militarisation of U.S. foreign policy, warns the report.
''Today, significant portions of the nation's foreign affairs business simply are not accomplished,'' it says. 'The work migrates by default to the military that does have the necessary people and funding but neither sufficient experience nor knowledge. The 'militarisation' of diplomacy exists and is accelerating.'
To that end, the report calls for the State Department to take over control from the Defence Department (DOD) of nearly 800 million dollars a year budgeted for several security assistance programmes, including humanitarian aid, created in the aftermath of the 9/11 terrorist attacks to help friendly militaries prosecute the 'global war on terrorism'.
'Our view is that the Secretary of State has and should have responsibility for assuring that all foreign and security assistance is carried out in accord with U.S. foreign policy, including setting overall policy, approving countries to receive assistance, and setting the budget for such assistance,' the report said.
'DOD's expanded policy responsibility for security assistance programs risks the additional atrophy of the civilian agencies' ability to plan and conduct foreign policy and foreign assistance and raises serious concerns that such programs could conflict with broader U.S. strategic and foreign policy interests.'
'Moreover, these expanded missions are not the core competence of the military and thus may detract from the readiness to perform more central military missions,' it added. 'Finally, it is important for the U.S. to ensure that its non-military international presence and engagement be carried out primarily by civilians, not by the military.'
Indeed, the latest report echoes the views -- albeit in more diplomatic language -- of a growing number of non-governmental organisations and foreign policy experts that the Pentagon, simply by virtue of its enormous budget and its worldwide presence with nearly 800 overseas bases, has become far too dominant in policy making.
Even Pentagon chief Robert Gates a former senior intelligence officer, has complained about the imbalance between U.S. military and diplomatic resources. 'Funding for non-military foreign affairs programmes...remains disproportionately small relative to what we spend on the military,' he declared in a much-discussed speech last November. 'What is clear for me is that there is a need for a dramatic increase in spending on the civilian instruments of national security.'
'Our diplomatic leaders -- be they in ambassadors' suites or on the State Department's seventh [top] floor -- must have the resources and political support needed to fully exercise their statutory responsibilities in leading American foreign policy,' he said in July.
He has also noted ruefully that there are more people serving in military bands than in the entire State Department.
Despite his support, however, Gates' views have not yet substantially altered the political equation in Congress, which has routinely approved or even increased the Bush administration's budgetary requests for the Pentagon over the last eight years while casting a far more sceptical eye on requests for the State Department, which lacks a comparably broad-based geographic, commercial, or demographic constituency.
The Defence Department is slated to receive well over 527 billion dollars for 2009 -- not including some 15 billion dollars a month for operations in Iraq and Afghanistan -- or roughly 13 times more than the State Department's budget of less than 40 billion dollars.
Moreover, despite his concerns, Gates has asked -- so far without success -- that substantially more money be allocated to the new discretionary accounts that the Pentagon currently may disburse for allies in the war on terror, a request which, to the dismay of most foreign service officers, Secretary of State Condoleezza Rice supported in hearings before Congress earlier this year.
Last week, the Pentagon submitted a new estimate for defence spending that is 450 billion dollars more over the next five years than it had previously announced, according to Congressional Quarterly, beginning with a nearly 10-percent increase in its 2010 budget to nearly 600 billion dollars.
Compared to that request, the recommendation by the AAD-Stimson report to increase the State Department's planned budget by roughly 3.3 billion dollars over the next five years seems paltry, indeed.
According to the report, which was put together by a task force of 14 former senior foreign service officers with the help of an advisory group chaired by former U.N. Amb. Thomas Pickering, the State Department currently suffers serious shortages in personnel in virtually all of its operations, from consular activity to development assistance and public diplomacy.
The report noted the decline in the foreign service and State Department spending began at the end of the Cold War when the international affairs budget was reduced by roughly 30 percent in real terms. Former Secretary of State Colin Powell succeeded in creating more than 1,000 new State Department posts between 2001 and 2004, according to the report, but these increases were quickly absorbed by diplomatic surges in Iraq and Afghanistan, leaving other key areas and global issues with significant staff shortfalls.
It called for total State Department staffing to increase from roughly 10,000 today to nearly 15,000 by 2014.
By Jim Lobe,
The report by the American Academy of Diplomacy (AAD) and the Henry L. Stimson Centre is calling for a nearly 50 percent increase in the number of diplomats and aid and development specialists recruited into the foreign service over the next five years. This would cost about three billion dollars -- or approximately what the Pentagon is currently spending every 10 days on military operations in Iraq -- over current budget estimates.
''Since the fall of the Berlin Wall, the diplomatic capacity of the United States has been hollowed out,' according to the 26-page report, 'A Foreign Affairs Budget for the Future'. 'The status quo cannot continue without serious damage to our vital interests.'
The vacuum created by the lack of diplomatic resources -- particularly in comparison to the Pentagon's budget and manpower -- has translated into the militarisation of U.S. foreign policy, warns the report.
''Today, significant portions of the nation's foreign affairs business simply are not accomplished,'' it says. 'The work migrates by default to the military that does have the necessary people and funding but neither sufficient experience nor knowledge. The 'militarisation' of diplomacy exists and is accelerating.'
To that end, the report calls for the State Department to take over control from the Defence Department (DOD) of nearly 800 million dollars a year budgeted for several security assistance programmes, including humanitarian aid, created in the aftermath of the 9/11 terrorist attacks to help friendly militaries prosecute the 'global war on terrorism'.
'Our view is that the Secretary of State has and should have responsibility for assuring that all foreign and security assistance is carried out in accord with U.S. foreign policy, including setting overall policy, approving countries to receive assistance, and setting the budget for such assistance,' the report said.
'DOD's expanded policy responsibility for security assistance programs risks the additional atrophy of the civilian agencies' ability to plan and conduct foreign policy and foreign assistance and raises serious concerns that such programs could conflict with broader U.S. strategic and foreign policy interests.'
'Moreover, these expanded missions are not the core competence of the military and thus may detract from the readiness to perform more central military missions,' it added. 'Finally, it is important for the U.S. to ensure that its non-military international presence and engagement be carried out primarily by civilians, not by the military.'
Indeed, the latest report echoes the views -- albeit in more diplomatic language -- of a growing number of non-governmental organisations and foreign policy experts that the Pentagon, simply by virtue of its enormous budget and its worldwide presence with nearly 800 overseas bases, has become far too dominant in policy making.
Even Pentagon chief Robert Gates a former senior intelligence officer, has complained about the imbalance between U.S. military and diplomatic resources. 'Funding for non-military foreign affairs programmes...remains disproportionately small relative to what we spend on the military,' he declared in a much-discussed speech last November. 'What is clear for me is that there is a need for a dramatic increase in spending on the civilian instruments of national security.'
'Our diplomatic leaders -- be they in ambassadors' suites or on the State Department's seventh [top] floor -- must have the resources and political support needed to fully exercise their statutory responsibilities in leading American foreign policy,' he said in July.
He has also noted ruefully that there are more people serving in military bands than in the entire State Department.
Despite his support, however, Gates' views have not yet substantially altered the political equation in Congress, which has routinely approved or even increased the Bush administration's budgetary requests for the Pentagon over the last eight years while casting a far more sceptical eye on requests for the State Department, which lacks a comparably broad-based geographic, commercial, or demographic constituency.
The Defence Department is slated to receive well over 527 billion dollars for 2009 -- not including some 15 billion dollars a month for operations in Iraq and Afghanistan -- or roughly 13 times more than the State Department's budget of less than 40 billion dollars.
Moreover, despite his concerns, Gates has asked -- so far without success -- that substantially more money be allocated to the new discretionary accounts that the Pentagon currently may disburse for allies in the war on terror, a request which, to the dismay of most foreign service officers, Secretary of State Condoleezza Rice supported in hearings before Congress earlier this year.
Last week, the Pentagon submitted a new estimate for defence spending that is 450 billion dollars more over the next five years than it had previously announced, according to Congressional Quarterly, beginning with a nearly 10-percent increase in its 2010 budget to nearly 600 billion dollars.
Compared to that request, the recommendation by the AAD-Stimson report to increase the State Department's planned budget by roughly 3.3 billion dollars over the next five years seems paltry, indeed.
According to the report, which was put together by a task force of 14 former senior foreign service officers with the help of an advisory group chaired by former U.N. Amb. Thomas Pickering, the State Department currently suffers serious shortages in personnel in virtually all of its operations, from consular activity to development assistance and public diplomacy.
The report noted the decline in the foreign service and State Department spending began at the end of the Cold War when the international affairs budget was reduced by roughly 30 percent in real terms. Former Secretary of State Colin Powell succeeded in creating more than 1,000 new State Department posts between 2001 and 2004, according to the report, but these increases were quickly absorbed by diplomatic surges in Iraq and Afghanistan, leaving other key areas and global issues with significant staff shortfalls.
It called for total State Department staffing to increase from roughly 10,000 today to nearly 15,000 by 2014.
By Jim Lobe,
Going Beyond Climate Change
While the financial mayhem continues to draw the headlines, the cost of persistent biodiversity loss has yet to be established. But it is believed to be bigger than that of the meltdown, and in many cases also irreparable.
The International Union for the Conservation of Nature (IUCN) now plans to gather incontrovertible evidence on the value of preserving biodiversity and the cost of losing it. The world's oldest and largest global environmental network will task its scientific commissions for this.
This is one eminent pillar of the immediate and strategic priorities of the IUCN as spelt out by the organisation's new president Ashok Khosla.
The idea, backed by IUCN's ten-day world conservation congress that concluded Tuesday (Oct 14) in Barcelona, is to protect the biosphere, with particular focus on the conservation of biodiversity in all its manifestations.
"This means that we must do what is necessary to bring the issue of biodiversity right into the centre stage of public awareness, media concern and decision-making at the local, national and global levels," Khosla told delegates at the closing session.
Discussions at the congress revealed that there are indeed definite lessons to learn from the debate about climate change. While many doubted the scientific basis of the connection between climate change and human activity, it was the authoritative and unambiguous view of the Inter-governmental Panel on Climate Change (IPCC) reflecting the combined scientific work of over 3,000 scientists that more or less put an end to the debate. Clearly, IUCN is the body that can and must do what IPCC is doing with climate change.
"The clear message coming out of this (Barcelona) meeting is that biodiversity underpins the well-being of human societies and their economies," said IUCN director-general Julia Marton-Lefèvre. "But conservation can only succeed if we attack the underlying causes of biodiversity loss, and action is taken at the same time to reduce the impacts of that loss."
The IUCN programme for 2009-2012 on 'Shaping a Sustainable Future' says the IUCN will contribute directly to targets agreed internationally by governments to reduce the rate of loss of biodiversity.
It will also add an environmental perspective to the achievement of the Millennium Development Goals (agreed in 2000 by 189 countries), the plan for implementation of the World Summit on Sustainable Development (agreed in September 2002 in Johannesburg) and other relevant international commitments.
Established in 1948 in Fontainebleau (Switzerland), three years after the United Nations was founded, the IUCN with about 1,000 members from across the world, including governments and international NGOs, is indeed poised to adjust itself to the changed and fast-changing realities of the globalised world.
Not only does it face the most challenging environmental issues ever in history -- climate change and diminishing biodiversity -- but IUCN members are also asking for fundamental changes in its working.
It is against this backdrop that the election of Khosla is of vital significance. He chairs the India-based Development Alternatives Group, a non-profit organisation established in 1983 "for creating large-scale sustainable livelihoods." He is also president of the Club of Rome, a global think-tank and centre of innovation and initiative.
One of his top priorities is to set up a world commission in collaboration with WWF and the UN Environment Programme (UNEP) to investigate the deeper implications of 'green carbon' such as sequestration, REED (a mechanism for compensating countries for reducing emissions from deforestation and forest degradation) and biofuels.
The proposed commission would, like the World Commission on Dams, bring together people from different walks of life and of different viewpoints who are in a position to look at where the action on climate change and on biodiversity can take place in the most meaningful way.
Another important point on IUCN's agenda in the coming years is to "form new partnerships among the best institutions to bring together their different insights and to generate meaningful solutions that deal effectively with the inter-related issues of population, natural resources, environment and development."
The IUCN will also bring clarity into the basis for establishing appropriate relationships with business. Judging from the debates on several motions on this subject at the Barcelona congress, there would appear to be a considerable consensus that the IUCN must engage with corporations, large, medium and small.
However, the terms of such engagement must be such as to lead to positive conservation outcomes, and ensure that at no time is IUCN's integrity or capacity to fulfil its mission compromised in any way.
Marton-Lefèvre confirmed that perception. "My view has always been that IUCN was set up to influence, encourage and assist society in dealing with nature and natural resources in a most sustainable and socially equitable manner -- and business is a part of society, whether some of our members like it or not. So my feeling is strongly that we must engage, but we don't lose our voice in this engagement," she told IPS.
But Khosla went a step ahead, when he said in his closing remarks: "The national and regional committees will have to be mandated to perform both expert and watchdog roles at the grassroot levels."
A task force to define the terms of such engagement and the changes in function required is expected to be set up by the 32-member council that serves as the board of directors of the organisation.
The congress did some important work to promote improvements in governance on the high seas. As an area outside of national jurisdiction, these are often exploited by all and managed by none.
The rights of vulnerable and indigenous communities received high priority at the Barcelona congress as IUCN members called on governments to take into account human rights implications in all conservation-related activities.
The congress saw the beginning of an ethical framework to guide conservation activities where poverty reduction, rights-based approaches and 'do no harm' principles can be applied to help redefine relating with nature.
With an eye on the UN climate change conference in Poland in December, the IUCN called for more specific goals in line with the Bali Plan of Action -- calling for a 50 to 85 percent reduction in CO2 emissions by 2050 and keeping a rise in temperature below 2 degrees Centigrade.
Several high profile commitments were made during the congress to support the IUCN mission: the MacArthur Foundation will invest 50 million dollars in climate change mitigation and adaptation, and the Mohammed Bin Zayed Species Conservation Fund will invest 25 million euros for worldwide biodiversity.
© 2008 Inter Press Service
The International Union for the Conservation of Nature (IUCN) now plans to gather incontrovertible evidence on the value of preserving biodiversity and the cost of losing it. The world's oldest and largest global environmental network will task its scientific commissions for this.
This is one eminent pillar of the immediate and strategic priorities of the IUCN as spelt out by the organisation's new president Ashok Khosla.
The idea, backed by IUCN's ten-day world conservation congress that concluded Tuesday (Oct 14) in Barcelona, is to protect the biosphere, with particular focus on the conservation of biodiversity in all its manifestations.
"This means that we must do what is necessary to bring the issue of biodiversity right into the centre stage of public awareness, media concern and decision-making at the local, national and global levels," Khosla told delegates at the closing session.
Discussions at the congress revealed that there are indeed definite lessons to learn from the debate about climate change. While many doubted the scientific basis of the connection between climate change and human activity, it was the authoritative and unambiguous view of the Inter-governmental Panel on Climate Change (IPCC) reflecting the combined scientific work of over 3,000 scientists that more or less put an end to the debate. Clearly, IUCN is the body that can and must do what IPCC is doing with climate change.
"The clear message coming out of this (Barcelona) meeting is that biodiversity underpins the well-being of human societies and their economies," said IUCN director-general Julia Marton-Lefèvre. "But conservation can only succeed if we attack the underlying causes of biodiversity loss, and action is taken at the same time to reduce the impacts of that loss."
The IUCN programme for 2009-2012 on 'Shaping a Sustainable Future' says the IUCN will contribute directly to targets agreed internationally by governments to reduce the rate of loss of biodiversity.
It will also add an environmental perspective to the achievement of the Millennium Development Goals (agreed in 2000 by 189 countries), the plan for implementation of the World Summit on Sustainable Development (agreed in September 2002 in Johannesburg) and other relevant international commitments.
Established in 1948 in Fontainebleau (Switzerland), three years after the United Nations was founded, the IUCN with about 1,000 members from across the world, including governments and international NGOs, is indeed poised to adjust itself to the changed and fast-changing realities of the globalised world.
Not only does it face the most challenging environmental issues ever in history -- climate change and diminishing biodiversity -- but IUCN members are also asking for fundamental changes in its working.
It is against this backdrop that the election of Khosla is of vital significance. He chairs the India-based Development Alternatives Group, a non-profit organisation established in 1983 "for creating large-scale sustainable livelihoods." He is also president of the Club of Rome, a global think-tank and centre of innovation and initiative.
One of his top priorities is to set up a world commission in collaboration with WWF and the UN Environment Programme (UNEP) to investigate the deeper implications of 'green carbon' such as sequestration, REED (a mechanism for compensating countries for reducing emissions from deforestation and forest degradation) and biofuels.
The proposed commission would, like the World Commission on Dams, bring together people from different walks of life and of different viewpoints who are in a position to look at where the action on climate change and on biodiversity can take place in the most meaningful way.
Another important point on IUCN's agenda in the coming years is to "form new partnerships among the best institutions to bring together their different insights and to generate meaningful solutions that deal effectively with the inter-related issues of population, natural resources, environment and development."
The IUCN will also bring clarity into the basis for establishing appropriate relationships with business. Judging from the debates on several motions on this subject at the Barcelona congress, there would appear to be a considerable consensus that the IUCN must engage with corporations, large, medium and small.
However, the terms of such engagement must be such as to lead to positive conservation outcomes, and ensure that at no time is IUCN's integrity or capacity to fulfil its mission compromised in any way.
Marton-Lefèvre confirmed that perception. "My view has always been that IUCN was set up to influence, encourage and assist society in dealing with nature and natural resources in a most sustainable and socially equitable manner -- and business is a part of society, whether some of our members like it or not. So my feeling is strongly that we must engage, but we don't lose our voice in this engagement," she told IPS.
But Khosla went a step ahead, when he said in his closing remarks: "The national and regional committees will have to be mandated to perform both expert and watchdog roles at the grassroot levels."
A task force to define the terms of such engagement and the changes in function required is expected to be set up by the 32-member council that serves as the board of directors of the organisation.
The congress did some important work to promote improvements in governance on the high seas. As an area outside of national jurisdiction, these are often exploited by all and managed by none.
The rights of vulnerable and indigenous communities received high priority at the Barcelona congress as IUCN members called on governments to take into account human rights implications in all conservation-related activities.
The congress saw the beginning of an ethical framework to guide conservation activities where poverty reduction, rights-based approaches and 'do no harm' principles can be applied to help redefine relating with nature.
With an eye on the UN climate change conference in Poland in December, the IUCN called for more specific goals in line with the Bali Plan of Action -- calling for a 50 to 85 percent reduction in CO2 emissions by 2050 and keeping a rise in temperature below 2 degrees Centigrade.
Several high profile commitments were made during the congress to support the IUCN mission: the MacArthur Foundation will invest 50 million dollars in climate change mitigation and adaptation, and the Mohammed Bin Zayed Species Conservation Fund will invest 25 million euros for worldwide biodiversity.
© 2008 Inter Press Service
Grøn økonomi kan skabe millioner af job
FN præsenterer sit udspil til 'A New Green Deal' i næste uge
På onsdag i næste uge præsenterer FN's Miljøprogram, UNEP, med støtte fra den tyske og norske regering samt EU-Kommissionen en ambitiøs appel til verdens politiske ledere om at skifte kurs og arbejde for en New Green Deal, der kan afværge miljømæssige katastrofer og samtidig skabe nye arbejdspladser i stort tal, trænge fattigdommen tilbage og hjælpe den syge internationale økonomi på fode.
Appellen præsenteres i London ved fremlæggelsen af The Green Economy Initiative, der henter inspiration fra præsident Roosevelts New Deal-initiativ i 1930'ernes USA.
UNEP påpeger det uholdbare i den eksisterende globale økonomi, der er fordoblet gennem det seneste århundrede, men samtidig bærer ansvar for, at 60 pct. af de naturressourcer, der sikrer grundlaget for mad, drikkevand, energi og ren luft er blevet alvorligt undergravet.
På den baggrund vil UNEP appellere til de globale ledere om at sikre en omdirigering af økonomiske ressourcer bort fra den finansspekulation, der har drevet finansmarkedet til randen af nedsmeltning, og hen mod investeringer i bæredygtig jobskabelse og ny vækst.
Bag initiativet ligger rapporten The Economics of Ecosystem and Biodiversity, udarbejdet af formanden for Deutsche Banks Global Market Centre, Pavan Sukhdev.
"Vi forsøger at navigere i ukendte og turbulente farvande med et gammelt og defekt økonomisk kompas, og det påvirker vores evne til at forme en bæredygtig økonomi i harmoni med naturen," siger den tyske bankøkonom.
Hans pointe er, at dagens økonomi stort set mangler redskaber til at værdisætte de goder, planeten tilbyder i form af økosystemerne og naturens tjenesteydelser. Derfor håndteres de som gratis goder, og derfor overforbruges, udpines og ødelægges de. Ifølge Sukhdevs analyser betyder f.eks. rydningen af skove, at verden p.t. mister - hidtil ikke værdisatte - tjenester og goder på 2.500 milliarder dollar årligt, sammenligneligt med de ca. 3.000 mia., der er gået til verdens kriseramte finanssektor.
En grøn økonomi, der tilskriver naturen dens reelle værdi for menneskeheden, vil lede til anderledes økonomiske dispositioner, der sikrer denne naturkapitals opretholdelse og dermed fastholder grundlaget for varig og bæredygtig anvendelse og jobskabelse, påpeger Sukhdev.
"Før har det været muligt at fare kloden rundt og udnytte den som en mine, hvorfra vi hentede reserverne. Det er tydeligt, at det ikke går længere. Hvor det 20. århundrede var industriens tidsalder, må det 21. århundrede blive biologiens tidsalder, hvor vi omdefinerer, hvad velstand og økonomi betyder," siger UNEP-talsmand Nick Nuttall.
Millioner af jobs
I en anden rapport, udarbejdet for bl.a. UNEP og FN's arbejdstagerorganisation ILO, dokumenteres beskæftigelseseffekten ved at styre de globale investeringer i bæredygtig retning.
"Ændrede mønstre for ansættelser og investeringer som resultat af en indsats for at bremse klimaændringerne og disses effekter skaber allerede nye arbejdspladser i mange sektorer og økonomier og kan skabe millioner flere i både i- og u-lande," hedder det i rapporten Green Jobs: Towards decent work in a sustainable low-carbon world.
"Vedvarende energi skaber flere jobs end beskæftigelse i den fossile energisektor. Projekterede investeringer på 630 mia. dollar i 2030 vil føre til mindst 20 mio. nye job i den vedvarende energisektor (...) En global omstilling til energieffektive bygninger kan skabe millioner af arbejdspladser og samtidig gøre eksisterende jobs grønnere for mange af de 111 mio. mennesker, der allerede arbejder i byggesektoren," konkluderer rapporten.
Source URL: http://www.information.dk/168858
På onsdag i næste uge præsenterer FN's Miljøprogram, UNEP, med støtte fra den tyske og norske regering samt EU-Kommissionen en ambitiøs appel til verdens politiske ledere om at skifte kurs og arbejde for en New Green Deal, der kan afværge miljømæssige katastrofer og samtidig skabe nye arbejdspladser i stort tal, trænge fattigdommen tilbage og hjælpe den syge internationale økonomi på fode.
Appellen præsenteres i London ved fremlæggelsen af The Green Economy Initiative, der henter inspiration fra præsident Roosevelts New Deal-initiativ i 1930'ernes USA.
UNEP påpeger det uholdbare i den eksisterende globale økonomi, der er fordoblet gennem det seneste århundrede, men samtidig bærer ansvar for, at 60 pct. af de naturressourcer, der sikrer grundlaget for mad, drikkevand, energi og ren luft er blevet alvorligt undergravet.
På den baggrund vil UNEP appellere til de globale ledere om at sikre en omdirigering af økonomiske ressourcer bort fra den finansspekulation, der har drevet finansmarkedet til randen af nedsmeltning, og hen mod investeringer i bæredygtig jobskabelse og ny vækst.
Bag initiativet ligger rapporten The Economics of Ecosystem and Biodiversity, udarbejdet af formanden for Deutsche Banks Global Market Centre, Pavan Sukhdev.
"Vi forsøger at navigere i ukendte og turbulente farvande med et gammelt og defekt økonomisk kompas, og det påvirker vores evne til at forme en bæredygtig økonomi i harmoni med naturen," siger den tyske bankøkonom.
Hans pointe er, at dagens økonomi stort set mangler redskaber til at værdisætte de goder, planeten tilbyder i form af økosystemerne og naturens tjenesteydelser. Derfor håndteres de som gratis goder, og derfor overforbruges, udpines og ødelægges de. Ifølge Sukhdevs analyser betyder f.eks. rydningen af skove, at verden p.t. mister - hidtil ikke værdisatte - tjenester og goder på 2.500 milliarder dollar årligt, sammenligneligt med de ca. 3.000 mia., der er gået til verdens kriseramte finanssektor.
En grøn økonomi, der tilskriver naturen dens reelle værdi for menneskeheden, vil lede til anderledes økonomiske dispositioner, der sikrer denne naturkapitals opretholdelse og dermed fastholder grundlaget for varig og bæredygtig anvendelse og jobskabelse, påpeger Sukhdev.
"Før har det været muligt at fare kloden rundt og udnytte den som en mine, hvorfra vi hentede reserverne. Det er tydeligt, at det ikke går længere. Hvor det 20. århundrede var industriens tidsalder, må det 21. århundrede blive biologiens tidsalder, hvor vi omdefinerer, hvad velstand og økonomi betyder," siger UNEP-talsmand Nick Nuttall.
Millioner af jobs
I en anden rapport, udarbejdet for bl.a. UNEP og FN's arbejdstagerorganisation ILO, dokumenteres beskæftigelseseffekten ved at styre de globale investeringer i bæredygtig retning.
"Ændrede mønstre for ansættelser og investeringer som resultat af en indsats for at bremse klimaændringerne og disses effekter skaber allerede nye arbejdspladser i mange sektorer og økonomier og kan skabe millioner flere i både i- og u-lande," hedder det i rapporten Green Jobs: Towards decent work in a sustainable low-carbon world.
"Vedvarende energi skaber flere jobs end beskæftigelse i den fossile energisektor. Projekterede investeringer på 630 mia. dollar i 2030 vil føre til mindst 20 mio. nye job i den vedvarende energisektor (...) En global omstilling til energieffektive bygninger kan skabe millioner af arbejdspladser og samtidig gøre eksisterende jobs grønnere for mange af de 111 mio. mennesker, der allerede arbejder i byggesektoren," konkluderer rapporten.
Source URL: http://www.information.dk/168858
ATTAC: Let's shut down the financial casino
ATTAC udfolder i denne pdf. fil deres tanker om finanskrisens årsag og medicinen md od den.
http://blog.tni.org/wp-content/uploads/2008/10/attac-finance-crisis-15_10_2008.pdf
http://blog.tni.org/wp-content/uploads/2008/10/attac-finance-crisis-15_10_2008.pdf
The Depression: A Long-Term View
Immanuel Wallerstein says that the belief that we are just in another cyclical swing and will soon bounce back hides the fact that three basic costs of capitalist production - personnel, inputs, and taxation - have steadily risen as a percentage of possible sales price, which makes it impossible to obtain the large profits from quasi-monopolized production that have always been the basis of significant capital accumulation.
“We can assert with confidence that the present system cannot survive. What we cannot predict is which new order will be chosen to replace it..This will not be a capitalist system but it may be far worse (even more polarizing and hierarchical) or much better (relatively democratic and relatively egalitarian) than such a system. The choice of a new system is the major worldwide political struggle of our times.”
The depression has started. Journalists are still coyly enquiring of economists whether or not we may be entering a mere recession. Don’t believe it for a minute. We are already at the beginning of a full-blown
worldwide depression with extensive unemployment almost everywhere. It may take the form of a classic nominal deflation, with all its negative consequences for ordinary people. Or it might take the form, a bit less likely, of a runaway inflation, which is simply another way in which values deflate, and which is even worse for ordinary people.
Of course everyone is asking what has triggered this depression. Is it the derivatives, which Warren Buffett called “financial weapons of mass destruction”? Or is it the subprime mortgages? Or is it oil speculators?
This is a blame game, and of no real importance. This is to concentrate on the dust, as Fernand Braudel called it, of short-term events. If we want to understand what is going on, we need to look at two other
temporalities, which are far more revealing. One is that of medium-term cyclical swings. And one is that of the long-term structural trends.The capitalist world-economy has had, for several hundred years at least, two major forms of cyclical swings. One is the so-called Kondratieff cycles that historically were 50-60 years in length. And the other is the hegemonic cycles which are much longer.
In terms of the hegemonic cycles, the United States was a rising contender for hegemony as of 1873, achieved full hegemonic dominance in 1945, and has been slowly declining since the 1970s. George W. Bush’s follies have transformed a slow decline into a precipitate one. And as of now, we are past any semblance of U.S. hegemony. We have entered, as normally happens, a multipolar world. The United States remains a strong power, perhaps still the strongest, but it will continue to decline relative to other powers in the decades to come. There is not much that anyone can do to change this.
The Kondratieff cycles have a different timing. The world came out of the last Kondratieff B-phase in 1945, and then had the strongest A-phase upturn in the history of the modern world-system. It reached its height
circa 1967-73, and started on its downturn. This B-phase has gone on much longer than previous B-phases and we are still in it.
The characteristics of a Kondratieff B-phase are well-known and match what the world-economy has been experiencing since the 1970s. Profit rates from productive activities go down, especially in those types of
production that have been most profitable. Consequently, capitalists who wish to make really high levels of profit turn to the financial arena, engaging in what is basically speculation. Productive activities, in order not to become too unprofitable, tend to move from core zones to other parts of the world-system, trading lower transactions costs for lower personnel costs. This is why jobs have been disappearing from Detroit, Essen, and Nagoya and factories have been expanding in China, India, and Brazil.
As for the speculative bubbles, some people always make a lot of money in them. But speculative bubbles always burst, sooner or later. If one asks why this Kondratieff B-phase has lasted so long, it is because the
powers that be - the U.S. Treasury and Federal Reserve Bank, the International Monetary Fund, and their collaborators in western Europe and Japan - have intervened in the market regularly and importantly - 1987 (stock market plunge), 1989 (savings-and-loan collapse), 1997 (East Asian financial fall), 1998 (Long Term Capital Management mismanagement), 2001-2002 (Enron) - to shore up the world-economy.
They learned the lessons of previous Kondratieff B-phases, and the powers that be thought they could beat the system. But there are intrinsic limits to doing this. And we have now reached them, as Henry Paulson and
Ben Bernanke are learning to their chagrin and probably amazement. This time, it will not be so easy, probably impossible, to avert the worst.
In the past, once a depression wreaked its havoc, the world-economy picked up again, on the basis of innovations that could be quasi-monopolized for a while. So, when people say that the stock market
will rise again, this is what they are thinking will happen, this time as in the past, after all the damage has been done to the world’s populations. And maybe it will, in a few years or so.
There is however something new that may interfere with this nice cyclical pattern that has sustained the capitalist system for some 500 years. The structural trends may interfere with the cyclical patterns. The basic structural features of capitalism as a world-system operate by certain rules that can be drawn on a chart as a moving upward equilibrium. The problem, as with all structural equilibria of all systems, is that over time the curves tend to move far from equilibrium and it becomes impossible to bring them back to equilibrium.
What has made the system move so far from equilibrium? In very brief, it is because over 500 years the three basic costs of capitalist production - personnel, inputs, and taxation - have steadily risen as a percentage
of possible sales price, such that today they make it impossible to obtain the large profits from quasi-monopolized production that have been the basis of significant capital accumulation.
It is not because capitalism is failing at what it does best. It is precisely because it has been doing it so well that it has finally undermined the basis of future accumulation.
What happens when we reach such a point is that the system bifurcates (in the language of complexity studies). The immediate consequence is high chaotic turbulence, which our world-system is experiencing at the moment and will continue to experience for perhaps another 20-50 years. As everyone pushes in whatever direction they think immediately best for each of them, a new order will emerge out of the chaos along one of two alternate and very different paths.
We can assert with confidence that the present system cannot survive. What we cannot predict is which new order will be chosen to replace it, because it will be the result of an infinity of individual pressures. But sooner or later, a new system will be installed. This will not be a capitalist system but it may be far worse (even more polarizing and hierarchical) or much better (relatively democratic and relatively egalitarian) than such a system. The choice of a new system is the major worldwide political struggle of our times.
As for our immediate short-run ad interim prospects, it is clear what is happening everywhere. We have been moving into a protectionist world (forget about so-called globalization). We have been moving into a much
larger direct role of government in production. Even the United States and Great Britain are partially nationalizing the banks and the dying big industries. We are moving into populist government-led redistribution, which can take left-of-center social-democratic forms or far right authoritarian forms. And we are moving into acute social conflict within states, as everyone competes over the smaller pie. In the short-run, it is not, by and large, a pretty picture.
by Immanuel Wallerstein
“We can assert with confidence that the present system cannot survive. What we cannot predict is which new order will be chosen to replace it..This will not be a capitalist system but it may be far worse (even more polarizing and hierarchical) or much better (relatively democratic and relatively egalitarian) than such a system. The choice of a new system is the major worldwide political struggle of our times.”
The depression has started. Journalists are still coyly enquiring of economists whether or not we may be entering a mere recession. Don’t believe it for a minute. We are already at the beginning of a full-blown
worldwide depression with extensive unemployment almost everywhere. It may take the form of a classic nominal deflation, with all its negative consequences for ordinary people. Or it might take the form, a bit less likely, of a runaway inflation, which is simply another way in which values deflate, and which is even worse for ordinary people.
Of course everyone is asking what has triggered this depression. Is it the derivatives, which Warren Buffett called “financial weapons of mass destruction”? Or is it the subprime mortgages? Or is it oil speculators?
This is a blame game, and of no real importance. This is to concentrate on the dust, as Fernand Braudel called it, of short-term events. If we want to understand what is going on, we need to look at two other
temporalities, which are far more revealing. One is that of medium-term cyclical swings. And one is that of the long-term structural trends.The capitalist world-economy has had, for several hundred years at least, two major forms of cyclical swings. One is the so-called Kondratieff cycles that historically were 50-60 years in length. And the other is the hegemonic cycles which are much longer.
In terms of the hegemonic cycles, the United States was a rising contender for hegemony as of 1873, achieved full hegemonic dominance in 1945, and has been slowly declining since the 1970s. George W. Bush’s follies have transformed a slow decline into a precipitate one. And as of now, we are past any semblance of U.S. hegemony. We have entered, as normally happens, a multipolar world. The United States remains a strong power, perhaps still the strongest, but it will continue to decline relative to other powers in the decades to come. There is not much that anyone can do to change this.
The Kondratieff cycles have a different timing. The world came out of the last Kondratieff B-phase in 1945, and then had the strongest A-phase upturn in the history of the modern world-system. It reached its height
circa 1967-73, and started on its downturn. This B-phase has gone on much longer than previous B-phases and we are still in it.
The characteristics of a Kondratieff B-phase are well-known and match what the world-economy has been experiencing since the 1970s. Profit rates from productive activities go down, especially in those types of
production that have been most profitable. Consequently, capitalists who wish to make really high levels of profit turn to the financial arena, engaging in what is basically speculation. Productive activities, in order not to become too unprofitable, tend to move from core zones to other parts of the world-system, trading lower transactions costs for lower personnel costs. This is why jobs have been disappearing from Detroit, Essen, and Nagoya and factories have been expanding in China, India, and Brazil.
As for the speculative bubbles, some people always make a lot of money in them. But speculative bubbles always burst, sooner or later. If one asks why this Kondratieff B-phase has lasted so long, it is because the
powers that be - the U.S. Treasury and Federal Reserve Bank, the International Monetary Fund, and their collaborators in western Europe and Japan - have intervened in the market regularly and importantly - 1987 (stock market plunge), 1989 (savings-and-loan collapse), 1997 (East Asian financial fall), 1998 (Long Term Capital Management mismanagement), 2001-2002 (Enron) - to shore up the world-economy.
They learned the lessons of previous Kondratieff B-phases, and the powers that be thought they could beat the system. But there are intrinsic limits to doing this. And we have now reached them, as Henry Paulson and
Ben Bernanke are learning to their chagrin and probably amazement. This time, it will not be so easy, probably impossible, to avert the worst.
In the past, once a depression wreaked its havoc, the world-economy picked up again, on the basis of innovations that could be quasi-monopolized for a while. So, when people say that the stock market
will rise again, this is what they are thinking will happen, this time as in the past, after all the damage has been done to the world’s populations. And maybe it will, in a few years or so.
There is however something new that may interfere with this nice cyclical pattern that has sustained the capitalist system for some 500 years. The structural trends may interfere with the cyclical patterns. The basic structural features of capitalism as a world-system operate by certain rules that can be drawn on a chart as a moving upward equilibrium. The problem, as with all structural equilibria of all systems, is that over time the curves tend to move far from equilibrium and it becomes impossible to bring them back to equilibrium.
What has made the system move so far from equilibrium? In very brief, it is because over 500 years the three basic costs of capitalist production - personnel, inputs, and taxation - have steadily risen as a percentage
of possible sales price, such that today they make it impossible to obtain the large profits from quasi-monopolized production that have been the basis of significant capital accumulation.
It is not because capitalism is failing at what it does best. It is precisely because it has been doing it so well that it has finally undermined the basis of future accumulation.
What happens when we reach such a point is that the system bifurcates (in the language of complexity studies). The immediate consequence is high chaotic turbulence, which our world-system is experiencing at the moment and will continue to experience for perhaps another 20-50 years. As everyone pushes in whatever direction they think immediately best for each of them, a new order will emerge out of the chaos along one of two alternate and very different paths.
We can assert with confidence that the present system cannot survive. What we cannot predict is which new order will be chosen to replace it, because it will be the result of an infinity of individual pressures. But sooner or later, a new system will be installed. This will not be a capitalist system but it may be far worse (even more polarizing and hierarchical) or much better (relatively democratic and relatively egalitarian) than such a system. The choice of a new system is the major worldwide political struggle of our times.
As for our immediate short-run ad interim prospects, it is clear what is happening everywhere. We have been moving into a protectionist world (forget about so-called globalization). We have been moving into a much
larger direct role of government in production. Even the United States and Great Britain are partially nationalizing the banks and the dying big industries. We are moving into populist government-led redistribution, which can take left-of-center social-democratic forms or far right authoritarian forms. And we are moving into acute social conflict within states, as everyone competes over the smaller pie. In the short-run, it is not, by and large, a pretty picture.
by Immanuel Wallerstein
When old dogmas die, there is room for all kinds of radical new thinking
The revival of the markets has postponed the sensation that violent revolution is imminent. No longer are the sages telling us the entire system is minutes away from total collapse. The first aid, devised by Gordon Brown and hailed and emulated from the US to the eurozone, seems to have soothed the fevered brow of the moneymen. For now at least.
Still, even if the mob is not about to storm finance ministries from Paris to Washington, few doubt that we are witnessing an epochal event, living through one of those moments on which history pivots. Newsweek International editor Fareed Zakaria writes that he had always wanted to experience the kind of event "one reads about in books. Well, this is it". In the Financial Times, Philip Stephens says that two centuries of US and European domination are now at an end, as the western economic model is humbled. Robert Peston announces the end of the Thatcherite age. On these pages yesterday Steve Bell consigned the lady herself to the dustbin of history.
Of course, these verdicts might turn out to be overblown. Some are counselling that the great turmoil of 2008 will turn out to be less tempestuous than advertised. For one thing, the Brownian notion of part-nationalising the banks could work, turning what would have been a major depression into a mere, if harsh, recession. In that case, the political impact would surely be muted. The ground was laid for Franklin Roosevelt's New Deal not simply by the Wall Street Crash of 1929, but the lines of the destitute queueing for a bowl of soup. In this view, a convulsion to the financial system will not, by itself, be enough to usher in a new political era; not unless the tremors shake the real-world economy and society along with it.
Still, let's accept that the events of the past few week are indeed epochal. Most are quite clear on what has ended: the era of let-it-rip, unfettered market capitalism has surely drawn to a close. As Andrew Simms, policy director of the New Economics Foundation, puts it: "This is to finance-driven capitalism what 1989 was to Soviet communism." In both cases, too much unaccountable power had concentrated in too few hands, with too little transparency, as those in charge lived in a financial fantasy land, playing with numbers wholly detached from productive economic activity.
If that's now all over, what's coming next? The first shift might be a radically different approach to public spending. Now that they have seen their governments spend eye-popping sums of money to get out of a crisis, won't voters demand similar largesse to solve other pressing problems? For decades, politicians have told constituents that there simply isn't the cash to pay for, say, the £3bn that would be needed to halve child poverty by 2010, or the annual £8bn it would take to get 20% of our energy from renewable sources. Now, though, those look like paltry sums next to the £37bn the government plans to inject into Britain's ailing banks. Saving post office branches in deprived areas at a cost of £150m? Small change! In this way, the rhetoric of public discussion on spending could change drastically, with voters' patience for arguments of prudence evaporated. "If you could find the money to clear up the mess left by a few greedy fat cats," voters will say, "then you can find the money to fund this bus service/save this village school/renationalise the railways."
Or it could go the other way. The politicians may find that, though the public mood becomes more conducive to active, high-spending government, they simply lack the means to pay for any of it. They will have already borrowed to the hilt for the banks bail-out and will have nothing left, resources further depleted by the coming recession. In this atmosphere of fiscal tightness, ministers could skirt round vexed ideological terrain and simply plead poverty. There would be no need for an embarrassing U-turn on, say, the principle of ID cards: Jacqui Smith could say she still thinks they are a good idea but, at an estimated £6bn or more, we simply cannot afford them. Ditto Trident renewal: Brown could insist he maintains his faith in nukes but say that at, £20bn, revamped weaponry is a luxury Britain cannot afford.
Elsewhere, the public failure of unregulated free markets has been so visible it could lead to a demand that financial institutions now operate by criteria other than the narrow, selfish measure of their own bottom line, taking into account the wider needs of society as a whole. If that sounds like woolly, hopelessly utopian thinking, consider this. RBS is set to be majority-owned by you and me, the taxpayer. HBOS is not far off. Now what will those banks do when faced with people falling behind on their mortgage payments? In the past they would have ordered repossession, which made sense in terms of pure profit and loss. But now there will be other factors to consider, because these banks will no longer work solely for dividend-hungry shareholders but for the taxpayer. Every family that has endured a repossession costs the public purse, through rehousing, most obviously, but in myriad and less visible ways - right down to the burden that falls on the NHS as it repairs the mental and emotional damage inflicted by forced eviction.
Now since RBS's imminent owners - us - have to pay those bills as well, we will surely demand that the bank slow down rather than move in for the kill, perhaps through restructuring the debt of that struggling homeowner or at least running a "full-impact assessment" of repossession. The government already promises to impose demands on the banks they part-own, including gentler treatment of small businesses. But once taxpayers realise their new-found power, there is no reason to assume it will be confined to just those areas. We could insist the banks we partly own behave in an entirely new way.
No less clear a lesson of 2008 is that we have to live much more closely within our means. That must apply to individuals, reining in the credit- card habits of the past decade, and to governments who have perpetuated what Zakaria calls "a great fraud", spending ever more without raising taxes. The result in the US is a national debt of $10.2 trillion.
That act of denial has to end now. It will mean either cutting back on spending or increasing taxes, or both. But that needn't be as gloomy as it sounds. Revenues could rise by taxing those things we want to see the back of anyway: starting with a windfall tax on the energy companies, penalising them for their reliance on fossil fuels. As for spending, we could shed the waste - ID cards and Trident renewal - and spend what we have on a massive effort to green our society, from home to factory. That would obey classic New Deal logic, providing jobs, helping those in fuel poverty, tackling climate change and keeping the economy ticking over - all at the same time.
Simms at the NEF thinks we may end up going further, moving to shorter working weeks as people accept that they will earn less and consume less - but will have more time for family, friends and life. That seems like a radical fantasy now, but who knows? For when old dogmas die, there is room for all kinds of new thinking. The financial tsunami has given us this if nothing else - a chance to start again.
freedland@guardian.co.uk
Still, even if the mob is not about to storm finance ministries from Paris to Washington, few doubt that we are witnessing an epochal event, living through one of those moments on which history pivots. Newsweek International editor Fareed Zakaria writes that he had always wanted to experience the kind of event "one reads about in books. Well, this is it". In the Financial Times, Philip Stephens says that two centuries of US and European domination are now at an end, as the western economic model is humbled. Robert Peston announces the end of the Thatcherite age. On these pages yesterday Steve Bell consigned the lady herself to the dustbin of history.
Of course, these verdicts might turn out to be overblown. Some are counselling that the great turmoil of 2008 will turn out to be less tempestuous than advertised. For one thing, the Brownian notion of part-nationalising the banks could work, turning what would have been a major depression into a mere, if harsh, recession. In that case, the political impact would surely be muted. The ground was laid for Franklin Roosevelt's New Deal not simply by the Wall Street Crash of 1929, but the lines of the destitute queueing for a bowl of soup. In this view, a convulsion to the financial system will not, by itself, be enough to usher in a new political era; not unless the tremors shake the real-world economy and society along with it.
Still, let's accept that the events of the past few week are indeed epochal. Most are quite clear on what has ended: the era of let-it-rip, unfettered market capitalism has surely drawn to a close. As Andrew Simms, policy director of the New Economics Foundation, puts it: "This is to finance-driven capitalism what 1989 was to Soviet communism." In both cases, too much unaccountable power had concentrated in too few hands, with too little transparency, as those in charge lived in a financial fantasy land, playing with numbers wholly detached from productive economic activity.
If that's now all over, what's coming next? The first shift might be a radically different approach to public spending. Now that they have seen their governments spend eye-popping sums of money to get out of a crisis, won't voters demand similar largesse to solve other pressing problems? For decades, politicians have told constituents that there simply isn't the cash to pay for, say, the £3bn that would be needed to halve child poverty by 2010, or the annual £8bn it would take to get 20% of our energy from renewable sources. Now, though, those look like paltry sums next to the £37bn the government plans to inject into Britain's ailing banks. Saving post office branches in deprived areas at a cost of £150m? Small change! In this way, the rhetoric of public discussion on spending could change drastically, with voters' patience for arguments of prudence evaporated. "If you could find the money to clear up the mess left by a few greedy fat cats," voters will say, "then you can find the money to fund this bus service/save this village school/renationalise the railways."
Or it could go the other way. The politicians may find that, though the public mood becomes more conducive to active, high-spending government, they simply lack the means to pay for any of it. They will have already borrowed to the hilt for the banks bail-out and will have nothing left, resources further depleted by the coming recession. In this atmosphere of fiscal tightness, ministers could skirt round vexed ideological terrain and simply plead poverty. There would be no need for an embarrassing U-turn on, say, the principle of ID cards: Jacqui Smith could say she still thinks they are a good idea but, at an estimated £6bn or more, we simply cannot afford them. Ditto Trident renewal: Brown could insist he maintains his faith in nukes but say that at, £20bn, revamped weaponry is a luxury Britain cannot afford.
Elsewhere, the public failure of unregulated free markets has been so visible it could lead to a demand that financial institutions now operate by criteria other than the narrow, selfish measure of their own bottom line, taking into account the wider needs of society as a whole. If that sounds like woolly, hopelessly utopian thinking, consider this. RBS is set to be majority-owned by you and me, the taxpayer. HBOS is not far off. Now what will those banks do when faced with people falling behind on their mortgage payments? In the past they would have ordered repossession, which made sense in terms of pure profit and loss. But now there will be other factors to consider, because these banks will no longer work solely for dividend-hungry shareholders but for the taxpayer. Every family that has endured a repossession costs the public purse, through rehousing, most obviously, but in myriad and less visible ways - right down to the burden that falls on the NHS as it repairs the mental and emotional damage inflicted by forced eviction.
Now since RBS's imminent owners - us - have to pay those bills as well, we will surely demand that the bank slow down rather than move in for the kill, perhaps through restructuring the debt of that struggling homeowner or at least running a "full-impact assessment" of repossession. The government already promises to impose demands on the banks they part-own, including gentler treatment of small businesses. But once taxpayers realise their new-found power, there is no reason to assume it will be confined to just those areas. We could insist the banks we partly own behave in an entirely new way.
No less clear a lesson of 2008 is that we have to live much more closely within our means. That must apply to individuals, reining in the credit- card habits of the past decade, and to governments who have perpetuated what Zakaria calls "a great fraud", spending ever more without raising taxes. The result in the US is a national debt of $10.2 trillion.
That act of denial has to end now. It will mean either cutting back on spending or increasing taxes, or both. But that needn't be as gloomy as it sounds. Revenues could rise by taxing those things we want to see the back of anyway: starting with a windfall tax on the energy companies, penalising them for their reliance on fossil fuels. As for spending, we could shed the waste - ID cards and Trident renewal - and spend what we have on a massive effort to green our society, from home to factory. That would obey classic New Deal logic, providing jobs, helping those in fuel poverty, tackling climate change and keeping the economy ticking over - all at the same time.
Simms at the NEF thinks we may end up going further, moving to shorter working weeks as people accept that they will earn less and consume less - but will have more time for family, friends and life. That seems like a radical fantasy now, but who knows? For when old dogmas die, there is room for all kinds of new thinking. The financial tsunami has given us this if nothing else - a chance to start again.
freedland@guardian.co.uk
Citat: Erwin Neutzsky-Wulff
Fascisme er vel i bredeste forstand at ignorere det menneskelige. Vi tror at kunne frelse verden med vores snusfornuft og glemmer, at vi er biologiske væsner, at det i sidste ende er det, der styrer os og udgør de behov, vi søger opfyldt. Målet er altså for så vidt altid irrationelt, og derfor kan det somme tider være et problem, hvis midlerne bliver alt for rationelle.
Værre er det, at vi ikke blot skyer næstens menneskelighed forstået som en svaghed, vi dømmer ham efter paroler i stedet for menneskelige egenskaber. Forståelsen mellem politiske modpoler opstår først, når vi indser, at de udspringer af en fælles menneskelighed, kærlighed, vrede, angst.
Somme tider er vi mere bange for vore allierede end vore fjender, for at de skal falde os i ryggen, fordi de måske alligevel ikke vil helt det samme, og det får os til at insistere på en åndsforladt ortodoksi. En væsentlig grund til nazisternes sejr i trediverne var således, at socialdemokrater og kommunister bekæmpede hinanden i jagten på den rene lære.
Mens man skændtes om, hvilken strategi man skulle lægge, marcherede de ind, som ikke var i tvivl. I sidste ende bliver det så ikke fornuften, men småligheden, der sejrer, forfængeligheden og hævnlysten.
Så længe venstrefløjen er en kaffeklub, hvor det udelukkende drejer sig om at komme til mikrofonen, hvad enten man har noget at sige og evner for at sige det eller ej, vil højrefløjen altid kunne holde sig flydende ved at appellere til den demokratiske egoisme. Tænk blot på, hvordan det eneste reelle initiativ i en halv snes år druknede i forstadskællingeagtigt intrigemageri, og mennesker, hvis formålsparagraf havde været at sige sandheden, nåede at indvikle sig i bevidste løgne og overlagt tilsvining af deres inspirationskilde, inden de døde af skam. Måske er der sandhed i det gamle ord, at menneskene fortjener deres herrer ...
Iraqi Government Fuels 'War for Oil' Theories by Putting Reserves up for Biggest Ever Sale
LONDON - The biggest ever sale of oil assets will take place today, when the Iraqi government puts 40bn barrels of recoverable reserves up for offer in London.
BP, Shell and ExxonMobil are all expected to attend a meeting at the Park Lane Hotel in Mayfair with the Iraqi oil minister, Hussein al-Shahristani.
Access is being given to eight fields, representing about 40% of the Middle Eastern nation's reserves, at a time when the country remains under occupation by US and British forces.
Two smaller agreements have already been signed with Shell and the China National Petroleum Corporation, but today's sale will ignite arguments over whether the overthrow of Saddam Hussein was a "war for oil" that is now to be consummated by western multinationals seizing control of strategic Iraqi reserves.
Al-Shahristani is expected to reveal some kind of "risk service agreements" that could run for up to 20 years, with formal offers to be submitted by next spring and agreements signed in the summer.
Gregg Muttitt, from the UK-based social and ecological justice group Platform, says he is alarmed that the government is pushing ahead with its plans without the support of many in Iraq.
"Most of the terms of what is being offered have not been disclosed. There are security, political and reputational risks here for oil companies but none of them will want to see one of their competitors gain an advantage," he said.
Heinrich Matthee, a senior Middle East analyst at the specialist risk consultant Control Risks Group, also believes there are many pitfalls for those considering whether to make an offer.
"Currently it is unclear which party in Iraq is authorised to award a contract and at the same time to deliver its side of the bargain," he said. "Any contract with an independent oil company will be subjected to opposition and possible revision after pressure by resource nationalists."
Oil companies will find their reputations at risk from the actions of their Iraqi counterparties, such as joint venture partners, suppliers and agents. They will also have to contend with oil smuggling and the possibility that the ruling alliance could collapse, Matthee said.
He said that if the conspiracy theory that western oil companies egged on US and British governments to invade Iraq were true, the plan could backfire on them and benefit rivals in Asia instead. "It is possible the American army has provided the economic stability that will encourage Malaysian, Chinese and other Asian companies to become involved," he said.
There is no precedent for proven oil reserves of this magnitude being offered up for sale, said Muttitt. "The nearest thing would be the post-Soviet sale of the Kashagan field [in the Caspian Sea], which had 7bn or 8bn barrels."
China's state-owned oil group, CNPC, has already agreed a $3bn (£1.78bn) oil services contract with the government of Iraq to pump oil from the Ahdab oil field.
The deal is the first major oil contract with a foreign firm since the US-led war and was followed up by an agreement with Shell, potentially worth $4bn, to develop a joint venture with the South Gas Company in Basra.
This deal has also triggered controversy. Issam al-Chalabi, Iraq's oil minister between 1987 and 1990, questioned why there had been no competitive tendering for the gas-gathering contract and claimed it had gone to Shell as the spoils of war.
"Why choose Shell when you could have chosen ExxonMobil, Chevron, BG or Gazprom?" he asked. "Shell appears to be paying $4bn to get hold of assets that in 20 years could be worth $40bn. Iraq is giving away half its gas wealth and yet this work could have been done by Iraq itself."
The Baghdad government says it aims to increase crude oil production from 2.5m barrels a day to 4.5m by 2013, but faces internal opposition from regional governors and political opponents.
The sale today comes as oil prices have plummeted after stockmarket turmoil on Friday. The price of crude fell by more than $4 at one point to $75 a barrel - the lowest point since September last year and a sharp drop from its peak of $147 in July. Opec, the oil producers' cartel, has called an emergency meeting to agree a cut in output to bolster prices in spite of protestations from politicians including Gordon Brown. Brown said on Friday: "We've had some success in getting the price of oil down: the price this morning is roughly $80, about half what it was a few months ago. I want these price cuts passed on to the consumer as quickly as possible.
"I'm concerned when I hear that the Opec countries are meeting, or are about to meet, to discuss cutting production - in other words, making the price potentially higher than it should be.
"I'm making it clear to Opec it would be wrong for the world economy and wrong for British people who are paying high petrol prices and high fuel prices to cut production and therefore keep prices high."
A government source said: "The one chink of light has been the fall in the price of oil. The last thing we want is to head into a difficult period with a return to high oil prices. People need to act responsibly."
Published on Monday, October 13, 2008 by the Guardian/UK
BP, Shell and ExxonMobil are all expected to attend a meeting at the Park Lane Hotel in Mayfair with the Iraqi oil minister, Hussein al-Shahristani.
Access is being given to eight fields, representing about 40% of the Middle Eastern nation's reserves, at a time when the country remains under occupation by US and British forces.
Two smaller agreements have already been signed with Shell and the China National Petroleum Corporation, but today's sale will ignite arguments over whether the overthrow of Saddam Hussein was a "war for oil" that is now to be consummated by western multinationals seizing control of strategic Iraqi reserves.
Al-Shahristani is expected to reveal some kind of "risk service agreements" that could run for up to 20 years, with formal offers to be submitted by next spring and agreements signed in the summer.
Gregg Muttitt, from the UK-based social and ecological justice group Platform, says he is alarmed that the government is pushing ahead with its plans without the support of many in Iraq.
"Most of the terms of what is being offered have not been disclosed. There are security, political and reputational risks here for oil companies but none of them will want to see one of their competitors gain an advantage," he said.
Heinrich Matthee, a senior Middle East analyst at the specialist risk consultant Control Risks Group, also believes there are many pitfalls for those considering whether to make an offer.
"Currently it is unclear which party in Iraq is authorised to award a contract and at the same time to deliver its side of the bargain," he said. "Any contract with an independent oil company will be subjected to opposition and possible revision after pressure by resource nationalists."
Oil companies will find their reputations at risk from the actions of their Iraqi counterparties, such as joint venture partners, suppliers and agents. They will also have to contend with oil smuggling and the possibility that the ruling alliance could collapse, Matthee said.
He said that if the conspiracy theory that western oil companies egged on US and British governments to invade Iraq were true, the plan could backfire on them and benefit rivals in Asia instead. "It is possible the American army has provided the economic stability that will encourage Malaysian, Chinese and other Asian companies to become involved," he said.
There is no precedent for proven oil reserves of this magnitude being offered up for sale, said Muttitt. "The nearest thing would be the post-Soviet sale of the Kashagan field [in the Caspian Sea], which had 7bn or 8bn barrels."
China's state-owned oil group, CNPC, has already agreed a $3bn (£1.78bn) oil services contract with the government of Iraq to pump oil from the Ahdab oil field.
The deal is the first major oil contract with a foreign firm since the US-led war and was followed up by an agreement with Shell, potentially worth $4bn, to develop a joint venture with the South Gas Company in Basra.
This deal has also triggered controversy. Issam al-Chalabi, Iraq's oil minister between 1987 and 1990, questioned why there had been no competitive tendering for the gas-gathering contract and claimed it had gone to Shell as the spoils of war.
"Why choose Shell when you could have chosen ExxonMobil, Chevron, BG or Gazprom?" he asked. "Shell appears to be paying $4bn to get hold of assets that in 20 years could be worth $40bn. Iraq is giving away half its gas wealth and yet this work could have been done by Iraq itself."
The Baghdad government says it aims to increase crude oil production from 2.5m barrels a day to 4.5m by 2013, but faces internal opposition from regional governors and political opponents.
The sale today comes as oil prices have plummeted after stockmarket turmoil on Friday. The price of crude fell by more than $4 at one point to $75 a barrel - the lowest point since September last year and a sharp drop from its peak of $147 in July. Opec, the oil producers' cartel, has called an emergency meeting to agree a cut in output to bolster prices in spite of protestations from politicians including Gordon Brown. Brown said on Friday: "We've had some success in getting the price of oil down: the price this morning is roughly $80, about half what it was a few months ago. I want these price cuts passed on to the consumer as quickly as possible.
"I'm concerned when I hear that the Opec countries are meeting, or are about to meet, to discuss cutting production - in other words, making the price potentially higher than it should be.
"I'm making it clear to Opec it would be wrong for the world economy and wrong for British people who are paying high petrol prices and high fuel prices to cut production and therefore keep prices high."
A government source said: "The one chink of light has been the fall in the price of oil. The last thing we want is to head into a difficult period with a return to high oil prices. People need to act responsibly."
Published on Monday, October 13, 2008 by the Guardian/UK
Ecologists Raise Alarm Ahead of UN Climate Summit
Ecologists Raise Alarm Ahead of UN Climate Summit
WARSAW - Ecologists raised the alarm Monday over global warming as environment ministers from more than 30 states met in Warsaw ahead of December's UN Climate summit focused on slashing greenhouse gases.
"We're ringing alarm bells -- the UN summit in Poznan must deliver a deal that will keep global warming below two degrees Celsius to the end of this century," Kaisa Kosonen from the global environmental group Greenpeace told reporters.
"Five years from now will be too late," she said as activists rang bells outside of the Warsaw hotel where ministers were gathered.
"We are currently on a pathway that implies temperatures could increase up to seven degrees (by the end of the century)," Kosonen said at an earlier press conference. "There is no more time for small steps."
Greenpeace and the Global Climate Initiative want the UN Poznan summit to agree on binding carbon dioxide (CO2) emissions cuts of 25-40 percent -- from 1990 levels -- by 2020.
Emissions of greenhouse gases like CO2 are believed to be the main culprits causing global warming.
European Union leaders are currently working on a package to cut CO2 emissions by 20 percent -- compared to 1990 emission levels -- by 2020.
Environmentalists insist the consequences of failure to agree on terms to deeply limit carbon dioxide emissions could include widespread flooding from rising sea-levels as polar icecaps melt and increased morbidity from heatwaves, floods and droughts.
Switching to green energy technologies based on solar, wind, biomas and hydro power as well as increasing energy efficiency makes both environmental and economic sense, Kosonen said.
"The amount of money world governments have pooled now in the financial crisis is huge and we have no guarantee it isn't being wasted - it would take just a fraction to spearhead renewable energy technologies," she observed.
World leaders will meet in Poznan, western Poland for the United Nations Climate Change conference dubbed COP 14 from December 1-14.
But within the EU's current talks on limiting emissions, host country Poland is calling on Brussels to increase its carbon dioxide emissions cap for its coal-reliant energy utilities and a more gradual introduction of the auctioned emissions quotas in order to ease the cost burden.
Relying on coal-fired power plants for 96 percent of its electricity, Poland has asked the commission for a 2008-2012 carbon dioxide quota of 284.6 million tonnes per year. Brussels reduced it by 26.7 percent to 208.5 million tonnes.
Poland has also proposed a 20-percent carbon dioxide quota auction be introduced in 2013, rising by degrees each year to reach the full 100 percent by 2020.
The EU's original proposal foresees full CO2 emission quota auctions to begin in 2013.
Published on Tuesday, October 14, 2008 by Agence France Presse
WARSAW - Ecologists raised the alarm Monday over global warming as environment ministers from more than 30 states met in Warsaw ahead of December's UN Climate summit focused on slashing greenhouse gases.
"We're ringing alarm bells -- the UN summit in Poznan must deliver a deal that will keep global warming below two degrees Celsius to the end of this century," Kaisa Kosonen from the global environmental group Greenpeace told reporters.
"Five years from now will be too late," she said as activists rang bells outside of the Warsaw hotel where ministers were gathered.
"We are currently on a pathway that implies temperatures could increase up to seven degrees (by the end of the century)," Kosonen said at an earlier press conference. "There is no more time for small steps."
Greenpeace and the Global Climate Initiative want the UN Poznan summit to agree on binding carbon dioxide (CO2) emissions cuts of 25-40 percent -- from 1990 levels -- by 2020.
Emissions of greenhouse gases like CO2 are believed to be the main culprits causing global warming.
European Union leaders are currently working on a package to cut CO2 emissions by 20 percent -- compared to 1990 emission levels -- by 2020.
Environmentalists insist the consequences of failure to agree on terms to deeply limit carbon dioxide emissions could include widespread flooding from rising sea-levels as polar icecaps melt and increased morbidity from heatwaves, floods and droughts.
Switching to green energy technologies based on solar, wind, biomas and hydro power as well as increasing energy efficiency makes both environmental and economic sense, Kosonen said.
"The amount of money world governments have pooled now in the financial crisis is huge and we have no guarantee it isn't being wasted - it would take just a fraction to spearhead renewable energy technologies," she observed.
World leaders will meet in Poznan, western Poland for the United Nations Climate Change conference dubbed COP 14 from December 1-14.
But within the EU's current talks on limiting emissions, host country Poland is calling on Brussels to increase its carbon dioxide emissions cap for its coal-reliant energy utilities and a more gradual introduction of the auctioned emissions quotas in order to ease the cost burden.
Relying on coal-fired power plants for 96 percent of its electricity, Poland has asked the commission for a 2008-2012 carbon dioxide quota of 284.6 million tonnes per year. Brussels reduced it by 26.7 percent to 208.5 million tonnes.
Poland has also proposed a 20-percent carbon dioxide quota auction be introduced in 2013, rising by degrees each year to reach the full 100 percent by 2020.
The EU's original proposal foresees full CO2 emission quota auctions to begin in 2013.
Published on Tuesday, October 14, 2008 by Agence France Presse
CIA Tactics Endorsed In Secret Memos Waterboarding Got White House Nod
The Bush administration issued a pair of secret memos to the CIA in 2003 and 2004 that explicitly endorsed the agency's use of interrogation techniques such as waterboarding against al-Qaeda suspects -- documents prompted by worries among intelligence officials about a possible backlash if details of the program became public.
The classified memos, which have not been previously disclosed, were requested by then-CIA Director George J. Tenet more than a year after the start of the secret interrogations, according to four administration and intelligence officials familiar with the documents. Although Justice Department lawyers, beginning in 2002, had signed off on the agency's interrogation methods, senior CIA officials were troubled that White House policymakers had never endorsed the program in writing.
The memos were the first -- and, for years, the only -- tangible expressions of the administration's consent for the CIA's use of harsh measures to extract information from captured al-Qaeda leaders, the sources said. As early as the spring of 2002, several White House officials, including then-national security adviser Condoleezza Rice and Vice President Cheney, were given individual briefings by Tenet and his deputies, the officials said. Rice, in a statement to congressional investigators last month, confirmed the briefings and acknowledged that the CIA director had pressed the White House for "policy approval."
The repeated requests for a paper trail reflected growing worries within the CIA that the administration might later distance itself from key decisions about the handling of captured al-Qaeda leaders, former intelligence officials said. The concerns grew more pronounced after the revelations of mistreatment of detainees at the Abu Ghraib prison in Iraq, and further still as tensions grew between the administration and its intelligence advisers over the conduct of the Iraq war.
"It came up in the daily meetings. We heard it from our field officers," said a former senior intelligence official familiar with the events. "We were already worried that we" were going to be blamed.
A. John Radsan, a lawyer in the CIA general counsel's office until 2004, remembered the discussions but did not personally view the memos the agency received in response to its concerns. "The question was whether we had enough 'top cover,' " Radsan said.
Tenet first pressed the White House for written approval in June 2003, during a meeting with members of the National Security Council, including Rice, the officials said. Days later, he got what he wanted: a brief memo conveying the administration's approval for the CIA's interrogation methods, the officials said.
Administration officials confirmed the existence of the memos, but neither they nor former intelligence officers would describe their contents in detail because they remain classified. The sources all spoke on the condition of anonymity because they were not cleared to discuss the events.
The second request from Tenet, in June 2004, reflected growing worries among agency officials who had just witnessed the public outcry over the Abu Ghraib scandal. Officials who held senior posts at the time also spoke of deteriorating relations between the CIA and the White House over the war in Iraq -- a rift that prompted some to believe that the agency needed even more explicit proof of the administration's support.
"The CIA by this time is using the word 'insurgency' to describe the Iraq conflict, so the White House is viewing the agency with suspicion," said a second former senior intelligence official.
As recently as last month, the administration had never publicly acknowledged that its policymakers knew about the specific techniques, such as waterboarding, that the agency used against high-ranking terrorism suspects. In her unprecedented account to lawmakers last month, Rice, now secretary of state, portrayed the White House as initially uneasy about a controversial CIA plan for interrogating top al-Qaeda suspects.
After learning about waterboarding and similar tactics in early 2002, several White House officials questioned whether such harsh measures were "effective and necessary . . . and lawful," Rice said. Her concerns led to an investigation by the Justice Department's criminal division into whether the techniques were legal.
But whatever misgivings existed that spring were apparently overcome. Former and current CIA officials say no such reservations were voiced in their presence.
In interviews, the officials recounted a series of private briefings about the program with members of the administration's security team, including Rice and Cheney, followed by more formal meetings before a larger group including then-Attorney General John D. Ashcroft, then-White House counsel Alberto R. Gonzales and then-Defense Secretary Donald H. Rumsfeld. None of the officials recalled President Bush being present at any of the discussions.
Several of the key meetings have been previously described in news articles and books, but Rice last month became the first Cabinet-level official to publicly confirm the White House's awareness of the program in its earliest phases. In written responses to questions from the Senate Armed Services Committee, Rice said Tenet's description of the agency's interrogation methods prompted her to investigate further to see whether the program violated U.S. laws or international treaties, according to her written responses, dated Sept. 12 and released late last month.
"I asked that . . . Ashcroft personally advise the NSC principles whether the program was lawful," Rice wrote.
Current and former intelligence officials familiar with the briefings described Tenet as supportive of enhanced interrogation techniques, which the officials said were developed by CIA officers after the agency's first high-level captive, al-Qaeda operative Zayn al-Abidin Muhammed Hussein, better known as Abu Zubaida, refused to cooperate with interrogators.
"The CIA believed then, and now, that the program was useful and helped save lives," said a former senior intelligence official knowledgeable about the events. "But in the agency's view, it was like this: 'We don't want to continue unless you tell us in writing that it's not only legal but is the policy of the administration.' "
One administration official familiar with the meetings said the CIA made such a convincing case that no one questioned whether the methods were necessary to prevent further terrorist attacks.
"The CIA had the White House boxed in," said the official. "They were saying, 'It's the only way to get the information we needed, and -- by the way -- we think there's another attack coming up.' It left the principals in an extremely difficult position and put the decision-making on a very fast track."
But others who were present said Tenet seemed more interested in protecting his subordinates than in selling the administration on a policy that administration lawyers had already authorized.
"The suggestion that someone from CIA came in and browbeat everybody is ridiculous," said one former agency official familiar with the meeting. "The CIA understood that it was controversial and would be widely criticized if it became public," the official said of the interrogation program. "But given the tenor of the times and the belief that more attacks were coming, they felt they had to do what they could to stop the attack."
The CIA's anxiety was partly fueled by the lack of explicit presidential authorization for the interrogation program. A secret White House "memorandum of notification" signed by Bush on Sept. 15, 2001, gave the agency broad authority to wage war against al-Qaeda, including killing and capturing its members. But it did not spell out how captives should be handled during interrogation.
But by the time the CIA requested written approval of its policy, in June 2003, the population of its secret prisons had grown from one to nine, including Khalid Sheik Mohammed, the alleged principal architect of the Sept. 11, 2001, attacks. Three of the detainees had been subjected to waterboarding, which involves strapping a prisoner to a board, covering his face and pouring water over his nose and mouth to simulate drowning.
By the spring of 2004, the concerns among agency officials had multiplied, in part because of shifting views among administration lawyers about what acts might constitute torture, leading Tenet to ask a second time for written confirmation from the White House. This time the reaction was far more reserved, recalled two former intelligence officials.
"The Justice Department in particular was resistant," said one former intelligence official who participated in the discussions. "They said it doesn't need to be in writing."
Tenet and his deputies made their case in yet another briefing before the White House national security team in June 2004. It was to be one of the last such meetings for Tenet, who had already announced plans to step down as CIA director. Author Jane Mayer, who described the briefing in her recent book, "The Dark Side," said the graphic accounts of interrogation appeared to make some participants uncomfortable. "History will not judge us kindly," Mayer quoted Ashcroft as saying.
Participants in the meeting did not recall whether a vote was taken. Several weeks passed, and Tenet left the agency without receiving a formal response.
Finally, in mid-July, a memo was forwarded to the CIA reaffirming the administration's backing for the interrogation program. Tenet had acquired the statement of support he sought.
The classified memos, which have not been previously disclosed, were requested by then-CIA Director George J. Tenet more than a year after the start of the secret interrogations, according to four administration and intelligence officials familiar with the documents. Although Justice Department lawyers, beginning in 2002, had signed off on the agency's interrogation methods, senior CIA officials were troubled that White House policymakers had never endorsed the program in writing.
The memos were the first -- and, for years, the only -- tangible expressions of the administration's consent for the CIA's use of harsh measures to extract information from captured al-Qaeda leaders, the sources said. As early as the spring of 2002, several White House officials, including then-national security adviser Condoleezza Rice and Vice President Cheney, were given individual briefings by Tenet and his deputies, the officials said. Rice, in a statement to congressional investigators last month, confirmed the briefings and acknowledged that the CIA director had pressed the White House for "policy approval."
The repeated requests for a paper trail reflected growing worries within the CIA that the administration might later distance itself from key decisions about the handling of captured al-Qaeda leaders, former intelligence officials said. The concerns grew more pronounced after the revelations of mistreatment of detainees at the Abu Ghraib prison in Iraq, and further still as tensions grew between the administration and its intelligence advisers over the conduct of the Iraq war.
"It came up in the daily meetings. We heard it from our field officers," said a former senior intelligence official familiar with the events. "We were already worried that we" were going to be blamed.
A. John Radsan, a lawyer in the CIA general counsel's office until 2004, remembered the discussions but did not personally view the memos the agency received in response to its concerns. "The question was whether we had enough 'top cover,' " Radsan said.
Tenet first pressed the White House for written approval in June 2003, during a meeting with members of the National Security Council, including Rice, the officials said. Days later, he got what he wanted: a brief memo conveying the administration's approval for the CIA's interrogation methods, the officials said.
Administration officials confirmed the existence of the memos, but neither they nor former intelligence officers would describe their contents in detail because they remain classified. The sources all spoke on the condition of anonymity because they were not cleared to discuss the events.
The second request from Tenet, in June 2004, reflected growing worries among agency officials who had just witnessed the public outcry over the Abu Ghraib scandal. Officials who held senior posts at the time also spoke of deteriorating relations between the CIA and the White House over the war in Iraq -- a rift that prompted some to believe that the agency needed even more explicit proof of the administration's support.
"The CIA by this time is using the word 'insurgency' to describe the Iraq conflict, so the White House is viewing the agency with suspicion," said a second former senior intelligence official.
As recently as last month, the administration had never publicly acknowledged that its policymakers knew about the specific techniques, such as waterboarding, that the agency used against high-ranking terrorism suspects. In her unprecedented account to lawmakers last month, Rice, now secretary of state, portrayed the White House as initially uneasy about a controversial CIA plan for interrogating top al-Qaeda suspects.
After learning about waterboarding and similar tactics in early 2002, several White House officials questioned whether such harsh measures were "effective and necessary . . . and lawful," Rice said. Her concerns led to an investigation by the Justice Department's criminal division into whether the techniques were legal.
But whatever misgivings existed that spring were apparently overcome. Former and current CIA officials say no such reservations were voiced in their presence.
In interviews, the officials recounted a series of private briefings about the program with members of the administration's security team, including Rice and Cheney, followed by more formal meetings before a larger group including then-Attorney General John D. Ashcroft, then-White House counsel Alberto R. Gonzales and then-Defense Secretary Donald H. Rumsfeld. None of the officials recalled President Bush being present at any of the discussions.
Several of the key meetings have been previously described in news articles and books, but Rice last month became the first Cabinet-level official to publicly confirm the White House's awareness of the program in its earliest phases. In written responses to questions from the Senate Armed Services Committee, Rice said Tenet's description of the agency's interrogation methods prompted her to investigate further to see whether the program violated U.S. laws or international treaties, according to her written responses, dated Sept. 12 and released late last month.
"I asked that . . . Ashcroft personally advise the NSC principles whether the program was lawful," Rice wrote.
Current and former intelligence officials familiar with the briefings described Tenet as supportive of enhanced interrogation techniques, which the officials said were developed by CIA officers after the agency's first high-level captive, al-Qaeda operative Zayn al-Abidin Muhammed Hussein, better known as Abu Zubaida, refused to cooperate with interrogators.
"The CIA believed then, and now, that the program was useful and helped save lives," said a former senior intelligence official knowledgeable about the events. "But in the agency's view, it was like this: 'We don't want to continue unless you tell us in writing that it's not only legal but is the policy of the administration.' "
One administration official familiar with the meetings said the CIA made such a convincing case that no one questioned whether the methods were necessary to prevent further terrorist attacks.
"The CIA had the White House boxed in," said the official. "They were saying, 'It's the only way to get the information we needed, and -- by the way -- we think there's another attack coming up.' It left the principals in an extremely difficult position and put the decision-making on a very fast track."
But others who were present said Tenet seemed more interested in protecting his subordinates than in selling the administration on a policy that administration lawyers had already authorized.
"The suggestion that someone from CIA came in and browbeat everybody is ridiculous," said one former agency official familiar with the meeting. "The CIA understood that it was controversial and would be widely criticized if it became public," the official said of the interrogation program. "But given the tenor of the times and the belief that more attacks were coming, they felt they had to do what they could to stop the attack."
The CIA's anxiety was partly fueled by the lack of explicit presidential authorization for the interrogation program. A secret White House "memorandum of notification" signed by Bush on Sept. 15, 2001, gave the agency broad authority to wage war against al-Qaeda, including killing and capturing its members. But it did not spell out how captives should be handled during interrogation.
But by the time the CIA requested written approval of its policy, in June 2003, the population of its secret prisons had grown from one to nine, including Khalid Sheik Mohammed, the alleged principal architect of the Sept. 11, 2001, attacks. Three of the detainees had been subjected to waterboarding, which involves strapping a prisoner to a board, covering his face and pouring water over his nose and mouth to simulate drowning.
By the spring of 2004, the concerns among agency officials had multiplied, in part because of shifting views among administration lawyers about what acts might constitute torture, leading Tenet to ask a second time for written confirmation from the White House. This time the reaction was far more reserved, recalled two former intelligence officials.
"The Justice Department in particular was resistant," said one former intelligence official who participated in the discussions. "They said it doesn't need to be in writing."
Tenet and his deputies made their case in yet another briefing before the White House national security team in June 2004. It was to be one of the last such meetings for Tenet, who had already announced plans to step down as CIA director. Author Jane Mayer, who described the briefing in her recent book, "The Dark Side," said the graphic accounts of interrogation appeared to make some participants uncomfortable. "History will not judge us kindly," Mayer quoted Ashcroft as saying.
Participants in the meeting did not recall whether a vote was taken. Several weeks passed, and Tenet left the agency without receiving a formal response.
Finally, in mid-July, a memo was forwarded to the CIA reaffirming the administration's backing for the interrogation program. Tenet had acquired the statement of support he sought.
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