IPD Volume I Issue XIII

7/31/2019 IPD Volume I Issue XIII

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by N athan W il li am M eyer

by Richard Falk

by Kour osh Z iabari and I qbal A hmed

by Binoy Kampmark

Volume I Issue XIII


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by N aili N abil

by M arshall Au erback

by Joshua Wallace and Richard H artley

by Ramzy Baroud

by D r. Sudhanshu Tripathi

by George Grevett

by Professor Johan Galtung

by Richard Falk

7

by Binoy Kampmark

16

by Kour osh Z iabari and I qbal A hmed

12

by N athan W illiam M eyer

3


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5/22

Twenty-four trillion dollars. It is a number that beggars theimagination, almost 40% of the global economy, and it is buried in

one of the worlds poorest and most violent countries: The

Democratic Republic of Congo. Failed state, rape capital of the

world, humanitarian catastropheCongo personifies all these but

beneath the surface its dark earth holds $24 trillion of copper, cobalt,

coltan, the bones and blood of information age manufacturing. For

this reason, if for no other, the world cannot ignore Congo. It cant

afford to.

Called Congos deal of the century, in 2007 China recognized

the beleaguered nations importance to the global economy with an

unprecedented $9 billion resources-for-infrastructure agreement

which holds the potential to unlock Congos vast mineral wealth and

improve the material lives of its seventy-one million people with new

roads, rails, hospitals, and universities.

Now, five years later, Congos eastern frontier remains a lawless

battleground with conflict minerals undermining regional stability

and the $9 billion question remains: Will Chinese investment be the

cornerstone for Congos development or a grave marker for dead

dreams in the g reen hills of Africa?

With incredible resource wealth and the land mass of Western

Europe, Congo is a country whose staggering economic potential is

matched only by its poverty and corrupt mismanagement. Congo

ranks last on the UNs Human Development Index and

Transparency Internationals 2011 Corruption Perception Index

ranks Congo at 168, tied with Libya which was at the time engulfed

by civil war.

In human terms the development reports shuffled around

New York and Geneva read like damning tarot cards to the

Congolese people. Life expectancy is less than 48 years. One of five

children will die before age five. Sixty percent of the countrys 71

million people live on less than $1.25 per day. More than 400,000

women a year are victims of sexual violence, a fact prompting UN

special Representative Margot Wallstrom to call Congo the rape

capital of the world.

On the grounds of these statistics it is difficult to see why

China would invest $9 billion in this country-cum-humanitarian

3

By Nathan William Meyer


6/22

crisis, but looking beneath the surface Chinas interests immediately

become clear: immense deposits of copper, cobalt, tin and coltan

the life blood of Chinese manufacturing.

It is a profound irony that Congo, rated by the IMF as the

worlds poorest country, is widely regarded as the worlds richest in

natural resources with wealth estimated at $24 trillion. Much of this

wealth is buried in mineral deposits whose size is a catalog of the

hyperbolic: Congo is the 5th leading producer of tungsten and 6th

of tin, holds 5% of the worlds copper and 50% of cobalt. MoreoverCongo possesses an estimated 80% of all known coltan which,

refined as tantalum, is a vital component of computers, personal

electronics, and the worlds 5.6 billion mobile phones. This cached

wealth, vital to the worlds present and future economy, is why

Congo cannot be overlooked and why China has taken particular

notice.

China views Africa as a major commodities source and Congos

$9 billion deal of the century is a natural extension of their

ongoing resources-for-infrastructure policy.

In 2004 China approved a $2 billion public investment package

for Angola and two years later struck a $3 billion deal with Gabon

who would receive dams, railroads, and ports in return for Chinese

access to iron ore reserves. This was followed in 2009 with similar

deals in Guinea and Zimbabwe amounting to $7 and $8 billion

respectively whereby resource wealth would underwrite Chinese

infrastructure investments. Under Beijings strategy of mutual benefit

China stokes its economic fire with African resources while resource-

rich but credit-poor countries further develop their economies with

Chinese infrastructure projects.

With Congos vast mineral deposits and critical development

needs a Chinese resources-for-infrastructure deal would seem an

inevitable and mutually beneficial arrangement.

Chinas initial $9 billion investment was later revised under IMF

objections to $6 billion with half going to mine development and

half to infrastructure projects and represents an investment

significant enough to radically transform Congos economy.

Many aspects of the deal are not public, but according to NGO

Global Witness China would be granted 10 million tons of copper

and 600,000 tons of cobalt. In exchange China would build 2,400

miles of roads and 2,000 of rail, 145 health clinics, 32 hospitals, two

universities, and two hydroelectric dams. Other infrastructure

projects include widespread transportation renovation and an

electricity distribution network. The other $3 billion of Chinese

investment would go to develop Congos copper and cobalt mines

which are expected to turn a profit in 2013, repaying Chinese invest-

ment in five years.

Despite the high cost China believes their mutual benefit in-

vestment will prove worthwhile as mines are expected to produce

$40 billion to $120 billion in revenues.

With significant Chinese investment at stake and profitability on

the horizon, Congos fragile government hopes that its buried wealth

will set the groundwork for successful economic development and

has begun courting other countries, notably South Korea, for

significant investment deals. However, the arc of history has seldom

bent in Congos favor and unresolved crises of the recent past

threaten both Chinas ambitions and Congos future.

In 1994 the world watched Africa in horror as some 800,000

people were killed without regard for sex or age over the course of

some hundred days it was the Rwandan Genocide and commanded

global guilt if not global action. In March, 1998, President Bill

Clinton stood on the tarmac of Rwandas Kigali airport and

expressed to on looking crowds his failure to stop the genocide was

the biggest regret of his presidency. Only six months later residualHutu-Tutsi hostilities ignited the Second Congo War which lasted

five years, directly involved eight African nations and twenty-five

armed groups, claimed 5.4 million lives, and garnered little global

attention.

While the deadliest conflict since WW2 may have been initiated

by deep ethnic and political tensions, the violence and bloody

aftermath which perpetuates today was driven in large part by

something deeper still: Congos mineral wealth.

Many of Africas resource-rich countries emerge from years of

civil war with residual conflict zones, but in this case Congo is in a

tragic class of its own. The enduring legacy of the Second Congo

War is the continuing conflict in Congos eastern provinces which

abut Rwanda and threaten to derail Chinas plans. Known as the Kivu

Conflict, in 2004 this armed struggle between government forces and

rebel militias picked up the Second Congo Wars bloody baton and

continues today due to innumerable artisanal mines funding a

perpetual conflict whose brutality includes mass rape, mutilation, and

cannibalism.

The UN believes over 50% of the regions 200 mines are

controlled by armed forces which employ illegal taxation, extortion,

forced labor, and violence to ensure the flow of mineral wealth.

According to one CNN report eastern Congos armed groups

generate some $180 million through the illicit trade of tin, coltan,

tungsten, and gold which are easily traded across the porous eastern

frontier and funneled into the international market.

It is this border pitted with mines and studded with militias

that undermines Chinese investments and jeopardizes Congos hopes

of development.

Congos eastern border is an established smuggling corridor

and its neighbors benefit from the re-export of conflict minerals.

According to a recent UN report Rwanda has covertly supported the

M23 rebel militia whose leader, General Ntaganda, has amassed a

huge fortune smuggling Congos coltan and tin to sell internationally

as Rwandan minerals.

This volatile mixture of extraordinary mineral wealth, ethnic

tension, and proxy armies can drag the region into another brutal

war. Since fighting began last April some 200,000 people have been

forced from their homes further destabilizing the region and sending

refugees into Rwanda and Uganda. Local government spokesman

Erneste Kyaviro described the latest conflict as an invasion and

M23s insurgency as a proxy army executing Rwandan military

offensives. This allegation was backed by Congos minister of

communications Lambert Mende stating we have evidence now that

Rwandese soldiers and officers are directly implicated in combat

4


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operations in DRC. And there appears to be evidence to these

allegations.

The militias are well supplied and increasing in numbers.

According to a UN report, rebel deserters claim they are Rwandans

pressed by their own army into militia service across the border in

Congo. With tensions high and 1994s genocide still casting its

shadow over the region another devastating war remains a looming

and distinct possibility.

Congos estimated $24 trillion of raw mineral ores representamazing potential to transform one of the worlds least developed

nations and supply the global economys increasing demand for the

building blocks of modern manufacturing.

Chinas resources-for-infrastructure policy holds real potential to

turn Congos mineral wealth into tangible benefits for the Congolese

people. Their contribution to the countrys transportation

infrastructure alone will open new market potential for stymied

economic sectors like agriculture and provide the transfer of goods

and services vital for long term economic growth.

However, Congos eastern frontier remains a lawless battleground

for proxy wars fueled by the ground they fight on, claiming 540,000

lives per year and internally displacing some 1.7 million people. With

Rwandas support for rebel militias an open secret the possibility of a

Third Congo War is more likely than ever and could leave Congo

deep in Chinas debt for all current infrastructure investments.

While ongoing national and international efforts attempt to

restore peace to Congos eastern border little progress has been

achieved. Cross border tensions increase daily and only time will tell

if Chinas gambit marks a new day for Congo or just another false

dawn.

shattered, divided, destitute, and at the complete mercy of the

Wests corporate-financier interests.

Asia Times correspondent, Pepe Escobar, writes Certain

countries are behaving like arsonists, especially Turkey, in continuing

to offer a logistical base for mercenaries from liberated Libya. Saudi

Arabia providing the money to buy them weapons. As for

Washington, London and Paris, they will continue to calibrate their

tactics in the protracted anticipation of a NATO attack against

Damascus.Saudi Arabia, Qatar and other reactionary Gulf states are

actively taking part in the covert operations and efforts to force

regime change in Syria are serving American geopolitical objectives

with the goal to neutralize American global competitors, namely,

Russia and China.

Aligning itself with the United States, the Arab League has

announced plans to open talks with the Syrian opposition and cut all

diplomatic ties with the Syrian government, without offering

condemnation of the Bahraini, Saudi and Sudanese protest

crackdowns.

Turkey is an active participant in the Syrian civil war. Not only

did Turkey introduce a de facto buffer zone, 4 miles along the

Syrian-Turkish border now enforced by F-16s taking off from

NATOs Incirlik base, it also dispatched tanks, missile batteries and

heavy artillery to the 500 mile border, following Erdogans

declaration that Syria is a hostile state.

5

The West is Playing with Fire in Syria

By Naili Nabil

Lets be clear: Washington is pursuing regime change by civil war

in Syria. The United States, Europe, and the Gulf states want regime

change, so they are starving the regime in Damascus and feeding the

opposition.

- Joshua Landis, director of the Center for Middle East Studies.

While the UN remains paralyzed on whether to extend its ob-server mission, or impose sanctions, Syria is drifting quickly towards

what the International Committee of the Red Cross calls a state of

civil war, a declaration, with cataclysmic consequences, and which

might radically change the rules of the game.

Finian Cunningham, Global Researchs Middle East and East

Africa Correspondent, notes to the extent to which the Syrian

uprising has been exploited, the irony is that leading NATO

members, the United States, Britain and France, as well as their

Turkish and Arab allies, are the very parties that have deliberately

created the precipice for all-out war in the Middle East.

Its no longer a secret that Saudi Arabia, Qatar and Turkey have

been steadily, and from the early stages of the Syrian crisis, increasing

the violence inside Syria, turning a blind eye to the dire, grim and

ominous consequences which might leave Syria, like Libya, a mess,

While Syria is sinking deeper and deeper into anuncertain future, drifting more and more into a bloody

civil war, the 16 month-old uprising against the Syrianregime seems to be reaching a tipping point

No one could doubt that the Syrian regime is corrupt, bloody

and brutal, and vital reforms are necessary. But reforms,

unfortunately, are no longer on the agenda of the rebels.

The Syrian civil war has already moved beyond the control of

the Assad regime and the opposition. From the moment the Syrian

uprising was hijacked, the whole Syrian affair has become part of a

different foreign agenda having nothing to with a better future for

the Syrian people. What is at stake is creating the necessary

mayhem, to manufacture and engineer an international crisis, which

will serve as a final push to get rid of the Syrian regime.

Until now, the objective seemed more and more to be confined

only to deposing the Syrian regime, but no one, save the victims

themselves, dares to evoke the possibility of an ominous civil war

which may quickly follow, as armed groups contest the succession,

and outside countries, with their different interests, rally to different

sides.

While Syria is sinking deeper and deeper into an uncertain future,

drifting more and more into a bloody civil war, the 16 month-old

uprising against the Syrian regime seems to be reaching a tipping

point. Kofi Anans peace plan was doomed and sabotaged from the

beginning. Arab countries and the international community must

assume their responsibilities. The crisis should not be allowed to

precipitate into a regional catastrophe.


8/22

Once the civil war reaches a tipping point it will escalate, and it

will be hard to contain within Syria. The Iraqi scenario, for those

who practice amnesia, is still a source for lessons learned. Turning a

blind eye, to a volatile and explosive situation, is nothing but playing

foolishly with fire on a powder keg.

Discarding any Arab, or at least a regional plan will make it

easier for the war-mongers to impose a NATO military intervention

to oust the Syrian despot and replace him with another puppet

regime. Focusing only on the Anans initiative without taking theadequate measures to make the conditions ripe, as far as security, a

cease-fire and dialogue are concerned, is by no means sufficient.

Former national security advisor, Zbigniew Brzezinski, cautioned

against acting simply on the basis of emotion, making it clear that

Were dealing here with a region in which all of these issues are

interconnected.

Brzezinski warned about producing a region-wide outbreak in

which the issues within Syria will become linked with a conflict

between the Saudis and the Shiites, Iraq will become destabilized,

Iran will be involved.

Secretary of State Hillary Clinton, though operating and doing

absolutely the opposite, is right when she declared, the sooner there

can be an end to the violence and a beginning of a political transition

6

process, not only will fewer people die, but theres a chance to save

the Syrian state from a catastrophic assault that would be very

dangerous not only to Syria but to the region.

Those who are sending hordes of excited radicals, recruited,

funded, trained and unleashed whenever proxy wars are waged, will

soon be convinced that their dangerous game is a double-edged

sword.

The monster, they have created, has already mutated and will

soon be untamed. Who dares betting on chaos?


9/22

There has been serious confusion associated with the wide-spread embrace of soft power as a preferred form of diplomacy for

the 21st century. Joseph Nye introduced and popularized the

concept, and later it was adopted and applied in a myriad of settings

that are often contradictory from the perspective of international law

and morality.

I write in the belief that soft power as a force multiplier for

imperial geopolitics is to be viewed with the greatest suspicion, but as

an alternative to militarism and violence is to be valued and adopted

as a potential political project that could turn out to be the first

feasible utopia of the 21st century.

Significantly, Nye first introduced the concept of soft power in

Bound to Lead, published in 1990, reaffirming confidence in the

United States as the self-anointed leader of the world for the

foreseeable future based on its military and economic prowess, as

well as due to its claimed status as an exemplary democracy and the

global outreach of its popular culture from jeans to Michael Jackson.

Nye has been a consistent advocate of what Michael Ignatieff

christened as empire lite a decade or so ago, and Nyes invocation

of soft power is essentially calling our attention to a cluster of

instruments useful in projecting American influence throughout the

world, and in his view under utilized, although less so, perhaps, since

the advent of drones.

It should be appreciated that Nyes influential career as a pro-

minent Harvard specialist in international relations was climaxed in

the 1990s by serving the government in Washington both as Chair of

the National Intelligence Council, making policy recommendations

on foreign policy issues to the American president, and as Assistant

Secretary of Defense for International Security Affairs during the

Clinton presidency.

He is an unabashed charter member of and valuable apologist

for the American foreign policy establishment in its current

embodiment, although the policies of the Bush presidency often

displeased him.

The idea of soft power was unveiled for the benefit of the

American establishment in Nyes 1996 Foreign Affairs article,

Americas Information Edge, appropriately written in collaboration

with Admiral William Owens, a leading navy planner who rose to be

Vice Chairman of the Joint Chiefs of Staff. The main argument of

the article was the need to realize the revolutionary relevance of

mastering the technologies of information if the American global

7

By Richard Falk


10/22

domination project was to be successful in the years ahead. This

emphasis on the role of information and networking was also certain

to lead to a revolution in military technology. Soft power was not, as

the words seem to suggest, a turn away from imperial geopolitics in

the aftermath of the Cold War, but rather the opposite. It was more

in the spirit of a geopolitical cookbook on how to remain in control

globally despite a rapidly changing political and technological

environment.

The recommended soft power breakthrough can be summarizedas the recognition of the role to be played by non-military forms of

global influence and capabilities in reinforcing and complementing

the mandate of hard power.

states is an imperial undertaking at its core, and completely disregards

the post-colonial ethos of self-determination widely affirmed as the

inalienable right of all peoples. This right of self-determination is

given pride of place in common Article 1 of the two major

international human rights covenants.

The Nye/Owens assumption that democracy means made in

the USA is an ideological claim that seems increasingly questionable

given the reality of political life in America. This is the case even if

the country somehow miraculously heeds the Nye/Owens call torestore national health to its democracy. Is it open to doubt as to

whether an elective plutocracy, which America has surely become,

can qualify as the sort of democracy that merits being exported

abroad. And since the 9/11 attacks the corporatizing of democratic

space has been complemented by a series of governmental

encroachments on traditional liberties in the name of homeland

security.

While it might have seemed unproblematic in 1996 for Nye/

Owens to write about planting the seeds of American democracy

throughout the world, by 2012 such a project has become nothingless than diabolical. The best the world can hope for at this point is

not a somewhat less aggressive version of soft power geopolitics but

an American turn toward passivity, what used to be called

isolationism, and was perhaps briefly abortively reborn by the

Obama posture during the 2011 Libyan intervention of leading from

behind, as if that is leading at all.

Of course, such a realistic retreat begets the fury of the Repub-

licans who seem to have not lost any of their appetite for the red

meat of military adventures despite a string of defeats and their

constant wailing about the fiscal deficit. When it comes to militarism

their firepower is directed at the alleged defeatism and softness of

American foreign policy in the hands of a Democratic president.

8

The idea of using power of any kind to democratize othersovereign states is an imperial undertaking at its core, and

completely disregards the post-colonial ethos of self-determination widely affirmed as the inalienable right of

all peoples

The final section of the Nye/Owens article is aptly title The

Coming American Century, insisting that the famous claim made a

generation earlier by Time publisher, Henry Luce, that the 20th

century was the American century, would turn out to be a gross

understatement when it came to describing the 21st century. Their

expectation is that America will be more dominant internationally in

the emerging future, thanks mainly to this superiority in information

technology, anticipating that if their views are adopted by robust

military applications of soft power it will have a huge foreign policy

payoff for the country: The beauty of information as a power

resource is that, while it can enhance the effectiveness of raw military

power, it ineluctably democratizes societies. This unabashed avowal

of imperial goals is actually the main thesis of the article, perhaps

most graphically expressed in the following wordsThe United

States can increase the effectiveness of its military forces and make

the world safe for soft power, Americas inherent comparative

advantage.

As the glove fits the hand, soft power complements hard power

within the wider enterprise of transforming the world in Americas

image, as well as embodying the ideal version of Americas sense of

self.

Nye/Owens acknowledge a major caveat rather parenthetically

by admitting that their strategy will not work if America continues

much longer to be perceived unfavorably abroad as a national abode

of drugs, crime, violence, fiscal irresponsibility, family breakdown,

political gridlock. They make a rather empty and apolitical plea to

restore a healthy democracy at home as a prelude to the heavy

lifting of democratizing the world, but they do not pretend medical

knowledge of how national health might be restored, offering no

prescriptions. And now sixteen years after their article appeared, it

would seem that the Burmese adage applies: disease unknown, cure

unknown.

There is much that I would object to about this l ine of advocacy

that waves the banner of soft power so triumphantly. First of all, the

idea of using power of any kind to democratize other sovereign

If we decide to respect the politics of self-determinationthen we need to be prepared to accept the prospect of some

tragic struggles for control of national space

There is a second sense of soft power that I advocate, which is

in its most maximal form, represents the extension of Gandhian

principles to the practice of diplomacy. A weaker form of Gandhian

geopolitics may seem more consistent with the world as it is,

restricting the role of hard power to self-defense as strictly limited in

the UN Charter and to UN humanitarian interventions in

exceptional circumstances of genocidal behavior or the repeated

commission of crimes against humanity. In such instances uses of

hard power would remain under the operational control of the UN

Security Council, and enacted by a UN Peace Force especially trained

in conflict resolution to minimize recourse to violence.

If we decide to respect the politics of self-determination (as

the preferred alternative to military intervention) then we need to be

prepared to accept the prospect of some tragic struggles for control

of national space. Geopolitical passivity, as validated by international

law, needs to be recognized as an essential political virtue in this

century. Such an imperative also mandates reliance on the greater

wisdom of collective procedures subject to constitutional constraints


11/22

as a necessary adjustment to the realities of a globalizing world, and

offers an alternative to unilateralist and oligarchic claims (coalitions

of the willing) to act in defiance of law and world public opinion.

Such an empowerment of the global community may go awry

on some occasions but it seems a far preferable risk than continuing

to entrust world peace and security to the untender mercies of global

and regional hegemonic sovereign states even should their domestic

democratic credentials are in good order, which happens not to be

the case.There is no doubt that I would like to live in a borderless soft

power world that was consistently attentive to human suffering,

protective of the global commons, and subject to the discipline of

global constitutional democracy. As global conditions now confirm,

such a benign fantasy lacks political traction at present, and is thus an

irresponsible worldview from the perspective of humane problem

solving.

The most we can currently hope for is a more moderate regime

of global governance presided over by sovereign states that exhibits a

greater sense of responsibility toward the wellbeing of the peoplesof the world, identifies and works to correct dysfunction and

corruption, and is thus less swayed by the reigning plutocracy that

now sets global policy. Such moderate global governance, while far

from the desired Gandhian model would at least become more

respectful of international law and responsive to transnational

movements dedicated to human rights and the preservation of the

global commons.

Nyes soft power geopolitics provides a roadmap for those com-

fortable with currents hierarchies of dominance and privilege, while

even the minimal version of a nonviolent and non-imperial

alternative could help humanity greatly in the deepening struggle to

find a world order path that leads to peace, justice, and development.

appears that Berlin has now moved into a position where they cannot

or will not prevent that disasterous scenario, either for economic or

legal reasons. The decision by Germanys constitutional court to

delay its approval of the German Parliaments ratification of the

ESM and fiscal compact may be a warning.

The court could have moved to approve quickly. Instead, it will

not rule on emergency appeals for an interim injunction against the

parliamentary approvals until the end of this month. If the court

rules in favor of an interim injunction, the final decision on the ESMand fiscal compact may not be made for several months.

This decision to delay by the constitutional court suggests that it

cannot be counted on to approve bailout measures for other

European nations even if a failure of Germany to participate in such

bailouts may lead to a quick and perhaps decisive European financial

crisis. Also its decision to delay may also reflect a growing opposition

to such bailouts in Germany that will lead to more and more

constitutional challenges. If so, the odds of an adequate ECB and

EU policy response are surely dimmer.

In short, there is virtually no appetite for the kind of FDICstyle eurozone-wide deposit insurance needed to halt the bank run

which is still afflicting the EMU.

Geithners Kinsleyian gaffe might therefore represent a very,

very revealing slip on his part.

So why is there so little reaction in the markets? Is it simply a

case of the summer doldrums? Are people just plain and simple sick

of the whole crisis and just want to enjoy a few weeks respite on the

beaches? That might be part of it, but an equally salient factor is that

the ECB now appears to be engaged in a massive cover-up to

disguise the extent of the bank run and the corresponding problems

afflicting Europe.

Consider this: about 18 months ago, Wilhem Buiter wrote for

Citibank on the legality of the ELAs use in Ireland. He suggested the

following:

Above we noted that, at least in the interpretation of the ECB,

the monetary financing prohibition in the Treaty would be violated if

ELA were granted to an institution that was not just illiquid, but

insolvent. Of course, the distinction between the two concepts is

notoriously difficult, and especially so during periods of high market

stress and very volatile asset prices. Nevertheless, in the Irish case, it

appears that the main beneficiaries of ELA were institutions whose

9

Geithner

Europe Cant be Left Hanging on the Edge of

Abyss

By Marshall Auerback

Michael Kinsley once defined a gaffe as when a politiciantells the truth some obvious truth he isnt supposed to say.

On that basis, the recent headline that just popped up might well

represent a major gaffe of the Kinsley variety by Treasury Secretary

Tim Geithner.

Speaking on CNBCs Delivering Alpha conference, the

Treasury Secretary argued:

What is very important is that [Eurozone officials] not leave the

Continent hanging on the edge of the abyss as a device for getting

more leverage for reform, because that leaves the rest of the world

much more exposed to financial pressure and slower growth from

Europe.

In essence, Geithner is letting the cat out of the bag. He is

implying that Europe is hanging on the edge of the abyss. Only

Germany can prevent it from falling in, and at the same time it


12/22

solvency must at the very least have been in question even at the time

ELA was provided

The implication was that the use of the ELA for Ireland was

probably illegal as Irelands banks were probably insolvent. If

Irelands banks were insolvent, then those of Greece today can only

be described as insolvency squared.

How are they surviving?

They are almost certainly being kept alive solely by the ELA. But

nobody talks about it. The odds are that, once the deposit rununexpectedly got out of hand, the ECB and the EU authorities have

been afraid to make any mention of it because, in drawing attention

to it, they would probably exacerbate the run.

In fact, you cant even find the ELA on the ECBs balance sheet

as a specific line item.

Two months ago the prevailing estimate for ELA financing from the

central bank of Greece was 50 billion euros as of the end of 2011.

As of February of this year, according to the central bank of Greece,

its ELA rose to 109 billion euros. However, that same central bank

of Greece reports now show that their ELA exposures are almostnonexistent. Has such emergency lender of last resort financing

suddenly been repaid? Of course not. It has been reclassified.

And as Buiters report indicated, the manner in which the ELA

has been used might well be illegal.

The cover-up will be hard to sustain going forward, given that

there has been a precipitous plunge in Eurozone interbank lending in

the nine months through April and a very sharp decline in the net

foreign assets of the ECB since the beginning of May.

And, in the final twist to this saga, Buiters report on Ireland,

entitled Ireland Emergency Liquidity Assistance (ELA) 21/01/11 .

Political Risk Today

With the onset of globalization, Political Risk is an increasingly

pertinent concern for multinational companies and investors as they

attempt to tap into, and harness, the velocity of the global

marketplace. New challenges and opportunities are sprouting up,

driven by increasingly social and politically aware young populations

across the globe who are armed with innovative & enabling forms of

technology.

The conventional top down approach to risk, supplemented byon the ground contacts is by no means becoming redundant, but in

need of refreshment if Political Risk firms are to continue providing

worthwhile assessments on whether countries provide a suitable, safe

or attractive investment destination.

Top Down Problems

A top down approach understanding the macro political and

economic developments is, of course, a necessary pre-requisite to

inform any accurate position on risk.

Nonetheless top down approaches often lean heavily on quan-

titative variables, which suffer from their inability to capturedynamics at a social level.

Ultimately how are these structural changes/events being inter-

preted and what are the implications?

10

Social Blindspot

Why Risk Models Need to Change

By Joshua Wallace and Richard Hartley

The risk landscape is undoubtedly shifting. PwC (Pricewater-houseCoopers), invoking Nassim Nicholas Talebs recent book, posit

that Black Swans are increasingly turning grey. By this, they mean

that previously catalytic and unforeseen events are becoming more

regular betraying an increased level of uncertainty faced by the

global community in the face of growing connectivity and

dependency.

Their approach is to expand existing ERM (Enterprise Risk

Management) frameworks by innovating around them, adding tools

and techniques such as scenario modelling, predictive indicators and

reverse stress-testing.

PwC is right to identify a changing terrain, in which political

developments play an increasingly important role, however traditional

approaches to Political Risk themselves must adjust to remain

relevant in the 21st century.

So while organisations will benefit from integrating Political

developments as a component into their ERM systems, more

fundamentally, Political Risk as a discipline needs to be re-calibrated.

Risk models pre-occupation with regime level politicscoupled with often-rigid country specific focuses has

obscured the potential of technologically empowered butpolitically marginalized populations to be decisive

drivers

While risk firms often utilise local contacts, who are able to

provide an in-country insight into the personalities, the dynamics and

the temperament of the situation the inside scoop, they do not

necessarily capture the diversity of opinions that now must be

accommodated. The problem with these contacts is that they their

focus is skewed towards the corridors of power to determine who

and what is shaping the contours of the issues at hand. Demographic

and technological changes have now empowered a whole raft of

actors who cannot be ignored, meaning that risk analysis must strive

to better integrate a bottom up approach to navigate uncertainty.

Technology Enabling Social Revolution

The Arab Spring dramatically bought to the fore the realisation

that an increasingly educated, and technical savvy young

demographic has the capacity to not only engage with, but to also

drastically disrupt the political elite.

In a world of big data, which continues to proliferate along-

side increased access to a plethora of new technologies- the ways in

which the public, across the world, engage with the political elite is

being revolutionized. These new forms of technology are facilitating

collaboration, discussion, review and mobilisation in a way

unparalleled in history.

It means the space between the political class and the public

is being continually shrunk, as the public has the ability to scrutinize

developments and provide feedback, often influential, by clustering

around certain issues.


13/22

Importance of Social Dynamics

The failure of Political Risk advisories to predict the Arab Spring

has shown current risk methodologies to be adequate. Most risk

methodologies focus heavily on political infrastructures and tend to

understate the importance of social dynamics.

This has led to blind spots specifically, a failure to predict

political shifts born through mass interaction and accelerated

through virtual networks. Modern Revolutions most recently, the

colour revolutions in Eastern Europe, and the Arab spring aresocially instigated. Whether they are successful depends, to a large

extent, on the density and cohesiveness of internal and external

social networks.

Yet, risk models pre-occupation with regime level politics

coupled with often-rigid country specific focuses has obscured the

potential of technologically empowered but politically marginalized

populations to be decisive drivers. Increasingly, quick fire social

dynamics determine risk probabilities not elite infighting or

factional separation. Populations, once mobilized, can destabilize a

regime without arms or money.Analysts were outflanked by the Arab Spring because they were

looking in the wrong place, and operating at too slow a speed.

Punctuated reports emphasising political change characteristics

ignored the explosive nexus of social technologies, youthful

populations and political disquiet. Risk therefore has migrated into

the virtual social space Political Risk, as it stands, remains concerned

with political developments.

Changes to Traditional Risk Methodologies

The preoccupation with the behaviour of governments must, in

our view, be augmented with a focus on the potential of populations

to mobilize. Necessarily, this involves the identification of

mechanisms that enable contagion and an understanding of how to

monitor and manage them effectively.

To be sure, existing risk methodologies are stil l relevant but must

be diversified to assess the range of options open to regimes in the

face of social contestation.

Contingencies, whilst improbable must be explored and built into

standard risk mitigation procedures. Is regime liberalisation

through limited, incremental democratisation possible? Can a

regime, under duress, successfully transition from full

authoritarianism to competitive authoritarianism?

Harnessing New Technologies

Yet these ideas, while necessary, remain under the (limited) remit

of traditional approaches. If risk is to start delivering value and

consistency, it needs to develop real time tools that can monitor,

map, and ultimately manage social dynamics as they occur. Here,

social network analysis namely, sentiment analysis- is the frontier.

Yet, technology at this moment is a long way away. Difficulties

transforming micro opinions into an overall risk picture, and

incorporating regional dialectics, vernaculars, sarcasm and misspelling

mean such technologies are nascent.

Nonetheless new forms and platforms of technology provide an

unparalleled opportunity to understand social interaction and

dynamics, critical now to any informed position on risk.

For example, Ushahidi, established in the wake of the violence

from the 2008 Kenyan election violence provided a real-time

platform for information to be updated and shared for the mapping

of developments- and is increasingly being used to map other events.

As crowd sourcing continues to gain momentum, there is growing

potential to be able to outsource the role of providing up to date

risk analysis away from expensive and often out of touch analysts to

those social actors who are the drivers of social movements.

Predicting the future is a chimera and we should not be pre-occupied by it. As various authors (most popularly Nassim Nicholas

Taleb, but also a growing body of political scientists concerned with

institutional change) have argued, social trajectories of humans,

movements and countries are highly contingent they are often

accidental and involve too many variables to yield to longitudinal

regression models.

Linear causation, linking a discreet cause to an effect, is often

empirically unsubstantiated. Instead, reflexivity circular casual loops

engendering rapid shifts in behaviour appears instrumental in

various risk dynamics that catalyse in the social sphere. Risk thereforeshould focus on the early identification, and the potential strength

and breadth of seismic social shifts. Such an approach emphasises

agility rather than predictability, and tracks risk at an embryonic stage.

Conclusion

To us, Political Risk is static in a world of high-speed interaction

and linkage. We foresee a movement away from content heavy

deliverables to products that operate surveillance of regional social

dynamics. We believe social dynamics shape political developments

and will do so more and more as populations intertwine with

governments and businesses. Concomitant will be a fusion of

business strategy and risk management.

Real time social monitoring enables effective engagement, and

through engagement, business can better understand social

behaviour and its ramifications. Building a new approach to risk that

places social dynamics at its core opens the door for a host of new

opportunities and breakthroughs. Risk management takes on a new

dimension in its capacity to identify, gauge and subsequently manage

the information that rises to prominence with the swell of public

opinion.

In turn, creating strategic opportunities to better understand

preference shifts, allowing for more relevant, tailored and sensitive

responses by both governments and corporations as they attempt to

manage risk in the 21st century.

11


14/22

For Muslims around the world, Ramadan is a month of peace

and calmness. That is hardly the case for the Rohingya Muslims in

Myanmar. The ethnic rift between them and the ethnic Buddhists

since June has spiraled out of control, leaving scores of Rohingya

Muslims dead and homeless. Many have crossed the border into

Bangladesh. Amnesty Internationals Benjamin Zawacki said the

latest violence has been primarily one-sided, with Muslims generally

and Rohingya specifically the targets and victims.

Branded by the United Nations as one of the most persecuted

minorities of the world, Rohingyas live in the Rakhine State, located

in west of Myanmar. With a population of 3 million, the Rakhine

state borders Bay of Bengal to the west and the majority of its

residents are Theravada Buddhists and Hindus.

The suppression of the Rohingya Muslims dates back to the

Second World War. On March 28, 1942, Rakhine nationalists brutally

massacred 5,000 Rohingya Muslims in the Minba and Mrohaung

Townships. Since then, the Burmese government has refused to

grant the Rohingya Muslims citizenship.

According to the UN High Commissioner for Refugees, the

lack of full citizenship rights means that the Rohingyas face

restrictions on their movement and limitations on access to

education, arbitrary confiscation of property, and even marriage.

Because of the discriminatory treatment by the government,

some 300,000 Rohingyas have so far emigrated to Bangladesh and

24,000 of them also escaped to Malaysia in search of a better life.

Many of them have also fled to Thailand.

Bangladesh is negotiating with the Burmese government to return

the Rohingyas and Thailand has sporadically rejected receiving them.

There have been instances where boats of Rohingyas reaching

Thailand have been towed out to sea and allowed to sink, sparking

outrage from the international community.

Human Rights Watch says that the government authorities

12

By Kourosh Ziabari and Iqbal Ahmed


15/22

continue to require Rohingya Muslims perform forced labor.

According to HRW, those who refuse or complain receives severe

physical punishment. Further, children as young as seven years old

have been forced into child labor.

Writing for The Egyptian Gazette, University of Waterloo pro-

fessor, Dr. Mohamed Elmasry, has enumerated that the hardships

that the Rohingya Muslims face have historically gone unnoticed.

He writes that they are subjected to various forms of extortion

and arbitrary taxation, land confiscation and forced evictions.Rohingyas continue to be used as forced laborers to build roads and

at military camps.

been murdered thus far in the region.

Along with the mainstream media, the Western governments

have also turned a blind eye to the anguish and suffering of the

Rohingya Muslims. Even the renowned Burmese political activist and

Nobel Peace Prize laureate Aung San Suu Kyi has spoken very little

about the crisis. This could be attributed to the fact that Ms. Kyi was

just freed and has to pick her battles carefully.

The international community needs to engage with the Bur-

mese government to stop the ethnic violence between the RohingyaMuslims and the ethnic Buddhists. The failure of political

intervention could lead to more bloodshed and unrest. An ongoing

civil conflict is not an option for Burma.

13

Amnesty International called the recent attacks againstminority Rohingyas and other Muslims in Myanmar astep back in the countrys recent progress on human

rights

They are also subjected to various forms of extortion and

arbitrary taxation land confiscation forced eviction and house

destruction and financial restrictions on marriage. Rohingyas

continue to be used as forced labourers on roads and at military

camps, although the amount of forced labour in northern Rakhine

State has decreased over the last decade, Elmasry writes.

The Myanmar governments mistreatment of the Rohingyas,

however, has long been contested and protested by international

organizations. For several years, human rights activists have decried

the arbitrary measures levied against the Rohingya Muslims in

Myanmar by the government.

In May 2009, Elaine Pearson, the Human Rights Watchs

Deputy Asia Director issued a statement in protest at the

deteriorating conditions of the Rohingya Muslims, calling on the

Association of Southeast Asian Nations (ASEAN) to press the

Burmese government to end its brutal practices.

She said, the treatment of the Rohingya in Burma is deplorable

the Burmese government doesnt just deny Rohingya their basic

rights, it denies they are even Burmese citizens.

Now, the conflict has escalated in the Rakhine State and the

Muslims are once again experiencing difficult times. According to a

report, 10 Rohingya Muslims were killed by a mob of 300 Rakhines

while on their way back from the countrys for mer capital Rangoon.

According to several UK-based NGOs, 650 Rohingyas were

massacred from June 10 to 28.

The United Nations estimates that between 50,000 and 90,000

Rohingyas were displaced since the eruption of violence in Malaysia.

However, due to the absence of independent reporters and

monitors in Myanmar, it is impossible to verify the exact number of

those who have been displaced. It has been reported that some 9,000

Muslim homes in the western state of Rakhine were destroyed.

On July 20, Amnesty International called the recent attacks

against minority Rohingyas and other Muslims in Myanmar a step

back in the countrys recent progress on human rights.

The Organization of Islamic Cooperation (OIC) has voiced its

concern over the recent violence in the state of Rakhine. The Time

Turk News Agency reported that over 1,000 Rohingya Muslims have

Democracy and Slaughter in Burma

Gold Rush Overrides Human Rights

By Ramzy Baroud

The widespread killings of Rohingya Muslims in Burma orMyanmar have received only passing and dispassionate coverage in

most media. What they actually warrant is widespread outrage and

decisive efforts to bring further human rights abuses to an immediate

halt.

Burmese helicopter set fire to three boats carrying nearly 50

Muslim Rohingyas fleeing sectarian violence in western Burma in an

attack that is believed to have killed everyone on board, reported

Radio Free Europe on July 12.

Why would anyone take such fatal risks? Refugees are attempt-

ing to escape imminent death, torture or arrest at the hands of the

Ethnic Buddhist Rakhine majority, which has the full support of the

Burmese government.

The relatively little media interest in Burmas ethnic clashes is

by no means an indication of the significance of the story. The

recent flaring of violence followed the raping and killing of a

Rhakine woman on May 28, allegedly by three Rohingya men.

The incident ushered a rare movement of unity between many

sectors of Burmese society, including the government, security forces

and so-called pro-democracy activists and groups. The first order of

business was the beating to death of ten innocent Muslims. The

victims, who were dragged out of a bus and attacked by a mob of

300 strong Buddhist Rhakine, were not even Rohingyas, according to

the Bangkok Post (June 22). Not all Muslims in Burma are from the

Rohingya ethnic group. Some are descendants of Indian immigrants,

some have Chinese ancestry, and some even have early Arab and

Persian origins. Burma is a country with a population of an estimated

60 million, only 4 percent of whom are Muslim.

Regardless of numbers, the abuses are widespread and rioters

are facing little or no repercussions for their actions. The

Rohingyasface some of the worst discrimination in the world,

reported Reuters on July 4, citing rights groups. UK-based Equal

Rights Trust indicated that the recent violence is not merely due to

ethnic clashes, but actually involves active government participation.

From June 16 onwards, the military became more actively involved

in committing acts of violence and other human rights abuses


16/22


17/22


18/22

It has begun. Oscar-winning Danny Boyle is one of the artistic

gatekeepers who was commissioned to deal with the opening

ceremony of the London Olympics, and was given 27m to do it.

There was Mary Poppins, the Red Arrows, there was the Tour de

France winner Bradley Wiggins, decked in yellow jersey in front of

the Olympic bell.

There was historical context thrown in, idiosyncratic twists and

turns. If people find hope and happiness in such saccharine

nonsense, well and good. There was certainly some bafflement to be

had.

The occasion provides a stupefacient, annulling the senses. If thefireworks show is good, then everything else will go swimmingly.

What the Olympics have, in their formal, cyclical way, wrote a

clearly moved James Lawton, is renewal, a wiping-away of the past

and a huge investment not so much in the future but the moment.

Criticism is muted, even neutered one had to be a brave and

resilient polemicist last night to ignore being caught up in that

moment.

Then come the almost moronic comparisons the pissing

contest is all de rigueur when it comes to Olympic openings. Did, for

instance, Beijing do it better? Watching these open ceremonies,

tweeted Slates Matt Yglesias, fairly confident that China will bury

the west. Police states must have all the fun at sporting ceremonies.

Marina Warner of The Guardian was thrilled by the brilliantly

irrational night and its indigestibility for foreign palettes. A true

muddle of a scene.

Then there was Mitt Romneys London visit, one that wenthopelessly wrong for the US presidential contender. His own

summations of Londons Olympic effort were negative, something

that immediately placed his own record regarding the 2002 Winter

Games in Utah in the spotlight. Lets ignore, shall we, the corruption

endemic to that event, and the papering over received from federal

16

By Binoy Kampmark


19/22

funding.

Or rather, lets not. Former rival Rick Santorum in February

remaindered us that, One of the things he talks about most is how

he heroically showed up on the scene and bailed out and resolved the

problems of the Salt Lake City Olympic Games.

He did so by heroically [bailing] out the Salt Lake City Olympic

Games by heroically going to Congress and asking them for tens of

millions of dollars to bail out the Salt Lake Games in an earmark.

An unimpressed Prime Minister David Cameron took his rapierout: Of course its easier if you hold an Olympics Games in the

middle of nowhere. Rupert MurdochsUK Sun also jointed the

criticism this was Mitt the Twit talking.

So, matters are already proving entertaining for London 2012.

Where there is rhetoric on fairness in sport, an actuality of

corruption is bound to take precedence.

The peoples games is all too often a short hand expression for

orgy of the elite, playground for the terminally cashed. Be it the

sportsmen and women who fight it out on the pitches or the

Olympic Committee members who move about their anointed citieslike an intergalactic parasite consuming all before them, we know

each Olympics when we see it. London has seen the unfortunate

construction and allocation of road lanes dubbed Zil lanes (or

Game Lanes) if Stalins vehicles could have special access in the

proletarian paradise, so can Olympic officials and their various

impedimenta.

The introduction of those lanes has been particularly disrupting

for motorists. One can be fined 130 for making unauthorised use

of them, and a mass revolt by drivers should be encouraged. (So far,

one item of resistance has been documented a taxi driver taking

the plunge off the Tower Bridge in protest against the exclusivity of

those lanes.) In any case, given that space is at a premium in

Londons transport infrastructure, such a move is something the city

can ill afford. On Wednesday, this became all too apparent with the

eight-mile clog-up on the M4 motorway.

Transport for London, that Orwellian overseer of a system they

scant understand, have been pleased by the compliance of

Londoners.

Riots are not imminent yet. Compliance among drivers have

been high (Independent, Jul 25). There was less compliance on the

part of those providing the new cable car system, valued at 45m.

More than 30 cars, equipped with 60 passengers, were suspended

300 ft above Thames on Wednesday. Emirates Air Line the

geniuses behind it had some explaining to do.

If not on the roads, then on the Tube the London transport

system will be moving into a well-earned paralysis. For the duration

of this month, there will be regular announcements of delays on

every single line of the network. Globally, the Circle, Metropolitan,

Hammersmith, and City Lines, shall be made more famous than they

already are. Yes, the games have well and truly begun.

Just one month after the so called make or break election,the state coffers in Greece are running low as tax revenues continue

to miss targets as the economy slows further. The election outcome,

dubbed by European political leaders as a victory for the euro, was

supposed to ensure that the bailout programme be implemented in

order to move Greece back onto a sustainable economic path.Since then the emphasis in Greece has shifted towards a re-

negotiation of the bailout conditions as the austerity measures hit

living standards. A recent statistic published by Eurostat claimed that

27.7 percent of Greeks are now living on or below the poverty line.

Such rhetoric is falling on deaf ears elsewhere in Europe as leaders in

countries such as Germany, Finland and the Netherlands struggle to

sell each of the bailouts to their respective electorates further

highlighting the North-South divide in the Eurozone.

Recent figures released suggest that Greece is making progress

towards reducing its deficit as the figure for the first six months of

2012 came in at 12.3 billion euros well ahead of the Troika target of

14.9 billion euros and down from 13.1 billion euros from the same

period in 2011.

However, a closer inspection reveals that, whilst spending cuts

are being met, the required taxation income was 1 billion euros

behind the plan during the first half of 2012.

One consequence of this is that Greece will struggle to survive

financially until September when the next bailout tranche is due to be

made payable.

The main impasse is two bonds that mature on August 20 when

Greece is due to repay 3.2 billion euros of debt owed to the

European Central Bank (ECB).

With the ECB insisting on repayment in full, and with 4 weeks to

go, Greece simply does not have the cash to meet this commitment.

Aside from a potential bridging loan, which has little support across

Europe, Greece would be forced to issue short dated debt at a highly

expensive rate of interest to cover this liability and to avoid a default.

Clearly this is not a sustainable solution, as any positive deficit

reduction effort would quickly be offset by the high financing costs

of avoiding a messy default.

As if this wasnt enough, a decision on Friday by the ECB to

17

Greece on the BrinkAgain

By George Grevett


20/22

refuse Greek Government bonds as collateral for direct funding will

place further strain on Greek banks ability to fund them and to

maintain solvency.

The effect of this decision is that struggling banks in Greece

(which is nearly all of them) will be forced to borrow via the Bank of

Greece at about 2 percent above the rate that could have been

obtained directly from the ECB.

Again this outcome is not sustainable for any amount of time as

any further banking collapses in Greece would trigger further chaosin financial markets as Eurozone leaders would have to weigh the

merits of yet another Greek rescue package. Any sign of doubt or

hesitation would no doubt trigger turmoil and contagion across to

Europes other troubled regions and could act as the stimulus for an

immediate break-up of the Eurozone.

The tale of the tape here is that progress towards overall crisis

resolution has not been made, as a solution for Greece still needs to

be found.

A decision must be made whether to provide an astonishing third

bail out to Greece or to let the sovereign bust out of the commoncurrency area. Any more political deadlock could likely spark

financial Armageddon in the Eurozone in the very near future.

See it as bad finance, economics and banking practice at

workand the structural violence hitting the old, the poor, the

underprivileged is without parallel since the Great Depression. See it

as politics, as intended acts of commissionand it becomes direct

violence hitting people whose only wrongdoing was to trust the

system.

One hypothesis does not exclude the other. The question

becomes: How much was banking gone mad, how much was

politics as usual?

18

The Politics of the Economic Crisis

By Professor Johan Galtung

Perhaps the most surprising aspect of the Libor scandal ishow familiar it seems. Sure, for some of the worlds leading banks to

try to manipulate one of the most important interest rates in

contemporary finance is clearly egregious. But is that worse than

packaging billions of dollars worth of dubious mortgages into a

bond and having it stamped with a Triple-A rating to sell to some

dupe down the road while betting against it? Or how about forging

documents on an industrial scale to foreclose fraudulently on

countless homeowners?, writes Eduardo Porter on The New York

Times.

A useful summary of the situation as of today. But of what?

What is this? We have been through many answers starting with

credit squeeze, then a real estate bubble that burst, toxic assets, credit

swaps, hedge funds, derivativesbets with the money of other

people, yours and mineall finance and banking. A psychologism

was added at an early stage, that of greed. Small savings banks

wanted to be in it, the pattern was contagious and spread from Wall

Street to the Euro zone. Bailout vs. Stimulus, Wall Street vs. Main

Street. But as big banks are too big to fail there was bailout for the

former and austerity for the latter, resulting in misery.

Jobless growth in the United States, 17 percent unemployment

in the European Union stocks slump worldwide and euro sinks as

bond rates soar to record (IHT, July 24, 2012). So on and so forth.

Whatever it is, the effect is an enormity. It stands to reason that

the causes should be commensurate. True, the system could have

reached a tipping edge and tumbled down after one small step, but

then that tipping edge is a huge cause. Why didnt we know about it?

Was it ignorance or sloppy theory? There could be other causes.

That was the tipping edge: the transition to the financeeconomy through deregulation, on credit offered with nocapital, on insider trading betting against customers, on

buying legislators by financing their campaigns, onSupreme Court judges appointed by bought legislators

One guide in the morass is useful if not perfect: Who are the

winners, who are the losers? US class warfare, said Warren Buffet,

and the rich are winning. Banks that had taken risks with other

peoples money and lost billions were bailed out the victims were

foreclosed. Speculation is all over. And on basic necessitiesfood,

water, housing, education (tuition fees), health services (ever rising

costs), the demand is inelastic. People have to buy them at whatever

price, hence safe bets.

There is speculation on the stock exchange on privatized

prisons. When common people do wrong by signing a mortgage that

they cannot service, the court system criminalizes them and the

police throw them out of the property. But when it comes to fixing,

manipulating and betting against their own customers, and rigging

the London Interbank Offered Rate (LIBOR), there are no arrests

(to prevent destroying evidence and coordinating testimony), but

gentle hearings in prestigious places, mild rebukes and milder fines.

One may argue that there are no laws clearly defining their

actions as criminal. Precisely. But why not? Why not right now?

The transfer of capital from investment in the real economy to

speculation in the finance economy, done digitally, in microseconds is

transfer to a labor-free economy.

Workers, the plague of industrial capitalists, quarrelsome, on

strike, always demanding more, are out. The longer the buying and

selling chains in the finance economy, there will be more

commissions. And hence, economic growth, and fewer jobs. A

handful can do it. Lehman Brothers took huge risks that are

compensated by huge Goldman Sachs bonuses.

That was the tipping edge: the transition to the finance

economy through deregulation, on credit offered with no capital, on

insider trading betting against customers, on buying legislators by

financing their campaigns, on Supreme Court judges appointed by

bought legislators. Goodbye democracy, welcome finance mogul

plutocracy.

The crisis was an opportunity that the rich used to cut what-

ever smelt of welfare state, privatizing basic needs including health

and education (coming). Under no democratic checks and balances.

Using the crisis as a cover for brutal class politics.

If the cause is not yet big enough, an international dimension


21/22

comes to the rescue.

The US empire is threatened militarily by being beaten in one

arena after the other politically by elites they thought they could

trust, but that are withdrawing into regional groupings like Latin

America and the Shanghai Cooperation Organization (SCO)

culturally by the US exceptionalism running out of its magic touch.

And economically? By the threats to the Bretton-

Woods/International Monetary Fund system with the dollar as the

world reserve currency. Deals are increasingly made in othercurrencies. Saddam Hussein and Muammar Gaddafi were punished,

but to punish China and Russia is more problematic.

The economic goal is to control the global flow of capital via

such privatized central banks as the Federal Reserve. Seven not-US-

friendly countries had state central banks: Iraq, Iran, Lebanon, Libya,

Syria, Sudan, Somalia. They were targeted after 9/11, according to

Wesley Clark, the US general who commanded NATOs attack on

Serbia (1997-2000).

How to manage the Euro zone? By having Goldman Sachs fix-

ing the Greek accounts, and by having Goldman Sachs insiders

appointed as interim prime ministers of Greece and Italy and as head

of the European Central Bank (who makes money available to the

banks at very cheap rates, below inflation). The name of the game is

finance, not real economy, with bailouts, not stimulus and then the

new European Stability Mechanism (ESM) treaty of debt, with

Article 27: The ESM, its property, funding and assetsshall enjoy

immunity from every form of judicial process.One day the US bubble starts bursting the real economy leav-

ing too much behind the finance economy and behind the massive

printing of money and serving people too much behind serving

debts. Sacrificing their own people for a world hegemony long since

lost. Who will be the winners? The non-West, already taking shape.

19


22/22

Title Page & Page 3 The United Nations became heavily involved in the DRC to insure that elections went off as planned. Martine

Perret/UN Photo

Page 6 - Syria independence flag flies over a large pathering of protesters in Idlib. Image source: Freedom House

Page 7 - President Barack Obama talks with President Dmitry Medvedev. Official White House Photo by Pete Souza

Page 9 - Secretary Timothy F. Geithner and John Podesta. Photo source: Center for American Progress

Page 12 - Rohingya refugees in the Nayapara camp. Photo by Ruben Flamarique/Austcare

Page 14 - U.S. Secretary of State Hillary Rodham Clinton met with Daw Aung San Suu Kyi in Rangoon, Burma, on December 1,

2011.

Page 16 - Tower Bridge with Olympic Rings. Photo by Katharine Hunter

Page 17 - A European Union (EU) flag, left, and Greek national flag fly near the Parthenon temple on Acropolis hill in Athens,

Greece. Simon Dawson/Bloomberg

Page 19 - Bank of England in the background. Photo by Mark Hillary

Documents

IPD Volume I Issue XIII