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TTIP Will Allow Private Companies to Sue …

2014/09/16 6 comments

… Governments for Millions

http://rt.com/op-edge (September 11 2014)

The Transatlantic Trade and Investment Partnership gives companies the right to sue governments if they think there was “indirect expropriation” of future profits, Glyn Moody, technology writer, told RT.

Some experts claim that TTIP could make a privatization of Britain’s National Health Service (NHS) irreversible.

RT: How will TTIP really affect the NHS?

Glyn Moody: What they are saying is rather clever because it is true that the NHS won’t be directly affected by TTIP as it is negotiated, but what lots of people are rightly concerned about is what happens afterwards because there is a chapter within TTIP which is called the “investor state dispute settlement” which basically gives companies the right to sue governments if they think there has been, what they call, indirect expropriation of future profits. Basically that gives them a right to profits in the future. Whether that might affect the NHS, is that we have got a current wave of privatization going on at the moment. And if in some future situation a Labor government might want to reverse that privatization which would be a perfectly natural thing for a government to do. This clause would kick in and the companies that have taken these parts of the NHS will say then: “hang on; you are taking our future profits. We are going to sue you for billions of euro”, and we know that this kind of thing is happening around the world and the fear is justified. That is exactly what will happen with the NHS. So basically privatization will be locked in. You couldn’t reverse it or rather you could reverse it, but you’d end up paying billions or possibly tens of billions of euro if you did so.

RT: The British government has given assurances that the NHS won’t be compromised by this trade deal – so what are people so worried about?

GM: Not really, because basically the reason the British government is quite keen on this is that it would actually lock in the ideology. Even if they lost an election or were replaced by a Labor government, that Labor government or coalition government would be unable to reverse their policy. So this is supposedly a trade deal about how people will get more money. But in fact it contains within it a particular agenda, a political agenda. And that is what is problematic about TTIP. It is not really a trade agreement. It is actually much more about liberalization and forcing the European Union to change in a certain way and irreversibly. That is why I think a lot of people increasingly are worried that TTIP is not going to be a good idea.

RT: The UK’s trade minister says that those against TTIP are probably motivated by antipathy towards America. Would you agree?

GM: I disagree. You can see that it is not true because at the moment there is also a trade agreement being negotiated with Canada. And in fact that is just coming to a head now. And people are equally worried about that agreement. So the argument that it is just anti-Americanism isn’t true. The problem is with this kind of ISDS (ability for Corporations to sue Government) clauses; this ability to sue governments and that would be present as far as we know in the Canadian agreement too. People are worried about that. It is clearly isn’t anything to do with nationalities; it is to do with this problem that companies can sue governments. They basically can put multinational corporations on the same level with these governments. Let’s not forget that these courts are actually just three lawyers sitting in a room and deciding these cases. It has nothing to do with the national law. It is actually circumvents national law. And that is true of TTIP, the American deal, and CETA (The Comprehensive Economic and Trade Agreement) which is the Canadian deal. And both of those are equally problematic. So that has nothing to do with the anti-Americanism.

RT: There are services already being contracted to private healthcare companies. In that sense, opening up to more competition from American firms would only improve services, would it not?

GM: That is not the issue. We are not talking about whether people should be allowed to open up to privatization. Many people would say that it is a good idea. What we are talking about is the irreversibility of that. Because a future government might decide that it didn’t work out too well, so let’s bring it back into the NHS. TTIP would prevent that. So it is nothing to do with the privatization as such. It is about irreversibility of privatization.

RT: Why is TTIP being negotiated behind closed doors?

GM: Interestingly, we do know about a similar agreement which is the Trans-Pacific Partnership (TPP). An American politician that has seen TPP actually said:

If the American public could see what is being negotiated than there would be riots in the streets.

And I think that something very similar is going to be to TTIP. If people knew what was being negotiated behind closed doors they wouldn’t stand for it. And what is being done? It is being set up a kind of fait accompli whereby it will be too late to do anything when the whole thing is finished. It will be presented to the public and said: “We are sorry, we can’t actually change it, you just have to accept it”.

_____

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.

http://rt.com/op-edge/187004-ttip-agreement-trade-economy/

Categories: Uncategorized

Outrage …

… as EU Blocks Democratic Challenge to US Trade Deal

by John Hilary

Politics.co.uk Comment and Analysis (September 12 2014)

There is something rotten in the state of Europe when an unelected, unaccountable EU body can glibly inform millions of us that we no longer have the right to question its most dangerous and unpopular policies.

This is exactly what has just happened, as the European Commission has announced that it will not allow a European Citizens’ Initiative (ECI) to challenge the secret trade talks it is holding with the US government, supposedly on our behalf.

The ruling is a slap in the face for the 230 civil society organisations from across Europe that have lined up behind the initiative, and the millions of European citizens they represent. The ECI is the only vehicle available to us to challenge the shadowy bureaucrats of the European Commission. Now even this seems to be too much scrutiny for them.

The negotiations on the Transatlantic Trade and Investment Partnership (TTIP) have become one of the hottest political topics across Europe. TTIP is effectively a new bill of rights for multinational corporations, granting them unprecedented powers and undermining vital labour, environmental and food safety standards in the name of ‘free’ trade.

TTIP is also a direct threat to our democracy, as the European Commission seeks to allow companies to challenge future policies introduced anywhere in Europe that could jeopardise their bottom line. The ECI, by contrast, was a fully democratic response. And the Commission has blocked it.

There are already huge movements of opposition to TTIP in most European countries. Trade unions and global justice groups have joined forces with environmental, consumer and digital privacy campaigners to confront the common threat that the negotiations pose.

The European Commission is well aware of the strength of this resistance, as it has been forced to suspend negotiations on one of the most controversial aspects of the agreement: the new ‘investor-state dispute settlement’ powers that companies will win through TTIP to sue host states when their profits come under threat.

That mechanism has been questioned by the German and French governments, as it effectively raises transnational capital to the status of the nation state itself. The new powers are already being used elsewhere under other treaties, as in the billion-dollar challenge being brought by Philip Morris against the Australian government for loss of profits as a result of the country’s public health requirement that all cigarettes be sold in plain packaging.

Under similar provisions in the Energy Charter Treaty, the Swedish energy company Vattenfall is suing Germany for 3.7 billion euros (GBP 2.94 billion) over its decision to phase out nuclear power in the wake of the Fukushima disaster. French company Veolia is even suing the Egyptian government for threatening its profits by raising the minimum wage. And there are countless other equally shocking examples stretching back over the past twenty years.

As always, the UK government is a major part of the problem. Leaked documents from internal EU discussions over the parallel EU-Canada trade talks (CETA) reveal that the UK is the only member state providing unconditional support for the European Commission in its desire to introduce these new powers for business, at the expense of democracy and the rule of law.

Yet just this week, the British trade union movement came out in full opposition to the introduction of all investor-state dispute settlement mechanisms in EU trade deals, with a unanimous vote to stop the EU-US talks in their tracks.

Not only is TTIP predicted to cost at least one million jobs between the EU and USA, but it will also make it impossible for any future government to repeal the Health & Social Care Act and bring the NHS back into public hands.

I am one of the seven people who make up the European citizens’ committee for the ECI against TTIP and CETA that the Commission has rejected. With fellow representatives from France, Germany, Finland, Romania, Luxembourg and Portugal, we were responsible for raising one million signatures in favour of the initiative within a year.

Given the massive opposition that exists to TTIP across Europe, we were confident of meeting the target well within the required time. The European Commission obviously thought the same, hence its decision to strangle the initiative at birth.

This is by no means the end of the story. We have legal advice to suggest that the European Commission is on thin ice in its attempt to prevent the ECI from going ahead, and we can take our appeal direct to the European Court of Justice in order to get the block lifted.

The fight against TTIP will continue regardless of whether we overcome the Commission’s opposition to the ECI. But the Brussels bureaucrats need to be careful as to the long-term consequences of their contempt for democracy.

The European parliament elections this May saw an unprecedented surge in the number of voters rejecting the European project in its entirety. Ukip won more seats than any other UK party, the Front National topped the poll in France and some of our continent’s nastiest far-right extremists now enjoy the legitimacy of EU parliamentary representation.

Jean-Claude Juncker, newly appointed as president of the European Commission, has been talking of his desire to see ‘fairness and democracy’ at the heart of Europe. He would do well to clean out his own stables first.

_____

John Hilary is executive director of War on Want. His full briefing on TTIP published with the Rosa Luxemburg Foundation (and available in seven European languages) can be read at http://www.waronwant.org/campaigns/trade-justice/more/inform/18078-what-is-ttip.

The opinions in Politics.co.uk’s Comment and Analysis section are those of the author and are no reflection of the views of the website or its owners.

http://www.politics.co.uk/comment-analysis/2014/09/12/comment-outrage-as-eu-blocks-democratic-challenge-to-us-trad

Categories: Uncategorized

Oil Is Back!

A Global Warming President Presides Over a Drill-Baby-Drill America

by Michael T Klare

TomDispatch (September 04 2014)

Considering all the talk about global warming, peak oil, carbon divestment, and renewable energy, you’d think that oil consumption in the United States would be on a downward path.  By now, we should certainly be witnessing real progress toward a post-petroleum economy.  As it happens, the opposite is occurring.  US oil consumption is on an upward trajectory, climbing by 400,000 barrels per day in 2013 alone – and, if current trends persist, it should rise again both this year and next.

In other words, oil is back.  Big time.  Signs of its resurgence abound.  Despite what you may think, Americans, on average, are driving more miles every day, not fewer, filling ever more fuel tanks with ever more gasoline, and evidently feeling ever less bad about it.  The stigma of buying new gas-guzzling SUVs, for instance, seems to have vanished; according to CNN Money, nearly one out of three vehicles sold today is an SUV.  As a result of all this, America’s demand for oil grew more than China’s in 2013, the first time that’s happened since 1999.

Accompanying all this is a little noticed but crucial shift in White House rhetoric.  While President Obama once spoke of the necessity of eliminating our reliance on petroleum as a major source of energy, he now brags about rising US oil output and touts his efforts to further boost production.

Just five years ago, few would have foreseen such a dramatic oil rebound.  Many energy experts were then predicting an imminent “peak” in global oil production, followed by an irreversible decline in output.  With supplies constantly shrinking, it was said, oil prices would skyrocket and consumers would turn to hybrid vehicles, electric cars, biofuels, and various transportation alternatives.  New government policies would be devised to facilitate this shift, providing tax breaks and other incentives for making the switch to renewables.

At that time, a growing concern over climate change and the prospect of further warming due to increased emissions of carbon dioxide from the burning of fossil fuels seemed to dim the long-term prospects for petroleum.  After all, oil combustion is this country’s single largest source of carbon emissions.  This, in turn, clearly meant that any significant attempt to reduce emissions – whether through a carbon tax, a carbon cap-and-trade program, or other such measures – would naturally have to incorporate significant impediments to oil use.  President Obama entered the White House promising to enact such a measure, and the House of Representatives passed a modified cap-and-trade bill in 2009.  (It failed in the Senate and so never became law.)

The 2008 financial crisis and global economic meltdown only put oil’s future in further doubt.  Suddenly cash-conscious Americans began trading in their gas-guzzlers for smaller, more fuel-efficient cars, with the Obama administration adding its encouragement.  When agreeing to the bailout of General Motors, for instance, the White House insisted that the reorganized company focus on the production of such vehicles.  In a similar spirit, the administration’s $787 billion stimulus package favored investment in electric cars, biofuels, high-speed rail, and other petroleum alternatives.

The president’s comments at the time clearly reflected a belief that oil was an “old” form of energy facing inevitable decline.  “The United States of America cannot afford to bet our long-term prosperity, our long-term security on a resource that will eventually run out, and even before it runs out will get more expensive to extract from the ground”, he declared in 2011.  “We can’t afford it when the costs to our economy, our country, and our planet are so high”.  Not only did the country need to lessen its dangerous reliance on imported oil, he insisted, but on oil altogether.  “The only way for America’s energy supply to be truly secure is by permanently reducing our dependence on oil”.

Obama’s Turnaround on Oil

That was then and this is now, and Obama ain’t talking that way no more.  Instead, he regularly boasts of America’s soaring oil output and points to all he’s done and is still doing to further increase domestic production.  Thanks to the sort of heightened investment in domestic output his administration has sponsored, he told a cheering Congress in January, “more oil [was] produced at home than we buy from the rest of the world – the first time that’s happened in nearly twenty years”.  Although still offering his usual bow to the dangers of climate change, Obama did not hesitate to promise to facilitate further gains in domestic output.

In accord with his wishes, the Bureau of Ocean Energy Management (BOEM) announced on July 18th that it would reopen a large portion of the waters off the Eastern seaboard, an area stretching all the way from Florida to Delaware, to new oil and natural gas exploration.  Under the BOEM plan, energy companies will be allowed to employ advanced seismic technology to locate promising reserves beneath the seabed in preparation for a round of offshore licensing scheduled for 2018.  At that point, the companies can bid for and acquire actual drilling leases. Environmental organizations have condemned the plan, claiming the seismic tests often involve the use of sonic blasts that could prove harmful to endangered sea animals, including whales. The truth is, however, that those seismic tests, by opening future fossil fuel deposits to development and exploitation, are likely, in the long run, to hurt human beings at least as much.

Here are some of the other measures recently taken by the administration to boost domestic oil production, according to a recent White House factsheet:

* An increase in the sales of leases for oil and gas drilling on federal lands.  In 2013, the Bureau of Land Management held thirty such sales – the most in a decade – offering 5.7 million acres for lease by industry.

* An increase in the speed with which permits are being issued for actual drilling on federal lands.  What’s called “processing time” has, the White House boasts, been cut from 228 days in 2012 to 194 days in 2013.

* The opening up of an additional 59 million acres for oil and gas drilling in the Gulf of Mexico, the site of a disastrous BP oil spill in April 2010.

In other words, global warming be damned!

In a turnaround that has gotten next to no attention and remarkably little criticism, President Obama is now making a legacy record for himself that will put the “permanent reduction of our dependence on oil” in its grave.  His administration is instead on a drill-baby-drill course to increase production in every way imaginable on US territory, including offshore areas that were long closed to drilling due to environmental concerns.

What explains this dramatic turnaround?

The Rekindled Allure of Oil

The most significant factor behind the renewed popularity of oil has been a revolution in drilling technology.  In particular, this involves the use of horizontal drilling and hydraulic fracturing (“fracking”) to extract oil and natural gas from previously inaccessible shale formations.  These techniques include the use of drills that can turn sideways after penetrating thin underground shale layers, along with high-pressure water cannons to fracture the surrounding rock and liberate pockets of oil and gas.  Until the introduction of these techniques, the hydrocarbons trapped in the shale were prohibitively expensive to produce and so ignored both by industry and the many experts predicting that “peak oil” was in sight.

Most domestic shale “plays” (as they are called in the industry) contain both oil and natural gas.  They were first exploited for their gas content because of the greater ease in extracting commercial volumes of that fossil fuel.  But when the price of gas collapsed – in part because of a glut of shale gas – many drillers found that they could make more money by redeploying their rigs in oil-rich shales like the Bakken formation in North Dakota and Eagle Ford in West Texas.  The result has been a sudden torrent of domestic crude that has brought gasoline prices down (with a resulting increase in gasoline consumption) and created boom-like conditions in several parts of the country.

Prior to the utilization of horizontal drilling and fracking technology, US crude production was indeed facing long-term decline.  According to the Energy Information Administration (EIA) of the Department of Energy, domestic crude output fell from a peak of 9.6 million barrels per day in 1970 to a low of five million barrels in 2008.  With the introduction of fracking, however, the numbers started to soar.  Total US crude output jumped from 5.7 million barrels per day in 2011 to 7.5 million in 2013.  Output in 2014 is projected to be 8.5 million barrels per day, which would represent a remarkable increase of 2.8 million barrels per day in just three years.

The increase is, by the way, the largest posted by any of the world’s oil producers from 2011 to 2013 and has generated multiple economic benefits for the country, along with significant environmental consequences.  For one thing, it has kept gas prices relatively low.  They are now averaging about $3.50 per gallon – a lot more than Americans were paying in the 1990s, but a lot less than most experts assumed would be the case in a post-peak-oil economy.  This has, of course, spurred both those SUV sales and an increase in recreational driving.  (“We were able to take a day-cation because of the lower gas prices”, said Beth Hughes, of a four-hour roundtrip drive with her husband to San Antonio, to visit the Alamo and do some shopping.)

The increased availability of relatively affordable oil has also spurred investment in ancillary industries like petrochemicals and plastics.  Petroleum is the basic raw material, or “feedstock”, for a wide variety of subsidiary materials, including ethylene, propylene, and benzene, which in turn are used to make polyesters, plastics, and numerous consumer products.  Many chemical firms have built new facilities to convert shale oil and shale gas into these commodities, a spur both to new jobs and greater tax revenues.  In addition, with crude oil selling at around $100 per barrel, those extra 2.8 million barrels produced daily will add about $100 billion to the US economy in 2014, a substantial contribution to an otherwise tepid recovery.

Of course, the environmental downside to all this, already significant, could be staggering for the future.  The use of hydro-fracking to release all that shale oil has resulted in the diversion of vast quantities of water to energy production, in the process regularly posing a threat to local water supplies.  In some drought-affected areas, oil drilling is now competing with farming for access to ever-diminishing supplies of fresh water.  The growing use of railroads to carry shale oil – an especially volatile hydrocarbon substance – has also led to several lethal explosions, triggered by accidents involving old and inadequately reinforced tank cars.

Of course, the greatest environmental fallout from the domestic oil boom will be a continuing deluge of carbon dioxide emissions into the atmosphere, further bolstering the greenhouse effect and ensuring higher world temperatures for years to come.  While emissions from domestic coal use are likely to decline in the years ahead, in part due to new rules being formulated by the Environmental Protection Agency, the expected rise in emissions from oil and natural gas use will wipe out these gains, and so total US emissions are expected to be higher in 2040 than they are today, according to the EIA.  As a result, we can expect little progress in international efforts to slow the advance of climate change and a steady increase in the frequency and intensity of storms, floods, fires, droughts, and heat waves.

As seen from Washington, however, the domestic oil rebound is largely a feel-good story and an essential part of an otherwise anemic economic recovery.  Putting people back to work, Obama declared in May,

… starts with helping businesses create more good jobs.  One of the biggest factors in bringing jobs back to America has been our commitment to American energy over the last five years.  When I took office, we set out to break our dependence on foreign oil.  Today, America is closer to energy independence than we have been in decades.

“A Stronger Hand”

For the president and many other politicians, increased oil output, however important as a source of economic vitality and job creation, is far more than that.  It is also a source of power and prestige, guaranteed to give the United States greater leverage in international affairs.

As Tom Donilon, then the president’s senior adviser on national security, explained in April 2013,

America’s new energy posture allows us to engage from a position of greater strength.  Increasing US energy supplies act as a cushion that helps reduce our vulnerability to global supply disruptions and price shocks.  It also affords us a stronger hand in pursuing and implementing our international security goals.

One area where American energy prowess has given us “a stronger hand”, he suggested, was in negotiations with Tehran over the Iranian nuclear program.  Because the US is importing less oil, there is a larger pool of foreign oil on which our allies can draw for their needs, which has made it easier to impose tough sanctions on Iran’s petroleum exports – and so wring concessions from Iran’s leadership circle.

Another area where many Washington pundits and politicians believe increased oil and gas production has strengthened the president’s hand lies in the administration’s efforts to impose multilateral sanctions on Russia’s energy companies as a punishment for the Kremlin’s covert backing of anti-government rebels in eastern Ukraine.  Although still dependent on Russia for a large share of their energy intake, America’s European allies are feeling somewhat less deferential to Moscow because of the growth in global supplies.

In other words, the striking spurt in domestic oil production has added a patriotic dimension to its already powerful allure.

Collective Schizophrenia

As polls show, most Americans acknowledge the reality of climate change and support efforts to reduce carbon emissions in order avert future climate-induced disasters.  California and other states have even taken significant steps to reduce energy-related emissions and the Obama administration has, among other things, announced plans to improve the fuel efficiency of American cars and trucks.

In addition, the president and many in his administration clearly grasp the dangers of climate change – the increasing heat, drought, fiercer storms, rising sea levels, and other perils that, without serious curbs on the combustion of fossil fuels, will make the present look like a utopian moment in human history.  Nevertheless, the numbers – from production to consumption – are anything but promising.  According to the latest EIA projections, US carbon dioxide emissions from petroleum use will increase by eight million metric tons between 2013 and 2015; such emissions are then expected to level off, at about 2.2 billion tons per year, despite substantial increases in average vehicle fuel efficiency.

With emissions from natural gas expected to rise – the inevitable result of the shale gas boom – and coal emissions experiencing only a modest decline (some of which is offset by rising US exports of coal to be burned elsewhere), total domestic carbon emissions from energy use in 2040 are still predicted to be a devastating six percent higher than they are today.  Can there be any question at this point of how this will help ensure the sorts of predicted global temperature increases, with all the ensuing side effects, that every expert knows will be devastating to the planet?

At a national level, such a situation – knowing one thing and doing something else – can only be described as some form of mass delusion or a collective version of schizophrenia.  In one part of our collective brain, we are aware that petroleum use must decline sharply to prevent the sorts of global catastrophes that we are only used to seeing in science fiction movies; in another, we retain our affection for driving and gasoline use without giving much thought to the consequences.  We have a global warming president presiding over a massive expansion of fossil fuel production.  Think of this as a form of collective mental compartmentalization that should frighten us all – and yet from the president on down, it’s remarkable how few seem disturbed by it.

Obviously, this is an unsustainable condition.  Eventually, excessive petroleum use will produce such frequent and severe climate effects that no president or energy executive would dare boast of increased petroleum output and none of us would even dream of filling up the gas tank to take a “day-cation” at a distant tourist site.  Until we identify and begin treating this state of national schizophrenia, however, we will ensure that a time of mutual pain and hardship is ever more likely.

_____

Michael T Klare, a TomDispatch regular, is a professor of peace and world security studies at Hampshire College and the author, most recently, of The Race for What’s Left (2012).  A documentary movie version of his book Blood and Oil (2005) is available from the Media Education Foundation.

Follow TomDispatch on Twitter and join us on Facebook and Tumblr. Check out the newest Dispatch Book, Rebecca Solnit’s Men Explain Things to Me (2014).

Copyright 2014 Michael T Klare

(c) 2014 TomDispatch. All rights reserved.

http://www.tomdispatch.com/blog/175889/

Categories: Uncategorized

The Cold War Never Ended

Vladimer Putin is not reviving the Cold War. Rather, the US failed to end it when it had the chance.

by John Feffer

Foreign Policy in Focus (September 10 2014)

If the US had disbanded NATO, pushed for nuclear abolition, and helped to create a new security architecture for Europe that included Russia, the Cold War would have died a natural death. But it didn’t.

In 1989, it looked as though the war had finally ended.

For five decades the conflict had ground on, and both sides had grown weary of it all. There had been previous pauses in the hostilities, even a detente or two, but this truce looked permanent. Sure, there were still tensions after ’89, and a few skirmishes broke out. But the peace held, miraculously, for more than 25 years. Then, as suddenly as it had begun, the truce collapsed in ’15, and the war picked up where it left off.

I’m not predicting the future. I’m talking about 1389.

From 1389 to 1415, the second peace between England and France marked the longest break in the Hundred Years War. But Henry V, who saw no glory in peace, started things up again at the Battle of Agincourt with the cry of “once more unto the breach, my friends!” (or so Shakespeare would have us believe). The conflict would rage for another forty years until the English were finally kicked back across the Channel for good.

We never know the length of the wars that drag on around us. When peace improbably comes, we’d like to think that the treaties are permanent, that they’ll turn former combatants into grumbling but harmless neighbors.

Wars, however, are like acid reflux – they keep recurring no matter how much Pepto-Bismol we chug. Perhaps the Vietnamese thought they’d finally won their independence when they delivered a stinging defeat to the French at Dien Bien Phu in 1954. Perhaps the Afghans imagined that self-determination was theirs when the Soviet superpower withdrew in 1989 (or, for that matter, when the British withdrew in 1880). Wars defy our efforts to write their obituaries.

Indeed, viewed over the long term, war is the very oxygen that we breathe, while peace is but the brief interval when we hold our breath and hope for the best.

The world is currently in the midst of several long wars that don’t have any clear endpoint. The battle over the boundaries of the Middle East, set into motion by the disintegration of the Ottoman Empire, continues to rage in Syria, Iraq, and Israel/Palestine. Conflicts over borders inside Africa, ignited by the collapse of colonialism, are still being fought in Congo, Sudan, and elsewhere around the continent. Then there’s that great misnomer, the “war on terror”, that stretches back before September 11 and will extend well into the future.

By contrast, we’ve been told ad nauseum that the Cold War is over. I’m sure you remember the funeral. We all watched the corpse lowered into the grave, and we happily lined up to throw a handful of dirt into the hole. The inscription on the gravestone – 1946 to 1991 – recorded the conflict’s birth in Fulton, Missouri, which was midwifed by Winston Churchill and his infamous Iron Curtain speech, to the quiet death that came with the dissolution of the Soviet Union. But you’ve seen enough whodunits to suspect, even as you were dancing on the grave, that the coffin buried underneath was empty.

The most obvious evidence that reports of the death of the Cold War had been greatly exaggerated has come from Asia. For two decades, I’ve had to add parenthetically to my articles on East Asian security that the Cold War may have ended in Europe but it was still alive and well along the Pacific rim. The Communist Parties of China, North Korea, Laos, and Vietnam all refused to follow the example of their European counterparts by stubbornly clinging to the historical stage, by their fingertips if necessary. The Korean peninsula has remained divided between ideologically implacable adversaries, mainland China and the United States continue to regard each other as military competitors, and the region is divided down the middle between China and its allies versus the United States and its allies.

The coffin was empty precisely because the Cold War had lived to fight another day – in the middle of the DMZ, across the Taiwan Strait, among the islands of the South China Sea.

But even in Europe, the traditional narrative of Cold War history has had its irregularities. During the detente period of the 1970s, Washington and Moscow worked out a reasonable modus operandi through arms control treaties, grain sales, and exchanges of ballet troupes. Pundits increasingly subscribed to the convergence theory whereby capitalism became more state-directed and Communism more market-driven. Then came the Soviet invasion of Afghanistan, the victory of Reaganism, the resurgent fear of nuclear war, and it was once more unto the breach, my friends, comrades, and neocons.

In the 1980s, the Soviet leadership became ever more geriatric as Brezhnev, Andropov, and Chernenko passed away in a blur of state funerals. Then it was the Warsaw Pact’s time to go into hospice. When Gorbachev stopped supplying Soviet life support, the Soviet bloc expired. Two years later, the Soviet Union followed suit. One side in the global tug-of-war stopped pulling. Game over.

Or maybe not. Maybe everything we’ve been told about the collapse of the Cold War is false. With the recent conflict in Ukraine, and heightened tensions between Washington and Moscow, observers across the political spectrum speak of a revival of the Cold War – the hawks with anti-Russian relish and the doves with anti-war horror.

But imagine instead that we’re in the middle of our own Hundred Years War, and the last 25 years were just a hiatus. After all, many of the features of the Cold War are still in place. Although two of the Soviet successor states – Ukraine and Kazakhstan – gave up their nuclear weapons, Russia has continued to maintain its much larger arsenal. And the United States has not only barely touched its own equally sizable deterrent force but has thrown billions of dollars into modernizing the very weapons that Obama has pledged to abolish (at some undetermined point in the future). Nor did NATO disappear even though it should have been obvious to everyone – except those on the NATO payroll – that the organization no longer had a purpose. Its vestigial status certainly didn’t prevent the alliance from pushing eastward to the very doorstep of Russia’s diminished sphere of influence.

The current focus of attention by the Cold War revivalists is the behavior of Vladimir Putin, who has been cast in the role of Henry V. He is responsible for the upsurge in bilateral tensions largely because of his territorial ambitions – first Georgia, then Crimea, and now eastern Ukraine. He has also played hardball with energy sales to Europe. He continues to back dictators like Assad in Syria. And he has worked to establish geopolitical formations to balance US power – the Eurasian Union with Kazakhstan and Belarus, the Shanghai Cooperation Organization with China and the Central Asian countries, the BRICS with Brazil and India.

Putin’s nationalism is noxious, and I’ve written about the impact of even more intolerant strains of extremism on his policies. But here’s the rub: his foreign policies are not substantially different than those pursued by that supposed Westernizer Boris Yeltsin. Russian-backed separatists challenged the sovereignty of the Georgian government in 1992. In that same year, Russian troops also occupied part of Moldova in support of Transnistrian separatists. Hafez al-Assad, Bashar’s father, visited Russia in 1999 and Yeltsin proclaimed him “an old friend of Russia”. In other words, when it was supposedly under the thrall of liberalism, Russia continued to pursue its interests in the “near abroad” and cultivate controversial allies further afield.

The difference is that Yeltsin did not challenge US unilateral power. Economically weak and no longer able to keep pace with the United States militarily, Russia did not push back hard as NATO expanded eastward, first with its Partnership for Peace and then with actual membership for the former Soviet republics of Estonia, Latvia, and Lithuania. Yeltsin was comfortable being a junior partner of the United States, as long as Washington allowed him latitude in his new circumscribed sphere of influence, permitted Russia to hold onto its nukes and export cheap jets and tanks, and ushered the country into the G7 and the WTO.

The Cold War, then, was not just about a confrontation between ideological foes. The Cold War was about a confrontation between two countries that each aspired to maintain hegemony over the entire planet. The Soviet Union dropped out of that competition. And Russia under Putin continues to remain focused on concerns along its borders. The United States, on the other hand, has not changed its attitude. And that, ultimately, is why the Cold War never died.

If the United States had disbanded NATO, pushed for nuclear abolition, and helped to create a new security architecture for Europe that included Russia, the Cold War would have died a natural death. Instead, because the institutions of the Cold War lived on, the spirit of the enterprise lay dormant, only waiting for the opportunity to spring forth.

It’s not that the United States conjured its Russian adversary back into existence out of some misguided nostalgia. Rather, the inevitable consequence of our refusal to restrain our global ambitions necessarily created a counterforce. In the end, it’s boils down to physics: for every action there is an equal and opposite reaction.

So, let’s stop talking about the Cold War’s revival as if Vladimir Putin is the one who raised the dead. We are the vampire hunters who failed to drive a stake through its heart. So we shouldn’t be surprised, when we go out for a stroll one day to survey our domain, to hear the click of sharp teeth poised to tear into its latest victim.

http://fpif.org/cold-war-never-ended/

Categories: Uncategorized

9/11 After Thirteen Years

by Paul Craig Roberts

Institute for Political Economy (September 10 2014)

The tragedy of September 11 2001, goes far beyond the deaths of those who died in the towers and the deaths of firefighters and first responders who succumbed to illnesses caused by inhalation of toxic dust. For thirteen years a new generation of Americans has been born into the 9/11 myth that has been used to create the American warfare/police state.

The corrupt Bush and Obama regimes used 9/11 to kill, maim, dispossess and displace millions of Muslims in seven countries, none of whom had anything whatsoever to do with 9/11.

A generation of Americans has been born into distain and distrust of Muslims.

A generation of Americans has been born into a police state in which privacy and constitutional protections no longer exist.

A generation of Americans has been born into continuous warfare while needs of citizens go unmet.

A generation of Americans has been born into a society in which truth is replaced with the endless repetition of falsehoods.

According to the official story, on September 11 2001, the vaunted National Security State of the World’s Only Superpower was defeated by a few young Saudi Arabians armed only with box cutters. The American National Security State proved to be totally helpless and was dealt the greatest humiliation ever inflicted on any country claiming to be a power.

That day no aspect of the National Security State worked. Everything failed.

The US Air Force for the first time in its history could not get intercepter jet fighters into the air.

The National Security Council failed.

All sixteen US intelligence agencies failed as did those of America’s NATO and Israeli allies.

Air Traffic Control failed.

Airport Security failed four times at the same moment on the same day. The probability of such a failure is zero.

If such a thing had actually happened, there would have been demands from the White House, from Congress, and from the media for an investigation. Officials would have been held accountable for their failures. Heads would have rolled.

Instead, the White House resisted for one year the 9/11 families’ demands for an investigation. Finally, a collection of politicians was assembled to listen to the government’s account and to write it down. The chairman, vice chairman, and legal counsel of the 9/11 Commission have said that information was withheld from the commission, lies were told to the commission, and that the commission “was set up to fail”. The worst security failure in history resulted in not a single firing. No one was held responsible.

Washington concluded that 9/11 was possible because America lacked a police state.
The PATRIOT Act, which was awaiting the event was quickly passed by the congressional idiots. The Act established executive branch independence of law and the Constitution. The Act and follow-up measures have institutionalized a police state in “the land of the free”.

Osama bin Laden, a CIA asset dying of renal failure, was blamed despite his explicit denial. For the next ten years Osama bin Laden was the bogyman that provided the excuse for Washington to kill countless numbers of Muslims. Then suddenly on May 2, 2011, Obama claimed that US Navy SEALs had killed bin Laden in Pakistan. Eyewitnesses on the scene contradicted the White House’s story. Osama bin Laden became the only human in history to survive renal failure for ten years. There was no dialysis machine in what was said to be bin Laden’s hideaway. The numerous obituaries of bin Laden’s death in December 2001 went down the memory hole. And the SEAL team died a few weeks later in a mysterious helicopter crash in Afghanistan. The thousands of sailors on the aircraft carrier from which bin Laden was said to have been dumped into the Indian Ocean wrote home that no such burial took place.

The fairy tale story of bin Laden’s murder by Seal Team Six served to end the challenge by disappointed Democrats to Obama’s nomination for a second term. It also freed the “war on terror” from the bin Laden constraint. Washington wanted to attack Libya, Syria, and Iran, countries in which bin Laden was known not to have organizations, and the succession of faked bin Laden videos, in which bin Laden grew progressively younger as the fake bin Laden claimed credit for each successive attack, had lost credibility among experts.

Watching the twin towers and WTC 7 come down, it was obvious to me that the buildings were not falling down as a result of structural damage. When it became clear that the White House had blocked an independent investigation of the only three steel skyscrapers in world history to collapse as a result of low temperature office fires, it was apparent that there was a coverup.

After thirteen years people at home and abroad find the government’s story less believable. The case made by independent experts is now so compelling that mainstream media has opened to it. Here is Richard Gage of Architects & Engineers for 9/11 Truth on C-SPAN: https://www.youtube.com/watch?v=3Zbv2SvBEec#t=23.

After years of persistence a group in New York has secured the necessary number of valid signatures to put on the ballot a vote to investigate the cause of the collapse of the three WTC buildings. The official account, if correct, means that existing fire and building codes are insufficient to protect the public and that all other steel high rise structures are subject to the same failure. The group has been clever to frame the issue in terms of public safety and not in terms of 9/11 truth.

New York authorities, of course, continue to oppose the initiative. The question now rests on a judge’s ruling. It is difficult to imagine a judge going against the government in such a major way, but the group will have made the point that the government has no confidence in the truth of its own story.

Over these thirteen years, physicists, chemists, architects, engineers, and first responders have provided massive evidence that completely disproves the official account of the failure of the three skyscrapers. The response to experts has been for non-experts to call experts “conspiracy theorists”. In other words, the defenders of the government’s story have no scientific or factual basis on which to stand. So they substitute name-calling.

9/11 was used to fundamentally alter the nature of the US government and its relationship to the American people. Unaccountable executive power has replaced due process and the checks and balances established by the US Constitution. In the name of National Security, executive power knows no restraints. Essentially, Americans today have no rights if the government targets them.

Those Americans born after 9/11 were born into a different country from the rest of us. Having never experienced constitutional government, they will not know what they have lost.

The anthrax attacks of October 2001 have been forgotten, but Professor Graeme MacQueen in The 2001 Anthrax Deception (Clarity Press, 2014) shows that the anthrax attacks played an essential role in setting the stage for the government’s acquisition of unaccountable police state power. Two Democratic Senate committee chairmen, Thomas Daschle and Patrick Leahy, were disturbed by the Bush regime’s overreach for carte blanche power, and were in a position to block the coming police state legislation and the ability of the executive branch alone to take America to war.

Both senators received anthrax letters, as did major news organizations. The TV network news anchors, such as Dan Rather, who compared the collapse of WTC skyscrapers to buildings brought down by controlled demolition, had not yet been fired by Republicans on framed-up charges.

Initially, the anthrax letters, which caused the deaths of some USPS employees, were seen as the second stage of the 9/11 attack. Fear multiplied. The senators and media shut up. Then it was discovered that the anthrax was a unique kind produced only by a US government military facility.

The response to this monkey wrench thrown into the government’s propaganda, was the FBI’s frame-up of a dead man, Bruce Edwards Ivins, who had been employed in the military lab that produced the anthrax and was driven to suicide by the false charges. The dead man’s colleagues did not believe one word of the government’s false story, and nothing in the dead man’s past indicated any motive or instability that would have led him to such a deed.

Initially, the US government tried to frame up Steven Jay Hatfill, but despite the best efforts of the New York Times and Nicholas Kristof the attempt to frame Hatfill failed. Hatfill received $5 million from the US government for the false accusation that ruined his life. So the corrupt US government moved on to Ivins.

Ivins was dead and couldn’t defend himself, but his colleagues did.

The entire episode stinks to high heaven. Justice is something that exists outside the borders of the United States. Never expect to find justice within the United States.

Most Americans are unaware of the extent to which the federal government owns the experts who can contradict its fairy tales. For example, no competent physicist can possibly believe the official story of the destruction of the three WTC buildings. But physics departments in US universities are heavily dependent on federal money. Any physicist who speaks his mind jeopardizes not only his own career but also the career of all of his colleagues. Physicist Steven Jones, who first pointed to the use of thermite in the destruction of the two towers had to agree to having his university buy out his tenure or his university was faced with losing all federal financing.

The same constraints operate in the private sector. High rise architects and structural engineers who express doubts about the official explanation of the collapse of three skyscrapers are viewed by potential clients as Muslim apologists and conspiracy kooks. The clients, of course, have no expert knowledge with which to assess the issue, but they are indoctrinated with ceaseless, endless, repetition that 9/11 was Osama bin Laden’s attack on America. Their indoctrination makes them immune to facts.

The 9/11 lie has persisted for thirteen years. Millions of Muslims have paid for this lie with their lives, the destruction of their families, and with their dislocation. Most Americans remain comfortable with the fact that their government has destroyed in whole or part seven countries based on a lie Washington told to cover up an inside job that launched the crazed neoconservatives’ drive for Washington’s World Empire.

See also: http://www.globalresearch.ca/no-airliner-black-boxes-found-at-the-world-trade-center-senior-officials-dispute-official-911-claim/5400891 .

Copyright (c) 2013 PaulCraigRoberts.org. All rights reserved.

http://www.paulcraigroberts.org/2014/09/10/911-13-years-paul-craig-roberts/

Categories: Uncategorized

Nuclear Power’s Insanities

Taxpayer-Guaranteed

by Ralph Nader

The Nader Page (September 05 2014)

The Nuclear Energy Institute (NEI) – the corporate lobbyist in Washington, DC for the disintegrating atomic power industry doesn’t have to worry about repercussions from the negative impacts of nuclear power. For nuclear power is a government/taxpayer-guaranteed boondoggle whose staggering costs, incurred and deferred, are absorbed by American taxpayers via a supine government regulatory and subsidy apparatus.

So if you go to work at the NEI and you read about the absence of any permanent radioactive waste storage site, no problem, the government/taxpayers are responsible for transporting and safeguarding that lethal garbage for centuries.

If your reactors experience ever larger cost over-runs and delays, as is now happening with two new reactors in South Carolina, no problem, the supine state regulatory commissions will just pass the bill on to consumers, despite the fact that consumers receive no electricity from these unfinished plants.

If these plants, and two others in Georgia under construction, experience financial squeezes from Wall Street, no problem, a supine Congress has already passed ample taxpayer loan guarantees that make Uncle Sam (you the taxpayer) bear the cost of the risk.

If there were to be an accident such as the one that happened in Fukushima, Japan, no problem, under the Price-Anderson Act, the government/taxpayers bear the cost of the vast amount of damage from any nuclear power plant meltdown. To put this cost into perspective, a report by the Atomic Energy Commission about fifty years ago estimated that a class nine meltdown could make an area “the size of Pennsylvania” uninhabitable.

Why do we stand for such a doomsday technology all over America that is uneconomic, uninsurable, unsafe, unnecessary (it can’t compete with energy conservation and renewable energies), unevacuable (try evacuating the greater New York City area from a disaster at the two Indian Point plants thirty miles from Manhattan) and unprotectable (either from sabotage or earthquake)?

David Freeman, the famous energy engineer and lawyer, who has run four giant utilities (the Tennessee Valley Authority, the SMUD complex – where he closed the Rancho Seco Nuclear Plant – the New York Power Authority and the Los Angeles Department of Water and Power) sums up the history of nuclear power this way:

Nuclear power, promoted as too cheap to meter, turned out to be too expensive to use, the road to nuclear proliferation, and the creator of radioactive trash that has no place to go.

Right wing conservative/libertarians call it extreme “crony capitalism”.

Nuclear power plants are shutting down. In 2013, four reactors shut down: Crystal River 3, Kewaunee, San Onofre 2 and San Onofre 3. Now, Michael Peck, a senior federal nuclear expert, is urging that the last nuke plant left in California, Diablo Canyon, be shut down until the Nuclear Regulatory Commission’s regulators can demonstrate that the two reactors at this site can withstand shaking from three nearby earthquake faults.

Meanwhile, the human, environmental and economic disasters at Japan’s Fukushima Daiichi power plants keep metastasizing. Scientists are producing studies that show serious biological effects (genetic damage and mutation rates) of radiation on plant, insect and bird life in and around the large, cordoned off, uninhabitable area surrounding these closed down reactors. The giant politically-influential electric utility company underestimated the likelihood of a powerful earthquake and tsunami.

In the early 1970s, the industry and its governmental patrons were expecting 1,000 nuclear plants – 100 of them along the California coast – to be operating by the year 2000. Instead, a little more than a hundred were built nationwide. In reality, as of 2014, there are only 100 operable reactors, many of which are aging.

The pitfalls are real and numerous. In addition to growing public opposition, and lower-priced natural gas attracting electric utilities, there are the ever-present, sky-rocketing costs and delays of construction, repair and the question of where to store nuclear waste. These costs are what make Wall Street financiers turn their backs on nuclear power unless the industry can ram more tens of billions of dollars in government/taxpayer loan guarantees through Congress.

And what is all this nuclear technology, from the uranium mines to the nuclear plants to the still absent waste storage dumps for? To boil water!

These are the tragic follies when the corporate masters and their political minions, who are ready and willing to guarantee taxpayer funding, have no “skin in the game”. This kind of staggering power without responsibility is indeed radioactive.

See Union of Concerned Scientists {1}, Nuclear Information and Resource Service {2} and Greenpeace {3} for more information.

Links:

{1} http://www.ucsusa.org/

{2} http://www.nirs.org/

{3} http://www.greenpeace.org/usa/en/

https://blog.nader.org/2014/09/05/nuclear-powers-insanities-taxpayer-guaranteed/

Categories: Uncategorized

Losing Credibility

The IMF’s New Cold War Loan to Ukraine

by Michael Hudson

CounterPunch (September 09 2014)

In April 2014, fresh from riots in Maidan Square and the February 22 coup, and less than a month before the May 2 massacre in Odessa, the IMF approved a $17 billion loan program to Ukraine’s junta. Normal IMF practice is to lend only up to twice a country’s quote in one year. This was eight times as high.

Four months later, on August 29, just as Kiev began losing its attempt at ethnic cleansing against the eastern Donbas region, the IMF signed off on the first loan ever to a side engaged in a civil war, not to mention rife with insider capital flight and a collapsing balance of payments. Based on fictitiously trouble-free projections of the ability to pay, the loan supported Ukraine’s hernia currency long enough to enable the oligarchs’ banks to move their money quickly into Western hard-currency accounts before the hernia plunged further and was worth even fewer euros and dollars.

This loan demonstrates the degree to which the IMF is an arm of US Cold War politics. Kiev used the loan for military expenses to attack the Eastern provinces, and the loan terms imposed the usual budget austerity, as if this would stabilize the country’s finances. Almost nothing will be received from the war-torn East, where basic infrastructure has been destroyed for power generation, water, hospitals and the civilian housing areas that bore the brunt of the attack. Nearly a million civilians are reported to have fled to Russia. Yet the IMF release announced: “The IMF praised the government’s commitment to economic reforms despite the ongoing conflict”. {1} A quarter of Ukraine’s exports normally are from eastern provinces, and are sold mainly to Russia. But Kiev has been bombing Donbas industry and left its coal mines without electricity.

This loan is bound to create even more dissension among IMF staff economists than broke out openly over the disastrous $47 billion loan to Greece –  at that time the largest loan in IMF history –  prompted a fifty-page internal document leaked to the Wall Street Journal acknowledging that the IMF had “badly underestimated the damage that its prescriptions of austerity would do to Greece’s economy”. Staff economists blamed pressure from eurozone countries protecting their own “banks [that] held too much Greek government debt … The IMF had originally projected Greece would lose 5.5% of its economic output between 2009 and 2012. The country has lost seventeen percent in real gross domestic output instead. The plan predicted a fifteen percent unemployment rate in 2012. It was 25%. {2}

The IMF’s Articles of Agreement forbid it to make loans to countries that clearly cannot pay, prompting its economists to complain at last year’s October 2013 annual meeting in Washington that their institution was violating its rules by making bad loans “to states unable to repay their debts”. In practice, the IMF simply advances however much a government needs to bail out its bankers and bondholders, pretending that more austerity enhances the ability to pay, not worsen it. Ukraine looks like a replay of the Greek situation with an exclamation mark! One official last year called its Debt Sustainability Analysis,

“a joke”, a [European] commission official described it “a fairy tale to put children to sleep” and a Greek finance ministry official said it was “scientifically ridiculous”. {3}

John Helmer’s Dances with Bears calculates that “of the $3.2 billion disbursed to the Ukrainian treasury by the IMF at the start of May, $3.1 billion had disappeared offshore by the middle of August”. {4} This raises the question of whether the IMF’s loan is legally an “odious debt”, being made to a military junta and stolen by government insiders. The IMF acknowledged that the central bank was simply turning money over to the kleptocrats who run the country’s banks as part of their conglomerates (as well as funding the government’s military attack on the East, largely on behalf of the leading kleptocrats behind the Maidan coup). “The proportion of government securities and loans to banks increased from 28 percent of National Bank of Ukraine total assets at the end of 2010 to 56 percent at the end of April 2014″. The financial situation is getting so much worse that to stave off insolvency, Ukraine’s leading banks are reported to need another $5 billion over and above the IMF’s $17 billion commitment.

In preparation for October’s scheduled elections, the eastern provinces are in no condition to vote, and the junta has banned the Communist party as well as TV and media reporting that it does not like (mainly in the Russian language). The leading pro-war parties are polling very low even in the West (as of early September), prompting warnings of a coup by the Right Sector and allied neo-Nazi Ukrainian nationalists, headed by the oligarch Igor Kolomoyskyy, who fields his own private army.

A defeat in war frequently leads to regime change. The spectre of a coup is once again roaming the streets and squares of Kyiv. Surviving National Guard fighters are threatening to turn their weapons on Poroshenko. A third Maydan [Independence Square protest movement] is taking shape, which is to sweep aside the present regime. The instigators of this Maydan are militants from the punitive battalions created with Kolomoyskyy’s money. It is obvious that the oligarch is playing his game against Poroshenko. Subordinate to him Kolomoyskyy has quite a strong private army capable of carrying out a coup. {5}

IMF and US-backed privatization plans for Ukraine

Ukraine’s main problem is that its debt is denominated in dollars and euros. There seems only one way for Ukraine to raise the foreign exchange to repay the IMF: by selling its natural resources, headed by gas rights and agricultural land. Here the shadowy figure of Kolomoyskyy resurfaces, with support from the United States. Recent Senate Bill 2277 “directs the US Agency for International Development to guarantee loans for every phase of the development of oil and gas” in Ukraine, Moldova and Georgia.

Vice President Joe Biden’s son, R Hunter Biden, recently was appointed to the board of Burisma, a Ukrainian oil and gas company registered in Cyprus, long a favorite for post-Soviet operators. The firm has enough influence over Kiev politics to make prospective gas-fracking lands a military objective. “Ukrainian troopers help installing shale gas production equipment near the east Ukrainian town of Slavyansk, which they bombed and shelled for the three preceding months, the Novorossiya news agency reports on its website citing local residents. Civilians protected by Ukrainian army are getting ready to install drilling rigs. More equipment is being brought in, they said, adding that the military are encircling the future extraction area.” {6}

One report notes the extent to which “pro-Russian” means opposing a gas grab:

The people of Slavyansk, which is located in the heart of the Yzovka shale gas field, staged numerous protest actions in the past against its development. They even wanted to call in a referendum on that subject …  Countries like the Czech Republic, the Netherlands and France have given up plans to develop shale gas deposits in their territories. Not only them but also all-important Germany, which two weeks ago announced it would halt shale-gas drilling for the next seven years over groundwater pollution concerns. {7}

US and IMF backing seems intended to help reduce European dependence on Russian gas so as to squeeze its balance of payments. The idea is that lower gas revenues will squeeze Russia’s ability to maneuver in today’s New Cold War. But this strategy involves a potentially embarrassing US alliance with Kolomoyskyy, reportedly the major owner of Burisma via his Privat Bank. He “was appointed by the coup regime to be governor of Dnipropetrovsk Oblast, a south-central province of Ukraine. Kolomoysky also has been associated with the financing of brutal paramilitary forces killing ethnic Russians in eastern Ukraine.” {8} The term “ethnic Russian” is a kakaism for local protest against fracking by kleptocrats privatizing the economy’s natural resource wealth.

It will be expensive to restore power and water facilities that have been destroyed by the Kiev forces in Donetsk, which faces a cold dark winter. Kiev has stopped paying pensions and other revenue to the Eastern Ukraine, all but guaranteeing its separatism. Even before the Maidan events the local population sought to prevent gas fracking, just as Germany and other European countries have opposed it.

Also opposed is the appropriation of land and other properties by Ukrainian kleptocrats and especially foreigners such as Monsanto, which has invested in genetically engineered grain projects in Ukraine, seeing the country as Europe’s Achilles Heel when it comes to resisting GMOs. A recent report by the Oakland Institute, Walking on the West Side: the World Bank and the IMF in the Ukraine Conflict, describes IMF-World Bank pressure to deregulate Ukrainian agricultural land use and promote its sale to US and other foreign investors. The World Bank’s Investment Finance Corporation (IFC) has “advised the country to ‘delete provisions regarding mandatory certification of food in the listed laws of Ukraine and Government Decree’ “, and “to avoid ‘unnecessary cost for businesses'” by regulations on pesticides, additives and so forth. {9}

Yet neither Russia nor many European countries accept genetically engineered foods. It would seem that the only way Ukraine can export GMO crops is if US diplomats pressure Europe to drop its GMO labeling. This would drive yet another wedge between the United States and European NATO members, much as US pressure to impose sanctions on Russia (“Let’s you and him fight”) has done.

US stratagems to save Ukraine from having to pay its debts to Russia

The “inner contradiction” in the IMF loan is that Ukraine owes the entire amount to Russia for gas arrears and current needs as winter nears, and also for the euro loan by Russia’s sovereign wealth fund on strictly commercial terms with cross-defaults if Ukrainian debt rises above sixty percent of GDP. The US Cold War response is to try to craft a legal argument to minimize payments to Russia out of IMF and NATO “reconstruction” lending. The Peterson Institute for International Economics has floated a proposal by former Treasury official Anna Gelpern to deprive Russia of legal means to enforce its claims on Ukraine. “A single measure can free up $3 billion for Ukraine”, she proposed. Britain’s Parliament might pass a law declaring the $3 billion bond negotiated by Russia’s sovereign wealth fund to be “foreign aid”, not a real commercial loan contract worthy of legal enforcement. “The United Kingdom can refuse to enforce English-law contracts for the money Russia lent”, thereby taking “away creditor remedies for default on this debt”. {10}

The problem with this ploy is that Russia’s sovereign wealth fund lent Ukraine euros with strict financial protection aimed at limiting the country’s overall debt to just sixty percent of its GDP. If debt rises above this level, Russia has the right to demand full immediate payment, triggering cross-default clauses in Ukraine’s foreign debt.

As recently as yearend 2013, Ukraine’s public debt amounted to just over forty percent –  a seemingly manageable $73 billion. But in view of the fact that Ukraine had only a B+ rating –  below Russian sovereign fund normal limit of requiring at least an AA rating for bond investments –  Russia acted in a prudent financial way by inserting protection clauses precisely to distinguish its investment from general purpose aid. Unlike foreign aid, Russia’s loan gives it “power to trigger a cascade of defaults under Ukraine’s other bonds and a large block of votes in any future bond restructuring. This is because all of the government’s bonds are linked among themselves. When one bond defaults, the rest can do the same.”

What the US Government classifies as foreign aid also typically takes the form of loans to be repaid, and insists on matching funds in local currency, for example, for Public Law 480 food exports. Congress insisted already during the Kennedy Administration that the US balance of payments, and specifically its farm exports, must benefit from any such “aid”. {11}

Waging civil war is expensive, and Ukraine’s currency is rupturing. The black market exchange rate already is reported to have plunged by one-third. If recognized officially (once the kleptocrats have moved their money out at IMF-supported hernia rates), this would raise the country’s debt/GDP ratio to the sixty percent threshold making the debt to Russia payable immediately.

“Governments do not normally sue one another to collect their debts in national courts”, Professor Gelpern points out. But if this should occur, the pari passu rule would prevent some debts from being annulled selectively. She therefore raises another possibility for how to prevent IMF and NATO credit from being paid to Russia for its bondholdings and gas arrears. Ukraine may claim that its debt to Russia is “odious”. This applies to situations where “an evil ruler signs contracts that burden future generations long after the ruler is deposed”. She adds that “Repudiating all debts incurred under Yanukovich would discourage lending to corrupt leaders”.

The double standard here is that instead of labeling Ukraine’s entire series of post-1991 kleptocratic governments odious, she singles out only Yanukovich, as if his predecessors and successors are not equally venal. But an even greater danger in trying to declare Ukraine’s debt “odious”: It may backfire on the United States, given its own support for military dictatorships and kleptocracies.

In contrast to IMF loans to support the kleptocrats’ banks and new Cold War asset grab from the Eastern border provinces with Russia, Ukraine’s sale of bonds to Russia’s sovereign debt fund and its contracts signed for gas purchases were negotiated by a democratically elected government, at prices that subsidized domestic industry and also household consumption. Unlike the case with Greece, there was no removal of a national leader to prevent a public referendum from taking place over whether to approve the loan or not. If the Ukrainian debt is deemed odious, what of Eurozone loans to Ireland and Greece or US loans to Argentina’s generals installed under Operation Condor? Gelpern acknowledges that Ukrainian refusal to pay the bonds by invoking the odious debt principle “is fraught with legal, political and market risks, all of which would play into Russia’s hands”.

Indeed!

This leaves the most promising solution to hurt Russia to be the above-mentioned ploy for Britain’s Parliament to pass a sanctions law invalidating “the Yanukovich bonds”. Such a sanctions law would reduce Russia’s “ability to profit from selling the debt on the market” simply by denying Russia legal rights to grab Ukrainian assets. It also would destroy London as a leading global financial center.

Gelpern concludes her paper by suggesting a universal principle: that contracts “used to advance military and political objectives … should lose their claim to court enforcement”. I love this suggestion! It certainly would open a can of worms in view of the fact that “the United Kingdom and the United States have both used military force in the past to collect debts and influence weaker countries. Is it legitimate for them to punish Russia for doing the same?” Are not the vast majority of inter-governmental debts either military or political in character?

On this logic, shouldn’t most inter-governmental debts be wiped out? Do not Gelpern’s arguments cited for not paying Russia serve even more to provide a legal basis for nullifying Ukraine’s debt to the IMF and subsequent NATO loans on terms that force it to forfeit its natural resource rights for gas and land to foreign investors?

Professor Gelpern’s legal review ostensibly seeking reasons to isolate Russia economically thus has the seemingly ironic effect of showing the legal and political difficulties in trying to achieve this. If Ukraine borrows from the IMF and/or EU, and then breaks up – with the East becoming independent – who will be obliged to pay? Certainly not the East, attacked by the military coup leaders.

So we are brought back to this month’s financial news in preparation for next month’s IMF annual meeting: Where then does the Ukrainian loan leave the IMF’s credibility?

_____

Michael Hudson’s book summarizing his economic theories, The Bubble and Beyond (2012), is available on Amazon. His latest book is Finance Capitalism and Its Discontents (2012).  He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press, 2012). He can be reached via his website, mh@michael-hudson.com

Notes:

{1} http://www.reuters.com/article/2014/08/29/us-ukraine-crisis-imf-idUSKBN0GT23Z20140829

{2} Matina Stevis, “IMF Admits Mistakes on Greece Bailout”, Wall Street Journal (June 05 2013).

{3} Matina Stevis, “IMF and Europe Part Ways Over Bailouts”, Wall Street Journal (October 12 2013).

{4} John Helmer, “Ukraine Takes Another $1.39 Billion from International Monetary Fund–$3 Billion in IMF Cash Already Sent Offshore–Insiders Suspected in Heist”, Dances with Bears, http://johnhelmer.net (September 03 2014).

{5} Marina Perevozkina and Artur Avakov, Moskovskiy Komsomolets (September 04 2014) from Johnson’s Russia List (September 06 2014 #14). They add that Putin has ordered Kolomoyskyy’s property in Crimea and Moscow to be sequestered.

{6} http://peureport.blogspot.com/2014/07/usaid-to-help-young-biden-burisma-file.html. The report adds:

Further supporting the ‘natural gas motive’ is the fact that it was Vice President Joe Biden who demanded that President Yanukovych pull back his police on February 21, a move that opened the way for the neo-Nazi militias and the US-backed coup. Then, just three months later, Ukraine’s largest private gas firm, Burisma Holdings, appointed Biden’s son, Hunter Biden, to its board of directors.

{7} http://truthstreammedia.com/bidens-son-a-director-in-shale-gas-firm-set-to-drill-in-east-ukraine/

{8} Robert Parry, “The Whys Behind the Ukraine Crisis”, Consortiumnews.com (September 03 2014)

{9} http://www.oaklandinstitute.org/press-release-world-bank-and-imf-open-ukraine-western-interests

{10} http://www.piie.com/publications/interstitial.cfm?ResearchID=2654.

{11} I provide a profuse documentation of US self-interest in The Myth of Aid (Orbis Books 1970) and Super Imperialism (1972). Gelpern accuses Russia of seeking to keep Ukraine “on a short leash”, as if this is not what the IMF and indeed most financial investors do. US/NATO anti-Russian policy is filled with such double standards, and it is reflected in IMF support for Ukraine.

http://www.counterpunch.org/2014/09/09/the-imfs-new-cold-war-loan-to-ukraine/

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