Archive for December, 2004

>The Energy Challenge 2004 – Solar

2004/12/31 7 comments

>by Murray Duffin

[Like previous articles in this series, the following article is somewhat technical. Nevertheless I decided to post it because solar energy is important in the overall discussion of the Energy Challenge. Bill Totten]

The Energy Challenge 2004 – Solar

by Murray Duffin (November 04 2004)

Solar energy is our most abundant renewable resource. An analysis of insolation in the USA southwest shows that using only the 1% of the land area considered, that has a slope of less than 1% and more than 7 kilowatt hours per square meter per day insolation, concentrated solar (CSP) can provide power of approximately thirty gigawatts electric. With effective storage (as for solar towers) this potential could provide at least three times the total productive energy of today’s economy.

Solar energy generation can be considered in three categories, solar thermal, solar photovoltaic (PV), and solar thermophotovoltaic (TPV). As TPV is still a far future technology, only the first two will be considered here. 2004 may have been the watershed year for the development of solar renewable energy, although that may not become obvious for several more years. While there has been little progress in installations in some years, technology has continued to improve, and with rising costs of coal oil and natural gas, interest in solar energy is now growing rapidly.

The new economic driver

North American production of natural gas is reported to have declined by more than 3% in 2003 versus 2002, and based on reports by the major producers in America, production in 2004 seems to have declined at least 3% in the first half, and as much as 10 to 12% in the third quarter year-on-year. Hurricane damage can account for less than 40% of third quarter decline, so it seems that decline of mature fields is accelerating. Against earlier forecasts of natural gas prices below $5 per million btu for the second half of 2004, recent cash prices have been above $7, at a time when demand is low, and storage is at record levels.

At the same time export demand for coal has caused prices to more than double, on average, for all but Powder River Basin coal; and we have seen oil prices rise 70% in a few months and are going into winter with heating oil stocks low and prices high. With possible brief respites, these trends appear irreversible.

Solar Thermal Overview

There are 2 major sets of solar thermal, (1) direct heating and cooling and (2) electricity generation.

Each can be split into flat plate and concentrating (CSP) subsets although for electricity generation CSP is the economic choice for all but small-scale applications.

– Direct heating and cooling

The mature technology is water heating for home hot water, space heating and swimming pool heating. Flat plate technology is common, inexpensive and effective and has been used successfully with gradual growth for at least fifty years. Efficiency can be in the 25 to 50% range, depending on design. More recent technology that is growing rapidly, and is the preferred choice for larger installations like hotels and public swimming pools is evacuated tube heating systems which provide much more heat per unit area, remain effective even during light overcasts, and can reach 60% conversion efficiency.

Recently compound parabolic concentrators (CPC) have begun to be industrialized, proving very effective in evacuated tube systems. The advantage of CPC is that, by concentrating sunlight it can raise liquid temperature in pressurized systems to over 300 degrees fahrenheit, enabling economic absorption chillers for cooling systems. CPC is also effective over a very wide angle of illumination, eliminating the need for a tracker in a concentrator system. The California Energy Commission retrofitted and optimized a twenty-ton conventional double effect (2E) LiBr/water absorption chiller to be solar hot water driven, and have estimated that such a system can be supplied commercially for under $4500 per ton, with a net reduction in electricity demand of 1.3 kilowatts per ton. Depending on hours per year of operation and peak electricity costs, an economic payback of 4 to 8 years can be expected.

Direct heating and cooling systems have the effect of displacing electricity, to use Amory Lovin’s term, providing “negawatts” instead of megawatts, and generally at lower cost than increased generating capacity.

– Electricity generation (CSP)

Thermal power generation is being addressed in several ways – and for different sizes of installation:

Solar dish concentrators driving Sterling engine generators.

Trough concentrators heating a liquid to gas system driving a turbine generator.

Solar towers using large reflector (heliostat) arrays to heat molten salts which, through a heat exchanger, drive steam turbines.

Solar chimneys using rising air from a large ground level greenhouse to drive turbines at the base of a kilometer-high chimney.

CSP Details

Dish/Sterling systems tend to be aimed at tens of kilowatt applications for grid connected distributed power, and reach conversion efficiencies near 30%. Cost of electricity is still high, though there is a wide range of estimates. Widespread use seems likely to be well in the future.

Trough concentrators get into the hundreds of kilowatts to tens of megawatts range, good for locally sighted factory power also at attractive efficiencies. The best-known examples are the SEGS series (now up to SEGS 9) in California. Recent projects have been commissioned in Nevada and Arizona. It has been estimated that a 100 mile square in the Nevada desert could provide about 500 gigawatts electric, roughly equal to the USA installed electric power base. Up to now such applications have limited storage ability, so they are unsuitable to 24 hour operation and dispatched power. CPC concentrators might overcome that drawback. These systems approach 14% efficiency today and are projected to get to 17% by about 2015.

Solar towers (Power Towers) are megawatt-sized for utility type supply and have the advantage of retaining heat for 24-hour operation. Solar 1 was operated near Barstow California in the 1980s as proof of concept. Solar 2, a 10 megawatt electric upgrade of Solar 1 operated from 1992 to 1999, demonstrating the feasibility of storing heat for dispatchable power and 24 hour operation. Solar Tres (17 megawatt electric) has been planned for Spain, originally to go into operation by late 2003, but now delayed to 2006, seemingly by bureaucracy. Towers in the 100 megawatt range are projected. Solar towers are about 23% efficient in conversion of incident energy to electricity, and can realize up to 70% capacity factor. Current experience indicates a space demand of ten acres per megawatt, with promise of at least a 20% reduction.

Solar chimneys are only theoretical so far, and seem to have captured most attention in Australia. They can be designed to heat water during the day to provide energy at night. Efficiency is estimated as 3%, but it seems likely that this can be at least doubled. Proposed designs have fresh air drawn into the heating area at ground level. Drawing in air near the tower top would augment generation with the sinking column of cooler air. In dry climates it should be possible to inject water vapor into intake air to further cool the descending air column. Current projected design is for 200 megawatts and requires about 23 acres per megawatt. Capital cost of $2 per peak watt is projected, but seems quite optimistic.

For utility scale electricity generation, the best choices today are trough concentrator and solar tower systems. An excellent 2003 analysis for trough concentrators (based on 2002 data and projections) considers a necessary competitive target price for electricity of $4.50 per million btu, assuming a floor fixed at that level by liquefied natural gas (LNG). We now can be sure that LNG will not be a major factor for at least a decade, and even then will set a floor above $6 per million btu. This analysis showed trough systems becoming competitive at 10 gigawatts electric installed capacity and 6 cents per kilowatt hour. It now seems more likely that 7-8 cents per kilowatt hour will be good which can be reached at 5-6 gigawatts electric installed. Another late 2003 report , using well reviewed data and analysis developed independently be Sunlab and Sargent & Lundy gives present electricity costs of 10 to 12.6 cents per kilowatt hour now, going down to 3.5 to 5.5 cents per kilowatt hour before 2020 for trough and tower systems. Growing fossil fuel shortages seem certain to accelerate progress relative to these studies.

Photovoltaic (PV)

Historically PV has been seen as much too expensive for widespread use, having been represented as “the energy of the future and always will be”. 2003 saw a novel development that should change that conclusion. All of the pieces now seem to be in place for PV to breakthrough all the barriers of demand, cost and capacity that have been holding it back, but it seems that no one in the North American PV or electric utility industries has seen all the pieces yet, let alone put them together to make a picture.

Recent natural gas demand growth is largely for electricity generation. From 1993 through 2003 nearly 300 gigawatts of electrical generating capacity was installed in the USA, about 90% of which is fired by natural gas, both to meet Clean Air Act requirements and to add flexible capability to meet peak loads. Base load demand is estimated to grow at least 1.5% per year (6 gigawatts per year), but seems to have shot up by at least 5% in 2004 versus 2003. Therefore supply fired by natural gas, intended for peaking, is being converted to base load supply, leaving a growing shortage of peaking capacity. Now declining supply of natural gas means that peaking demand growth can no longer be met by adding new capacity fired by natural gas. However peak demand coincides with peak insolation, making PV an attractive alternative.

So, we have demand, at least if the cost is not too high. Can needed costs be met, and can there be adequate supply? In Renewable Energy World, December 2002, Auliche and Schulze estimated worldwide polysilicon feedstock capacity for electronic grade silicon at 26,000 metric tons per year, with production estimated at 14,000 metric tons per year. With such a large excess capacity, polysilicon suppliers have been happy to sell electronic grade silicon for PV production at very attractive prices ($20 to 25 per kilogram), enabling PV producers to lower their prices. As Maycock noted in Solar Today, January/February 2004, PV producers have sold cells and modules at cost, enabling very rapid industry growth in 2001-2003. System quotes as low as $4 per peak watt installed have been mentioned. Total world silicon PV production in 2003 was about 0.7 peak gigawatts, having grown 32% worldwide while actually shrinking in the USA.

Auliche and Schulze estimated that about 2000 metric tons each of “off spec” and “non-prime” electronic grade silicon were supplied to the PV industry in 2000. At 17 metric tons per peak megawatt that was enough to produce 235 peak megawatts in 2000. Maycock shows 2000 production at 288 peak megawatts, which implies another 1000 metric tons from capacity dedicated specifically for PV. With perhaps 8000 metric tons excess capacity in 2000, suppliers have had no incentive to add capacity. However, production of more than 700 peak megawatts in 2003 has surely consumed the excess capacity, even if price may not yet have been attractive for the polysilicon producers. In parallel, while technology is reducing the share of off spec and non-prime silicon being produced, microelectronics demand for silicon is growing rapidly. As a result, in the last twelve months the price of polysilicon has gone from $20 to 25 per kilogram to over $30 per kilogram and is projected to go to $40 to 60 per kilogram. These price increases push bottom prices for PV installations back to the range of $6-7 per peak watt.

While there may still have been some stockpiles from prior years to work off in 2004, it is probably safe to say that PV growth will now be limited by polysilicon capacity and price. To aggravate the situation, during the 2000-2003 period, polysilicon producers experienced very low ROI, making it difficult now to attract the large increments of capital needed for conventional “Siemens process” polysilicon production capacity. Unless there are dramatic technical advances, this condition is likely to persist for several years. John Schumacher has pointed out (Solar Today, January/February 2004), that breakthroughs are needed in both polysilicon capacity capital and production costs, and in ways to get more collector surface per ton of polysilicon. Fortunately, it seems that the technology now exists to meet both needs, and the only delay factor is time to recognition and industrialization.

Schumacher has already operated a “proof of concept” facility for a new polysilicon process that has a capital cost about 40% of that for the Siemens process and projected product price of under $15 per kilogram. Existing, possibly surplus, CZ pullers can be adapted to use the output of this new process with a probable increase in throughput at lower energy input, further lowering the cost of PV wafers.

In December 2003, Origin Energy of Australia , in conjunction with the Australian National University (ANU) announced a new “sliver cell” approach to making PV cells from silicon wafers that is a classic example of “lateral thinking”. Origin claims a twelve-fold increase in collector surface per ton of silicon, and a thirty-fold potential increase in peak watts per wafer. My calculations do not confirm these claims, but taking all yield factors into account, they can probably get to more than six-fold increase in collector surface per ton, which is still a sufficient breakthrough.

In 2004 ANU delivered a paper on sliver cells in concentrator applications, showing a 21% conversion efficiency at 20 suns. The Fraunhofer Institute has also worked with very thin silicon for PV and show 24% efficiency at 60 suns. Even at 20 suns and six-fold yield per ton, polysilicon scarcity ceases to be a restraint.

In writing a National Energy Policy “primer” for the House and Senate Energy Committees in 2001 (which regrettably, but not surprisingly, they totally ignored), I estimated that we would need the output of fifty large factories for twenty years to install enough collector surface at 20 suns to produce 10 quads of PV solar energy per year. The sliver cell will enable 5 quads in twenty years with only four factories. What seemed quite impractical in 2001, now appears quite feasible.

Sliver Cell Whole System Pluses

ANU notes that the cells can readily be connected in series, reducing the need for protective diodes and eliminating the transformer from the inverter. In addition to lowering system cost, these changes would also improve conversion efficiency to alternating current significantly, thus reducing the needed collector area for a given peak watt. Taking all of these factors into account (Schumacher’s polysilicon + six-fold surface increase per metric ton + elimination of diodes and transformer + light weight deriving from thin slivers + system efficiency) it seems likely that PV could get to an installed cost of $1.50 per peak watt before 2010. (ANU has estimated $1.80 peak watt, but it’s not clear that they took all factors into account.)

In a concentrator system, when used for peaking power in conjunction with a Combined Cycle Gas Turbine (CCGT), the concentrator could also preheat water for the steam turbine stage, potentially increasing CCGT output by at least 3%, at no additional cost. If a 500 megawatt CCGT installation needed 100 megawatts for peaking, the extra 15 megawatts of thermal energy would lower the total investment per effective peak watt to about $1.30. With regulated utility type financing (cost of money 3% above inflation) the resulting peaking electricity could be provided at a cost near 13 cents per kilowatt hour. Historic PV electricity cost estimates have typically been quoted (see the Wall Street Journal Special Report September 2001) as 22 to 40 cents per kilowatt hour.

The average retail price of electricity in the USA in 2002 was 7 cents per kilowatt hour, and is surely higher now. Peak electricity price can be at least 3 times higher, making conventional PV historically uncompetitive. (In some California districts, base rates are 12 cents per kilowatt hour and conventional PV is marginally competitive for peak power now). At a base cost of 13 cents per kilowatt hour, even after markup for maintenance and overhead, PV would be attractive for peaking supply across the southern tier. This base cost leaves room for attractive profit margins for everyone. I would expect suppliers of power fired by natural gas to start pushing very hard to have these technologies industrialized as rapidly as possible.


Solar thermal energy for hot water has long been attractive, and recent developments now make it attractive for air conditioning as well. Widespread use could reduce electricity demand in the USA by at least 10%, and this degree of reduction will probably become necessary as supply of natural gas declines.

Concentrated solar (CSP) for electricity production begins to look attractive with rising cost of fossil fuels and very long permitting and construction times for nuclear. The technology is now well understood and poised for rapid development with corresponding cost reductions. We now need an intelligent National Energy Policy, with relatively modest subsidies to kick-start the needed development. We can be very confident of successful exploitation.

A major breakthrough in PV technology has now raised the potential of PV to the level of practicality. Production capacity is still a limiting factor. Lack of awareness is also a barrier. Again, an intelligent National Energy Policy is the key to further progress.

Reliance on imported fossil fuel energy, with its attendant cost, security risk and negative payments balance could realistically be overcome in less than twenty years, with a government driven “Apollo Program” for energy, focused on efficiency, conservation, renewables and nuclear. Renewable solar energy is now positioned to make its contribution.











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>A Scandal of Secrecy and Collusion

>Why have we paid GBP 93 million for a GBP 15 million bridge?

by George Monbiot

Published in the Guardian (December 28 2004)

One of the ways in which the government can avoid the freedom of information laws, which come into force at the end of this week, is to classify public business as private business. Under the act, information can be withheld from the public if its disclosure would “prejudice the commercial interests of any person”. Wherever the government has entered into partnership with a private company, it can argue that it would damage the company’s interests if it told us what it was doing. So unless there is a public inquiry, we might never discover why a bridge that should have cost no more than GBP 25 million to build has now cost GBP 93 million.

Last week the people of the island of Skye won a remarkable victory. For nine years they had been fighting for the removal of the tolls on the bridge to the mainland. The bridge, built at the behest of the Conservative government, was Britain’s first privately financed public project. Under the Private Finance Initiative, public works such as roads, bridges, schools and hospitals are built and run by private companies, then rented back to the government. Because, the government claims, private companies are more efficient than the public sector, Private Finance Initiative schemes cost less.

On the day the bridge was opened (October 16 1995), the government stopped the ferry service it ran between Skye and the mainland, thus granting the consortium that built the bridge a monopoly; there was no other means of getting on and off the island. The consortium was able to charge the islanders what are believed to be the highest tolls per mile of road in the world. They rose to GBP 5.70 each way for a one-mile crossing. (After massive public pressure, the Labour government gave the residents a discount, but only if they bought tickets in books of twenty.) After nine years of what was to have been a 27-year contract, the companies that built the bridge have reaped GBP 33 million from motorists.

This is bad enough. But before the bridge was built, the government threw in GBP 13 million of sweeteners. Desperate to make its showcase project work, it spent GBP 6 million on building the approach roads (a few hundred metres of tarmac); another GBP 3 million on hiring consultants and buying land; and a further GBP 4 million as “compensation” to the consortium for the costs of construction delays and design changes (which, if you believe the government’s claims about “risk transfer”, should have been carried by the consortium itself).

The European Investment Bank lent a further GBP 13 million to help finance the bridge. This loan breached the bank’s own investment criteria. The bank’s purpose is to fund projects that boost the livelihoods of people in the less developed parts of Europe. It is legally bound to lend money only when “funds are not available from other sources on reasonable terms” and to support only those schemes that do not “distort competition”. The tolls have damaged people’s livelihoods by discouraging tourists. Private investors, who know a good thing when they see it, were falling over themselves to buy a stake in the project. The closure of the ferry service on the day the bridge opened did not distort competition: it eliminated it.

The discount for books of twenty tickets was financed by the government, not the consortium. So to help reduce the cost of the tolls (which would not have been levied at all had the bridge been built at public expense), the government has paid a further GBP 7.6 million. Now the tolls are being removed and the contract is being bought back from the companies by the Scottish executive at a cost of GBP 27 million.

The bridge, in other words, appears to have cost the public GBP 93.6 million. If we accept the consortium’s account of how much it cost to build – GBP 25 million – we have paid for it 3.7 times. Even this could be an underestimate: independent engineers suggest that it shouldn’t have cost more than GBP 15 million.

So what was in the contract? I have no idea, and nor does anyone who was not involved in negotiating it. Though it was giving away our money, though there was no possible security argument for keeping it secret, both the Tory and Labour governments have hidden the contract behind the excuse of “commercial confidentiality”. Unless an inventive challenge can be launched, governments will continue to do so, using the loophole in the act.

The lesson of the Skye bridge fiasco is obvious. If we are not allowed to see what’s being done in our name, there’s a pretty good chance we are being ripped off.


1. Freedom of Information Act 2000. Part II, section 42.

2. For a fuller account of the Skye Bridge story, see George Monbiot, 2000. Captive State: the corporate takeover of Britain. Macmillan, London.

3. David Ross, 22nd December 2004. Tolls end on the bridge over troubled water. The Herald.

4. GBP 6 million is the figure cited in the tender document by Scottish Office Roads Directorate/JMP Consultants, 1989: A Bridge to Skye – Information for prospective tenderers (RD15) and in the Scottish Office, May 1992 report of the public inquiry into the Skye Bridge Crossing, section 8, paragraph 31. The website of the Miller Group, which built the bridge, claimed in February 1999 that the cost may have been GBP 7 million ( An earlier report by JMP Consultants (1988, Report to the Highland Council: Skye Bridge Revised Traffic and Economic Feasibility Report – RD12) suggests that the total cost of land and approach roads should have been GBP 1,640,600.

5. Skye and Kyle Against Tolls, 1997. Project Report 1; Skye and Kyle Against Tolls Press Release 16th October 1998. Eilean Ban Hand-Over: Who Got the Missing GBP 200,000?; House of Commons Committee of Public Accounts, 1998: Forty-second Report. The Skye Bridge. Minutes of Evidence, page 18.

6. European Investment Bank statute, article 18(1), cited in Skye and Kyle Against Tolls, 1997. Project Report 2.

7: Article 130 of the Treaty of Rome, cited in Skye and Kyle Against Tolls, 1997. Project Report 2.

8. The bridge ended up 70% over-financed. Skye and Kyle Against Tolls, 1997. Project Report 2.

9. David Ross, ibid.

10. A civil engineer who studied the bridge told me it should not have cost more than GBP 12 million. The Scotsman’s analysis suggests GBP 15 million.


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>Harper’s Index

>Harper’s Magazine (December 2004)

Number of terrorism trials brought before a jury since September 11, 2001 : 1

Number of terrorism convictions resulting : 2

Number of them dismissed in June due to a “pattern of mistakes” by the prosecution : 2

Revenue generated by Halliburton under CEO Dick Cheney from business deals with Iraq under Saddam Hussein : $30,000,000

Estimated revenue generated by Halliburton last year through subsidiaries in Iran : $63,506,000

Value of the Halliburton shares owned by New York City’s Fire Department Pension Fund : $3,359,095

Number of times since 2002 the city has filed a shareholders’ resolution questioning the risk of doing business in Iran : 3

Number of companies in which Tom Ridge holds stock that have a contract with the Department of Homeland Security : 7

Number of overseas bullet suppliers the Army contracted with last year and this year, respectively : 1,5

Minimum number of bullets the military purchased for use this year : 1,500,000,000

Average number of bullets per Iraqi this represents : 58

Number of major weapons systems the Pentagon has under development : 77

Ratio of the original estimate of these programs’ total cost to the estimate today : 1:2

Ratio of arms dealers’ campaign contributions made since January 2001 to Democrats to those made to Republicans : 1 :2

Number of states with a Libertarian Party presidential candidate on the ballot last month : 48

Number with a Reform, Green, and/or Socialist Workers Party candidate on the ballot, respectively : 35,28,14

Weeks the Green Party’s vice-presidential candidate spent staying in homeless shelters as part of her campaign tour : 2

Average number of clothing items an adult American acquired in 2002 : 52

Estimated average amount of textiles thrown out by each household in 2001, in pounds : 66

Percentage salary cut that Delta’s CEO announced this fall that he would take through the end of the year : 100

Percentage of 30-year-old American men who were married, self-supporting fathers in 1960 and 2000, respectively : 65,31

Number of levels of executive positions in the federal government in 1960 and this year, respectively : 17,58

Total number of federal executives in each of those years : 451,2592

Percentage of poor Americans who lived in the suburbs in 1959 and last year, respectively : 17,39

Ratio of the number of poor Americans living in cities to the number who live in suburbs : 21:20

Number of the 20 fastest-growing counties that are coastal : 17

Number of body bags a New Orleans suburb secured for this year’s hurricane season : 10,000

Estimated number of Britons sent government warnings last fall of their increased chance of having mad cow disease : 6,000

Minimum number of countries with a greater capacity to produce nuclear weapons than Iraq at the time of the invasion : 35

Ratio of spending on Iraq each week to total aid to Sudan since February 2003 : 2:1

Minimum number of tribes and ethnic groups in Sudan’s Darfur region : 80

Chances that an adult male citizen of Pitcairn Island has been arrested for a sex-related crime this year : 2 in 5

Minimum number of those arrested who are direct descendants of mutineer Fletcher Christian : 4

Estimated average price of a female newborn in a Bulgarian infant-selling ring busted this summer : $6,000

Estimated average price of a male newborn : $18,000

Average black-market price in Baghdad of a DVD showing the beheading of a foreigner or Iraqi “collaborator” : 50 cents

Price of the bottle of champagne a New York club requires patrons to buy in order to use a diamond-encrusted table : $5,000

Minutes of weightlessness that Virgin Galactic passengers will experience on suborbital space flights in 2007 : 5

“Degrees of freedom” accorded each eyebrow of an “Emotion Expression” robot under development : 4 (see page 28)

Figures cited are the latest available as of October 2004.

December Index Sources

1-3 US Department of Justice

4 Colum Lynch, Washington Post (New York City)

5 Halliburton (Houston, Texas)

6-7 Office of the Comptroller (New York City)

8 US Department of Homeland Security

9-10 Program Executive Office for Ammunition (Picatinny Arsenal, New Jersey)

11 Harper’s Research

12-13 US Department of Defense

14 PoliticalMoneyLine (Washington)

15-16 Ballot Access News (San Francisco)

17 Green Party (Washington)

18-19 Juliet Schor, Boston College (Boston)

20 Delta Air Lines (Atlanta)

21 American Sociological Association (Washington)

22-23 The Brookings Institution (Washington)

24-25 Harper’s Research

26 National Oceanic and Atmospheric Administration (Silver Spring, Maryland)

27 Times-Picayune (Jefferson Parish, Louisiana)

28 Department of Health (London)

29 International Atomic Energy Agency (Vienna)

30 Harper’s Research

31 Embassy of the Republic of Sudan (London)

32 British High Commission (Wellington, New Zealand)

33 Harper’s Research

34-35 State Police Headquarters (Pondenone, Italy)

36 Richard Beeston (Baghdad)

37 Select (New York City)

38 Virgin Group (London)

39 Waseda University (Tokyo)

“Harper’s Index” is a registered trademark.


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>The world’s first multinational

>Corporate greed, the ruination of traditional ways of life, share-price bubbles, western imperialism: all these modern complaints were made against the British East India Company in the 18th century.

by Nick Robins

New Statesman Cover Story (December 13 2004)

In The Discovery of India, the final and perhaps most profound part of his “prison trilogy”, written in 1944 from Ahmednagar Fort, Jawaharlal Nehru described the effect of the East India Company on the country he would shortly rule. “The corruption, venality, nepotism, violence and greed of money of these early generations of British rule in India”, he wrote, “is something which passes comprehension”. It was, he added, “significant that one of the Hindustani words which has become part of the English language is ‘loot'”.

For most of the succeeding sixty years, the East India Company sank from view. No plaque marked the site where its headquarters had stood in the City of London for more than two centuries. It was regarded as something that could be consigned to the history books, its deeds to be squabbled over by academics and imperial romantics. But the onset of globalisation has revived interest in a company that could be seen as a pioneering force for world trade. Exhibitions at the British Library and the V&A, plus a string of popular histories, have sought to revive the reputation of the “Honourable East India Company”. Its founders are now hailed as swashbuckling adventurers, its operations praised for pioneering the birth of modern consumerism and its glamorous executives profiled as multicultural “white moguls”.

Yet the East India Company, romantic as it may seem, has more profound and disturbing lessons to teach us. Abuse of market power; corporate greed; judicial impunity; the “irrational exuberance” of the financial markets; and the destruction of traditional economies (in what could not, at one time, be called the poor or developing world): none of these is new. The most common complaints against late 20th- and early 21st-century capitalism were all foreshadowed in the story of the East India Company more than two centuries ago.

In The Wealth of Nations (1776), Adam Smith used the East India Company as a case study to show how monopoly capitalism undermines both liberty and justice, and how the management of shareholder-controlled corporations invariably ends in “negligence, profusion and malversation”. Yet nothing of Smith’s scepticism of corporations, his criticism of their pursuit of monopoly and of their faulty system of governance, enters the speeches of today’s free-market advocates.

Smith’s vision of free trade entailed firm controls on corporate power. And, as did his own times, subsequent history shows how right he was. If it is to contribute to economic progress, the corporation’s market power has to be limited to allow real choice, and to prevent suppliers being squeezed and consumers gouged. Its political power also needs to be constrained, if it is not to rig the rules of regulation so that it enjoys unjustified public subsidy or protection. Internal and external checks and balances must curb the tendency of executives to become corporate emperors. And clear and enforceable systems of justice are necessary to hold the corporation to account for any damage to society and the environment. These are tough conditions, and have rarely been met, either in the age of the East India Company or in today’s era of globalisation.

Today, we can see the East India Company as the first “imperial corporation”, the very design of which drove it to market domination, speculative excess and the evasion of justice. Like the modern multinational, it was eager to avoid the mere interplay of supply and demand. It jealously guarded its chartered monopoly of imports from Asia. But it also wanted to control the sources of supply by breaking the power of local rulers in India and eliminating competition so that it could force down its purchase prices.

By controlling both ends of the chain, the company could buy cheap and sell dear. This meant organising coups against local rulers and placing puppets on the throne. By the middle of the 18th century, the company was deliberately breaching the terms of its commercial concessions in Bengal by trading in prohibited domestic goods and selling its duty-free passes to local merchants. Combining economic muscle with extensive bribery and the deployment of its small but effective private army, the company engineered a series of “revolutions” that gave it territorial as well as economic control.

After Robert Clive’s victory at the Battle of Palashi in 1757, the company literally looted Bengal’s treasury. It loaded the country’s gold and silver on to a fleet of more than a hundred boats and sent it downriver to Calcutta. In one stroke, Clive netted a cool GBP 2.5 million (more than GBP 200 million today) for the company, and GBP 234,000 (GBP 20 million) for himself. Historical convention views Palashi as the first step in the creation of the British empire in India. It is perhaps better understood as the company’s most successful business deal.

It was the unrivalled quality and cheapness of textiles that had lured the East India Company to Bengal, and it would be Bengal’s weavers who felt the full force of the company’s new-found market power. Never rich, the weavers nevertheless had a better standard of living than their counterparts in 18th-century England. At a time when the British state was intervening on the side of the employer – for example, to set maximum levels for wages – India’s weavers were able to act collectively, aiding their ability to negotiate favourable prices. But the East India Company eliminated the weavers’ freedom to sell to other merchants, and so crushed their limited but important market autonomy. It imposed prices forty per cent below the market rate, and enforced them with violence and imprisonment. Many weavers were driven to despair. One account reports that, among the winders of raw silk, “instances have been known of their cutting off their thumbs to prevent their being forced to wind silk”.

As the company transformed itself from a modest trading venture into a powerful corporate machine, so its systems of governance completely failed to cope with the new responsibilities that it faced. As Philip Francis, one of its leading critics, put it, instead of seeking “moderate but permanent profit”, the company had recklessly pursued “immediate and excessive returns”. Corruption assumed epidemic proportions and speculation overtook its shares, stoked up by insider trading led by Clive and other executives.

In the history of financial crises, the South Sea Bubble is often regarded as the only premodern crash worthy of note. But the East India Company also engineered its own stock-market boom, ending in a share-price slump that rocked the world. The company’s share price doubled in the decade following Palashi, stoked by ever more extraordinary acquisitions, such as the takeover of Bengal’s entire tax system in 1765. In London, the company’s management and shareholders fought for control of a money machine they believed would yield unlimited returns. A swarm of “bulls” and “bears” descended on the company’s shares, with shareholders voting for a doubling of the annual dividend from six to twelve per cent in order to cash in on the new-found wealth. This upward spiral of “infectious greed” – to use a phrase employed by Alan Greenspan, chairman of the US Federal Reserve, more than two centuries later – came to an end in May 1769 when news of renewed conflict in India reached the London markets. The share price fell sixteen per cent in a single month, and would continue a downward course for the next fifteen years, reaching the depths in July 1784 after a fall of 55 per cent.

Yet the human tragedy was just beginning. In Bengal, the annual monsoon rains had failed. But what turned a manageable natural disaster into a catastrophe was the manipulation of local grain markets by East India speculators, driving up the price of food beyond the reach of the poor. “As soon as the dryness of the season foretold the approaching dearness of rice”, went one eyewitness account, “our Gentlemen in the Company’s service were as early as possible in buying up all they could lay hold of”. The situation was compounded by the company’s decision to increase the rate of tax to ensure that revenue levels remained stable. Estimates vary, but up to ten million people may have died of starvation. When the full story became known in Britain, there was fury at the firm’s negligence. As Horace Walpole wrote at the time: “We have murdered, deposed, plundered, usurped – nay, what think you of the famine in Bengal, in which millions perished, being caused by a monopoly of provisions by the servants of the East Indies”.

The company’s fortunes had now turned sharply downwards. By the end of 1772 it was, in effect, bankrupt. A final slump in its shares precipitated a Europe-wide financial crisis, and forced the company, begging for a bailout, into the arms of the government. But not only was the East India Company the mother of the modern multinational corporation, it also stimulated one of the first movements for corporate reform.

Well-versed in the history of the Roman Republic, Britain’s elite feared that, just as the proceeds of Rome’s conquest of Asia (western Anatolia) had been used to subvert its ancient freedoms, so the company’s takeover of Bengal would bring despotism back home. If left unchecked, argued one editorial, the company could “repeat the same cruelties in this island which have disgraced humanity and deluged with native and innocent blood the plains of India”. Prior to his conservative turn during the French revolution, Edmund Burke pressed repeatedly for the company to be made accountable to parliament and for its system of exploitation to be ended. “Every rupee of profit made by an Englishman is lost for ever to India”, he concluded, a judgement that would probably be echoed today by millions of people working at the wrong end of the multinational bargain.

All the tools with which we are now familiar were deployed to tame the firm: codes of conduct for company executives, rules on shareholder abuse, government regulation, and ultimately, as with so many failed firms, nationalisation.

Government intervention over a hundred years transformed the company from a purely commercial institution to an agent of the British state. It was only in the wake of the great rebellion against company rule, which shook northern India in 1857-58, that its anachronistic position as a profit-making ruler was put to an end. Direct control of the company’s territories passed to the crown, and the British Raj was born.

Yet in spite of all the parliamentary inquiries and waves of regulation, few of the company’s executives were ever brought to book. Clive narrowly escaped parliamentary censure in 1773, only to die by his own hand. Parliament then turned its attention to Warren Hastings, governor-general of Bengal, voting twice to recall him for mismanagement. Both times this was rebuffed by the company’s shareholders and, as a last resort, and at Burke’s instigation, the medieval practice of impeachment was revived and used against him. Among the charges was that Hastings had introduced a company monopoly over the production of opium and, in an attempt to smuggle the crop into China, had awarded the contract at a knock-down price to the son of the East India Company chairman, who promptly sold it on for a tidy profit. Hastings was also the first to seek deliberately to break China’s ban on the importation of opium. His attempt failed, but would be pursued by his successors, with tragic consequences. Burke won Commons majorities in support of his case, and in February 1788, the trial of Hastings began in the Lords with Burke delivering a four-day opening speech against him.

What makes Burke’s challenge to Hastings and the East India Company so compelling are the principles on which it was based. “The laws of morality”, he declared, “are the same everywhere … there is no action which would pass for an act of extortion, of peculation, of bribery, and oppression in England, that is not an act of extortion, of peculation, of bribery, and oppression in Europe, Asia, Africa and the world over”. Against the relativism that increasingly viewed India as an inferior land in which different standards of justice should apply, Burke unfurled the standard of absolute values, protesting against “geographical morality”. In the heat of his reactions to the French revolution, Burke would oppose Tom Paine’s Rights of Man. But in the case against Hastings, Burke argued for companies to be judged by their respect for what we would understand as universal human rights. The trial was interrupted, first by George III’s madness and then by the French revolution. After eight long years, Hastings was acquitted of all charges, a result that surprised nobody, given the political complexion of the Lords.

Yet there is one instance where the company’s impunity was broken. In 1774, a group of Armenian merchants launched a civil case for damages against Hastings’s predecessor, Harry Verelst. Led by Gregore Cojamaul and Johannes Padre Rafael, the merchants alleged that Verelst had arbitrarily locked them up in Bengal six years earlier, confiscating their property and removing their freedom to trade. It is a testimony to the British legal system that in December 1774, the Lord Chief Justice decided in favour of the Armenians, judging that Verelst had been guilty of “oppression, false imprisonment and singular depredations”. Verelst had to pay GBP 9,000 in damages, as well as full costs. Thousands of miles away from the scene of the crime, the principle of extra-territorial liability for corporate malpractice was established in 1770s London.

Many in business regard the current upsurge of global litigation against corporations such as Talisman, Unocal and Shell as somehow new and unjustified. Yet Verelst’s case provides a powerful precedent, demonstrating that more than 200 years ago, a senior executive of the world’s first multinational was tried and found guilty of what we would now consider human rights abuses.

It is not, however, Cojamaul’s statue that stands outside the Foreign Office in Whitehall, but Robert Clive’s. That such a rogue still has pride of place at the heart of government suggests that Britain has not yet confronted the connections between its corporate and imperial pasts. This is not mere forgetfulness, but the mark of a continued belief that the unrestrained pursuit of market power and personal reward is to be praised at the highest levels. In India, the East India Company’s mismanagement remains part of the national consciousness; here, knowledge of the company’s corruption and abuse is almost entirely lacking. We still do not recognise the “imperial gene” that remains at the heart of modern corporate design.

Perhaps Nehru can help us. In The Discovery of India, he examined the consequences of England’s long domination of India in terms of karma, the spiritual law of cause and effect. “Entangled in its meshes”, he wrote, “we have thus struggled in vain to rid ourselves of this past inheritance and start afresh on a different basis”. Independence was a necessary starting point for India, wrote Nehru, but Britain, too, needed to “start afresh”. As we approach the 250th anniversary of Palashi, we do not need further glorification of the East India Company’s contribution to consumerism or of the celebrity of its executives. We need an honest reckoning with the human costs of its quest for market domination.

Nick Robins’s Imperial Corporation: reckoning with the East India Company will be published next year. He also takes part in The Great Debates: Hastings v Burke (Radio 4, 29 December, 8 pm)

Copyright New Statesman 1913 – 2004


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>R & D

>by Lewis H Lapham

Harper’s Magazine (December 2004)

A country without its czar is like a village without an idiot.

– Russian proverb

The documentary play “Guantanamo: Honor Bound to Defend Freedom” serves as a dispatch from the Cuban internment camps in which the American government currently holds captive several hundred presumed terrorists of Arab nationality and descent, and very early in the performance I saw last October in New York it occurred to me that I had been extended the privilege of watching a Pentagon experiment with laboratory animals. On the strength of the play’s intelligence and from what I knew of its provenance (the script based on evidence gathered by British journalists and London civil-rights lawyers), I could assume that the association of ideas was deliberate and the irony intended. The principal actors appear as “detainees” dressed in orange prison uniforms and placed on a desolate stage furnished with a few tables and chairs, four narrow bunks, and four steel cages; for the most part silent and inert, they wait to be moved, like so many numbered mice, into another maze, tent, interrogation booth, or isolation cell. When permitted to speak about the circumstances of their arrest or the terms of their confinement, they use the words given in legal pleadings, press reports, and private letters from three British citizens, law-abiding but inopportunely Muslim, who found themselves among the herd of suspects rounded up by American military authorities searching the world for allies of Osama bin Laden during the months subsequent to the overthrow of the Taliban in Afghanistan.

The play doesn’t quarrel with a civilized society’s right to defend itself – if necessary, by whatever means come most expediently to hand – against enemies both real and imagined; neither does it doubt the possibility that at least some of the suspects brought to Guantanamo Bay provided information forestalling the destruction of a bridge in Maryland or the poisoning of a reservoir in Oklahoma. The play doesn’t address the realpolitik of the war on terror; it considers the moral consequences – not the grand strategy of what President Bush defines as the “monumental struggle of good versus evil” but the brutalization of the participants on both sides of the interrogation, both ends of the rope. The actors speak as detainees who happen to be innocent – not surprisingly, because, as was made clear with the publication of The 9/11 Commission Report, our American intelligence agencies find it hard to distinguish one Muslim from another, to tell the difference between a jihadist mullah, an Iraqi politician, an Afghan warlord, and a Syrian bicycle thief. Among the inmates held at Guantanamo Bay for nearly three years, only four have been formally charged with a crime, apparently no more than twelve or maybe twenty guilty of some sort of a connection to Al Qaeda. The Supreme Court last June granted the detainees the right to inquire about the reasons for their imprisonment, but the questions of procedure have yet to be resolved. In what legal jurisdiction do the hearings take place, with or without advice of counsel, under whose rules of engagement? The shuffling and reshuffling of paper could continue for another three years; in the meantime the voices on the stage try to account for their presence in a void.

Their joint and corroborating testimony gathers its force from the gradual accumulation of small and wretched fact. No grandiloquent statements about man’s inhumanity to man, no artful turns of phrase or plot, little else except plain narrative and the bearing of collective witness – one man arrested for no discernible cause while making, a religious pilgrimage to Pakistan, another man shipped across the Atlantic Ocean in a freight container with the cargo of his dead and dying companions. Slowly and against its will, the audience comes to learn what sort of prison it is that America, “honor bound to defend freedom”, has created in the image of its own fear on a distant Caribbean shore: a system of justice operating outside the bounds of national or international law, similar in its charter to one of the Enron Corporation’s special-purpose entities, accountable to no authority other than the word of the American president and the whim of the American military command, which acts as warden, prosecutor, defense counsel, jury, judge, and, if deemed appropriate, executioner.

Classified as enemy combatants and therefore ineligible for the rights accorded prisoners of war, denied access to a lawyer or a writ of habeas corpus, the detainees fall into the category of a subhuman species available to experiment – kept in cages; exposed to deafening noise, unmuzzled dogs, extreme temperatures of heat and cold; stripped naked and searched for contraband in their teeth and anal cavities; deprived of food, medicine, water, and sleep; seldom allowed to stand or move unless shackled with the weight of chains.

First staged in London at about the same time that the photographs from Baghdad’s Abu Ghraib prison were making the rounds of the print and broadcast media, the play attracted a good deal of notice in the periodical press, and before seeing the off-Broadway production I was well enough acquainted with the Bush Administration’s approach to suspected terrorists – in Afghanistan and Iraq as well as at Camps X-Ray, Romeo, and Delta, praised by Secretary of Defense Donald Rumsfeld as safe, healthy, and humane environments in “beautiful, sunny” Cuba – to know that the dramatization was faithful to the facts. What I didn’t expect was the shift in perspective introduced by the notion of a Pentagon research project, and on leaving the theater I found myself wondering about the purpose of the experiments. What was it that our inspectors general were trying to find out, and why so many of them? Who was learning what from whom?

The large number of intelligence operatives (regular Army as well as CIA) sent to Cuba since the winter of 2002 to interrogate the same few hundred inmates suggests the need for a training facility where Christian officers and gentlemen might practice the art of extracting information from hardened infidels, improve their technique, overcome their feelings of revulsion and disgust. I can understand why it might be important to learn how to translate a scream in Arabic into a word in English, or useful to note the precise degrees of humiliation and degradation that a human being can be made to suffer without inducing insanity or attempted suicide, but how often must the experiments be repeated? Surely at some point the answers cease to be of interest. The research staff presumably looks for something other than fantastic guesses as to the whereabouts of Mullah Omar, and so I’m obliged to think that our apprentice Grand Inquisitors have more far-reaching questions in mind – not questions about the phobias of captive Muslims (how do they react to sexual insults, Big Mac cheeseburgers, and giant spiders?) but questions about the character and quality of free Americans.

If it is our intention to rule the world from the throne of military empire, how willing are the American people to tolerate or ignore, perhaps even to admire and applaud, the cruelties necessary to the maintenance of so great a glory? Is it possible to construct the moral equivalent of a toxic-waste dump in which to dispose of our sentimental squeamishness? If the government chooses to hang its prisoners by their testicles or thumbs, must the authorities in Washington anticipate objections from CBS News? From the Catholic and evangelical churches? From the Supreme Court? If so, how strong an objection, and can it be silenced with the antidote of fear? If a Marine colonel makes a mistake with an experiment involving two Syrian terrorists, a fishing boat, and a shark, will a feature editor at the Washington Post award the story seven paragraphs or one?

Different answers to the questions imply different versions of the American future, and as I considered the various possibilities in the light of the next day’s newspaper reports arriving from Israel, Afghanistan, Russia, and Iraq, I noticed that it was hard to find much deviation between the reasons given by American generals for the bombing of Iraqi civilians in Fallujah and those given by Israeli generals for bombing Palestinian civilians in the Gaza Strip; or to make a clear distinction between Vladimir Putin’s belief that too much freedom threatens the stability of the Russian state and the Bush Administration’s aversion to any and all forms of constitutional law. Given the money and effort that the United States has assigned over the last half-century to the shaping of Russian and Israeli politics, it shouldn’t come as a surprise that both countries now serve us as laboratories in which we might study various strains of anti-democratic government and cultivate socioeconomic organisms adaptable to the totalitarian climate of the new American imperium.

At present the most advanced research is being done in Iraq, much of it apparently directed toward a further and more complete understanding of the necessity for a state of perpetual war. George Orwell identified the importance of the topic in the novel 1984; Adolf Hitler conducted extensive field studies in both Eastern and Western Europe; America and the Soviet Union cooperated for forty years in a joint experiment with the waging of synthetic war, words substituted for deeds, prolonged artillery bombardment replaced with the constant threat of nuclear annihilation. The prior research need not be discounted or ignored, but in Baghdad at the moment we have access to a near limitless supply of laboratory specimens and a rare chance, literally God-given to President George W Bush, to add to our store of knowledge.

The senior managers of the Bush Administration can be counted upon to acknowledge the truth of Orwell’s dictum that “ignorance is strength”, but will the Iraqi people verify the corollary finding that “freedom is slavery”? For how many weeks or months, and with what degree of religious zeal, will a true believer in the promise of Islam persist in his or her refusal to pledge allegiance to the American flag? To accept the word of Christ? Can our own soldiers be relied upon to decimate the ranks of our enemies with the same reptilian calm that the historians ascribe to the legions of imperial Rome? How quickly, and with what modifications to its assembly lines, can a nominally free press be converted to the production of weapons-grade propaganda?

The scale of the federal program in Iraq should yield results well worth the cost of the undertaking, but it cannot answer all the questions, and in some areas of related interest we will continue to depend on the experiments being performed in Israel, Afghanistan, and Russia. The Afghans test the hypothesis that an economy sustained by drug trafficking and a social order governed by a savage interpretation of the Koran can be presented to the world in the costume of democracy. Ever since its 1967 conquest of the Palestinian territories in Gaza and the West Bank, more desperately since the rising of the second intifada in September 2000, the Israeli government has been searching for new and improved techniques guaranteed to control the pestilence of a subject population. In the process it has developed lines of anesthetic reasoning, among them the theory of preemptive strike and precautionary assassination, to protect its own citizens against the pains induced by an overly active conscience. Many of the same arguments we have adopted as palliatives for our own states of anxiety, but we have yet to learn the secret of removing from the American body politic large numbers of people deemed undesirable, dangerous, or impious. The Israelis are fortunate to find every antisocial trait of character in the same enemy, and so their experiment with a wall neatly separating the just from the unjust might not prove immediately applicable to the American circumstance. Our society is too multifaceted, infiltrated by too many people of different races, colors, creeds, and sexual orientations. The work in Israel, however, deserves serious consideration and careful study. An alarming number of our most eminent political theorists and financial advisers foresee a soon arriving end not only to American democracy but also to the country’s long-abiding economic prosperity. If their premonitions of heavy debt and chronic unemployment prove as well founded as their own offshore bank accounts, how then do our ruling and possessing classes redistribute the presence of the no longer working poor?

Some of the more impregnable gated communities in the country’s upscale suburbs already incorporate elements of medieval-fortress architecture, but they don’t come fully equipped with floodlights, razor wire, and readily available armored vehicles; fences along the Mexican border from California to Texas are, in places, adequate to their purpose but not suitable to the terrain along the Canadian border in Minnesota and Montana. It’s conceivable that we might wish to build model communities within the United States that combine the theory of the refugee camp at Khan Younis with the design of Camps X-Ray, Romeo, and Delta.

The lessons to be learned in the Russian laboratories have to do with the problems presented by a national economy fallen into the hands of thieves. During the long siege of the Cold War, Russia bankrupted itself in the attempt to compete with America’s weapons industry and thus to earn promotion to the rank of superpower and the name of hegemon. The collapse of the Berlin Wall in November 1989 put an end to Communism, and within a matter of months a new class of arriviste oligarchs, schooled by American bankers in the science of high-end swindle, privatized what remained of the national wealth. Now comes the question as to whether they can keep the rewards of their entrepreneurial enterprise. The Putin government, increasingly authoritarian in character and method, seeks to repatriate the assets lost to the private sector. The fledgling system of representative government has been canceled by a return to czarism, the news media have been brought obediently to heel, and among the richest captains of Russian industry and finance quite a few have been forced to depart for London and the French Riviera. Mikhail Khodorkovsky, proprietor of the Yukos oil monopoly and a man believed to be worth $15 billion, currently occupies a jail cell in Moscow not much bigger than the ones reserved for the guests of the United States Navy in Cuba.

His situation is not without interest to our own fellowship of corporate oligarchs. How much is it possible to steal, and to what degrees of economic degradation and humiliation can the general population be exposed, before a virulent outbreak of a revolutionary virus obliges even the most venal and accommodating of governments to suppress the disease with the vaccine of despotism? Judging by the strong bipartisan support for the bill passed last October by both the Senate (69-17) and the House of Representatives (280-141) granting American business interests $137 billion in tax breaks, the day of reckoning is not yet come. Even so, prudence is a virtue, and it’s always wise to know when the morning plane leaves for Zurich or Dubai.


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>Social Security



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>It’s now or never for Washington

2004/12/26 1 comment

>America’s real aim in Ukraine and other former Soviet republics is to seize control of vital resources before China and India can challenge US dominance.

by Mark Almond

New Statesman (December 06 2004)

Are we on the brink of a new cold war? On both sides of the Atlantic, media commentators see the crisis in Ukraine as comparable to the Berlin crises, involving the US and the Soviet Union, which kept the world on tenterhooks for decades. In this supposed drama, a resurgent Kremlin under an ex-KGB colonel is suppressing freedom at home and encroaching on ex-Soviet republics around his country’s vast rim.

This terror of shadows has a track record of success. In the 1970s and early 1980s, the ailing world of Leonid Brezhnev was portrayed as a sinister superpower with its tentacles almost around Uncle Sam’s throat. The US and the majority of western European nations combined behind a programme of arms build-up and covert sponsorship of anti-communist dissidents.

The coincidence of dates is not often noted, but the Pentagon was inaugurated on 11 September 1941, exactly sixty years before it took its first direct hit. In my view, its role was positive for many years: few would regret the fall of Hitler or the deterrence of Stalin. But America’s bloodless victory in the cold war did not lead her to rest on her laurels. As early as 1992, Pentagon insiders led by Paul Wolfowitz and sponsored by the then defence secretary, Dick Cheney (under President Bush I), had drawn up a doctrine designed to prevent any power getting the “capacity” to challenge the US in the future. Not only potential foes but friends were to be kept subordinate.

There was no peace dividend. Instead, US defence spending rose. Now the Pentagon spends more than the European Union, Russia, China and India combined. As one Pentagon friend said to me recently: “The new arms race is between the US army today and the US army which might fight it tomorrow!”

Yet, according to Washington’s friends, Russia is on the prowl, even though its military technology is ageing and Nato expansion (and with it, US bases) reaches deep inside the old Soviet Union. In reality, the Kremlin’s writ is fraying at the edges of the smaller, post-1991 Russia. Already Chechnya is in chaos and much of the north Caucasus is simmering. If Russia poses no military threat even to its neighbours, the divide of the first cold war era is dead.

And yet the culture of the new cold war is very different from that of the old. For forty years, the west’s intellectuals and media were bitterly divided over policy towards Moscow. Each side – particularly the west – had its allies on the other side. The west’s victory in 1989 was good for the market economy but bad for intellectual pluralism. Sky News came online in 1989 but the explosion of 24-hour news has been matched by an implosion of alternative views.

With the collapse of one-party states, any justification for western covert intervention in elections died. Yet the methods of the old cold war have continued and even grown in scale. Washington’s power elite see the whole world as former president Reagan saw Latin America – indeed, many Reagan administration figures are involved in current events. Cold war methods are still in use – even more so – but now against opponents who do not merit the description “totalitarian”, whatever their faults.

In the run-up to the velvet revolutions of 1989, I was a bagman carrying tens of thousands of dollars to eastern European dissidents. I have a good idea of how much money and foreign input are required to get a spontaneous “people power” revolution going. Then, however, it was the Communist Party that blocked dissent. Today, western intelligence agencies, the media and “the people” crush any dissent from the Washington consensus.

At the time of the Falklands war, Henry Kissinger said: “No great power retreats for ever”. Maybe Russia is about to disprove his thesis, because so far Russia has retreated steadily under Vladimir Putin’s rule. If Ukraine falls into the Nato orbit, Russia will lose her access to Black Sea naval bases and Russian oil and gas export routes will have to pass an American stranglehold.

Yet Russia is a bit player in this new global competition. The Pentagon is really aiming at Beijing in its grab for the old Soviet strategic space around Russia. China is booming, but energy is her Achilles heel. Economically and technologically, China’s 1.3 billion people seem poised to assume superpower status, but China cannot risk falling out with America. Only access to Russian and central Asian oil can liberate China from dependence on vulnerable sea-borne oil supplies, so the real “Great Game” is between Beijing and Washington. America’s real strategic fear is the rise of China and India. Unlike Russia, they are not beset by demographic decline.

Worse still for US planners, the Chinese and Indians may want the benefits of western consumerism but they do not share the cultural cringe of peoples of the former Soviet bloc: like Gandhi, they believe that western civilisation would be a very good idea.

In Latin America, too, Washington does not have everything its own way. It is not just that Venezuela’s Hugo Chavez saw off a Ukrainian-style “people power” push, having already trounced an old-style putsch in 2002; Brazil and Argentina are also failing to toe the Washington line. The region’s big players show signs of looking to China and south Asia for markets and investment.

If South America, south Asia and China begin to coalesce, then Washington could find itself confronted by an alternative axis not seen since before the Sino-Soviet split in the early 1960s. But, whereas Mao and Brezhnev represented economic dead ends, the new China and her potential partners have dynamism on their side. Maybe India and China are business rivals, but their old frontier disputes in the Himalayas are frozen. Latin America has nothing to fear from either superpower of the future, nor do Latin Americans nurse visceral resentments of Beijing or Delhi that are in any way comparable to their deep-dyed anti-Yankee feelings.

America’s drive to dominate the old Soviet Union represents a gamble by today’s only superpower to seize the highest-value chips on the table before China and India join the game. If China can add access to post-Soviet energy to the Chinese hand, it will be game on for a real new cold war. Many of the predictions among Washington neoconservatives about China’s growing power recall the fear among German militarists that the window of opportunity for a global role was closing by 1914. Washington’s drive to seize maximum advantage before the inevitable waning of US power recalls the Kaiser’s cry eighty years ago: “Now or never!”

Mark Almond is a lecturer in modern history at Oriel College, Oxford

Copyright New Statesman 1913 – 2004

See also “The Political Crisis in The Ukraine: Key articles and essays”, Global Research E-Monograph and Reports Series, No 2, 2004 (December 23 2004)


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