I cannot teach you violence, as I do not myself believe in it. I can only teach you not to bow your heads before any one even at the cost of your life.
Mahatma Gandhi
“What are we having this liberty for? We are having this liberty in order to reform our social system, which is full of inequality, discrimination and other things, which conflict with our fundamental rights.”
B. R. Ambedkar
I emphasise that I am full of ambition and hope and of full charm of life. But I can renounce all at the time of need, and that is the real sacrifice.
Bhagat singh
Thursday, July 31, 2008
Tuesday, July 29, 2008
Serial blasts a political conspiracy: Sushma Swaraj
Tue, Jul 29 06:35 PM
Yahoo India
New Delhi, July 29 (ANI): Senior Bharatiya Janata Party leader Sushma Swaraj has accused the Congress-led UPA Government of perpetrating the serial blasts in Bengaluru and Ahmedabad to divert attention from the cash of vote scandal. The Manmohan Singh - led UPA Government proved its majority in Parliament on July 22, days after the Left withdrew support following differences between the two on the controversial US-India civil nuclear deal.
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Also Read: Sushma alleges conspiracy
http://www.hindu.com/2008/07/29/stories/2008072960391000.htm
Yahoo India
New Delhi, July 29 (ANI): Senior Bharatiya Janata Party leader Sushma Swaraj has accused the Congress-led UPA Government of perpetrating the serial blasts in Bengaluru and Ahmedabad to divert attention from the cash of vote scandal. The Manmohan Singh - led UPA Government proved its majority in Parliament on July 22, days after the Left withdrew support following differences between the two on the controversial US-India civil nuclear deal.
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Also Read: Sushma alleges conspiracy
http://www.hindu.com/2008/07/29/stories/2008072960391000.htm
शिवराज का जूता और सुषमा की बोली
शिवराज का जूता और सुषमा की बोली
रवीश कुमार
नई दिल्ली, मंगलवार, जुलाई 29, 2008
एनडीटीवी इंडिया पर देश के गृहमंत्री शिवराज पाटिल की एक तस्वीर दिखाई गई। पाटिल अहमदाबाद के सिविल अस्पताल के बाहर अपने सफेद जूते को कहां रखें इस उधेड़बुन में नज़र आते हैं। शिवराज पाटिल की सफेद पतलून और सफेद जूते जितेंद्र मार्का स्टाइल की नकल लगते हैं। लगता है पाटिल जितेंद्र के ज़माने से आगे नहीं बढ़ पाए हैं।आध्यात्मिक दक्षता हासिल कर चुके गृह मंत्री मीडिया की नज़र में कभी योग्य नहीं माने गए। ना ही उन्होंने इस नज़र को बदलने की कोशिश की। वह आराम से जगह बनाते हुए अपने जूते संभालते कदमों को बचाते रख रहे थे। उनसे पहले सोनिया गांधी कीचड़ की परवाह किए बगैर आगे निकल जाती हैं। शिवराज पाटिल को पीछे रहना पसंद है इसलिए सोच-समझ कर कदम बढ़ाते हैं।दूसरी तरफ गृह राज्य मंत्री भी हैं। जायसवाल साहब हर संकट पर बयान देते हैं इसलिए संकट के समाधान पर मथुरा में हो रहे किसी पूजा पाठ में वेदी पर बैठ गए। गृह मंत्रालय पहले राम भरोसे था अब भगवान भरोसे है। जायसवाल तमाम तरह के आसन्न संकटों के समाधान के लिए पूजा कर रहे हैं। अगर यही समाधान है तो उन्हें रोज़ किसी न किसी पूजा में शामिल होना चाहिए। वह पूजा ही करें। गृह मंत्रायल में बाकायदा साईं बाबा से लेकर देवराहा बाबा तक की प्रतिमा लगनी चाहिए। तमाम तरह के अर्द्धसैनिक बलों का अपना अलग-अलग इष्ट देव घोषित होना चाहिए। ताकि इन देवों के सहारे उनका प्रदर्शन अच्छा हो और देश को संकटों से मुक्ति मिले।दूसरी तरफ, गुजरात में एक मंत्री हैं जयनारायण व्यास। इनका कहना है कि आतंकवादी हर वक्त एक कदम आगे सोचता है। वे कभी भी कुछ भी कर सकते हैं। भाई साहब! सरकार एक कदम पीछे क्यों रह जाती है। इसका जवाब है आपके पास। व्यास और मोदी तो कह रहे थे कि गुजरात में किसी की हिम्मत है तो धमाका कर ले। सिर्फ कहते ही रहे, लगता है आतंकवादियों को रोकने की तैयारी भूल गए। गुजरात के अख़बारों में ख़बर छप रही है कि मोदी सरकार ने खुफिया विभाग को नष्ट कर दिया। खुफिया तंत्र में मुस्लिम अफसरों की कमी है। उनका भरोसा अपने ही तंत्र पर नहीं है लेकिन मोदी की मांग में कमी नहीं आई। पोटा कानून लगाने की बात कर रहे हैं। एक आतंकवादी पकड़ा नहीं गया, कानून लेकर क्या करेंगे। इस देश में तमाम तरह के अपराधों की सख्त से सख्त सज़ा है। पोटा की कमी क्यों महसूस की जा रही है। एक पकड़ा भी था अज़हर मसूद को। उसे तो जसवंत जी छोड़ आए, बिना आडवाणी जी को बताए!इसका मतलब है कि आतंकवाद कानून से नहीं निगाह रखने से रुकेगा। जांच एजेंसी को बेहतर करने से होगा लेकिन हम इस पर 10 साल से बहस ही कर रहे हैं। न यूपीए ने, न एनडीए ने किसी ने कुछ नहीं किया। एनडीए के समय में बड़ी से बड़ी आतंकवादी घटनाएं हुईं, तब क्यों नहीं कि एक केंद्रीय एजेंसी बनाने की मांग हुई। अब क्यों हो रही है इसलिए क्योंकि राजनीति हो रही है। सुषमा स्वराज कहती हैं संसद में नोट के बदले विश्वासमत हासिल करने के मुद्दे से ध्यान से हटाने के लिए यह धमाका हुआ है। इसका क्या प्रमाण है उनके पास। क्या वह यह कह रही हैं कि यूपीए न करवा दिया तो गुजरात की पुलिस किसी यूपीए वाले को क्यों नहीं पकड़ती। तब तो घटना का राज़ खुलना आसान हो जाना चाहिए। ज़ाहिर है या तो सुषमा को अपने बोले जाने वाले बयानों को सुनना ज़्यादा अच्छा लगता है या फिर उन्हें नहीं पता कि क्या बोल रही हैं।दरअसल हमारे राजनेता हैं ही इसी के लायक। वो बोल देते हैं। एक से एक बड़ी बात और एक से एक छोटी बात। उन्हें फर्क नहीं पड़ता। वो जानते हैं कि इन सब मुद्दों से वोट नहीं मिलता। बस किसी पर लापरवाही का आरोप लगा कर खुद को ज़िम्मेदार बना दो। सुषमा स्वराज का यह बयान ऐसे समय में हुआ है जब भाजपा लोकसभा चुनावों में आतंकवाद को मुद्दा बनाने की सोच रही है। बीजेपी को पता होना चाहिए कि पोटा कानून संसद ने बनाया और संसद ने ही खत्म कर दिया। जब खत्म हुआ तो देश में कोई बाढ़ नहीं आ गई थी। उसके बाद कई चुनाव हुए लेकिन वहां कांग्रेस हारी भी तो पोटा हटाने की वजह से नहीं। ज़ाहिर है नेताओं को कुछ नहीं पता कि वे क्या कह रहे हैं क्योंकि उन्हें यही नहीं पता कि वे क्या कर रहे हैं। वरना अहमदाबाद में हुआ धमाका कोई पहला धमाका नहीं था। इससे पहले बंगलुरु, जयपुर, अजमेर, फ़ैज़ाबाद, बनारस, हैदराबाद, दिल्ली आदि तमाम जगहों पर भी धमाके हो चुके हैं। क्या ये सभी धमाके बकौल सुषमा किसी न किसी मुद्दे से ध्यान हटाने के लिए किये गए। आखिर सुषमा के इस बयान और शिवराज पाटिल के जूते में क्या फर्क है।
एनडीटीवी इंडिया
रवीश कुमार
नई दिल्ली, मंगलवार, जुलाई 29, 2008
एनडीटीवी इंडिया पर देश के गृहमंत्री शिवराज पाटिल की एक तस्वीर दिखाई गई। पाटिल अहमदाबाद के सिविल अस्पताल के बाहर अपने सफेद जूते को कहां रखें इस उधेड़बुन में नज़र आते हैं। शिवराज पाटिल की सफेद पतलून और सफेद जूते जितेंद्र मार्का स्टाइल की नकल लगते हैं। लगता है पाटिल जितेंद्र के ज़माने से आगे नहीं बढ़ पाए हैं।आध्यात्मिक दक्षता हासिल कर चुके गृह मंत्री मीडिया की नज़र में कभी योग्य नहीं माने गए। ना ही उन्होंने इस नज़र को बदलने की कोशिश की। वह आराम से जगह बनाते हुए अपने जूते संभालते कदमों को बचाते रख रहे थे। उनसे पहले सोनिया गांधी कीचड़ की परवाह किए बगैर आगे निकल जाती हैं। शिवराज पाटिल को पीछे रहना पसंद है इसलिए सोच-समझ कर कदम बढ़ाते हैं।दूसरी तरफ गृह राज्य मंत्री भी हैं। जायसवाल साहब हर संकट पर बयान देते हैं इसलिए संकट के समाधान पर मथुरा में हो रहे किसी पूजा पाठ में वेदी पर बैठ गए। गृह मंत्रालय पहले राम भरोसे था अब भगवान भरोसे है। जायसवाल तमाम तरह के आसन्न संकटों के समाधान के लिए पूजा कर रहे हैं। अगर यही समाधान है तो उन्हें रोज़ किसी न किसी पूजा में शामिल होना चाहिए। वह पूजा ही करें। गृह मंत्रायल में बाकायदा साईं बाबा से लेकर देवराहा बाबा तक की प्रतिमा लगनी चाहिए। तमाम तरह के अर्द्धसैनिक बलों का अपना अलग-अलग इष्ट देव घोषित होना चाहिए। ताकि इन देवों के सहारे उनका प्रदर्शन अच्छा हो और देश को संकटों से मुक्ति मिले।दूसरी तरफ, गुजरात में एक मंत्री हैं जयनारायण व्यास। इनका कहना है कि आतंकवादी हर वक्त एक कदम आगे सोचता है। वे कभी भी कुछ भी कर सकते हैं। भाई साहब! सरकार एक कदम पीछे क्यों रह जाती है। इसका जवाब है आपके पास। व्यास और मोदी तो कह रहे थे कि गुजरात में किसी की हिम्मत है तो धमाका कर ले। सिर्फ कहते ही रहे, लगता है आतंकवादियों को रोकने की तैयारी भूल गए। गुजरात के अख़बारों में ख़बर छप रही है कि मोदी सरकार ने खुफिया विभाग को नष्ट कर दिया। खुफिया तंत्र में मुस्लिम अफसरों की कमी है। उनका भरोसा अपने ही तंत्र पर नहीं है लेकिन मोदी की मांग में कमी नहीं आई। पोटा कानून लगाने की बात कर रहे हैं। एक आतंकवादी पकड़ा नहीं गया, कानून लेकर क्या करेंगे। इस देश में तमाम तरह के अपराधों की सख्त से सख्त सज़ा है। पोटा की कमी क्यों महसूस की जा रही है। एक पकड़ा भी था अज़हर मसूद को। उसे तो जसवंत जी छोड़ आए, बिना आडवाणी जी को बताए!इसका मतलब है कि आतंकवाद कानून से नहीं निगाह रखने से रुकेगा। जांच एजेंसी को बेहतर करने से होगा लेकिन हम इस पर 10 साल से बहस ही कर रहे हैं। न यूपीए ने, न एनडीए ने किसी ने कुछ नहीं किया। एनडीए के समय में बड़ी से बड़ी आतंकवादी घटनाएं हुईं, तब क्यों नहीं कि एक केंद्रीय एजेंसी बनाने की मांग हुई। अब क्यों हो रही है इसलिए क्योंकि राजनीति हो रही है। सुषमा स्वराज कहती हैं संसद में नोट के बदले विश्वासमत हासिल करने के मुद्दे से ध्यान से हटाने के लिए यह धमाका हुआ है। इसका क्या प्रमाण है उनके पास। क्या वह यह कह रही हैं कि यूपीए न करवा दिया तो गुजरात की पुलिस किसी यूपीए वाले को क्यों नहीं पकड़ती। तब तो घटना का राज़ खुलना आसान हो जाना चाहिए। ज़ाहिर है या तो सुषमा को अपने बोले जाने वाले बयानों को सुनना ज़्यादा अच्छा लगता है या फिर उन्हें नहीं पता कि क्या बोल रही हैं।दरअसल हमारे राजनेता हैं ही इसी के लायक। वो बोल देते हैं। एक से एक बड़ी बात और एक से एक छोटी बात। उन्हें फर्क नहीं पड़ता। वो जानते हैं कि इन सब मुद्दों से वोट नहीं मिलता। बस किसी पर लापरवाही का आरोप लगा कर खुद को ज़िम्मेदार बना दो। सुषमा स्वराज का यह बयान ऐसे समय में हुआ है जब भाजपा लोकसभा चुनावों में आतंकवाद को मुद्दा बनाने की सोच रही है। बीजेपी को पता होना चाहिए कि पोटा कानून संसद ने बनाया और संसद ने ही खत्म कर दिया। जब खत्म हुआ तो देश में कोई बाढ़ नहीं आ गई थी। उसके बाद कई चुनाव हुए लेकिन वहां कांग्रेस हारी भी तो पोटा हटाने की वजह से नहीं। ज़ाहिर है नेताओं को कुछ नहीं पता कि वे क्या कह रहे हैं क्योंकि उन्हें यही नहीं पता कि वे क्या कर रहे हैं। वरना अहमदाबाद में हुआ धमाका कोई पहला धमाका नहीं था। इससे पहले बंगलुरु, जयपुर, अजमेर, फ़ैज़ाबाद, बनारस, हैदराबाद, दिल्ली आदि तमाम जगहों पर भी धमाके हो चुके हैं। क्या ये सभी धमाके बकौल सुषमा किसी न किसी मुद्दे से ध्यान हटाने के लिए किये गए। आखिर सुषमा के इस बयान और शिवराज पाटिल के जूते में क्या फर्क है।
एनडीटीवी इंडिया
'Terror attacks timed to deflect attention from politics'
By IANS,
Mumbai :
Terror attacks are being carried out to divert people's attention from "a serious issue", like how communal riots took place in the past, a group of intellectuals from progressive, Dalit and backward class groups said here Monday.
Under an umbrella organisation called Awami Bharat, the groups emphasised that the politics of communal riots had now been replaced by the politics of terror.
They stressed that terror strikes should be analysed in a political context.
Awami Bharat national president Firoz Mithiborwala told reporters here that past analysis of communal riots indicate they almost always took place when there was a political or economic crisis.
"Communal riots were sparked off in order to deflect people's perception from a serious issue," said Mithiborwala, who is also vice president of Rashtra Samaj Paksh.
He contended that the pattern of terror attacks revealed the same. Mithiborwala said that the terror attacks in Bangalore and Ahmedabad come at a time when the country is divided over the controversial India-US nuclear deal.
"It does not require a great deal of analysis to understand and comprehend the pattern of recent attacks. It is surprising that intelligence agencies and the home ministry were caught unawares," he added.
While a series of blasts in Bangalore killed one Friday, this was followed by a series of blasts in Ahmedabad Saturday in which at least 50 people were killed and over 100 injured.
According to Mithiborwala, the terror attacks provide an escape chute for the Bharatiya Janata Party (BJP) from its own internal crisis and the Congress party from the controversial nuclear deal due to which it had to face a trust vote in parliament July 22.
Mumbai :
Terror attacks are being carried out to divert people's attention from "a serious issue", like how communal riots took place in the past, a group of intellectuals from progressive, Dalit and backward class groups said here Monday.
Under an umbrella organisation called Awami Bharat, the groups emphasised that the politics of communal riots had now been replaced by the politics of terror.
They stressed that terror strikes should be analysed in a political context.
Awami Bharat national president Firoz Mithiborwala told reporters here that past analysis of communal riots indicate they almost always took place when there was a political or economic crisis.
"Communal riots were sparked off in order to deflect people's perception from a serious issue," said Mithiborwala, who is also vice president of Rashtra Samaj Paksh.
He contended that the pattern of terror attacks revealed the same. Mithiborwala said that the terror attacks in Bangalore and Ahmedabad come at a time when the country is divided over the controversial India-US nuclear deal.
"It does not require a great deal of analysis to understand and comprehend the pattern of recent attacks. It is surprising that intelligence agencies and the home ministry were caught unawares," he added.
While a series of blasts in Bangalore killed one Friday, this was followed by a series of blasts in Ahmedabad Saturday in which at least 50 people were killed and over 100 injured.
According to Mithiborwala, the terror attacks provide an escape chute for the Bharatiya Janata Party (BJP) from its own internal crisis and the Congress party from the controversial nuclear deal due to which it had to face a trust vote in parliament July 22.
Sunday, July 27, 2008
PRESS CONFERENCE
PRESS CONFERENCE
MARATHI PATRAKAR, AZAD MAIDAN, CST,
MARATHI PATRAKAR, AZAD MAIDAN, CST,
28 JULY, MONDAY, 3-4pm
POLITICAL ANALYSIS OF THE TERROR ATTACKS IN HYDERABAD (2007) & KABUL, BANGALORE AND AHMEDABAD (2008)
IN THE POST INDO-US NUCLEAR DEAL - STRATEGIC ALLIANCE PHASE.
WHO STANDS TO GAIN ??
WHAT IS THE LARGER GAMEPLAN IN STORE FOR THE INDIAN PEOPLE AS NOW THE INDIAN RULING POLITICAL AND ECONOMIC CLASSES ARE ALLIES OF THE US IN IMPLEMENTING THEIR PLANS FOR THE WEST ASIAN AND SOUTH ASIAN REGION, WITH THE COMING WAR ON IRAN ??
THE SIMILARITIES BETWEEN THE THE MALEGAON, LUCKNOW, JAIPUR, BANGALORE AND AHMEDABAD BLASTS PROVES THAT THE PERPETRATORS ARE THE SAME.
INSPITE OF THE FACT THAT THE TERRORISTS SEEM TO BE HAVING A FREE RUN OF THE COUNTRY WITH AN ABILITY TO STRIKE ANYWHERE AND EVERYWHERE WITH NO END IN SIGHT, WHY ARE THE TARGETS ONLY SOFE TARGETS, WHICH IS CONVENIENTLY HAPPENS TO BE US THE INDIAN PEOPLE.
WHY IS IT NOT THAT NOT A SINGLE POLITICAL OR ECONOMIC LEADER OF CONSEQUENCE HAS BEEN TARGETTED EVEN THOUGH WE HEAR OF LISTS WITH THEIR NAMES BEING ISSUED ON A WEEKLY BASIS ??
WHY ARE THE PERPETRATORS RUNNING SCOTFREE?? HOWCOME OUR INTELLIGENCE SERVICES ARE SO POORLY INFORMED ?? THE ONLY WAY TO PREVENT TERROR IS THROUGH INTELLIGENCE AND ESPIONAGE OPERATIONS.
WHERE ARE THE LEADS ??
WHERE IS THE CONCRETE EVIDENCE ?? WHY IS IT THAT THE TRAIL RUNS DRY WITHIN A FEW DAYS AND THEN WE ARE ONTO THE NEXT STORY ??
WHO IS ANSWERABLE TO THE INDIAN PEOPLE WHO ARE DYING IN THEIR THOUSANDS WHILST OUR POLITICIANS OFFER CONDOLENCES ??
WE HAVE BEEN COURAGEOUS, INCISIVE AND HONEST IN PUTTING FORTH OUR ANALYSIS WHICH GOES WAY BEYOND THE SIMPLISTIC & UNI-LINEAR REPORTING ON OFFER.
WE WILL ALSO BE PUTTING FORTH OUR ANALYSIS FOR THE COMING MONTHS AND IN THE MANNER THAT EVENTS COULD UNFOLD.
WE INVITE ALL THOSE WHO ARE COMMITTED TO THE STRUGGLE AGAINST IMPERIALISM TO ATTEND THE SAME.
ALSO BELOW IS INCLUDED OUR ANALYSIS OF THE TERROR ATTACKS & THE POLITICAL CONTEXTS IN WHICH THEY OCCURRED. DO PLEASE REMEMBER THAT THE AGENDA IS NOT TO FORMENT COMMUNAL RIOTS. THAT IS PASSE. THE TECHNIQUE IS FAR MORE SOPHISTICATED. BASICALLY THE POLITICS OF TERROR HAS REPLACED THE POLITICS OF COMMUNAL RIOTS TO BOTH DIVIDE AND WEAKEN THE INDIAN PEOPLE. THE PERPETRATORS OF THE COMMUNAL RIOTS AND THE CURRENT PHASE OF TERROR ATTACKS ON THE CIVILIAN POPULATION ARE VERY SIMILAR.
Once again the common Indians have become the victims of terror attacks and we condemn the apathy as well as complicity of the Indian state from protecting the masses. Our organizations are committed to exposing the politics of terror and in our analysis, the weapon of terrorism has replaced the 'politics of communal riots' in dividing, weakening and communalising the masses.
Its very effective, more easier to organize and moreover no commission of inquiry will ever look into the matter. Thus the risks to the ruling elite are immense whilst the risks are minimal.
In our estimation the reprehensible serial terror attacks that occured in the streets of Jaipur today need to be analysed in the political context. They have occurred on the eve of major global demonstrations against the Zionist Apartheid State of Israel. Thus the news on the global media channels will be dominated by one more instance of "Muslim Terrorism" and far worse. The news regarding global opposition to Zionist Israel will be relegated to the inside pages. The breaking news on CNN, BBC etc will be "more Islamic terror in Jaipur....."
Interestingly the Mumbai serial train terror attacks of July 11, 2006 occured on the very same day that Israel launched its war on Lebanon. Thus this is the second glaring instance as to when a terror attack in India has proved to be very helpful to the cause of Israel in deflecting the attention of the International media.
It is basically the political timing and the beneficiaries that gives us the clues to the perpetrators of the attack.
Also consider the following terror attacks:
The terror attack on the Sankat Mochan Mandir in Varanasi (7th March 2006) occurred only 5 days after the largest demonstrations and protests against the visit of Pesident Bush to India on May 2, 2006. The level of protests by the Indian masses and the unity of the Hindu and Muslim masses that came out in their lakhs across the country was unprecedented in post-Independence India. It was for the first time that the Indian masses took to the streets, vehemently protesting against the shift in our foreign policy. It is extremely naive for anyone to believe that the attack on the Mandir was perpetrated by any Muslim organization, as it makes no political sense. The mother of the suppossed terrrorist who was killed in the subsequent encounter in Kanpur, stated that her son had been in Police custody since a year and she had no clue as to when her son was let out. The terror attack proved very useful to counter the growing unity of the Indian masses against US-Zionist imperialism.
The terror attacks in the park in Hyderabad (2007) were basically to counter the tense situation on the issue of the Indo-US Nuclear Deal, where the very longevity of the Congress led UPA government itself was at stake.
The Nanded incident where RSS-Bajrang Dal activists died whilst making bombs has been swept under the carpet by the government of Maharashtra as well as the media.
Even the fake attack on the RSS HQ in Nagpur has been dealt with in a similar manner.
Recently the attack on the RSS HQ at Teenkasi, Chennai is also a case in point. The Tamil Nadu police arrested RSS activists for enginerring the blasts.
Of course, all this news barely makes it to the channels and even if they do, they disappear in a day or two. This is in stark contrast to the coverage given in case the suspect is a Muslim. One can go on and on. The pity and the hypocricy of it all, is the duplicity and connivance of sections of the Indian State, the ruling dispensation at the Centre, the BJP-RSS and its affliates, the allies of the US-Israeli lobby, the police, our security apparatus and sections of the Corporate Media, wrongly referred to as the mainstream media. This is very similar to the situation that prevails within the USA, but it needs to be stated that we are still far away from being reduced to a dumbed down version that the US is. We are on our way there, but not if the anti-Imperialist Indian masses can help it and we know that we will finally defeat the forces that are the allies of the US-Zionist Empire.
Every terror attack only serves to:
Futher communalise the people. Hindus grow more and more wary and fear or rather detest the Muslims. It leads to further ghettoization and marginalization of the Muslim community.
The Muslim community becomes an increasingly easy target for the State, the police apparatus and the right-wing Hindutva forces.
Pushes the Indian people into the waiting arms of George Bush and Ehud Olmert, who thrive in promoting terror, wars and the Neoconservative oxmoron of "controlled chaos".
The Global War on Terror is an instrument for global US-Israeli-EU hegemony and is basically an instrument of foreign policy. "A war without borders and time against shadowy organizations with no central structure but spread in cells across the world". The world is now in a state of perpetual warfare.
The bogey of Al-Qaeda and Bin Laden is used with a dual purpose. Basically Bin Laden has been dead since December 2001 even according to the French DGSE. Al-Qaeda is nothing more than a covert US-Israeli-Saudi-Pakistani joint operation. Al Qaeda is basically the outsourcing of terror by the CIA-MOSSAD-MI6-ISI, the true axis of evil. Bin Laden is the ghost used to scare the world and his video threats pop-up at very convenient times for the Bush's and Musharraf's of the world.
More and more American people are realising that the 9/11-WTC attacks were planned, financed and executed by the US-Neoconservatives and by the Israelis. They are basically demanding an independent commission of inquiry to reopen the investigation and the Bush regime is refusing to do so. We wonder why!
The lies of the Bush junta are common knowledge, especially with the case of Iraq and now again on Iran. Why then is it that the Indian media is refusing to even begin questioning the absurdities od the 9/11-WTC attack and the entire flawed Global War on Terror which has proved to be a disaster for the world.
Our Basic demand is that the Government of India should insitute an Independent Commission of inquiry to investigate the terror attacks that are devouring the Indian people. The commission should comprise personalities of an impeccable and honest track record and we believe that we do have people with such credentials. Actually its time that the social movements take the initiative and that we ourselves constitue a People's Tribunal to investigate the terror attacks.
Our plea to the people is the following. The Indian people need to awaken to the scourge of terrorism. It has become the political and social challenge of our times. It is the new system of control of the Indian masses by the elite and we will have to stand together and fight this menace unitedly. None of the political leaders seem to be victims of the terror attacks, not even when the Indian Parliament was attacked! But we continue to die in Temples, Masjids, Churches, Gurdwaras and Buddhavihars. We continue to die in Buses, Trains and Taxis. We know that they lie, the media lies and so do our police.
We need to find the answers, but for that we need to start asking basic questions and challenge the paradigm within which our minds are forced to think or rather "not think".
We the members of the Awami Bharat and the Dalit-OBC Intellectual Forum have found the answers because we began to question and seek the truth independently of the politicians, the police and the media. All of the Indian people need to do the same.
This is in solidarity with all the ordinary Indian people who have been victims of communal riots and terror attacks.
Feroze Mithiborwala / Kishore Jagtap / Shraddha Shendge / Amol S B / Varsha V V / Chetna Birje / Mulaniwasi Mala / Jagdish Nagarkar
Thursday, July 24, 2008
'Sarva Shiksha Abhiyan' : A Burden Of Another Billion Dollars!!
'Sarva Shiksha Abhiyan' : A Burden Of Another Billion Dollars!!
To read full Article click above
By Pardeep
Receiving green signal form World Bank for the next installment of 600 million USD, Indian political leaders might have started celebrating!! Why don't they celebrate? They have reason to celebrate, this Sarva Shiksha Abhiyan movement has made many millionaires & if not this 600 million USD will make them!! This "Education for All Children" movement has proved "Money for All Politicians" nothing else
To read full Article click above
By Pardeep
Receiving green signal form World Bank for the next installment of 600 million USD, Indian political leaders might have started celebrating!! Why don't they celebrate? They have reason to celebrate, this Sarva Shiksha Abhiyan movement has made many millionaires & if not this 600 million USD will make them!! This "Education for All Children" movement has proved "Money for All Politicians" nothing else
INDIA US NUCLEAR DEAL – LESS ENERGY, MORE HYPE
Dear All,
This well-drafted document addresses most if not all of the issues raised by the Indo-US Nuclear Deal. As part of our struggle against the deal and resistance to Imperialism our request and appeal is to disseminate this article as widely as possible.
Warm regards
Feroze M, Kishore Jagtap
INDIA US NUCLEAR DEAL – LESS ENERGY, MORE HYPE
Will the nuclear deal provide nuclear fuel and reactors to India?
Contrary to the impression being created, the India US Civilian Cooperation Agreement is only a waiver allowing the US to trade with India on nuclear items. Any import of uranium or reactors will have to be separately negotiated with the US or other countries. The reason that this waiver is required is because after India's Pokhran I test, the US passed a law that barred the US from nuclear commerce with countries which had exploded a nuclear device and were defined as non-nuclear weapons countries in the Non-Proliferation Treaty.
How does the Hyde Act impact India?
The Hyde Act gives India a one time waiver and can be withdrawn by the US in case India does not abide the conditions of the Hyde Act. This includes any further tests and also a number of other issues not related to nuclear matters such as India aligning its polices with the US on foreign policy, working with the US on Iran, joining the Proliferation Security Initiative (PSI) that calls for illegal search and seizure operations in high seas. The US President has to report every year to the Congress on India's "good conduct" and if the US President or the US Congress is not happy, can either terminate or suspend nuclear trade with India. The Hyde Act also makes clear that India cannot get an uninterrupted fuel supply arrangement, cannot stockpile fuel and no other country can give better terms than the US in their nuclear trade with India. The Hyde Act also demanded that while India would not get uninterrupted fuel supply guarantees, it must put its civilian reactors under perpetual IAEA safeguards.
Since the Hyde Act is only an US Law, and the actual agreement with the US is the 123 Agreement, how is India is bound by the Hyde Act?
India is not bound by the Hyde Act, but the US is. For us, the 123 Agreement is a agreement with the US for supply of fuel and equipment. The key issue is how to bind the US as a supplier. The US officials are on record that the 123 Agreement ensures that all the Hyde Act conditions are met, the Government's contrary claims notwithstanding. "..we had to make sure that everything in this U.S.-India civil nuclear agreement, the 123 Agreement, was completely consistent with the Hyde Act and well within the bounds of the Hyde Act itself."(Nicholas Burns, Under Secretary for Political Affairs Washington, DC July 27, 2007).
The US has built into the 123 Agreement that it can pull out whenever it wants: the termination clause makes clear that if either party feels consultation preceding termination will serve no purpose, they can cease further co-operation. In case the US terminates the 123 Agreement, all fuel supplies will stop and all equipment has to be returned to the US. And as per the Hyde Act, the termination clause can come into effect on a broad range of issues including India's continued links with Iran. Therefore, India can be held to ransom over fuel and spare parts for its imported reactors as it was earlier for the two reactors in Tarapur.
Since the issue is our ability to bind the US as a supplier to give guaranteed fuel supplies and spares, no Indian Act passed by Parliament -- as some are arguing -- will help.
Did not 123 Agreement and the IAEA Safeguards Agreement provide for uninterrupted fuel supplies?
The UPA and the PM had assured the country that though the Hyde Act made fuel supply conditional and barred stock piling of fuel except to meet immediate operational requirements, fuel supply assurances would be there in the 123 Agreement and also corrective measures in case of fuel failure would be addressed in the IAEA Agreement. The fuel supply assurances in the 123 Agreement have now been exposed as hollow. The IAEA was held out as the hope for corrective measures, in case fuel supply fails. It is now clear that though the IAEA Draft Safeguards Agreement has perpetual safeguards as per the Hyde Act, the so-called corrective measures are purely cosmetic. There are no corrective measures possible that include pulling Indian reactors out of safeguards once they are offered to IAEA.
Will the Deal not help in lifting sanctions on India for nuclear technology and dual use technology?
The Hyde Act and subsequently the 123 Agreement is clear that sanctions on only uranium fuel and reactors will be lifted. All other technology sanctions – fuel enrichment, fuel reprocessing, heavy water production and other dual use technologies – will remain. Dual use technologies are those that are used not only nuclear areas but also other applications such as aerospace, precision manufacturing, electronics, weather prediction, etc. Thus advanced technology for our industries, air crafts, rockets, etc., along with nuclear fuel cycle technology, will continue to be under sanctions. This is in contradiction to what the PM had assured the Indian Parliament.
The Fast breeder Reactors would be regarded as fuel enrichment or fuel reprocessing facilities and would not get access to any technology. Therefore, the mainstay of our future indigenous nuclear energy program will continue under technology sanctions.
Will importing nuclear plants solve our immediate power crisis?
There is a deliberate misinformation being created that nuclear plants will be a quick fix to our huge shortages and power cuts. Nuclear plants have to have detailed studies regarding where and how to put them up and take a long time to build. The import of reactors have to be negotiated commercially and their fuel has to be guaranteed. Typically, the entire process takes 8-10 years. So even if we finish all the steps required to complete the India US Nuclear Deal, it will take not less than 8-10 years before any electricity is produced. And this is an optimistic figure; the last plant that the US commissioned – the Watts Bar 2 Reactor – took 23 years to complete. So the belief that nuclear energy will provide an immediate solution to our power crisis is a deliberate fraud on the people.
As against this, the coal-fired plants can be built in 3 ½- 4 years – we can build coal-fired plants in about half the time it would take for nuclear plants. Gas fired plants can be put up even faster and with the new strikes of gas in the Kaveri Godaveri Basin, use of gas for producing power quickly is an attractive option.
What is the reason for the power crisis in the country?
This crisis of the power sector is the result of a systematic attempt by successive Governments to starve the sector of public funds hoping to make high-cost private power more acceptable to the people. Instead of investing in the power sector, the Government has gone in for privatisation of the power sector with higher prices of electricity. In the 7th Five Year Plan, we had put in about 21,000 MW; in each of the 8th, 9th and the 10th Plans, we have added less than what we added in the 7th Plan. The net result has been the increasing bankruptcy of State Electricity Boards and converting what was a shortage of the early 90's to a full-blown crisis today.
If we now have enough money for the power sector, we need then to think on the quickest and cheapest way to remove the current electricity shortages while keeping all our options open.
Will the India US Nuclear Deal provide energy security?
The India US Nuclear Deal is not about India's energy security. Energy security lies in using indigenous energy resources such as coal, gas, hydro, etc., and ensuring our future energy supplies from Iran and other countries in West and Central Asia. Obviously, augmenting indigenous coal production, building hydro plants, investing in oil exploration, securing gas supplies through Iran Gas Pipeline are much more important for India's energy security than buying imported reactors and importing uranium for such nuclear plants.
If we do want to build nuclear power plants, we can also build these indigenously. The original three-phase nuclear energy program was based on indigenous fuel and indigenous technology and can give us nuclear energy without making us dependent on imported uranium and imported reactors.
The Government is pushing hard for immediately importing 40,000 MW of Light Water Reactors. Such a scenario would make India completely dependent on imported uranium, which is controlled by a small international cartel. It because of this cartel that the price of uranium has gone up by five times in the last few years. The US, which controls the uranium cartel, would be therefore able to dictate its terms as it will have a stranglehold over these 40,000 MW of nuclear plants.
What are the relative costs of building nuclear plants and coal fired ones?
The nuclear plants – if we take the cost of imported reactors -- are about three times (Rs. 10-12 crore per MW) the cost of coal-fired plants (Rs. 4 crore per MW). Simply put, with the same amount of money, we can install three coal-fired plants against one nuclear plant of the same size. If we want to install 40,000 MW by 2020 with imported nuclear plants as the Government wants to do, with the same amount of money it can build 100,000 MW of coal fired plants, that too in half the time.
The French company Areva is building a new 1600 MW nuclear plant in Finland. When the estimates were made, Areva had given estimates of $ 2,000 per KW. By the time the plant was ordered, it had gone up about $ 2,800 per KW. Currently, the costs have already shot up to a mammoth $ 6.1 billion or almost $ 4,000 per KW. This is four times the cost of coal-fired plants and also more than twice that of indigenous nuclear plants built by Nuclear Power Corporation. At these costs, even solar energy using solar thermal plants would be competitive!
What are the comparative costs of electricity from nuclear and coal-fired plants? The cost of electricity from imported nuclear plants is high because of the high capital cost. Even without including de-commissioning costs, storage of spent fuel indefinitely, etc., the cost of electricity from imported nuclear plants will be more than Rs. 5.00 per unit as against about Rs. 2.00 to 2.50 from coal-fired plants. The cost of electricity is therefore at least twice that from coal fired plants.
For those who might remember the Enron case, would know that at that time, India was pushed to accept expensive private power only to help Enron. Once Enron started to produce power, its cost of Rs.5-7 per unit sank the Maharashtra State Electricity Board. If a 2,000 MW Enron plant sank the largest State Electricity Board in the country – the impact of pushing high cost 40,000 MW of nuclear energy using imported reactors, as the Government wants to do, may well be imagined.
How much can nuclear energy contribute to our energy needs?
Even if we decide to invest heavily in nuclear energy, its contribution to our total energy needs is of limited importance. India has installed capacity of 143,000 MW currently and is slated to raise this to 700,000 to 800,000 MW by 2032. Coal currently meets about 66% of our electricity generation. In this nuclear energy is only 3% of current capacity electricity generating capacity and will at best reach a figure of 8% by 2032. The primary energy source for India will remain coal, which we have in adequate quantities for the next 100 years.
Is there a nuclear renaissance in the world as the Government is claiming?
Nuclear power is not the energy of choice for most advanced countries. Nuclear renaissance is a hype created by the nuclear industry in the US, Western Europe and Japan. In all these countries, the total number of nuclear plants currently being built is only 3. This is against 20 new plants being commissioned every year in the heydays of nuclear energy in these countries.
The US itself has commissioned its last reactor in 1996 and has not licensed a new reactor now for more than 27 years. Its interest in supplying India with reactors is in order to revive its own dying nuclear equipment industry, which has yet to secure a single order in the US despite the promise of billions of dollars in subsidies from the Bush Administration.
It is in order to bail out its dying nuclear industry that the US is so keen that India sign on the Nuclear Deal. Condoleezza Rice, testifying before Senate Foreign Relations Committee (April 5, 2006), pointed out the importance of the Deal for the US, "The initiative may add as many as three to 5,000 new direct jobs in the United States and about 10,000 to 15,000 indirect jobs in the United States, as the United States is able to engage in nuclear commerce and trade with India."
Is there a serious uranium shortage in the country for which we need this Nuclear Deal?
The Department of Atomic Energy has always maintained that we have enough indigenous uranium for 10,000 MW of nuclear power for 30 years. We are not yet close to that number. The present mismatch in uranium availability for operating reactors is a consequence of poor planning, and inadequate prospecting and mining. If we focus on our know uranium deposits and prospect for new ones, there will be enough uranium for a robust indigenous nuclear power programme.
It is because of a smaller availability of indigenous uranium that the 3-phase program started under Homi Bhabha, envisaged Fast Breeder Reactors. Breeder reactors can produce 50 times more energy from the same amount of uranium. This program also planned to use thorium, which we have in abundance. India is a world leader in Fast Breeder technology and is very near to commercialising it. It is not surprising that this is precisely the time that people who have put India under nuclear sanctions for the last 30 years are now talking about making India a member of the nuclear club. A simple objective is to get India to give up its quest for independence in nuclear technology and fuel.
Will nuclear energy address the issue of global warming?
The Inter Governmental Panel on Climate Change, the most authoritative body on climate change has made clear that nuclear energy will have only a marginal impact on global warming. That is simply because its total contribution to the energy needs of the world would be relatively insignificant, even if we consider a very ambitious nuclear energy program. Therefore, the major thrust for reducing greenhouse gases would be greater energy efficiency, public transport, thrust for renewable energy sources and clean coal technologies.
Cynically, the US has been advancing the reduction of India's greenhouse gases as an argument for the India US Nuclear Deal. Nicholas Burns writes, "This agreement will deepen the strategic partnership, create new opportunities for U.S. businesses in India, enhance global energy security, and reduce India's carbon emissions" (Foreign Affairs, Nov/Dec 2007). It is strange that this argument is being advanced when India's per capita emissions are one twentieth that of the US, which has yet to accept a cap on its own greenhouse emissions. The US position is that if the world is endangered by greenhouse emissions, it is countries such as India and China that need to limit their emissions. For the US, no reduction of greenhouse gases is possible; George Bush senior expressed this quite clearly, "American lifestyles are not open to negotiations".
Will investing heavily in nuclear energy reduce our dependence on imported oil and therefore reduce the burden of rising oil price?
Oil and gas, in primary energy terms, are much more important than nuclear as they are already about 45% of our primary energy demand. Oil alone is about 35% of our primary energy demand of which more than 50% is in the transport sector – cars, buses and trucks and the rest in petrochemicals and fertilizers. Nuclear energy, in contrast is only 1.5% of our primary energy demand. Only a negligible amount of oil – less than 3% of the total oil consumption -- is used in the power plants. Nuclear energy cannot be used as a substitute for oil except for this 3%; unless the Government experts have found a new way to burn uranium directly in cars and buses!
Though nuclear energy cannot be used in transport, natural gas can -- as we can see in the large number of buses and cars that run on CNG in Delhi. It is indeed strange that the Government, faced with a huge and ever rising oil bill, should focus on the nuclear deal while ignoring the Iran Gas Pipeline project, which will partly insulate India from oil price shocks. It only makes sense if we understand that one of the objectives of the US is to de-link India from Iran through the nuclear deal. "Diversifying India's energy sector will help it to meet its ever increasing needs and more importantly, ease its reliance on hydrocarbons and unstable sources like Iran. This is good for the United States." (Condoleezza Rice, testifying before Senate Foreign Relations Committee, April 5, 2006).
About 13,000 MW of gas-fired plants are partially idling as we also have a shortage of gas in the country. If we had gone ahead with the LNG or the Iran Pipeline project, we could have removed some of the electricity shortage we have in the country today.
How is the nuclear deal related to the India US Strategic ties?
The Nuclear Deal is a part of a larger vision which seeks to subordinate India to the US's strategic vision. For the last two years, the Government has been taking a number of steps that align India to the US's strategic interests. It is known that the US strategic thinking calls for dominance in all possible theatres. In Asia, the US has been handicapped that it has only one major base – Okinawa, Japan -- in East, South-east and South Asia. The only other base it has in this region is in the Indian Ocean in Diego Garcia. That is why the US's interest in making India as a junior partner in Asia.
One of the major steps was signing of the New Framework for India-US Defence Relationship in Washington on June 28, 2005, just prior to Bush Manmohan Singh Agreement of July 18, 2005. In the Agreement, it is stated, "U.S.-India defence relationship derives from a common belief in freedom, democracy, and the rule of law, and seeks to advance shared security interests". Considering that the Iraq invasion was justified by the US as "bringing democracy to West Asia", a reference to a shared belief in "democracy and rule of law" cannot be acceptable to the Indian people. The Defence Framework Agreement is also sweeping in its scope; it envisages a host of strategic and military relations -- joint exercises, joint planning, joint operations, and defence procurement. India has also joined in with the US, Japan and Australia (or what is called the trilateral nations) for naval exercises in the Bay of Bengal, as a part of this.
The Manmohan Singh Bush agreement was followed immediately by India's two votes against Iran in the International Atomic Energy Authority (IAEA). Senator Lugar in his opening remarks in the Senate Foreign Relations Committee had noted, approvingly, "We have already seen strategic benefits from our improving relationship with India. India's votes at the IAEA on the Iran issue last September and this past February demonstrate that New Delhi is able and willing to adjust its traditional foreign policies and play a constructive role on international issues." Manmohan Singh's oft-repeated claims that India's foreign policy would not change due to this Deal, is not borne out by his Governments' record, especially when the US officials are busy selling the agreement to the US Congress on the strategic value of India aligning with the US as a consequence of this agreement.
Currently, the Manmohan Singh Government is negotiating a Logistics and Service Agreement. It essentially allows refuelling and complete access to Indian facilities for all US ships and aircraft. The US navy can bomb Iraq and Iran and then come to India's ports for rest, recreation and refuelling, before going back for another round of hostilities. Step by step, from a vote against Iran, we are now to become hosts to the US navy in US-Israel military misadventures in West Asia.
Launching the TecSar spy satellite for Israel, which is being used to plan military attacks on Iran and Syria, show the depth of the strategic ties that India already has developed with Israel. India is not only Israel's biggest arm-buyer, it also buys more arms from the Israeli arms industry than the Israeli defence forces.
The Logistics and Service Agreement as well as the Defence Framework Agreement have also requirements of "interoperability". This calls for both sides to have the same equipment so that military personnel of both sides can use each other's equipment and operate better together. This also means spares can be shared by the two sides. That is why such agreements invariably lead to buying of US arms, particularly expensive aircraft and missiles. Billions of dollars of aircraft and missile sales is now in the offing – F16 Aircraft, missile systems and ships.
COMMITTEE FOR AN INDEPENDENT FOREIGN POLICY
NEW DELHI
This well-drafted document addresses most if not all of the issues raised by the Indo-US Nuclear Deal. As part of our struggle against the deal and resistance to Imperialism our request and appeal is to disseminate this article as widely as possible.
Warm regards
Feroze M, Kishore Jagtap
INDIA US NUCLEAR DEAL – LESS ENERGY, MORE HYPE
Will the nuclear deal provide nuclear fuel and reactors to India?
Contrary to the impression being created, the India US Civilian Cooperation Agreement is only a waiver allowing the US to trade with India on nuclear items. Any import of uranium or reactors will have to be separately negotiated with the US or other countries. The reason that this waiver is required is because after India's Pokhran I test, the US passed a law that barred the US from nuclear commerce with countries which had exploded a nuclear device and were defined as non-nuclear weapons countries in the Non-Proliferation Treaty.
How does the Hyde Act impact India?
The Hyde Act gives India a one time waiver and can be withdrawn by the US in case India does not abide the conditions of the Hyde Act. This includes any further tests and also a number of other issues not related to nuclear matters such as India aligning its polices with the US on foreign policy, working with the US on Iran, joining the Proliferation Security Initiative (PSI) that calls for illegal search and seizure operations in high seas. The US President has to report every year to the Congress on India's "good conduct" and if the US President or the US Congress is not happy, can either terminate or suspend nuclear trade with India. The Hyde Act also makes clear that India cannot get an uninterrupted fuel supply arrangement, cannot stockpile fuel and no other country can give better terms than the US in their nuclear trade with India. The Hyde Act also demanded that while India would not get uninterrupted fuel supply guarantees, it must put its civilian reactors under perpetual IAEA safeguards.
Since the Hyde Act is only an US Law, and the actual agreement with the US is the 123 Agreement, how is India is bound by the Hyde Act?
India is not bound by the Hyde Act, but the US is. For us, the 123 Agreement is a agreement with the US for supply of fuel and equipment. The key issue is how to bind the US as a supplier. The US officials are on record that the 123 Agreement ensures that all the Hyde Act conditions are met, the Government's contrary claims notwithstanding. "..we had to make sure that everything in this U.S.-India civil nuclear agreement, the 123 Agreement, was completely consistent with the Hyde Act and well within the bounds of the Hyde Act itself."(Nicholas Burns, Under Secretary for Political Affairs Washington, DC July 27, 2007).
The US has built into the 123 Agreement that it can pull out whenever it wants: the termination clause makes clear that if either party feels consultation preceding termination will serve no purpose, they can cease further co-operation. In case the US terminates the 123 Agreement, all fuel supplies will stop and all equipment has to be returned to the US. And as per the Hyde Act, the termination clause can come into effect on a broad range of issues including India's continued links with Iran. Therefore, India can be held to ransom over fuel and spare parts for its imported reactors as it was earlier for the two reactors in Tarapur.
Since the issue is our ability to bind the US as a supplier to give guaranteed fuel supplies and spares, no Indian Act passed by Parliament -- as some are arguing -- will help.
Did not 123 Agreement and the IAEA Safeguards Agreement provide for uninterrupted fuel supplies?
The UPA and the PM had assured the country that though the Hyde Act made fuel supply conditional and barred stock piling of fuel except to meet immediate operational requirements, fuel supply assurances would be there in the 123 Agreement and also corrective measures in case of fuel failure would be addressed in the IAEA Agreement. The fuel supply assurances in the 123 Agreement have now been exposed as hollow. The IAEA was held out as the hope for corrective measures, in case fuel supply fails. It is now clear that though the IAEA Draft Safeguards Agreement has perpetual safeguards as per the Hyde Act, the so-called corrective measures are purely cosmetic. There are no corrective measures possible that include pulling Indian reactors out of safeguards once they are offered to IAEA.
Will the Deal not help in lifting sanctions on India for nuclear technology and dual use technology?
The Hyde Act and subsequently the 123 Agreement is clear that sanctions on only uranium fuel and reactors will be lifted. All other technology sanctions – fuel enrichment, fuel reprocessing, heavy water production and other dual use technologies – will remain. Dual use technologies are those that are used not only nuclear areas but also other applications such as aerospace, precision manufacturing, electronics, weather prediction, etc. Thus advanced technology for our industries, air crafts, rockets, etc., along with nuclear fuel cycle technology, will continue to be under sanctions. This is in contradiction to what the PM had assured the Indian Parliament.
The Fast breeder Reactors would be regarded as fuel enrichment or fuel reprocessing facilities and would not get access to any technology. Therefore, the mainstay of our future indigenous nuclear energy program will continue under technology sanctions.
Will importing nuclear plants solve our immediate power crisis?
There is a deliberate misinformation being created that nuclear plants will be a quick fix to our huge shortages and power cuts. Nuclear plants have to have detailed studies regarding where and how to put them up and take a long time to build. The import of reactors have to be negotiated commercially and their fuel has to be guaranteed. Typically, the entire process takes 8-10 years. So even if we finish all the steps required to complete the India US Nuclear Deal, it will take not less than 8-10 years before any electricity is produced. And this is an optimistic figure; the last plant that the US commissioned – the Watts Bar 2 Reactor – took 23 years to complete. So the belief that nuclear energy will provide an immediate solution to our power crisis is a deliberate fraud on the people.
As against this, the coal-fired plants can be built in 3 ½- 4 years – we can build coal-fired plants in about half the time it would take for nuclear plants. Gas fired plants can be put up even faster and with the new strikes of gas in the Kaveri Godaveri Basin, use of gas for producing power quickly is an attractive option.
What is the reason for the power crisis in the country?
This crisis of the power sector is the result of a systematic attempt by successive Governments to starve the sector of public funds hoping to make high-cost private power more acceptable to the people. Instead of investing in the power sector, the Government has gone in for privatisation of the power sector with higher prices of electricity. In the 7th Five Year Plan, we had put in about 21,000 MW; in each of the 8th, 9th and the 10th Plans, we have added less than what we added in the 7th Plan. The net result has been the increasing bankruptcy of State Electricity Boards and converting what was a shortage of the early 90's to a full-blown crisis today.
If we now have enough money for the power sector, we need then to think on the quickest and cheapest way to remove the current electricity shortages while keeping all our options open.
Will the India US Nuclear Deal provide energy security?
The India US Nuclear Deal is not about India's energy security. Energy security lies in using indigenous energy resources such as coal, gas, hydro, etc., and ensuring our future energy supplies from Iran and other countries in West and Central Asia. Obviously, augmenting indigenous coal production, building hydro plants, investing in oil exploration, securing gas supplies through Iran Gas Pipeline are much more important for India's energy security than buying imported reactors and importing uranium for such nuclear plants.
If we do want to build nuclear power plants, we can also build these indigenously. The original three-phase nuclear energy program was based on indigenous fuel and indigenous technology and can give us nuclear energy without making us dependent on imported uranium and imported reactors.
The Government is pushing hard for immediately importing 40,000 MW of Light Water Reactors. Such a scenario would make India completely dependent on imported uranium, which is controlled by a small international cartel. It because of this cartel that the price of uranium has gone up by five times in the last few years. The US, which controls the uranium cartel, would be therefore able to dictate its terms as it will have a stranglehold over these 40,000 MW of nuclear plants.
What are the relative costs of building nuclear plants and coal fired ones?
The nuclear plants – if we take the cost of imported reactors -- are about three times (Rs. 10-12 crore per MW) the cost of coal-fired plants (Rs. 4 crore per MW). Simply put, with the same amount of money, we can install three coal-fired plants against one nuclear plant of the same size. If we want to install 40,000 MW by 2020 with imported nuclear plants as the Government wants to do, with the same amount of money it can build 100,000 MW of coal fired plants, that too in half the time.
The French company Areva is building a new 1600 MW nuclear plant in Finland. When the estimates were made, Areva had given estimates of $ 2,000 per KW. By the time the plant was ordered, it had gone up about $ 2,800 per KW. Currently, the costs have already shot up to a mammoth $ 6.1 billion or almost $ 4,000 per KW. This is four times the cost of coal-fired plants and also more than twice that of indigenous nuclear plants built by Nuclear Power Corporation. At these costs, even solar energy using solar thermal plants would be competitive!
What are the comparative costs of electricity from nuclear and coal-fired plants? The cost of electricity from imported nuclear plants is high because of the high capital cost. Even without including de-commissioning costs, storage of spent fuel indefinitely, etc., the cost of electricity from imported nuclear plants will be more than Rs. 5.00 per unit as against about Rs. 2.00 to 2.50 from coal-fired plants. The cost of electricity is therefore at least twice that from coal fired plants.
For those who might remember the Enron case, would know that at that time, India was pushed to accept expensive private power only to help Enron. Once Enron started to produce power, its cost of Rs.5-7 per unit sank the Maharashtra State Electricity Board. If a 2,000 MW Enron plant sank the largest State Electricity Board in the country – the impact of pushing high cost 40,000 MW of nuclear energy using imported reactors, as the Government wants to do, may well be imagined.
How much can nuclear energy contribute to our energy needs?
Even if we decide to invest heavily in nuclear energy, its contribution to our total energy needs is of limited importance. India has installed capacity of 143,000 MW currently and is slated to raise this to 700,000 to 800,000 MW by 2032. Coal currently meets about 66% of our electricity generation. In this nuclear energy is only 3% of current capacity electricity generating capacity and will at best reach a figure of 8% by 2032. The primary energy source for India will remain coal, which we have in adequate quantities for the next 100 years.
Is there a nuclear renaissance in the world as the Government is claiming?
Nuclear power is not the energy of choice for most advanced countries. Nuclear renaissance is a hype created by the nuclear industry in the US, Western Europe and Japan. In all these countries, the total number of nuclear plants currently being built is only 3. This is against 20 new plants being commissioned every year in the heydays of nuclear energy in these countries.
The US itself has commissioned its last reactor in 1996 and has not licensed a new reactor now for more than 27 years. Its interest in supplying India with reactors is in order to revive its own dying nuclear equipment industry, which has yet to secure a single order in the US despite the promise of billions of dollars in subsidies from the Bush Administration.
It is in order to bail out its dying nuclear industry that the US is so keen that India sign on the Nuclear Deal. Condoleezza Rice, testifying before Senate Foreign Relations Committee (April 5, 2006), pointed out the importance of the Deal for the US, "The initiative may add as many as three to 5,000 new direct jobs in the United States and about 10,000 to 15,000 indirect jobs in the United States, as the United States is able to engage in nuclear commerce and trade with India."
Is there a serious uranium shortage in the country for which we need this Nuclear Deal?
The Department of Atomic Energy has always maintained that we have enough indigenous uranium for 10,000 MW of nuclear power for 30 years. We are not yet close to that number. The present mismatch in uranium availability for operating reactors is a consequence of poor planning, and inadequate prospecting and mining. If we focus on our know uranium deposits and prospect for new ones, there will be enough uranium for a robust indigenous nuclear power programme.
It is because of a smaller availability of indigenous uranium that the 3-phase program started under Homi Bhabha, envisaged Fast Breeder Reactors. Breeder reactors can produce 50 times more energy from the same amount of uranium. This program also planned to use thorium, which we have in abundance. India is a world leader in Fast Breeder technology and is very near to commercialising it. It is not surprising that this is precisely the time that people who have put India under nuclear sanctions for the last 30 years are now talking about making India a member of the nuclear club. A simple objective is to get India to give up its quest for independence in nuclear technology and fuel.
Will nuclear energy address the issue of global warming?
The Inter Governmental Panel on Climate Change, the most authoritative body on climate change has made clear that nuclear energy will have only a marginal impact on global warming. That is simply because its total contribution to the energy needs of the world would be relatively insignificant, even if we consider a very ambitious nuclear energy program. Therefore, the major thrust for reducing greenhouse gases would be greater energy efficiency, public transport, thrust for renewable energy sources and clean coal technologies.
Cynically, the US has been advancing the reduction of India's greenhouse gases as an argument for the India US Nuclear Deal. Nicholas Burns writes, "This agreement will deepen the strategic partnership, create new opportunities for U.S. businesses in India, enhance global energy security, and reduce India's carbon emissions" (Foreign Affairs, Nov/Dec 2007). It is strange that this argument is being advanced when India's per capita emissions are one twentieth that of the US, which has yet to accept a cap on its own greenhouse emissions. The US position is that if the world is endangered by greenhouse emissions, it is countries such as India and China that need to limit their emissions. For the US, no reduction of greenhouse gases is possible; George Bush senior expressed this quite clearly, "American lifestyles are not open to negotiations".
Will investing heavily in nuclear energy reduce our dependence on imported oil and therefore reduce the burden of rising oil price?
Oil and gas, in primary energy terms, are much more important than nuclear as they are already about 45% of our primary energy demand. Oil alone is about 35% of our primary energy demand of which more than 50% is in the transport sector – cars, buses and trucks and the rest in petrochemicals and fertilizers. Nuclear energy, in contrast is only 1.5% of our primary energy demand. Only a negligible amount of oil – less than 3% of the total oil consumption -- is used in the power plants. Nuclear energy cannot be used as a substitute for oil except for this 3%; unless the Government experts have found a new way to burn uranium directly in cars and buses!
Though nuclear energy cannot be used in transport, natural gas can -- as we can see in the large number of buses and cars that run on CNG in Delhi. It is indeed strange that the Government, faced with a huge and ever rising oil bill, should focus on the nuclear deal while ignoring the Iran Gas Pipeline project, which will partly insulate India from oil price shocks. It only makes sense if we understand that one of the objectives of the US is to de-link India from Iran through the nuclear deal. "Diversifying India's energy sector will help it to meet its ever increasing needs and more importantly, ease its reliance on hydrocarbons and unstable sources like Iran. This is good for the United States." (Condoleezza Rice, testifying before Senate Foreign Relations Committee, April 5, 2006).
About 13,000 MW of gas-fired plants are partially idling as we also have a shortage of gas in the country. If we had gone ahead with the LNG or the Iran Pipeline project, we could have removed some of the electricity shortage we have in the country today.
How is the nuclear deal related to the India US Strategic ties?
The Nuclear Deal is a part of a larger vision which seeks to subordinate India to the US's strategic vision. For the last two years, the Government has been taking a number of steps that align India to the US's strategic interests. It is known that the US strategic thinking calls for dominance in all possible theatres. In Asia, the US has been handicapped that it has only one major base – Okinawa, Japan -- in East, South-east and South Asia. The only other base it has in this region is in the Indian Ocean in Diego Garcia. That is why the US's interest in making India as a junior partner in Asia.
One of the major steps was signing of the New Framework for India-US Defence Relationship in Washington on June 28, 2005, just prior to Bush Manmohan Singh Agreement of July 18, 2005. In the Agreement, it is stated, "U.S.-India defence relationship derives from a common belief in freedom, democracy, and the rule of law, and seeks to advance shared security interests". Considering that the Iraq invasion was justified by the US as "bringing democracy to West Asia", a reference to a shared belief in "democracy and rule of law" cannot be acceptable to the Indian people. The Defence Framework Agreement is also sweeping in its scope; it envisages a host of strategic and military relations -- joint exercises, joint planning, joint operations, and defence procurement. India has also joined in with the US, Japan and Australia (or what is called the trilateral nations) for naval exercises in the Bay of Bengal, as a part of this.
The Manmohan Singh Bush agreement was followed immediately by India's two votes against Iran in the International Atomic Energy Authority (IAEA). Senator Lugar in his opening remarks in the Senate Foreign Relations Committee had noted, approvingly, "We have already seen strategic benefits from our improving relationship with India. India's votes at the IAEA on the Iran issue last September and this past February demonstrate that New Delhi is able and willing to adjust its traditional foreign policies and play a constructive role on international issues." Manmohan Singh's oft-repeated claims that India's foreign policy would not change due to this Deal, is not borne out by his Governments' record, especially when the US officials are busy selling the agreement to the US Congress on the strategic value of India aligning with the US as a consequence of this agreement.
Currently, the Manmohan Singh Government is negotiating a Logistics and Service Agreement. It essentially allows refuelling and complete access to Indian facilities for all US ships and aircraft. The US navy can bomb Iraq and Iran and then come to India's ports for rest, recreation and refuelling, before going back for another round of hostilities. Step by step, from a vote against Iran, we are now to become hosts to the US navy in US-Israel military misadventures in West Asia.
Launching the TecSar spy satellite for Israel, which is being used to plan military attacks on Iran and Syria, show the depth of the strategic ties that India already has developed with Israel. India is not only Israel's biggest arm-buyer, it also buys more arms from the Israeli arms industry than the Israeli defence forces.
The Logistics and Service Agreement as well as the Defence Framework Agreement have also requirements of "interoperability". This calls for both sides to have the same equipment so that military personnel of both sides can use each other's equipment and operate better together. This also means spares can be shared by the two sides. That is why such agreements invariably lead to buying of US arms, particularly expensive aircraft and missiles. Billions of dollars of aircraft and missile sales is now in the offing – F16 Aircraft, missile systems and ships.
COMMITTEE FOR AN INDEPENDENT FOREIGN POLICY
NEW DELHI
Monday, July 21, 2008
Friday, July 18, 2008
STUDY CIRCLE
AWAMI BHARAT
Dear All,
As part of our struggle against the Indo - US Nuclear Deal, we are announcing the following programmes and requesting your participation for the same.
As the struggle against the Deal which is a small but essential component of the strategic alliance with the US Empire we are organizing a study circle for activists from the various movements and political parties.
Venue: Bombay Sarvodaya Mandal, next to Bhaji Galli, Nana Chowk, near Grant Road Stn (West),
Date: 19th July / Time: 6pm - 8.30pm
Public Meetings at:
1) Dahisar Railway Station (E) at 6pm in Friday July 18th.
2) Chunabhatti-Kurla-Nagoba Mandir at 7pm, Saturday, July 19th
Both of the above will be organzied by the Rashtriya Samaj Paksh
3) Demonstration at Azad Maidan, July 19th saturday, 3-5pm to be organized by Dalit-OBC organizations
In Solidarity against Imperialism
Feroze Mithiborwala, Kishore Jagtap, Amol Madame, Varsha V V, Mulaniwasi Mala, Jagdish Nagarkar, Arif Kapadia,
Monday, July 14, 2008
Jews And Christians Unite Against The Empire OfNeo-Cons And 'Christian' Zionists
Jews And Christians Unite Against The Empire OfNeo-Cons And 'Christian' Zionists
By Eileen Fleming
The following words of wisdom by united Christians and Jews who are confronting the empire of neo-cons and 'Christian' Zionists are not just praying for the peace of Jerusalem, they are doing something to help achieve it
By Eileen Fleming
The following words of wisdom by united Christians and Jews who are confronting the empire of neo-cons and 'Christian' Zionists are not just praying for the peace of Jerusalem, they are doing something to help achieve it
India Caught In The Taliban Myth
India Caught In The Taliban Myth
By M K Bhadrakumar
The horrendous terrorist attack on the Indian Embassy in Kabul on Monday has no precedents. Never has the mission there been attacked in this fashion - not even during the darkest periods of the civil war in the 1980s and 1990. Nor has any other diplomatic mission in Kabul been so targeted in the current phase of the civil war that began with the United States invasion in 2001. Unsurprisingly, Indian opinion makers have been swift in depicting the terrorist act as a moral evil, which it probably is. All the same, it is necessary to draw a line while presenting what happened as a kind of morality play of good versus evil
click to read full article: India Caught In The Taliban Myth
By M K Bhadrakumar
The horrendous terrorist attack on the Indian Embassy in Kabul on Monday has no precedents. Never has the mission there been attacked in this fashion - not even during the darkest periods of the civil war in the 1980s and 1990. Nor has any other diplomatic mission in Kabul been so targeted in the current phase of the civil war that began with the United States invasion in 2001. Unsurprisingly, Indian opinion makers have been swift in depicting the terrorist act as a moral evil, which it probably is. All the same, it is necessary to draw a line while presenting what happened as a kind of morality play of good versus evil
click to read full article: India Caught In The Taliban Myth
Friday, July 11, 2008
The Left parties have issued the following statement:
July 11, 2008
Press Statement
The Left parties have issued the following statement:
On The IAEA Safeguards Agreement
Why the Text was Hidden till Submission to the IAEA?
The Left Parties had opposed the operationalisation of the Indo-US Nuclear Deal after the passage of the Hyde Act. After the 123 agreement was finalised, it was pointed out that the agreement was in conformity with the Hyde Act. The Left Parties had then asked the UPA Government not to take further steps to operationalise the nuclear deal.
In the UPA-Left Committee, the UPA claimed that they should be allowed to proceed with the IAEA Safeguards Agreement, which would incorporate uninterrupted fuel supplies and various corrective measures, which the Government had failed to secure in the 123 agreement. The Left Parties were skeptical about these issues being resolved in the IAEA. The UPA refused to show the negotiated text for the last four months.
The text of the Safeguards Agreement has now become public. It is clear that the text was hidden from the Left Parties and the Indian people in order to suppress the fact that India is about to bind its entire civilian nuclear energy programme into IAEA safeguards in perpetuity without getting concrete assurances for uninterrupted fuel supply, right to build strategic reserves and right to take corrective steps in case fuel supplies are stopped.
IAEA Safeguards in Perpetuity without Concrete Fuel Supply Assurance
The text of the draft "Agreement Between the Government of India and the International Atomic Energy Agency for the Application of Safeguards to Civilian Nuclear Facilities"; the so-called 'India-specific Safeguards' agreement sent to the IAEA Board of Governors on July 9, 2008, makes it clear that the repeated assurances made by the UPA Government in Parliament and outside, on securing uninterrupted fuel supply assurances and strategic fuel reserves have not been fulfilled. There are no concrete corrective measures in the main enforceable body of the Agreement, only a vague mention of "corrective measures" in the preamble.
Under the Hyde Act, IAEA safeguards are to be imposed on India's civilian nuclear facilities in perpetuity. The UPA government had repeatedly claimed that India would put its civilian reactors under safeguards under the strictly reciprocal condition of assured fuel supply. If fuel supply was disrupted, as happened in Tarapur, India would have the right to take corrective measures, including taking reactors out of IAEA safeguards.
The key question therefore with respect to IAEA safeguards is: how to ensure that once India's civilian reactors go under safeguards in perpetuity, the country would not be blackmailed by the withholding of nuclear fuel supplies, as the United States did in Tarapur following Pokhran-I?
The preamble to the Safeguards Agreement notes that India is offering its civilian nuclear facilities for IAEA safeguards on the "essential basis" of "the conclusion of international cooperation arrangements creating the necessary conditions for India to obtain access to the international fuel market, including reliable, uninterrupted and continuous access to fuel supplies from companies in several nations, as well as support for an Indian effort to develop a strategic reserve of nuclear fuel to guard against any disruption of supply over the lifetime of India's reactors." The real point is that the preamble merely 'notes' India's intentions in these respects. IAEA has neither any obligation regarding fuel supplies or building strategic reserves nor does this noting India's basis for this offer give India any additional rights through this agreement. Therefore to read into this clause either a guarantee for fuel supplies or IAEA's support for building up a strategic reserve is misleading the people.
"Corrective Measures": Vague and Ineffective
The preamble of the IAEA Agreement notes: "India may take corrective measures to ensure uninterrupted operation of its civilian nuclear reactors in the event of disruption of foreign fuel supplies." Neither the "corrective measures" nor the precise relationship between these "corrective measures" and the in-perpetuity imposition is spelt out in any meaningful terms in the text. This means that should India for any reason decide to take the items subject to the Agreement out of IAEA safeguards on the contention that the "essential basis" no longer applies, it will open itself to the serious charge of violating an international agreement. In this connection, it is worth remembering that although India claims the right, under the provisions of the 1963 Indo-US agreement on Tarapur, to reprocess the considerable quantities of Tarapur spent fuel that have accumulated to India's great inconvenience and expense, it has not been able to enforce the claimed right to reprocess, which has long been disputed by the United States.
As against the vagueness of the "corrective measures" figuring in the preamble, what is spelt out clearly in the body of the agreement (Paragraph 32) is that India can withdraw its facilities from safeguards only if it is (a) jointly agreed between India and IAEA, and (b) if these facilities are no longer usable for any nuclear activity. What does this mean? It can only mean that India can withdraw any facility it wants out of IAEA safeguards only if it strips it of all capability of producing nuclear energy and that too only after the IAEA determines that "the facility is no longer usable for any nuclear activity relevant from the point of view of safeguards."
Even if the Agreement is terminated by mutual consent, the termination of safeguards on the items subject to the Agreement [these are material and facilities as defined in Paragraph 11(a)] would stay in place in accordance with GOV/1621 till all the conditions of GOV/1621 are met. The conditions of GOV/1621 are so stringent that the rights and obligations of the parties continue to apply on all nuclear materials till they have been returned or all fissionable materials supplied or produced goes out of the inventory – that is, until all the facilities and material, nuclear or non-nuclear, supplied to the country under these safeguards are either returned or consumed or no longer usable for any nuclear activity. Therefore, this provision will not allow a single reactor to be taken out of safeguards.
Preambular References Non-Enforceable
It is well established in international law that the preamble is a part of the treaty or international agreement and it can be used to give colour and tone to the interpretation of the operative part of the treaty/agreement. This does not however mean that it can be used to create additional rights or obligations that are not contained in the clauses of the Treaty/Agreement.
The text of the IAEA Draft Agreement makes clear there are no corrective measures identified in the operative of the clauses of the Agreement. The mention of corrective measures is only in the preamble and here too, no concrete corrective measures have been defined. Unless there are specific provisions in the operative clauses, a phrase such as "corrective measures" inserted in the preamble cannot create either omnibus rights or obligations outside the text of the treaty. A similar example is for instance the TRIPS Agreement in WTO. The preamble states that it recognizes "the underlying public policy objectives of national systems for the protection of intellectual property, including developmental and technological objectives". However, can any country use the "public policy objectives" to override, for instance, the need for providing product patents as contained the body of the TRIPS agreement?
The way a facility can be withdrawn from safeguards has been spelt out in the main body of the draft agreement. Therefore, if the UPA government is trying to argue that the preambular statement of "corrective measures" gives India some kind of overriding right over all clauses in the body of the Agreement, it is committing a deliberate fraud on the people.
The final arbiter with regards to any interpretation of the Agreement and dispute settlement is the Board of Governors of IAEA. The Board of Governors decision is final in this regard and if India is held to be non-compliant, even though it is not so by its own interpretation, India can be referred to the Security Council for action including sanctions. The Iran case is an example. Though many countries including India had publicly endorsed Iran's right to the fuel cycle, it was referred to the Security Council for violation of its Safeguards Agreement by the Board of Governors at US's instance.
Left Parties' Concerns Not Addressed
The Left Parties, on July 8, 2008, asked the UPA government to spell out the following:
In case the US or other countries in the Nuclear Suppliers Group renege on fuel supply assurances for imported reactors, will India have the ability to withdraw these reactors from IAEA safeguards?
If the US/NSG countries renege on fuel supply assurances, can we withdraw our indigenous civilian reactors from IAEA safeguards?
If we have to bring nuclear fuel from the non-safeguarded part of our nuclear programme for these reactors in case of fuel supply assurances not being fulfilled, will we have the ability to take it back again?
What are the corrective steps India can take if fuel supplies are interrupted by the US/NSG countries?
What are the conditions that India must fulfill if the corrective steps are to be put into operation?
What is clear now is that every one of these concerns remains, and that the unspecified "corrective measures" inserted in the preamble of the Safeguards Agreement will not address any of them.
India to be treated as a Non-Nuclear Weapons State for Safeguarded Facilities
Except for the preamble, which explains the context in which India is entering this Safeguards Agreement and outlines the basis of India's concurrence, the main body of the Text is a true copy of INFCIRC-66/Rev.2 (1968), which is the standard agreement applicable to all Non-Nuclear Weapon States of the NPT. The India-specific part comes not from INFCIRC 66 but from the fact that India has kept a part of its nuclear programme out of IAEA safeguards. But for the facilities it proposes to put under IAEA safeguards, it will be treated as a Non-Nuclear Weapon State. Clearly, India will not have any special rights in its safeguarded facilities and this directly contradicts the assurances given by the Prime Minister to Parliament. Nuclear Weapon States, as defined in the NPT, have the right to take any facility out of safeguards, a right India will not have for the reactors it is offering to IAEA for safeguards.
Against India's Interests
It is clear that the IAEA Safeguards Agreement does not address the fundamental problems in the Hyde Act and the 123 Agreement. As a result of operationalising the Indo-US Nuclear Deal, India will place its costly imported reactors under perpetual IAEA safeguards and risk their permanent shutdown in case it fails to toe the US line on foreign policy issues. Thus going ahead with the Safeguards Agreement will be harmful to India's interests.
Sd/
Prakash Karat A.B. Bardhan
Debabrata Biswas T.J Chandrachoodan
Press Statement
The Left parties have issued the following statement:
On The IAEA Safeguards Agreement
Why the Text was Hidden till Submission to the IAEA?
The Left Parties had opposed the operationalisation of the Indo-US Nuclear Deal after the passage of the Hyde Act. After the 123 agreement was finalised, it was pointed out that the agreement was in conformity with the Hyde Act. The Left Parties had then asked the UPA Government not to take further steps to operationalise the nuclear deal.
In the UPA-Left Committee, the UPA claimed that they should be allowed to proceed with the IAEA Safeguards Agreement, which would incorporate uninterrupted fuel supplies and various corrective measures, which the Government had failed to secure in the 123 agreement. The Left Parties were skeptical about these issues being resolved in the IAEA. The UPA refused to show the negotiated text for the last four months.
The text of the Safeguards Agreement has now become public. It is clear that the text was hidden from the Left Parties and the Indian people in order to suppress the fact that India is about to bind its entire civilian nuclear energy programme into IAEA safeguards in perpetuity without getting concrete assurances for uninterrupted fuel supply, right to build strategic reserves and right to take corrective steps in case fuel supplies are stopped.
IAEA Safeguards in Perpetuity without Concrete Fuel Supply Assurance
The text of the draft "Agreement Between the Government of India and the International Atomic Energy Agency for the Application of Safeguards to Civilian Nuclear Facilities"; the so-called 'India-specific Safeguards' agreement sent to the IAEA Board of Governors on July 9, 2008, makes it clear that the repeated assurances made by the UPA Government in Parliament and outside, on securing uninterrupted fuel supply assurances and strategic fuel reserves have not been fulfilled. There are no concrete corrective measures in the main enforceable body of the Agreement, only a vague mention of "corrective measures" in the preamble.
Under the Hyde Act, IAEA safeguards are to be imposed on India's civilian nuclear facilities in perpetuity. The UPA government had repeatedly claimed that India would put its civilian reactors under safeguards under the strictly reciprocal condition of assured fuel supply. If fuel supply was disrupted, as happened in Tarapur, India would have the right to take corrective measures, including taking reactors out of IAEA safeguards.
The key question therefore with respect to IAEA safeguards is: how to ensure that once India's civilian reactors go under safeguards in perpetuity, the country would not be blackmailed by the withholding of nuclear fuel supplies, as the United States did in Tarapur following Pokhran-I?
The preamble to the Safeguards Agreement notes that India is offering its civilian nuclear facilities for IAEA safeguards on the "essential basis" of "the conclusion of international cooperation arrangements creating the necessary conditions for India to obtain access to the international fuel market, including reliable, uninterrupted and continuous access to fuel supplies from companies in several nations, as well as support for an Indian effort to develop a strategic reserve of nuclear fuel to guard against any disruption of supply over the lifetime of India's reactors." The real point is that the preamble merely 'notes' India's intentions in these respects. IAEA has neither any obligation regarding fuel supplies or building strategic reserves nor does this noting India's basis for this offer give India any additional rights through this agreement. Therefore to read into this clause either a guarantee for fuel supplies or IAEA's support for building up a strategic reserve is misleading the people.
"Corrective Measures": Vague and Ineffective
The preamble of the IAEA Agreement notes: "India may take corrective measures to ensure uninterrupted operation of its civilian nuclear reactors in the event of disruption of foreign fuel supplies." Neither the "corrective measures" nor the precise relationship between these "corrective measures" and the in-perpetuity imposition is spelt out in any meaningful terms in the text. This means that should India for any reason decide to take the items subject to the Agreement out of IAEA safeguards on the contention that the "essential basis" no longer applies, it will open itself to the serious charge of violating an international agreement. In this connection, it is worth remembering that although India claims the right, under the provisions of the 1963 Indo-US agreement on Tarapur, to reprocess the considerable quantities of Tarapur spent fuel that have accumulated to India's great inconvenience and expense, it has not been able to enforce the claimed right to reprocess, which has long been disputed by the United States.
As against the vagueness of the "corrective measures" figuring in the preamble, what is spelt out clearly in the body of the agreement (Paragraph 32) is that India can withdraw its facilities from safeguards only if it is (a) jointly agreed between India and IAEA, and (b) if these facilities are no longer usable for any nuclear activity. What does this mean? It can only mean that India can withdraw any facility it wants out of IAEA safeguards only if it strips it of all capability of producing nuclear energy and that too only after the IAEA determines that "the facility is no longer usable for any nuclear activity relevant from the point of view of safeguards."
Even if the Agreement is terminated by mutual consent, the termination of safeguards on the items subject to the Agreement [these are material and facilities as defined in Paragraph 11(a)] would stay in place in accordance with GOV/1621 till all the conditions of GOV/1621 are met. The conditions of GOV/1621 are so stringent that the rights and obligations of the parties continue to apply on all nuclear materials till they have been returned or all fissionable materials supplied or produced goes out of the inventory – that is, until all the facilities and material, nuclear or non-nuclear, supplied to the country under these safeguards are either returned or consumed or no longer usable for any nuclear activity. Therefore, this provision will not allow a single reactor to be taken out of safeguards.
Preambular References Non-Enforceable
It is well established in international law that the preamble is a part of the treaty or international agreement and it can be used to give colour and tone to the interpretation of the operative part of the treaty/agreement. This does not however mean that it can be used to create additional rights or obligations that are not contained in the clauses of the Treaty/Agreement.
The text of the IAEA Draft Agreement makes clear there are no corrective measures identified in the operative of the clauses of the Agreement. The mention of corrective measures is only in the preamble and here too, no concrete corrective measures have been defined. Unless there are specific provisions in the operative clauses, a phrase such as "corrective measures" inserted in the preamble cannot create either omnibus rights or obligations outside the text of the treaty. A similar example is for instance the TRIPS Agreement in WTO. The preamble states that it recognizes "the underlying public policy objectives of national systems for the protection of intellectual property, including developmental and technological objectives". However, can any country use the "public policy objectives" to override, for instance, the need for providing product patents as contained the body of the TRIPS agreement?
The way a facility can be withdrawn from safeguards has been spelt out in the main body of the draft agreement. Therefore, if the UPA government is trying to argue that the preambular statement of "corrective measures" gives India some kind of overriding right over all clauses in the body of the Agreement, it is committing a deliberate fraud on the people.
The final arbiter with regards to any interpretation of the Agreement and dispute settlement is the Board of Governors of IAEA. The Board of Governors decision is final in this regard and if India is held to be non-compliant, even though it is not so by its own interpretation, India can be referred to the Security Council for action including sanctions. The Iran case is an example. Though many countries including India had publicly endorsed Iran's right to the fuel cycle, it was referred to the Security Council for violation of its Safeguards Agreement by the Board of Governors at US's instance.
Left Parties' Concerns Not Addressed
The Left Parties, on July 8, 2008, asked the UPA government to spell out the following:
In case the US or other countries in the Nuclear Suppliers Group renege on fuel supply assurances for imported reactors, will India have the ability to withdraw these reactors from IAEA safeguards?
If the US/NSG countries renege on fuel supply assurances, can we withdraw our indigenous civilian reactors from IAEA safeguards?
If we have to bring nuclear fuel from the non-safeguarded part of our nuclear programme for these reactors in case of fuel supply assurances not being fulfilled, will we have the ability to take it back again?
What are the corrective steps India can take if fuel supplies are interrupted by the US/NSG countries?
What are the conditions that India must fulfill if the corrective steps are to be put into operation?
What is clear now is that every one of these concerns remains, and that the unspecified "corrective measures" inserted in the preamble of the Safeguards Agreement will not address any of them.
India to be treated as a Non-Nuclear Weapons State for Safeguarded Facilities
Except for the preamble, which explains the context in which India is entering this Safeguards Agreement and outlines the basis of India's concurrence, the main body of the Text is a true copy of INFCIRC-66/Rev.2 (1968), which is the standard agreement applicable to all Non-Nuclear Weapon States of the NPT. The India-specific part comes not from INFCIRC 66 but from the fact that India has kept a part of its nuclear programme out of IAEA safeguards. But for the facilities it proposes to put under IAEA safeguards, it will be treated as a Non-Nuclear Weapon State. Clearly, India will not have any special rights in its safeguarded facilities and this directly contradicts the assurances given by the Prime Minister to Parliament. Nuclear Weapon States, as defined in the NPT, have the right to take any facility out of safeguards, a right India will not have for the reactors it is offering to IAEA for safeguards.
Against India's Interests
It is clear that the IAEA Safeguards Agreement does not address the fundamental problems in the Hyde Act and the 123 Agreement. As a result of operationalising the Indo-US Nuclear Deal, India will place its costly imported reactors under perpetual IAEA safeguards and risk their permanent shutdown in case it fails to toe the US line on foreign policy issues. Thus going ahead with the Safeguards Agreement will be harmful to India's interests.
Sd/
Prakash Karat A.B. Bardhan
Debabrata Biswas T.J Chandrachoodan
Tuesday, July 8, 2008
Nuclear deal: RSS is the winner
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http://www.merinews.com/catFull.jsp?articleID=137202&catID=2&category=India
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Indo US Nuclear Deal: Why This Hurry and at What Cost?
By Dr. Sandeep Pandey:
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Political group wary of N-deal
Political group wary of N-dealTimes of India - IndiaMUMBAI: Decrying the impending Indo-US nuclear deal as detrimental to India’s sovereignty, a little known political party, Rashtriya Samaj Paksh (RSP), ...See all stories on this topic
Advanced Imperialism: A Phase of Capitalism
A Marxist perspective
by Carl Pinkston
On April 26, 1917, V.I. Lenin published a major piece on imperialism titled "Imperialism – Highest Stage of Capitalism". Lenin was able to draw from J.A. Hobson, Imperialism, and Rudolf Hilferding, Finance Capital. Lenin conducted extensive research on imperialism from wide array of writers, but he was very critical of many writers including Hobson and Hilferding. Lenin's work on imperialism remained a premier until Harry Magdoff published The Age of Imperialism in 1969 and Kwame Nkrumah, Neo-Colonialism-The Last Stage of Imperialism, in 1965.
Since 1990, the world has changed and considerably more so since the inter-imperialists rivalry of the classical imperialism period of 1870-1945. There have been changes in the development of capitalism, finance, resource control and international investments. Along with the changes in capitalism there have been a series of world wide financial and economic crises. In other words, we are in the period of advanced imperialism. It is not fundamentally ideological, military, or social but principally socio-economic – a new phase of capitalism.
In what follows is the examination of the development of capitalism from competitive capitalism to international oligopoly- advanced capitalism. Also, capitalist development is not limited to the concentration of international production but also to the development of finance domination – finanancialization of capital. The international oligopoly and finance domination are forging new imperialist centers that are slowing re-dividing the world by a new map making machine – Foreign Direct Investment. Proxy wars and American form of colonialism will attempt to conceal international struggle of advanced imperialism today. However, advanced imperialism will expose its naked actions in one form or another and no neo-imperialism apologist can hide its cloths. .
Advanced Capitalism
Modern capitalism or super-capitalism (as coined by a liberal economist Robert Reich) is a phase of capitalism. The history of modern capitalism can be described as follows: 1) 1860-70, the apex of development of free competition; 1870-1945, the period of monopoly capitalism, cartels, trusts, syndicates and finance capital; 2) 1945-1973, the US dominated oligopoly capitalism, multi-divisional corporations; and 3) the 1973-75 crisis and the boom of the 1990's cultivated the massive growth of giant multi-national corporations. By 1870, it was clear that capitalism had developed from a competitive capitalism to monopoly capitalism. Capitalism development is not only internal but is express internationally in the form of imperialism. Lenin said,
"that capitalism has been transformed into imperialism;" [1]
Prior to 1920, the management of large enterprises was centralized in a few hands (called Tycoons) that managed production, secure raw resources for the industry, and marketed a few products. Giant enterprises were managed by Tycoons with small staffs. Andrew Carnegie ran the Pennsylvania Railroad and Carnegie Steel; John D. Rockefeller ran Standard Oil Company (whose descendant is ExxonMobil) and Henry Ford ran Ford Motors. Very few giant enterprises were corporate in structure; that gave the ability to have internal financing; and multi-divisional in operation As Michael Reich noted,
"Of the Fortune 500 largest corporation in 1994, more than half were founded between 1880 and 1930." [2]
The events of the two world wars and the success of the Bolsheviks revolution ended the phase of monopoly capitalism and transformed capitalism into US dominated oligopoly capitalism-the rise of giant corporations. Marxist's economists Baran and Sweezy noted,
"Under capitalism the highest form of success is business success, and under monopoly capitalism the highest form of business is big corporation."[3]
The characteristic features of a giant corporation as defined by Baran and Sweezy is: 1) control rest in the hands of management (ie Board of Directors and Chief Executive Officers), 2) management is self-perpetuating, and 3) each corporation normally achieves financial independence through the internal generation of funds which remain at the disposal of management.
"The replacement of the individual capitalist by the corporate capitalist constitutes an institutionalization of the capitalist function. The heart and core of the capitalist function is accumulation: accumulation has always been the prime mover of the system, the locus of its conflicts, the source of both its triumphs and disasters."[4]Baran and Sweezy made clear.
Along with the rise of giant corporations was the change in administrating giant corporations and the development of a multi-divisional structure. During the monopoly period, centralization of management was the norm and a few men were entrusted with very complex decision making. Stephan Hymer, a Marxist economist, said,
"Thus, product development and marketing replaced production as a dominant problem of business enterprise. To meet the challenges of a constantly changing market, business enterprise evolved the multidivisional structure. The new form was originated by General Motors and DuPont shortly after World War I, followed by few others during the 1920s and 1930s, and was widely adopted by most of the giant U.S. corporations in the great boom following World War II. As with the previous stages, evolution involved a process of both differentiation and integration. Corporations were decentralized into several divisions, each concerned with one product line and organized with its own head office. At a higher level, a general office was created to coordinate the divisions and to plan for the enterprise as a whole."[5]
The diversification movement in the 1960, multi-product lines, complex internal financing and the need to plan the market are basic features of multi-divisional corporations. As Stephan Hymer indicated,
"The new corporation formed has great flexibility. Because of its decentralized structure, a multidivisional corporation can enter a new market by adding a new division while leaving the old divisions undisturbed. (And to a lesser extent it can leave the market by dropping a division without disturbing the rest of its structure.) It can also create competing product-lines in the same industry, thus increasing its market share while maintaining the illusion of competition. Most important of all, because it has a cortex specializing in strategy, it can plan on a much wider scale than before and allocate capital with more precision."[6]
From 1945-1961, the increase in mergers and internal growth forged a greater concentration of production – US dominated corporations.
"It is fair to assume that the greatest increases in manufacturing concentration have come in the three periods of greatest mergering. But increased concentration can also come from internal growth either through the reinvestment of earnings or from the sale of new securities, provided, of course, that growth from these sources is more rapid for larger companies than for smaller companies."[7], as noted liberal economist Gadiner Means.
Means also reported that by 1969,
"The top 10 firms account for fully one-seventh of total industrial sales and almost one-quarter of total industrial after-tax profits. The top 100 firms account for more than 40 percent of total sales and almost 60 percent of total."[8]
During the period US dominant oligopoly capitalism, giant multi-divisional corporation practiced priced leadership, sabotage of production, and all without entering into trusts, syndicates, or associations. Michael Reich, another liberal economist, says it well that,
" Besides, the largest companies had grown so vast that prices could be maintained and output controlled by the simple expedient of collusion among the two or three biggest ones in each industry (or, to use the more technical and less alarming language of economics, 'oligopolistic coordination'). Steel was controlled by three giants – United States Steel, Republic, and Bethlehem; the electrical equipment and appliance industry by two – General Electric and Westinghouse. In basic chemicals, there were three – DuPont, Union Carbide, and Allied Chemical. In food processing, three dominated – General Goods, Quaker Oaks, and General Mills. In tobacco, three – R.J. Reynolds, Ligget & Myers, and American Tobacco; in jet engines, two – General Electric and Pratt & Whitney; in automobiles, three – General Motors, Ford, and Chrysler. In the new industry of television broadcasting, there were three networks – NBC,CBS, and ABC. This consolidation took place all across the vast expanse of American industry."[9]
The economic crisis of 1973-75 transformed US dominated oligopoly capitalism to internationalization of oligopoly. Manuel Castells argued that the cause of the 1973-75 crisis or rupture is as follows:
"The capitalist mode of production is an expanding contradictory system. Capitalist societies are shaped by the particular way these contradictions develop through the conflicts and interactions defined on the social classes and by their political expression. The major structural problems created by the process of capitalist accumulation in the United States were determined by the upheavals caused by new economic policies and the transformation of the system on the basis of a new relationship between the sate and the large corporations. The internationalization of capital, the creation of debt economy, and the decisive role of the state in the process of accumulation and realization of profit were major structural trends that allowed for sustained capitalist growth during almost three decades. But the introduction of these countertendencies to fight stagnation triggered new contradictions that were increasingly expressed through monetary crisis and the sprawl of structural inflation. In this particular situation, dominated by the defeat of imperialism in Indochina, increasing intercapitalist competition, and the development of social unrest within advanced capitalist societies, the new structural contradictions came together in certain conjunctural factors that, in return, made them more acute and precipitated the latest crisis."[10]
The transformation to the internationalization of oligopoly was driven principally by the development of multinational corporations. Stephen Hymer said,
"Since the beginning of the Industrial Revolution, there has been a tendency for the representative firm to increase in size from the workshop to the factory to the national corporation to the multidivisional corporation and now to the multinational corporation."[11]
Multinational corporation was pioneered by Standard Oil at the beginning of 1900 and today the top 50 US giant corporations operate internationally. Paul Baran and Paul Sweezy best described a multinational corporation as follow:
"It is not enough that a multinational corporation should have a base of operations abroad that; its true differentia specifica is that 'its management makes fundamental decision on marketing, production, and research in terms of the alternatives that are available to it anywhere in the world."[12]
Multinational corporations concentrated production on an international level. Capitalist apologist economists Fatemi, Williams and Saint-Phalle pointed this out:
"The significant impact of the multinational corporation is the internationalization of production and in the incipient development of a world economy. In this process the investment decisions and operations of companies are increasingly viewed in terms of world allocations of resources and of maximizing world welfare."[13]
Translation for maximizing world welfare is maximizing profit.
Once the internationalization of production was the exception, today, multinational corporations have made it the rule. The United Nations report titled "World Investment Report 2007", stated;
"The world's 100 largest TNCs[14] play a major role in international production. In 2005, they accounted for 10%, 17% and 13% repectively of the estimated foreign assets, sales and employment of all TNCs worldwide…..The top 10, with about $1.7 trillion in foreign assets (i.e almost 36% of the total foreign assets of the top 100), include four TNCs in petroleum and three in automobile production."[15]
Also, the United Nations Conference on Trade and Development (UNCTD) stated,
"Of the top 100 TNCs, 58 belonged to six industries; motor vehicles (11), petroleum (10), electrical and electronic equipment (10), pharmaceuticals (9), Telecommunications (9), and electricity, gas and water services (9)…If ranking were to be based on foreign sales or foreign employment they would yield different result. Ranking by sales would move the petroleum TNCs into the top four positions on the list and another four motor vehicles TNCs into the top 10 .The largest TNC in terms of foreign sales (ExxonMobil) is 10 times larger than the firm ranked 55 in the list. Ranking the companies by foreign employment would present yet another picture, placing three retail TNCs in the top position. On average, the largest TNCs had affilates in 39 foreign countries. Deutsche Post (Germany) was the leader in this regard, with value-added activities in 103 host economies, followed by Royal Dutch/Shell (United Kingdom/Netherlands) with 96."[16]
In 2006, America's Fortune 500 largest corporations generated over $10.6 trillion in revenues and over $645 billion in profits. The world's 100 largest corporations in 2005 generated over $10.2 trillion revenues and $696.8 billion in profits. The world's profits represent about 100 underdeveloped countries Gross Domestic Product. In other words, 100 underdeveloped countries Gross Domestic Product would double if the profits were shared.
As reported in the Fortune 500 May 5, 2008 edition, the largest corporation in the United States in sales for 2007 was Wal-Mart Stores, Inc (a consumer product company) with a total revenue of $379 billion and generated a profit of $13 billion. Wal-Mart Stores Inc employs over 1.9 million workers worldwide and operates 4,750 stores (3,600 in the US). It is the largest private employer in the world and operates in Mexico as Walmex, in United Kingdom as ASDA, and in Japan as Seiyu.[17] The Wal-Mart monopoly is both horizontal and vertical. From the vertical side 20-30 percent of the manufacturers sell their product to one big box – Wal-Mart. Ray Bracy, Wal-Mart Vice President for Federal & International Public Affairs said.
" Wal-Mart prefers to deal directly with Chinese and other suppliers and 'If there's a middleman in our process, even if it's a Wal-Mart middleman, we try and eliminate those. Wal-Mart inherited a massive list of global suppliers, from PREL which is Pacific Rim Export Limited that now is winnowed down to 6,000 global suppliers which is 80 percent in China."[18]
In addition, Wal-Mart has used computerized supply chains to master the science of global sourcing.
Wal-Mart horizontal monopoly is shown by the various subsidiaries – Wal-Mart Stores Divisions in the US (Discount stores, Super-centers and Neighborhood markets); Sam's Club, and Wal-Mart International. On the international side Wal-Mart operates in 13 countries with 2,757 locations, employs about 550,000 and generated sales of about $77 billion.
"Wal-Mart's marketplace clout is hard to overstate. In household staples such as toothpaste, shampoo, and paper towels, the company commands about 30% of the U.S. market, and analysts predict that its share of many such goods could hit 50% before decade's end.", as reported by Business Week.[19]
Wal-Mart is three times the size of the No. 2 retailer, France's Carrefour. Once again as Business Week noted, "Every week, 138 million Wal-Mart." shoppers visit Wal-Mart's 4,750 stores; last year, 82% of American household made at least one purchase at Wal-Mart. Wal-Mart is an example of the modern corporation – modern capitalism.
Not only the massive growth of multinational corporations has had profound impact but also one of the characteristic features of modern capitalism is the continuing process of the concentration of production. The international concentration of production is driven by the global merger and acquisition activities.
"A new surge of corporate concentration is in the process in the United States and abroad, driven in large measure by a restructuring of global markets through mergers and acquisitions (M&As)"[20]as reported, by Richard B. Du Boff and Edward S Herman.
In 1999, the worldwide merger deal (also know as megamergers) were $3.4 trillion, but by 2007 worldwide merger deal reach $4.7 trillion. Global consolidation was in the area of Materials, Financials and Energy/Power sectors. A record-breaking 47% of all mergers were cross-border mergers and acquisitions. Even capitalist advisors, Merger and Acquisition Review described the massive concentration of multinational corporations, as follows
" Consolidation in the Materials and Energy and Power sectors combined for nearly 29% of worldwide activity largely due to BHP Billiton's US$193 billion bid for Rio Tinto. The deal, which ranks as the second biggest deal of all time, bolstered the all time, bolstered the already high level of activity in the Materials sector. Financials accounted for 16% of activity during 2007 driven by the takeover of ABN Amro by a consortium led by the Royal Bank of Scotland, which ranks as the biggest financial merger on record. Activity in the Industrials sector topped all industry groups, by number, with over 5,600 deals announced during 2007."[21]
Du Boff and Herman give us a very clear picture of the merger and acquisition of multinational corporations.
"Unlike those of the 1980s, the current mergers are financed primarily with corporate stock, not borrowed money, and companies are not being broken into pieces for sale but are merging to enlarge their size. Today's M&As are based on long-term strategic and economic motives. This involves acquiring the scale and resources to compete at home and abroad, protecting and enlarging market share, reducing competition and attaining greater pricing power, in what large corporations see increasingly, often primarily, as a global market ...eiither way, excess capacity squeezes profitability, and mergers and takeovers are effective ways to reduce it, if temporarily, by shedding labor and closing down less profitable facilities.",[22]said Du Boff and Herman.
Since the 1970s technological revolution, the multinational corporation has developed advanced cargo ships, cargo planes, overseas cables, steel containers, satellites communication and micro-computers to increase production and transportation. Even a liberal writer such as William Greider pointed out that
"Fast, lean, flexible – these familiar buzzwords are modern corporate management's response to the revolutionary conditions. Rigorous contests for design efficiency. Continuous suppression of costs including labor costs. Redeploying elements of production overseas to capture local advantages, from low wages and taxes to other political favors. Securing access to the hot new markets in the world where rising demand exceeds supply and per unit profit margins can be widened. Reducing the fixed costs by dismantling corporate assets – selling plants and properties, shrinking middle-level bureaucracies, converting jobs to temporary status. Sharing cost burdens by forming alliances with putative rivals who will jointly finance the overhead of research and development, even share production."[23]
During the hey day of monopoly capitalism trusts, syndicates and agreements were the norm of giant enterprises but modern giant multinational corporation practice joint ventures, cutting subsidiaries and price leadership. Joint venture is a corporate practice of sharing the cost of research, development and production. William Greider indicated that
"Corporations hedge against the risk of future rivals by globalizing – forming partnerships with their potential competitors, the new producers in emerging markets. The major multinationals hope to guide their evolution and, if it comes to that, to share the future markets with them in transnational corsortia of producers. Even if this corporate strategy should succeed, it still leaves out one group: the industrial workers back home whose jobs were traded away."[24]
Also, multinational corporations engage in market leverage.
"Market leverage, in its usual application, provides domestic enterprises with greater economies of scale, allowing them to produce for their shelter home market, then sell surplus production into the other guy's market, often at competitive discounts. Japan had used market leverage to brilliant advantage, relentlessly capturing market share and sometimes entire sectors, from automobiles to consumer electronics."[25],as presented by William Grieder.
Today, advanced capitalism – multi-national corporation – is international oligopoly. Advanced capitalism was developed during the period of giant multi-division corporations. Capitalism has been transformed into imperialism and advanced capitalism has been transformed into advanced imperialism. Samir Amin also noted the change in capitalism – advanced capitalism, he said:
"Capitalism today is totally different. A handful of oligopolies alone occupy all the dominant heights in the conduct of national and global business. These are not strictly financial oligopolies but 'groups' within which the production activities of industry, agribusiness, commerce, services, and of course financial activities coalesce."[26]
International oligopoly cannot abolish crisis or international crisis in particular. However, economic and financial crisis in turn increased the tendency for concentration of international oligopoly. Lenin pointed this out over 100 years ago when he said,
"The statement that cartels can abolish crises is a fable spread by bourgeois economists who at all costs desire to place capitalism in a favourable light. On the contrary, monopoly which is created in certain branches of industry, increases and intensifies the anarchy inherent in capitalist production as a whole."[27]
Reinhart and Rogoff identified the following post 1973-75 crises during the international oligopoly period: Spain (1977), Norway (1987), Finland (1991), Sweden (1991) and Japan (1992), Australia (1989), Canada (1983), Denmark (1987), France (1994), Germany (1997), Greece (1991), Iceland (1985), Italy (1990), New Zealand (1987), Mexico (1982), United Kingdom, (1974, 1991, 1995) and United States (1984).[28] The Economist reported the 2007-08 financial crises wiped out $5 trillion value from worldwide public companies balance sheet.[29]
International oligopoly is the latest phase in the development of capitalism. But to understand the significance of international oligopoly is to take into consideration the financialization of capital.
Mulitnational Banking and Financialization of Capital
The development of modern banking arises with the concentration of multinational banking – the oligopoly of finance. Lenin noted that,
"As banking develops and becomes concentrated in a small number of establishments, the banks grow from humble middleman into powerful monopolies having at their command almost the whole of money capital of all the capitalists and small businessmen and also the larger part of the means of production and of the sources of raw materials of the given country and in a number of countries. This transformation of numerous humble middlemen into a handful of monopolists represents one of the fundamental processes in the growth of capitalism into capitalism imperialism."[30]
Bank monopoly (finance capital) transformed bankers as industrial capitalists because banks coalescence with industry capital; and banks control and in some cases created the largest industries. For example, Ron Chernow gives us a vivid example of how JP Morgan created US Steel.
" U.S. Steel stoked the bonfire of speculation, at a time when million-dollar issues were considered large, the new corporation was capitalized at a whopping $1.4 billion (23 billion in 1989 dollars) – the first billion-dollar corporation in history. At the time, all U.S. manufacturing combined had only $9 billion in capitalization. To manage the flood of bonds and stock that finance the deal, Pierpont mustered a monster syndicate of three hundred underwriters. He appointed ace stock manipulator James R. Keene – a sharp-faced man with a pointed beard, known as the Silver Fox of Wall Street- to make a market in the shares. By simultaneously buying and selling shares, Keene created steadily rising prices and the illusion of tremendous volume. Despite predictions that so much stock would saturate the market, the issue's success confirmed the boast of Morgan partner George W. Perkins that a Morgan issue "from the desert of Sahara'' would find buyers. For its servers, the syndicate took in $57.5 million in stock (nearly $1 billion in 1989 dollars). The U.S. Steel promotion made explicit the marriage of finance and industry that marked the Baronial Age; when four Morgan partners joined the new trust's board, the marriage was consummated."[31]
Once again, the Great Depression and the two World Wars ended the reign of finance capital.
During the period of 1945-1973, the giant multidivisional corporation had accumulated massive internal capital to expand, control and monopolized more industries. In other words, multidivisional corporations no longer needed giant banks money capital. The Post-1945 age was a period of banks separating from multidivisional corporations and the rise of multinational banks. Harry Magdoff noted this when he said,
"This development in banking is a fitting complement to the new role of the United States as the leader and organizer of the imperialist order. What could be more natural than the coincidence of (a) the widespread military and political presence of the United States around the globe (via wars, military bases, and military and economic aid);(b) the dominant position of United States capital in the creation of multinational industrial empires; (c) the evolution of the dollar as the key international medium payment, credit, and reserve; and (d) the growth of multinational banking."[32]
It's also during this period that banks were transforming into multinational banks.
"When ranked by year 2000 revenues, 115 of the 500 largest companies in the world are FIs.[33] Ninety percent of these firms, which collectively hold USD $33 trillion of assets, are either banks or insurers."[34]
In the Forbes 2008 special issue it reported HSBC Holdings as the worlds largest company (based on a composite score and fourth largest bank in the world) with sales of 147 billion dollars and assets of 2.3 trillion. Global Finance reported that in 2005 the top 10 global banks held assets of $12.6 trillion. They noted
"The growth in the assets held by the world's banking titans has been anything but even ,though, and, as a result, the top of the list has been transformed. With a massive 36% jump in assets to more than $1.5 trillion, Switzerland's UBS has leapfrogged second place Citigroup to adopt its mantle as the world biggest bank."[35]
Citigroup Inc, operating as Citi, is the biggest bank in the world and formed from a merger of Citicorp and Travelers Group in 1998, the price of the merger was $140 billion. Citigroup is engaged in the business of credit card services, consumer finance, brokerage, insurance, and banking. Citigroup Inc has a $2.4 trillion in assets, employs 332,000 employees around the world, and has accounts in over 100 countries. In Mexico Citibank is known as Banamex, in El Salvador Citigroup is known as Banco Cuscatlan, and the Central America credit card is Banco Uno.
Multinational banking is dominated by Citibank, Bank of America Corp, HSBC Holdings, J.P. Morgan Chase & Co., and Bank One Corp. The Federal Reserve Statistical Release of September 2007, reported Citibank NA, Bank of America and JP Morgan Chase had a combined total of consolidated asset of $3.8 trillion. Multinational banks were being created by the giant mergers such as the mega merger of Chase Manhattan and J.P. Morgan & Company Inc, which created J.P. Morgan Chase & Chase Co. In addition, the National City Bank of New York, established in 1894, was considered one of the largest banks in 1897 and had open overseas banking offices by 1914. By 1955 National City Bank of New York merged with First National Bank and by 1976 it had changed the name to Citibank. By 1998, a mega merger of $70 billion between Citicorp (a creation of Citibank "one-bank holding company") and Travelers created the largest financial institutions -Citigroup. Further concluded by James Houpt,
"Merger and acquisitions among large U.S. banking organizations since the mid-1980s have concentrated foreign lending among fewer U.S. banks. At the end of 1998, for example, a separately monitored group of six large money center banks held 83 percent of all transfer risk claims of U.S. banks. In 1986 that group consisted of nine banks, but it held only 58 percent of all such claims."[36]
Banking was transformed from a single person controlled enterprise to giant multinational banking. As Magdoff clearly illustrated,
"The business economics behind the upsurge of foreign banking is similar to the motives behind the movement of industry abroad: a relative shrinkage of business opportunities on the domestic front and the attractive profit opportunities overseas."[37]
The rise of multinational banking is the expansion of foreign branches into other countries. James Houpt of the Board Division of Banking Supervision and Regulation stated the following:
" Consequently, the number of U.S. Banks having foreign branches began to grow. In late 1965, only 13 U.S. banks had foreign branches, and most of those had only a few: the branches' assets totaled less than $10 billion. By 1970, 79 banks had foreign branches, with assets totaling 53 billion. Ten years later, 159 banks – nearly every U.S. banks having assets of more than $2 billion – had at least one foreign branch, the number of branches had grown to 787, and combined branch assets exceeded $340 billion."[38]
By 1998 the Banking Empire was complete and worldwide. Christian Weller from the Center for Popular Economics makes a conclusive point,
"The global reach of private banking has two major dimension; cross-border lending and direct investment in the financial services sector of other nations. Cross-border lending occurs when a U.S. institution like BankAmerica lends dollars to the Mexican government or to a company in Mexico. Direct investment occurs when a U.S. bank like Citibank establishes a subsidiary in a foreign country. Banks that have subsidiaries in other countries are called multinational banks (MNBs). The largest U.S. banks do both: lend internationally and have an array of subsidiaries active in the financial services sector of many foreign countries."[39]
Magdoff reported that US banks began entering the foreign markets in the 1970s by (1) the use of foreign banks as correspondent bank, (2) by setting branches which carry on full banking operations as they would in the United States, and (3) by setting up subsidiary corporations. These corporations buy into foreign-owned banks, set up banks and finance companies abroad, and invest in a wide variety of non-banking business.[40] Foreign branch offices that provide international banking services (full authority to represent and commit the bank) is the most preferred international banking structure. In 1998 Citibank and BankBoston purchased Argentine banks allowing the number of Citibank foreign branches to reach the peak of 935. Foreign subsidiaries, a separately incorporated wholly owned by the U.S. banking parent, is very common internationally because they can extend its reach into local retail banking in ways not practical through branches. Again as Houpt noted,
"Foreign subsidiaries vary widely in size, depending on their role. Some approach the size the of large U.S. banks, when measured by total assets (including claims on affiliates). At the end of 1998, the 23 largest foreign subsidiaries (those having assets of more than $5 billion, about 2 percent of all such subsidiaries) accounted for 68 percent of all foreign subsidiary assets. The nearly 800 subsidiaries having total assets of less than $100 million (70 percent of all foreign subsidiaries) held less than 2 percent of total foreign subsidiary assets."[41]
Multinational banks also engage in foreign joint ventures and simple representative office. Lastly, US banks use Edge corporations, a limited purpose subsidiary, where the banking business is linked to foreign or international transaction. Also, indicated by Houpt that,
"At the end of 1998, 70 percent of the assets of all foreign subsidiaries of U.S. banking organizations were owned through Edge corporations."[42]
Multinational banks have taken on the role of merchant banks, investment banks and active investors. The modern merchant banks, however, tend to advise multinational corporations and wealthy individuals on how to use their money. The advice varies from counsel on merger and acquisition to recommendation on the type of credit needed. The investment banks have taken on the job of generating loans and initiating complex financial transactions. More often than not, multinational banks were deal makers and not advisors. They would recommend a company for Leverage Buyout (LBO) deals that they would compete against one of their own underwriter clients. Ron Chernow describes the reinvention of banks into merchant banking. He said,
"Just when the 1982 Rule 415 had seemed to end the problem of banker-company collusion, investment banks reinvented it with merchant banking. It was no coincidence that Morgan Stanley's entry into merchant banking occurred after the advent of Rule 415, for through LBOs it could restore the exclusive relationship lost in the transactional age. What better hold to have on a company than to own a large piece of it? Three of the five Burlington board members were suddenly Morgan Stanley managing directors."[43]
Although, the number of banks has dropped 29 percent from 1994 to 2003, the number of bank branches has increased by 15 percent. This is also the period of rapid technological advances with the proliferation of automated teller machines (ATM), the rise of the Internet and broadband.[44] The number of ATMs has surpassed 1.5 million worldwide. The Retail Banking Research reported that the USA, Japan, Brazil, and China account for half the global ATM market. In 2005, Asia Pacific had the largest regional ATM market with 31% of the global total, having recently overtaken North America at 29%.
A new financial trend was developing in capitalism after the 1973-75 crises. Sweezy pointed out three trends transforming capitalism:
"(1) the slowing down of the overall rate of growth, (2) the worldwide proliferation of monopolistic (or olgipolistic) multinational corporations, and (3) what may be called the financialization of the capital accumulation process."[45]
By 1973 Robert Brenner, noted that there was persistent stagnation of private capital accumulation which was the slowing down of the overall rate of growth.[46] The last section covers the proliferation of oligopolistic corporation. However, the newest phenomenon of advance capitalism is the development of financialization of the capital accumulation process. John Bellamy Foster explained further that the financialization of capital is;
"The resulting 'double process of faltering real investment and burgeoning financialization' as capital sought to find a way to utilize its economic surplus, first appeared with the waning of the 'golden age' of the post-Second World War decades and has persisted, Sweezy observed, 'with increasing intensity to the present."[47]
Greta R. Krippner defines financialization as
"a pattern of accumulation in which profits accrue primarily through financial channels rather than through trade and commodity production."[48]
Another liberal writer, Gerald A. Epstein described the new financial period as
"Evidently, then, sometime in the mid- to late 1970s or early 1980s, structural shifts of dramatic proportions took place in a number of countries that led to significant increases in financial transactions, real interest rates, the profitability of financial firms, and the shares of national income accruing to the holders of financial assets." [49]
The most important development that has spurred the rise of financialization of capital is information technology. As Richard Barnet and John Cavanagh put it,
"The introduction of state-of-the-art information technology has changed what banks are and what banks do. Computers and electronic communications networks have expanded the markets for money products and reduced the costs of making transfers, in large measure by eliminating thousands of jobs for clerks, tellers, messengers, and the like. But the installation of the automated systems has required huge capital investments. In 1990, commercial banks in the United States spent $15 billion on information technology. The need to amass large investment funds for such purposes has encouraged the consolidation of investment and banking corporations. Firms merge to save costs by sharing expensive data systems. These systems facilitate the speedy settlement of money trading; even a few seconds of exposure before a transfer is settled can spell disaster if millions of dollars are involved."[50]
The informational technology has ushered in the computerization and the Internet access of 24 hours investment news for individual investors but it
"facilitated the identification of asset price trends, fostered momentum investing and for a while at least, made momentum investing a self-fulfilling prophecy."[51]
Electronic money has created massive fraud, computer breakdown due to viruses; gridlock and most importantly electronic transfers are secret. Barnett and Cavanagh pointed out that electronic money is money that is hidden funds from regulators, creditors, wives or husbands. The Cayman Islands, Bahamas, Bermuda, Cape Verde, Hong Kong, Bahrains have all serve as tax havens for the rich.
"Grand Cayman's financial district is reputed to have the highest concentration of fax machines in the world to serve its 548 banking outposts, which hold assets of about $400 billion." [52]
In the Cayman Islands New Resident Magazine reported that Cayman Island is the world's fifth largest financial centre with 300 banks registered and approximately one trillion dollars in deposit; 8,000 investment funds, 740 companies registered as captive insurance companies and 135 registered trust companies. [53]
The rise of the Euromarket facilitated the financialization of world capital. Barnett and Cavanagh said,
"By the 1970s, for every dollar U.S Banks were lending to non-Americans from their domestic bank offices, they were lending six or seven more from offshore facilities that collectively came to be called the Euromarket. This pooling of funds, mostly in dollars, started in Europe to accommodate the financial needs of Communist China, but it soon became a global money pool that could be used by borrowers anywhere. The distinguishing feature of the Euromarket is that money is denominated in a currency different from the official currency where the deposits are located."[54]
In other words, Euromarket is money (capital) for the multinational corporation in denomination that suit world investments.
Along with the rise of the Euromarket is the buying and selling of money itself. After Richard Nixon ended the backing of US dollars with gold and Paul Volcker, chair of the Federal Reserve Board, allowed the interest and exchange rates to float, the monetary system became a casino – place your bet and hope for the best. Barnett and Cavanagh said,
"The buying, selling, and lending of monetary products worldwide became businesses in themselves. Most of it had little or nothing to do with investment in either production or commerce. (However, as exchange rates became more volatile, hedging became almost a necessity for some transnational businesses.) Foreign direct investment in the Third World fell as the leading commercial banks of the world saw that they could reap quicker profits in commissions, fees, and interest by 'recycling' ten of billions of 'petrodollars' from the coffers of Kuwait and Saudi Arabia to the governments and their business associates in poor countries."[55]
The separation of banking finance from the multinational corporation, technological development in communication and information processing, aging baby boomers, and the financial institutions quest for profits (commission or fees) have given rise to Institutional Investors. Institutional investors as defined by Blommestein and Norbert Funke is a
" financial institutions that 'invest' savings of individuals and non-financial companies in the financial markets."[56]
Institutional investors generally are pension funds, insurance companies, open-end funds, hedge funds, closed-end funds, and commercial and security banks. Institutional investors have become a significant financial development of advanced capitalism. The size of Institutional investors was $24.4 trillion in the Organization for Economic Co-operation and Development (OECD) countries.
Pension funds have taken on a greater share of the role in Institutional investments. Retirement trusts increased from $2 billion in 1940 to $58 billion by 1977. Laura Olson, a liberal economist, best describe the development of the pension fund.
"During the 1950s and 1960s public-system investments tended to be legally restricted to certain types of fixed-income securities, particularly public sector obligations and bonds. As late as 1961 stocks accounted for only 3 percent ($.6 billion) and corporate bonds 39 percent ($8.5 billion)of total portfolios, while public securities represented nearly half ($10 billion) of investments. In the mid-1960s corporate bonds and stocks actually surpassed public issues. By 1976, the former accounted for 74 percent while public sector obligations represented only 11 percent of total state and local retirement trust portfolios."[57]
Laura Olson exposed the false appearances of workers control of retirement trust noting that
"banks and insurance companies serve as custodians and advisers for substantial number of public pension systems, thus buttressing the power of financial institutions considerably. For example, 21 percent of total plans rely on the services of banks and 23.5 percent on insurance companies. While the power of these outside custodians and advisers varies widely, they often obtain full or partial control over the assets. Further, 'in some cases one-half of the members of the investment committees [of state and local boards] represent financial institutions."[59]
She is correct when in fact many of the fund mangers of public pension are division of large financial centers such as Citigroup, State Street, Merrill Lynch and Morgan Stanley. Robin Blackburn described the so-called sophistication of fund management as;
"However sophisticated fund management becomes, it remains the case that the nominal owners or beneficiaries of the assets in a pension fund have no say in how their savings are managed. There is thus a double accountability deficit, with fund managers not answerable to plan beneficiaries, and corporate management only sporadically answerable to shareholders. Indeed the now widely admitted crisis of corporate governance—several symptoms of which are to be considered below—has its roots in the failures of pension funds, and other institutional investors, properly to represent the interests and views of the ultimate owners, namely the plan participants. The evidence suggests that capitalism works better if its stewards are answerable to someone other than themselves."[60]
Furthermore, Laura Olsen noted the following,
"Total pension-fund management in 1979, including private and public systems, is concentrated in 100 large-scale financial institutions that oversee investments of over 63 percent of the $500 billion tax-exempt assets or approximately $314.3 billion. Significantly, 81 percent of these funds were fully discretionary. The largest ten money managers held $113.5 billion in tax-exempt funds, which accounted for 50 percent of the total assets managed by these institutions. All ten had at least some state and local funds, with either full or partial discretion over investment decisions."[61]
In 2007, the top 300 world pension funds had assets of $10.4 trillion. The world largest pension fund is Government Pension Investment from Japan, with assets of $936 billion and the second largest was Government Pension from Norway with assets of $286 billion. Although these are large pension funds (institutional investors) they are fundamentally the guardians of banks and financial institutions.
The complexity of financial investment and technological development created the need for professional managers such as the hedge fund. What is a hedge fund?
"Hedge funds are simple structures that engage in extremely complex investments. Essentially, they are nothing more than a group of wealthy individual and institutional investors. Because these rich investors are presumed to know how to handle their money intelligently-absorb losses- the Securities and Exchange Commission leaves the funds largely unregulated, an the managers are able to guard their investment carefully. They can move money in and out of stocks or commodities rapidly around the globe in response to market trends and fresh analysis. Investing with borrowed money (leverage) is a trademark of hedge funds, allowing for exponential returns on investment."[62]
In 2005, there were 8000 hedge funds with $1.5 trillion assets under their management. These hedge funds managers engage in risky derivatives markets- an investment instruments such as futures and options whose value depends on the price movements of an underlying investment in stock or currency.
"But with the various styles of investment management that arose as institutional investors tried to promote product differentiation to justify their fee structures, there came a proliferation of benchmarks. Each niche of the equity market had its own style of investing, from large capitalization growth down to small cap value and so each needed its own appropriately skewed benchmark."[63]
As Parenteau described above that investment managers are driven by short-term profit.
Many middle class households in OECD got into the game of speculative investments from IRAs to leverage of home equity. Parenteau understood that the thirst for fees (wealth) will seep down into the middle class. He said,
"By late 1999, households use of leveraging to finance equity investment positions had become so compelling that $24 billion in margin debt was added in November alone. Home mortgages collateralized by equity portfolios were offered by several brokerage houses by the height of the equity bubble. In effect, users of this form of financial engineering appeared indifferent to a margin call that could literally displace them from their homes."[64]
The financialization of capital is a new phase of capitalism where profit (in form of fees and/or commission) is derived from the buying and selling of money. Capital assets are artificially inflated for the sole purpose of market transaction to buy and sell. The Dot.com boom was an artificial inflation of internet assets and the housing boom was driven the same way. John Bellamy Foster summed up three critical points about the financialization of capital.
"This symbiosis had three crucial aspects: (1) The stagnation of the underlying economy meant that capitalists were increasingly dependent on the growth of finance to preserve and enlarge their money capital. (2) The financial superstructure of the capitalist economy could not expand entirely independently of its base in the underlying productive economy – hence the bursting of speculative bubbles was a recurrent and growing problem. (3) Financialization, no matter how far it extended, could never overcome stagnation within production."[65]
Robin Blackburn described financialization as:
"the growing and systemic power of finance and financial engineering" [66]
In other words, the domination of finance in advanced capitalism –the fourth dimension Robin Blackburn called it.
A decadent and speculative nature of financialization is characteristic of advanced capitalism. The development of multinational banking and the financialization of capital can be sum up in two words–finance dominated. Professor Engelbert Stockhammer noted,
"The term finance-dominated rather that finance-led is used to highlight that financialization is shaping the pattern of accumulation (or put in another way: the composition of the components of aggregate demand and their volatitity)."[67]
Although, Stockhammer characterize finance-dominated in terms of nations growth, expenditure, and investment; he failed to understand the context of finance-dominated as a phase of international oligopoly – a phase of capitalism. In the classical imperialism period finance capital reigned supreme; today, in advanced imperialism finance- dominated reigns internationally supreme. Another feature of the development of multinational corporations/banks and finance-dominated is the development of Foreign Direct Investment (FDI)
Foreign Direct Investment
Stephen Hymer clearly points out that the rise of Multinational Corporation/Banking is related to the growth of Foreign Direct Investment (FDI). He said,
" U.S. corporations began to move to foreign countries almost as soon as they had completed their continent-wide integration. For one thing, their new administrative structure and great financial strength gave them the power to go abroad. In becoming national firms, U.S. corporations learned how to become international. Also, their large size and oligopolistic position gave them an incentive. Direct investment became a new weapon in their arsenal of oligopolistic rivalry. Instead of joining a cartel (prohibited under U.S. law), they invested in foreign customers, suppliers and competitors. For example, some firms found they were oligopolistic buyers of raw materials produced in foreign countries and feared a monopolization of the sources of supply. By investing directly in foreign producing enterprises, they could gain the security implicit in control over their raw material requirements. Other firms invested abroad to control marketing outlets and thus maximize quasi rents on their technological discoveries and differentiated products. Some went abroad simply to forestall competition."[68]
Table 1
Historical U.S. Direct Investment Abroad (1950-2006)
Year
Direct Capital Outflow (Billon of Dollars)
1950
.06
1960
1.7
1969
3.1
1982
207.8
2006
2,384.0
Source: Survey of Current Business, July 2007 and
The new weapon in the U.S. Multinational Corporation/Banking arsenal is the $2.3 trillion Foreign Direct Investment in 2006. As noted in the Table 1, US direct investment has increased dramatically since 1950
Also, the Survey of Current Business reported U.S. parent companies have funneled an increasing share of their direct investments abroad through holding-company affiliates. A holding company is a shell company whose purpose is to hold securities or financial assets of other companies. In 1982, foreign affiliates classified as holding companies represented only 9 percent of US Direct Investment in industries, but by 2006 this had rose to account for 30 percent as noted below in Table 2.
Table 2
US Direct Investment in Industries 2006 (million)
Industries Amount Percent
Mining 136,145 5.71
Manufacturing 503,495 21.12
Wholesale trade 164.290 6.89
Information 74,368 3.12
Depository Institution 67,550 2.83
Finance 484,840 20.34
Professional, Scientific 57,429 2.41
Holding Companies 710.336 29.80
Other Industries 185.549 7.78
Total 2,384,004 100.00
In 2003, $7.5 trillion of direct foreign investment outflow was from the Organization for Economic Co-operation and Development (OECD) countries. The United States accounted for about 28 percent and the United Kingdom accounted for 16.5 percent. The massive growth is a result of international oligopoly spurred on by the giant mega mergers. To quote Hans Christiansen and Ayse Bertrand from the OECD,
"While M&A are only one element in total FDI flows, in most OECD countries they account for more than half of total investment. In addition, they tend to be the component of FDI that responds most strongly, or most immediately, to changes in the business climate, financial conditions macroeconomic performance."[69]
Furthermore, Thomas Weisskopf explained to us how the multinational corporation/banking new arsenal is used on underdeveloped countries. He said,
"The increasing significance of foreign investment in manufacturing has important implications for the (nonsocialist) underdevelopment countries. Where foreign investors in an earlier era were primarily concerned with extracting and exporting valuable raw materials, they are now becoming more and more directly involved in the local economy. This leads on the one hand to a greater degree of influence and control over domestic economic affairs. It leads also to a new kind of relationship with the host government. Rather than simply requiring a minimum of interference with their activities, foreign investors now seek the active cooperation of host government in measure design to promote capitalist social and economic relations within the country. The desire to create a 'favorable investment climate' results in a continued spread of capitalism and an increasing integrated world capitalist system."[70]
What Weisskopf is helping us to understand is that monopoly capitalism had developed from principally extracting and exporting raw resources of a country (the monopoly period); transitional period of protecting the flow of extracted raw resources and initial control of countries; to international oligopoly and finance-dominated capital of direct economic control of a country.
Foreign Direct Investment is the latest phase of capitalism. Lenin said,
"Type of old capitalism, when free competition had undivided sway, was the export of goods. Typical of the latest stage of capitalism, when monopolies rule, is the export of capital."[71]
Lenin also noted,
"that that international exchange is a characteristic distinguishing feature of capitalism, but also that uneven development of individual enterprises and individual countries is inevitable under a capitalist system. Some capitalist countries will become rich from its monopolist position to create the 'superabundance of capital'. This 'superabundance of capital' has to be invested somewhere and capitalist will not invest it at home. Thus, the superabundance of capital' is exported overseas."[72]
During the period Lenin was writing his piece on imperialism (monopoly capitalist period), the export of capital was uneven and undeveloped. Much of the export was in the form of loans to countries and infrastructural development to get raw material to the center industries. After 1945, the export of capital took on a new form. The United States was in a strong economic position, Britain industries were destroyed and the UK was forced to ask US for a loan of $3.8 million and France asked for a $1 billion loan. To manage the free flow trade for the US and international finance the US sponsored the Bretton Wood conference to established the International Monetary Fund and the International Bank for Reconstruction and Development (IBRD) which later became the World Bank. The World Bank was capitalized with $10 billion to make loans and to issue securities to promote postwar recovery in Germany, France, Great Britain and Japan. The International Monetary Fund (IMF) was capitalized with $8.8 billion to grants loans to member's countries in financial difficulties. While, IMF and the World Bank were granting loans to countries, the US was using these institutions to export US capital in Europe and former European colonies. The US hegemony dominated the exporting of capital until 1970s. Not only did the US use the IMF and the World Bank as a means of exporting capital but also promoted structural adjustment programs and dependent aid. President Kennedy said,
"Foreign aid is a method by which the United States maintains a position of influence and control around the world, and sustains a good many countries which would definitely collapse, or pass into the Communist bloc,"[73]
In 2004, the United States provided $4.5 billion in some form of foreign assistance to about 150 countries. Israel and Egypt were the largest recipients, although Iraq, which received over $20 billion for reconstruction activities since mid-2003, is the biggest recipient in FY 2004.
Multinational banks found it difficult to compel a Maldeveloped country to change economic policy, but IMF and the World Bank were used as Trojan Horses to force countries to change. For example, many former colonies of European countries had won political independence but were nationalizing industries and promoting non-align economic development. Imperialist powers address the problem of former colonies economic independence by hiring economic mercenaries called Economic Hit Man (EHM). Economic Hit Man's were hired to convince developing countries to accept loans from IMF and World Bank; plus to accept subsidized loans that inevitably funnel back to U.S. multicorporations. A confessed economic hit man, John Perkins said,
"That is what we EHMs do best: we build a global empire. We are an elite group of men and women who utilize financial organizations to foment conditions that make other nations subservient to the corporatocracy running our biggest corporations, our government, and our banks." [74]
IMF and World Bank approved loans on the conditions that national industries are privatize and subordinated to the world capital market. IMF called this program the Structural Adjustment – 1) privatize the economy, 2) promote private investment, 3) restructure your economy to repay the debt, 4) open up your national market to imperialist trade and investment. In other words, become part of the capitalist global market or die.
The IMF and the World Bank, principally run by the United States, have been promoting a policy of global consensus – Washington consensus – imperialist consensus. In 1999, Michael D. Bordo and Harold James prepared a report to the US Congress which stated,
"The collapse of the communist economies, or (in the case of China) their transformation into market economies was the last stage in the creation of the new consensus. The consequence has been an increasing homogeneity of political outlook, as well as of the economic order. Indeed, one key insight is that the two are linked: that economic efficiency depends on a functioning civil society, on the rule of law, and on respect for private property." [75]
Today, the export of capital is dominated by the Foreign Direct Investment from multinational corporation/banks, but also aid and loans from the World Bank and IMF are also use. Today, imperialist countries are in the process of re-dividing the world.
The Re-Division of the World by Imperialist Countries.
"The capitalists divide the world, not out of any particular malice, but because the degree of concentration which has been reached forces them to adopt this method in order to obtain profits. And they divide it 'in proportion to capital,''in proportion to strength,' because there cannot be any other method of division under commodity production and capitalism. But strength varies with the degree of economic and political development. In order to understand what is taking place, it is necessary to know what questions are settled by the changes in strength. The question as to whether these changes are 'purely' economic or non-economic (e.g. military) is a secondary one, which cannot in the least affect the fundamental views on the latest epoch of capitalism. To substitute the question of the form of the struggle and agreements (today peaceful, tomorrow warlike, the next day warlike again) for the question of the substance of the struggle and agreement between capitalist combines is to sink to the role of a sophist."
by Carl Pinkston
On April 26, 1917, V.I. Lenin published a major piece on imperialism titled "Imperialism – Highest Stage of Capitalism". Lenin was able to draw from J.A. Hobson, Imperialism, and Rudolf Hilferding, Finance Capital. Lenin conducted extensive research on imperialism from wide array of writers, but he was very critical of many writers including Hobson and Hilferding. Lenin's work on imperialism remained a premier until Harry Magdoff published The Age of Imperialism in 1969 and Kwame Nkrumah, Neo-Colonialism-The Last Stage of Imperialism, in 1965.
Since 1990, the world has changed and considerably more so since the inter-imperialists rivalry of the classical imperialism period of 1870-1945. There have been changes in the development of capitalism, finance, resource control and international investments. Along with the changes in capitalism there have been a series of world wide financial and economic crises. In other words, we are in the period of advanced imperialism. It is not fundamentally ideological, military, or social but principally socio-economic – a new phase of capitalism.
In what follows is the examination of the development of capitalism from competitive capitalism to international oligopoly- advanced capitalism. Also, capitalist development is not limited to the concentration of international production but also to the development of finance domination – finanancialization of capital. The international oligopoly and finance domination are forging new imperialist centers that are slowing re-dividing the world by a new map making machine – Foreign Direct Investment. Proxy wars and American form of colonialism will attempt to conceal international struggle of advanced imperialism today. However, advanced imperialism will expose its naked actions in one form or another and no neo-imperialism apologist can hide its cloths. .
Advanced Capitalism
Modern capitalism or super-capitalism (as coined by a liberal economist Robert Reich) is a phase of capitalism. The history of modern capitalism can be described as follows: 1) 1860-70, the apex of development of free competition; 1870-1945, the period of monopoly capitalism, cartels, trusts, syndicates and finance capital; 2) 1945-1973, the US dominated oligopoly capitalism, multi-divisional corporations; and 3) the 1973-75 crisis and the boom of the 1990's cultivated the massive growth of giant multi-national corporations. By 1870, it was clear that capitalism had developed from a competitive capitalism to monopoly capitalism. Capitalism development is not only internal but is express internationally in the form of imperialism. Lenin said,
"that capitalism has been transformed into imperialism;" [1]
Prior to 1920, the management of large enterprises was centralized in a few hands (called Tycoons) that managed production, secure raw resources for the industry, and marketed a few products. Giant enterprises were managed by Tycoons with small staffs. Andrew Carnegie ran the Pennsylvania Railroad and Carnegie Steel; John D. Rockefeller ran Standard Oil Company (whose descendant is ExxonMobil) and Henry Ford ran Ford Motors. Very few giant enterprises were corporate in structure; that gave the ability to have internal financing; and multi-divisional in operation As Michael Reich noted,
"Of the Fortune 500 largest corporation in 1994, more than half were founded between 1880 and 1930." [2]
The events of the two world wars and the success of the Bolsheviks revolution ended the phase of monopoly capitalism and transformed capitalism into US dominated oligopoly capitalism-the rise of giant corporations. Marxist's economists Baran and Sweezy noted,
"Under capitalism the highest form of success is business success, and under monopoly capitalism the highest form of business is big corporation."[3]
The characteristic features of a giant corporation as defined by Baran and Sweezy is: 1) control rest in the hands of management (ie Board of Directors and Chief Executive Officers), 2) management is self-perpetuating, and 3) each corporation normally achieves financial independence through the internal generation of funds which remain at the disposal of management.
"The replacement of the individual capitalist by the corporate capitalist constitutes an institutionalization of the capitalist function. The heart and core of the capitalist function is accumulation: accumulation has always been the prime mover of the system, the locus of its conflicts, the source of both its triumphs and disasters."[4]Baran and Sweezy made clear.
Along with the rise of giant corporations was the change in administrating giant corporations and the development of a multi-divisional structure. During the monopoly period, centralization of management was the norm and a few men were entrusted with very complex decision making. Stephan Hymer, a Marxist economist, said,
"Thus, product development and marketing replaced production as a dominant problem of business enterprise. To meet the challenges of a constantly changing market, business enterprise evolved the multidivisional structure. The new form was originated by General Motors and DuPont shortly after World War I, followed by few others during the 1920s and 1930s, and was widely adopted by most of the giant U.S. corporations in the great boom following World War II. As with the previous stages, evolution involved a process of both differentiation and integration. Corporations were decentralized into several divisions, each concerned with one product line and organized with its own head office. At a higher level, a general office was created to coordinate the divisions and to plan for the enterprise as a whole."[5]
The diversification movement in the 1960, multi-product lines, complex internal financing and the need to plan the market are basic features of multi-divisional corporations. As Stephan Hymer indicated,
"The new corporation formed has great flexibility. Because of its decentralized structure, a multidivisional corporation can enter a new market by adding a new division while leaving the old divisions undisturbed. (And to a lesser extent it can leave the market by dropping a division without disturbing the rest of its structure.) It can also create competing product-lines in the same industry, thus increasing its market share while maintaining the illusion of competition. Most important of all, because it has a cortex specializing in strategy, it can plan on a much wider scale than before and allocate capital with more precision."[6]
From 1945-1961, the increase in mergers and internal growth forged a greater concentration of production – US dominated corporations.
"It is fair to assume that the greatest increases in manufacturing concentration have come in the three periods of greatest mergering. But increased concentration can also come from internal growth either through the reinvestment of earnings or from the sale of new securities, provided, of course, that growth from these sources is more rapid for larger companies than for smaller companies."[7], as noted liberal economist Gadiner Means.
Means also reported that by 1969,
"The top 10 firms account for fully one-seventh of total industrial sales and almost one-quarter of total industrial after-tax profits. The top 100 firms account for more than 40 percent of total sales and almost 60 percent of total."[8]
During the period US dominant oligopoly capitalism, giant multi-divisional corporation practiced priced leadership, sabotage of production, and all without entering into trusts, syndicates, or associations. Michael Reich, another liberal economist, says it well that,
" Besides, the largest companies had grown so vast that prices could be maintained and output controlled by the simple expedient of collusion among the two or three biggest ones in each industry (or, to use the more technical and less alarming language of economics, 'oligopolistic coordination'). Steel was controlled by three giants – United States Steel, Republic, and Bethlehem; the electrical equipment and appliance industry by two – General Electric and Westinghouse. In basic chemicals, there were three – DuPont, Union Carbide, and Allied Chemical. In food processing, three dominated – General Goods, Quaker Oaks, and General Mills. In tobacco, three – R.J. Reynolds, Ligget & Myers, and American Tobacco; in jet engines, two – General Electric and Pratt & Whitney; in automobiles, three – General Motors, Ford, and Chrysler. In the new industry of television broadcasting, there were three networks – NBC,CBS, and ABC. This consolidation took place all across the vast expanse of American industry."[9]
The economic crisis of 1973-75 transformed US dominated oligopoly capitalism to internationalization of oligopoly. Manuel Castells argued that the cause of the 1973-75 crisis or rupture is as follows:
"The capitalist mode of production is an expanding contradictory system. Capitalist societies are shaped by the particular way these contradictions develop through the conflicts and interactions defined on the social classes and by their political expression. The major structural problems created by the process of capitalist accumulation in the United States were determined by the upheavals caused by new economic policies and the transformation of the system on the basis of a new relationship between the sate and the large corporations. The internationalization of capital, the creation of debt economy, and the decisive role of the state in the process of accumulation and realization of profit were major structural trends that allowed for sustained capitalist growth during almost three decades. But the introduction of these countertendencies to fight stagnation triggered new contradictions that were increasingly expressed through monetary crisis and the sprawl of structural inflation. In this particular situation, dominated by the defeat of imperialism in Indochina, increasing intercapitalist competition, and the development of social unrest within advanced capitalist societies, the new structural contradictions came together in certain conjunctural factors that, in return, made them more acute and precipitated the latest crisis."[10]
The transformation to the internationalization of oligopoly was driven principally by the development of multinational corporations. Stephen Hymer said,
"Since the beginning of the Industrial Revolution, there has been a tendency for the representative firm to increase in size from the workshop to the factory to the national corporation to the multidivisional corporation and now to the multinational corporation."[11]
Multinational corporation was pioneered by Standard Oil at the beginning of 1900 and today the top 50 US giant corporations operate internationally. Paul Baran and Paul Sweezy best described a multinational corporation as follow:
"It is not enough that a multinational corporation should have a base of operations abroad that; its true differentia specifica is that 'its management makes fundamental decision on marketing, production, and research in terms of the alternatives that are available to it anywhere in the world."[12]
Multinational corporations concentrated production on an international level. Capitalist apologist economists Fatemi, Williams and Saint-Phalle pointed this out:
"The significant impact of the multinational corporation is the internationalization of production and in the incipient development of a world economy. In this process the investment decisions and operations of companies are increasingly viewed in terms of world allocations of resources and of maximizing world welfare."[13]
Translation for maximizing world welfare is maximizing profit.
Once the internationalization of production was the exception, today, multinational corporations have made it the rule. The United Nations report titled "World Investment Report 2007", stated;
"The world's 100 largest TNCs[14] play a major role in international production. In 2005, they accounted for 10%, 17% and 13% repectively of the estimated foreign assets, sales and employment of all TNCs worldwide…..The top 10, with about $1.7 trillion in foreign assets (i.e almost 36% of the total foreign assets of the top 100), include four TNCs in petroleum and three in automobile production."[15]
Also, the United Nations Conference on Trade and Development (UNCTD) stated,
"Of the top 100 TNCs, 58 belonged to six industries; motor vehicles (11), petroleum (10), electrical and electronic equipment (10), pharmaceuticals (9), Telecommunications (9), and electricity, gas and water services (9)…If ranking were to be based on foreign sales or foreign employment they would yield different result. Ranking by sales would move the petroleum TNCs into the top four positions on the list and another four motor vehicles TNCs into the top 10 .The largest TNC in terms of foreign sales (ExxonMobil) is 10 times larger than the firm ranked 55 in the list. Ranking the companies by foreign employment would present yet another picture, placing three retail TNCs in the top position. On average, the largest TNCs had affilates in 39 foreign countries. Deutsche Post (Germany) was the leader in this regard, with value-added activities in 103 host economies, followed by Royal Dutch/Shell (United Kingdom/Netherlands) with 96."[16]
In 2006, America's Fortune 500 largest corporations generated over $10.6 trillion in revenues and over $645 billion in profits. The world's 100 largest corporations in 2005 generated over $10.2 trillion revenues and $696.8 billion in profits. The world's profits represent about 100 underdeveloped countries Gross Domestic Product. In other words, 100 underdeveloped countries Gross Domestic Product would double if the profits were shared.
As reported in the Fortune 500 May 5, 2008 edition, the largest corporation in the United States in sales for 2007 was Wal-Mart Stores, Inc (a consumer product company) with a total revenue of $379 billion and generated a profit of $13 billion. Wal-Mart Stores Inc employs over 1.9 million workers worldwide and operates 4,750 stores (3,600 in the US). It is the largest private employer in the world and operates in Mexico as Walmex, in United Kingdom as ASDA, and in Japan as Seiyu.[17] The Wal-Mart monopoly is both horizontal and vertical. From the vertical side 20-30 percent of the manufacturers sell their product to one big box – Wal-Mart. Ray Bracy, Wal-Mart Vice President for Federal & International Public Affairs said.
" Wal-Mart prefers to deal directly with Chinese and other suppliers and 'If there's a middleman in our process, even if it's a Wal-Mart middleman, we try and eliminate those. Wal-Mart inherited a massive list of global suppliers, from PREL which is Pacific Rim Export Limited that now is winnowed down to 6,000 global suppliers which is 80 percent in China."[18]
In addition, Wal-Mart has used computerized supply chains to master the science of global sourcing.
Wal-Mart horizontal monopoly is shown by the various subsidiaries – Wal-Mart Stores Divisions in the US (Discount stores, Super-centers and Neighborhood markets); Sam's Club, and Wal-Mart International. On the international side Wal-Mart operates in 13 countries with 2,757 locations, employs about 550,000 and generated sales of about $77 billion.
"Wal-Mart's marketplace clout is hard to overstate. In household staples such as toothpaste, shampoo, and paper towels, the company commands about 30% of the U.S. market, and analysts predict that its share of many such goods could hit 50% before decade's end.", as reported by Business Week.[19]
Wal-Mart is three times the size of the No. 2 retailer, France's Carrefour. Once again as Business Week noted, "Every week, 138 million Wal-Mart." shoppers visit Wal-Mart's 4,750 stores; last year, 82% of American household made at least one purchase at Wal-Mart. Wal-Mart is an example of the modern corporation – modern capitalism.
Not only the massive growth of multinational corporations has had profound impact but also one of the characteristic features of modern capitalism is the continuing process of the concentration of production. The international concentration of production is driven by the global merger and acquisition activities.
"A new surge of corporate concentration is in the process in the United States and abroad, driven in large measure by a restructuring of global markets through mergers and acquisitions (M&As)"[20]as reported, by Richard B. Du Boff and Edward S Herman.
In 1999, the worldwide merger deal (also know as megamergers) were $3.4 trillion, but by 2007 worldwide merger deal reach $4.7 trillion. Global consolidation was in the area of Materials, Financials and Energy/Power sectors. A record-breaking 47% of all mergers were cross-border mergers and acquisitions. Even capitalist advisors, Merger and Acquisition Review described the massive concentration of multinational corporations, as follows
" Consolidation in the Materials and Energy and Power sectors combined for nearly 29% of worldwide activity largely due to BHP Billiton's US$193 billion bid for Rio Tinto. The deal, which ranks as the second biggest deal of all time, bolstered the all time, bolstered the already high level of activity in the Materials sector. Financials accounted for 16% of activity during 2007 driven by the takeover of ABN Amro by a consortium led by the Royal Bank of Scotland, which ranks as the biggest financial merger on record. Activity in the Industrials sector topped all industry groups, by number, with over 5,600 deals announced during 2007."[21]
Du Boff and Herman give us a very clear picture of the merger and acquisition of multinational corporations.
"Unlike those of the 1980s, the current mergers are financed primarily with corporate stock, not borrowed money, and companies are not being broken into pieces for sale but are merging to enlarge their size. Today's M&As are based on long-term strategic and economic motives. This involves acquiring the scale and resources to compete at home and abroad, protecting and enlarging market share, reducing competition and attaining greater pricing power, in what large corporations see increasingly, often primarily, as a global market ...eiither way, excess capacity squeezes profitability, and mergers and takeovers are effective ways to reduce it, if temporarily, by shedding labor and closing down less profitable facilities.",[22]said Du Boff and Herman.
Since the 1970s technological revolution, the multinational corporation has developed advanced cargo ships, cargo planes, overseas cables, steel containers, satellites communication and micro-computers to increase production and transportation. Even a liberal writer such as William Greider pointed out that
"Fast, lean, flexible – these familiar buzzwords are modern corporate management's response to the revolutionary conditions. Rigorous contests for design efficiency. Continuous suppression of costs including labor costs. Redeploying elements of production overseas to capture local advantages, from low wages and taxes to other political favors. Securing access to the hot new markets in the world where rising demand exceeds supply and per unit profit margins can be widened. Reducing the fixed costs by dismantling corporate assets – selling plants and properties, shrinking middle-level bureaucracies, converting jobs to temporary status. Sharing cost burdens by forming alliances with putative rivals who will jointly finance the overhead of research and development, even share production."[23]
During the hey day of monopoly capitalism trusts, syndicates and agreements were the norm of giant enterprises but modern giant multinational corporation practice joint ventures, cutting subsidiaries and price leadership. Joint venture is a corporate practice of sharing the cost of research, development and production. William Greider indicated that
"Corporations hedge against the risk of future rivals by globalizing – forming partnerships with their potential competitors, the new producers in emerging markets. The major multinationals hope to guide their evolution and, if it comes to that, to share the future markets with them in transnational corsortia of producers. Even if this corporate strategy should succeed, it still leaves out one group: the industrial workers back home whose jobs were traded away."[24]
Also, multinational corporations engage in market leverage.
"Market leverage, in its usual application, provides domestic enterprises with greater economies of scale, allowing them to produce for their shelter home market, then sell surplus production into the other guy's market, often at competitive discounts. Japan had used market leverage to brilliant advantage, relentlessly capturing market share and sometimes entire sectors, from automobiles to consumer electronics."[25],as presented by William Grieder.
Today, advanced capitalism – multi-national corporation – is international oligopoly. Advanced capitalism was developed during the period of giant multi-division corporations. Capitalism has been transformed into imperialism and advanced capitalism has been transformed into advanced imperialism. Samir Amin also noted the change in capitalism – advanced capitalism, he said:
"Capitalism today is totally different. A handful of oligopolies alone occupy all the dominant heights in the conduct of national and global business. These are not strictly financial oligopolies but 'groups' within which the production activities of industry, agribusiness, commerce, services, and of course financial activities coalesce."[26]
International oligopoly cannot abolish crisis or international crisis in particular. However, economic and financial crisis in turn increased the tendency for concentration of international oligopoly. Lenin pointed this out over 100 years ago when he said,
"The statement that cartels can abolish crises is a fable spread by bourgeois economists who at all costs desire to place capitalism in a favourable light. On the contrary, monopoly which is created in certain branches of industry, increases and intensifies the anarchy inherent in capitalist production as a whole."[27]
Reinhart and Rogoff identified the following post 1973-75 crises during the international oligopoly period: Spain (1977), Norway (1987), Finland (1991), Sweden (1991) and Japan (1992), Australia (1989), Canada (1983), Denmark (1987), France (1994), Germany (1997), Greece (1991), Iceland (1985), Italy (1990), New Zealand (1987), Mexico (1982), United Kingdom, (1974, 1991, 1995) and United States (1984).[28] The Economist reported the 2007-08 financial crises wiped out $5 trillion value from worldwide public companies balance sheet.[29]
International oligopoly is the latest phase in the development of capitalism. But to understand the significance of international oligopoly is to take into consideration the financialization of capital.
Mulitnational Banking and Financialization of Capital
The development of modern banking arises with the concentration of multinational banking – the oligopoly of finance. Lenin noted that,
"As banking develops and becomes concentrated in a small number of establishments, the banks grow from humble middleman into powerful monopolies having at their command almost the whole of money capital of all the capitalists and small businessmen and also the larger part of the means of production and of the sources of raw materials of the given country and in a number of countries. This transformation of numerous humble middlemen into a handful of monopolists represents one of the fundamental processes in the growth of capitalism into capitalism imperialism."[30]
Bank monopoly (finance capital) transformed bankers as industrial capitalists because banks coalescence with industry capital; and banks control and in some cases created the largest industries. For example, Ron Chernow gives us a vivid example of how JP Morgan created US Steel.
" U.S. Steel stoked the bonfire of speculation, at a time when million-dollar issues were considered large, the new corporation was capitalized at a whopping $1.4 billion (23 billion in 1989 dollars) – the first billion-dollar corporation in history. At the time, all U.S. manufacturing combined had only $9 billion in capitalization. To manage the flood of bonds and stock that finance the deal, Pierpont mustered a monster syndicate of three hundred underwriters. He appointed ace stock manipulator James R. Keene – a sharp-faced man with a pointed beard, known as the Silver Fox of Wall Street- to make a market in the shares. By simultaneously buying and selling shares, Keene created steadily rising prices and the illusion of tremendous volume. Despite predictions that so much stock would saturate the market, the issue's success confirmed the boast of Morgan partner George W. Perkins that a Morgan issue "from the desert of Sahara'' would find buyers. For its servers, the syndicate took in $57.5 million in stock (nearly $1 billion in 1989 dollars). The U.S. Steel promotion made explicit the marriage of finance and industry that marked the Baronial Age; when four Morgan partners joined the new trust's board, the marriage was consummated."[31]
Once again, the Great Depression and the two World Wars ended the reign of finance capital.
During the period of 1945-1973, the giant multidivisional corporation had accumulated massive internal capital to expand, control and monopolized more industries. In other words, multidivisional corporations no longer needed giant banks money capital. The Post-1945 age was a period of banks separating from multidivisional corporations and the rise of multinational banks. Harry Magdoff noted this when he said,
"This development in banking is a fitting complement to the new role of the United States as the leader and organizer of the imperialist order. What could be more natural than the coincidence of (a) the widespread military and political presence of the United States around the globe (via wars, military bases, and military and economic aid);(b) the dominant position of United States capital in the creation of multinational industrial empires; (c) the evolution of the dollar as the key international medium payment, credit, and reserve; and (d) the growth of multinational banking."[32]
It's also during this period that banks were transforming into multinational banks.
"When ranked by year 2000 revenues, 115 of the 500 largest companies in the world are FIs.[33] Ninety percent of these firms, which collectively hold USD $33 trillion of assets, are either banks or insurers."[34]
In the Forbes 2008 special issue it reported HSBC Holdings as the worlds largest company (based on a composite score and fourth largest bank in the world) with sales of 147 billion dollars and assets of 2.3 trillion. Global Finance reported that in 2005 the top 10 global banks held assets of $12.6 trillion. They noted
"The growth in the assets held by the world's banking titans has been anything but even ,though, and, as a result, the top of the list has been transformed. With a massive 36% jump in assets to more than $1.5 trillion, Switzerland's UBS has leapfrogged second place Citigroup to adopt its mantle as the world biggest bank."[35]
Citigroup Inc, operating as Citi, is the biggest bank in the world and formed from a merger of Citicorp and Travelers Group in 1998, the price of the merger was $140 billion. Citigroup is engaged in the business of credit card services, consumer finance, brokerage, insurance, and banking. Citigroup Inc has a $2.4 trillion in assets, employs 332,000 employees around the world, and has accounts in over 100 countries. In Mexico Citibank is known as Banamex, in El Salvador Citigroup is known as Banco Cuscatlan, and the Central America credit card is Banco Uno.
Multinational banking is dominated by Citibank, Bank of America Corp, HSBC Holdings, J.P. Morgan Chase & Co., and Bank One Corp. The Federal Reserve Statistical Release of September 2007, reported Citibank NA, Bank of America and JP Morgan Chase had a combined total of consolidated asset of $3.8 trillion. Multinational banks were being created by the giant mergers such as the mega merger of Chase Manhattan and J.P. Morgan & Company Inc, which created J.P. Morgan Chase & Chase Co. In addition, the National City Bank of New York, established in 1894, was considered one of the largest banks in 1897 and had open overseas banking offices by 1914. By 1955 National City Bank of New York merged with First National Bank and by 1976 it had changed the name to Citibank. By 1998, a mega merger of $70 billion between Citicorp (a creation of Citibank "one-bank holding company") and Travelers created the largest financial institutions -Citigroup. Further concluded by James Houpt,
"Merger and acquisitions among large U.S. banking organizations since the mid-1980s have concentrated foreign lending among fewer U.S. banks. At the end of 1998, for example, a separately monitored group of six large money center banks held 83 percent of all transfer risk claims of U.S. banks. In 1986 that group consisted of nine banks, but it held only 58 percent of all such claims."[36]
Banking was transformed from a single person controlled enterprise to giant multinational banking. As Magdoff clearly illustrated,
"The business economics behind the upsurge of foreign banking is similar to the motives behind the movement of industry abroad: a relative shrinkage of business opportunities on the domestic front and the attractive profit opportunities overseas."[37]
The rise of multinational banking is the expansion of foreign branches into other countries. James Houpt of the Board Division of Banking Supervision and Regulation stated the following:
" Consequently, the number of U.S. Banks having foreign branches began to grow. In late 1965, only 13 U.S. banks had foreign branches, and most of those had only a few: the branches' assets totaled less than $10 billion. By 1970, 79 banks had foreign branches, with assets totaling 53 billion. Ten years later, 159 banks – nearly every U.S. banks having assets of more than $2 billion – had at least one foreign branch, the number of branches had grown to 787, and combined branch assets exceeded $340 billion."[38]
By 1998 the Banking Empire was complete and worldwide. Christian Weller from the Center for Popular Economics makes a conclusive point,
"The global reach of private banking has two major dimension; cross-border lending and direct investment in the financial services sector of other nations. Cross-border lending occurs when a U.S. institution like BankAmerica lends dollars to the Mexican government or to a company in Mexico. Direct investment occurs when a U.S. bank like Citibank establishes a subsidiary in a foreign country. Banks that have subsidiaries in other countries are called multinational banks (MNBs). The largest U.S. banks do both: lend internationally and have an array of subsidiaries active in the financial services sector of many foreign countries."[39]
Magdoff reported that US banks began entering the foreign markets in the 1970s by (1) the use of foreign banks as correspondent bank, (2) by setting branches which carry on full banking operations as they would in the United States, and (3) by setting up subsidiary corporations. These corporations buy into foreign-owned banks, set up banks and finance companies abroad, and invest in a wide variety of non-banking business.[40] Foreign branch offices that provide international banking services (full authority to represent and commit the bank) is the most preferred international banking structure. In 1998 Citibank and BankBoston purchased Argentine banks allowing the number of Citibank foreign branches to reach the peak of 935. Foreign subsidiaries, a separately incorporated wholly owned by the U.S. banking parent, is very common internationally because they can extend its reach into local retail banking in ways not practical through branches. Again as Houpt noted,
"Foreign subsidiaries vary widely in size, depending on their role. Some approach the size the of large U.S. banks, when measured by total assets (including claims on affiliates). At the end of 1998, the 23 largest foreign subsidiaries (those having assets of more than $5 billion, about 2 percent of all such subsidiaries) accounted for 68 percent of all foreign subsidiary assets. The nearly 800 subsidiaries having total assets of less than $100 million (70 percent of all foreign subsidiaries) held less than 2 percent of total foreign subsidiary assets."[41]
Multinational banks also engage in foreign joint ventures and simple representative office. Lastly, US banks use Edge corporations, a limited purpose subsidiary, where the banking business is linked to foreign or international transaction. Also, indicated by Houpt that,
"At the end of 1998, 70 percent of the assets of all foreign subsidiaries of U.S. banking organizations were owned through Edge corporations."[42]
Multinational banks have taken on the role of merchant banks, investment banks and active investors. The modern merchant banks, however, tend to advise multinational corporations and wealthy individuals on how to use their money. The advice varies from counsel on merger and acquisition to recommendation on the type of credit needed. The investment banks have taken on the job of generating loans and initiating complex financial transactions. More often than not, multinational banks were deal makers and not advisors. They would recommend a company for Leverage Buyout (LBO) deals that they would compete against one of their own underwriter clients. Ron Chernow describes the reinvention of banks into merchant banking. He said,
"Just when the 1982 Rule 415 had seemed to end the problem of banker-company collusion, investment banks reinvented it with merchant banking. It was no coincidence that Morgan Stanley's entry into merchant banking occurred after the advent of Rule 415, for through LBOs it could restore the exclusive relationship lost in the transactional age. What better hold to have on a company than to own a large piece of it? Three of the five Burlington board members were suddenly Morgan Stanley managing directors."[43]
Although, the number of banks has dropped 29 percent from 1994 to 2003, the number of bank branches has increased by 15 percent. This is also the period of rapid technological advances with the proliferation of automated teller machines (ATM), the rise of the Internet and broadband.[44] The number of ATMs has surpassed 1.5 million worldwide. The Retail Banking Research reported that the USA, Japan, Brazil, and China account for half the global ATM market. In 2005, Asia Pacific had the largest regional ATM market with 31% of the global total, having recently overtaken North America at 29%.
A new financial trend was developing in capitalism after the 1973-75 crises. Sweezy pointed out three trends transforming capitalism:
"(1) the slowing down of the overall rate of growth, (2) the worldwide proliferation of monopolistic (or olgipolistic) multinational corporations, and (3) what may be called the financialization of the capital accumulation process."[45]
By 1973 Robert Brenner, noted that there was persistent stagnation of private capital accumulation which was the slowing down of the overall rate of growth.[46] The last section covers the proliferation of oligopolistic corporation. However, the newest phenomenon of advance capitalism is the development of financialization of the capital accumulation process. John Bellamy Foster explained further that the financialization of capital is;
"The resulting 'double process of faltering real investment and burgeoning financialization' as capital sought to find a way to utilize its economic surplus, first appeared with the waning of the 'golden age' of the post-Second World War decades and has persisted, Sweezy observed, 'with increasing intensity to the present."[47]
Greta R. Krippner defines financialization as
"a pattern of accumulation in which profits accrue primarily through financial channels rather than through trade and commodity production."[48]
Another liberal writer, Gerald A. Epstein described the new financial period as
"Evidently, then, sometime in the mid- to late 1970s or early 1980s, structural shifts of dramatic proportions took place in a number of countries that led to significant increases in financial transactions, real interest rates, the profitability of financial firms, and the shares of national income accruing to the holders of financial assets." [49]
The most important development that has spurred the rise of financialization of capital is information technology. As Richard Barnet and John Cavanagh put it,
"The introduction of state-of-the-art information technology has changed what banks are and what banks do. Computers and electronic communications networks have expanded the markets for money products and reduced the costs of making transfers, in large measure by eliminating thousands of jobs for clerks, tellers, messengers, and the like. But the installation of the automated systems has required huge capital investments. In 1990, commercial banks in the United States spent $15 billion on information technology. The need to amass large investment funds for such purposes has encouraged the consolidation of investment and banking corporations. Firms merge to save costs by sharing expensive data systems. These systems facilitate the speedy settlement of money trading; even a few seconds of exposure before a transfer is settled can spell disaster if millions of dollars are involved."[50]
The informational technology has ushered in the computerization and the Internet access of 24 hours investment news for individual investors but it
"facilitated the identification of asset price trends, fostered momentum investing and for a while at least, made momentum investing a self-fulfilling prophecy."[51]
Electronic money has created massive fraud, computer breakdown due to viruses; gridlock and most importantly electronic transfers are secret. Barnett and Cavanagh pointed out that electronic money is money that is hidden funds from regulators, creditors, wives or husbands. The Cayman Islands, Bahamas, Bermuda, Cape Verde, Hong Kong, Bahrains have all serve as tax havens for the rich.
"Grand Cayman's financial district is reputed to have the highest concentration of fax machines in the world to serve its 548 banking outposts, which hold assets of about $400 billion." [52]
In the Cayman Islands New Resident Magazine reported that Cayman Island is the world's fifth largest financial centre with 300 banks registered and approximately one trillion dollars in deposit; 8,000 investment funds, 740 companies registered as captive insurance companies and 135 registered trust companies. [53]
The rise of the Euromarket facilitated the financialization of world capital. Barnett and Cavanagh said,
"By the 1970s, for every dollar U.S Banks were lending to non-Americans from their domestic bank offices, they were lending six or seven more from offshore facilities that collectively came to be called the Euromarket. This pooling of funds, mostly in dollars, started in Europe to accommodate the financial needs of Communist China, but it soon became a global money pool that could be used by borrowers anywhere. The distinguishing feature of the Euromarket is that money is denominated in a currency different from the official currency where the deposits are located."[54]
In other words, Euromarket is money (capital) for the multinational corporation in denomination that suit world investments.
Along with the rise of the Euromarket is the buying and selling of money itself. After Richard Nixon ended the backing of US dollars with gold and Paul Volcker, chair of the Federal Reserve Board, allowed the interest and exchange rates to float, the monetary system became a casino – place your bet and hope for the best. Barnett and Cavanagh said,
"The buying, selling, and lending of monetary products worldwide became businesses in themselves. Most of it had little or nothing to do with investment in either production or commerce. (However, as exchange rates became more volatile, hedging became almost a necessity for some transnational businesses.) Foreign direct investment in the Third World fell as the leading commercial banks of the world saw that they could reap quicker profits in commissions, fees, and interest by 'recycling' ten of billions of 'petrodollars' from the coffers of Kuwait and Saudi Arabia to the governments and their business associates in poor countries."[55]
The separation of banking finance from the multinational corporation, technological development in communication and information processing, aging baby boomers, and the financial institutions quest for profits (commission or fees) have given rise to Institutional Investors. Institutional investors as defined by Blommestein and Norbert Funke is a
" financial institutions that 'invest' savings of individuals and non-financial companies in the financial markets."[56]
Institutional investors generally are pension funds, insurance companies, open-end funds, hedge funds, closed-end funds, and commercial and security banks. Institutional investors have become a significant financial development of advanced capitalism. The size of Institutional investors was $24.4 trillion in the Organization for Economic Co-operation and Development (OECD) countries.
Pension funds have taken on a greater share of the role in Institutional investments. Retirement trusts increased from $2 billion in 1940 to $58 billion by 1977. Laura Olson, a liberal economist, best describe the development of the pension fund.
"During the 1950s and 1960s public-system investments tended to be legally restricted to certain types of fixed-income securities, particularly public sector obligations and bonds. As late as 1961 stocks accounted for only 3 percent ($.6 billion) and corporate bonds 39 percent ($8.5 billion)of total portfolios, while public securities represented nearly half ($10 billion) of investments. In the mid-1960s corporate bonds and stocks actually surpassed public issues. By 1976, the former accounted for 74 percent while public sector obligations represented only 11 percent of total state and local retirement trust portfolios."[57]
Laura Olson exposed the false appearances of workers control of retirement trust noting that
"banks and insurance companies serve as custodians and advisers for substantial number of public pension systems, thus buttressing the power of financial institutions considerably. For example, 21 percent of total plans rely on the services of banks and 23.5 percent on insurance companies. While the power of these outside custodians and advisers varies widely, they often obtain full or partial control over the assets. Further, 'in some cases one-half of the members of the investment committees [of state and local boards] represent financial institutions."[59]
She is correct when in fact many of the fund mangers of public pension are division of large financial centers such as Citigroup, State Street, Merrill Lynch and Morgan Stanley. Robin Blackburn described the so-called sophistication of fund management as;
"However sophisticated fund management becomes, it remains the case that the nominal owners or beneficiaries of the assets in a pension fund have no say in how their savings are managed. There is thus a double accountability deficit, with fund managers not answerable to plan beneficiaries, and corporate management only sporadically answerable to shareholders. Indeed the now widely admitted crisis of corporate governance—several symptoms of which are to be considered below—has its roots in the failures of pension funds, and other institutional investors, properly to represent the interests and views of the ultimate owners, namely the plan participants. The evidence suggests that capitalism works better if its stewards are answerable to someone other than themselves."[60]
Furthermore, Laura Olsen noted the following,
"Total pension-fund management in 1979, including private and public systems, is concentrated in 100 large-scale financial institutions that oversee investments of over 63 percent of the $500 billion tax-exempt assets or approximately $314.3 billion. Significantly, 81 percent of these funds were fully discretionary. The largest ten money managers held $113.5 billion in tax-exempt funds, which accounted for 50 percent of the total assets managed by these institutions. All ten had at least some state and local funds, with either full or partial discretion over investment decisions."[61]
In 2007, the top 300 world pension funds had assets of $10.4 trillion. The world largest pension fund is Government Pension Investment from Japan, with assets of $936 billion and the second largest was Government Pension from Norway with assets of $286 billion. Although these are large pension funds (institutional investors) they are fundamentally the guardians of banks and financial institutions.
The complexity of financial investment and technological development created the need for professional managers such as the hedge fund. What is a hedge fund?
"Hedge funds are simple structures that engage in extremely complex investments. Essentially, they are nothing more than a group of wealthy individual and institutional investors. Because these rich investors are presumed to know how to handle their money intelligently-absorb losses- the Securities and Exchange Commission leaves the funds largely unregulated, an the managers are able to guard their investment carefully. They can move money in and out of stocks or commodities rapidly around the globe in response to market trends and fresh analysis. Investing with borrowed money (leverage) is a trademark of hedge funds, allowing for exponential returns on investment."[62]
In 2005, there were 8000 hedge funds with $1.5 trillion assets under their management. These hedge funds managers engage in risky derivatives markets- an investment instruments such as futures and options whose value depends on the price movements of an underlying investment in stock or currency.
"But with the various styles of investment management that arose as institutional investors tried to promote product differentiation to justify their fee structures, there came a proliferation of benchmarks. Each niche of the equity market had its own style of investing, from large capitalization growth down to small cap value and so each needed its own appropriately skewed benchmark."[63]
As Parenteau described above that investment managers are driven by short-term profit.
Many middle class households in OECD got into the game of speculative investments from IRAs to leverage of home equity. Parenteau understood that the thirst for fees (wealth) will seep down into the middle class. He said,
"By late 1999, households use of leveraging to finance equity investment positions had become so compelling that $24 billion in margin debt was added in November alone. Home mortgages collateralized by equity portfolios were offered by several brokerage houses by the height of the equity bubble. In effect, users of this form of financial engineering appeared indifferent to a margin call that could literally displace them from their homes."[64]
The financialization of capital is a new phase of capitalism where profit (in form of fees and/or commission) is derived from the buying and selling of money. Capital assets are artificially inflated for the sole purpose of market transaction to buy and sell. The Dot.com boom was an artificial inflation of internet assets and the housing boom was driven the same way. John Bellamy Foster summed up three critical points about the financialization of capital.
"This symbiosis had three crucial aspects: (1) The stagnation of the underlying economy meant that capitalists were increasingly dependent on the growth of finance to preserve and enlarge their money capital. (2) The financial superstructure of the capitalist economy could not expand entirely independently of its base in the underlying productive economy – hence the bursting of speculative bubbles was a recurrent and growing problem. (3) Financialization, no matter how far it extended, could never overcome stagnation within production."[65]
Robin Blackburn described financialization as:
"the growing and systemic power of finance and financial engineering" [66]
In other words, the domination of finance in advanced capitalism –the fourth dimension Robin Blackburn called it.
A decadent and speculative nature of financialization is characteristic of advanced capitalism. The development of multinational banking and the financialization of capital can be sum up in two words–finance dominated. Professor Engelbert Stockhammer noted,
"The term finance-dominated rather that finance-led is used to highlight that financialization is shaping the pattern of accumulation (or put in another way: the composition of the components of aggregate demand and their volatitity)."[67]
Although, Stockhammer characterize finance-dominated in terms of nations growth, expenditure, and investment; he failed to understand the context of finance-dominated as a phase of international oligopoly – a phase of capitalism. In the classical imperialism period finance capital reigned supreme; today, in advanced imperialism finance- dominated reigns internationally supreme. Another feature of the development of multinational corporations/banks and finance-dominated is the development of Foreign Direct Investment (FDI)
Foreign Direct Investment
Stephen Hymer clearly points out that the rise of Multinational Corporation/Banking is related to the growth of Foreign Direct Investment (FDI). He said,
" U.S. corporations began to move to foreign countries almost as soon as they had completed their continent-wide integration. For one thing, their new administrative structure and great financial strength gave them the power to go abroad. In becoming national firms, U.S. corporations learned how to become international. Also, their large size and oligopolistic position gave them an incentive. Direct investment became a new weapon in their arsenal of oligopolistic rivalry. Instead of joining a cartel (prohibited under U.S. law), they invested in foreign customers, suppliers and competitors. For example, some firms found they were oligopolistic buyers of raw materials produced in foreign countries and feared a monopolization of the sources of supply. By investing directly in foreign producing enterprises, they could gain the security implicit in control over their raw material requirements. Other firms invested abroad to control marketing outlets and thus maximize quasi rents on their technological discoveries and differentiated products. Some went abroad simply to forestall competition."[68]
Table 1
Historical U.S. Direct Investment Abroad (1950-2006)
Year
Direct Capital Outflow (Billon of Dollars)
1950
.06
1960
1.7
1969
3.1
1982
207.8
2006
2,384.0
Source: Survey of Current Business, July 2007 and
The new weapon in the U.S. Multinational Corporation/Banking arsenal is the $2.3 trillion Foreign Direct Investment in 2006. As noted in the Table 1, US direct investment has increased dramatically since 1950
Also, the Survey of Current Business reported U.S. parent companies have funneled an increasing share of their direct investments abroad through holding-company affiliates. A holding company is a shell company whose purpose is to hold securities or financial assets of other companies. In 1982, foreign affiliates classified as holding companies represented only 9 percent of US Direct Investment in industries, but by 2006 this had rose to account for 30 percent as noted below in Table 2.
Table 2
US Direct Investment in Industries 2006 (million)
Industries Amount Percent
Mining 136,145 5.71
Manufacturing 503,495 21.12
Wholesale trade 164.290 6.89
Information 74,368 3.12
Depository Institution 67,550 2.83
Finance 484,840 20.34
Professional, Scientific 57,429 2.41
Holding Companies 710.336 29.80
Other Industries 185.549 7.78
Total 2,384,004 100.00
In 2003, $7.5 trillion of direct foreign investment outflow was from the Organization for Economic Co-operation and Development (OECD) countries. The United States accounted for about 28 percent and the United Kingdom accounted for 16.5 percent. The massive growth is a result of international oligopoly spurred on by the giant mega mergers. To quote Hans Christiansen and Ayse Bertrand from the OECD,
"While M&A are only one element in total FDI flows, in most OECD countries they account for more than half of total investment. In addition, they tend to be the component of FDI that responds most strongly, or most immediately, to changes in the business climate, financial conditions macroeconomic performance."[69]
Furthermore, Thomas Weisskopf explained to us how the multinational corporation/banking new arsenal is used on underdeveloped countries. He said,
"The increasing significance of foreign investment in manufacturing has important implications for the (nonsocialist) underdevelopment countries. Where foreign investors in an earlier era were primarily concerned with extracting and exporting valuable raw materials, they are now becoming more and more directly involved in the local economy. This leads on the one hand to a greater degree of influence and control over domestic economic affairs. It leads also to a new kind of relationship with the host government. Rather than simply requiring a minimum of interference with their activities, foreign investors now seek the active cooperation of host government in measure design to promote capitalist social and economic relations within the country. The desire to create a 'favorable investment climate' results in a continued spread of capitalism and an increasing integrated world capitalist system."[70]
What Weisskopf is helping us to understand is that monopoly capitalism had developed from principally extracting and exporting raw resources of a country (the monopoly period); transitional period of protecting the flow of extracted raw resources and initial control of countries; to international oligopoly and finance-dominated capital of direct economic control of a country.
Foreign Direct Investment is the latest phase of capitalism. Lenin said,
"Type of old capitalism, when free competition had undivided sway, was the export of goods. Typical of the latest stage of capitalism, when monopolies rule, is the export of capital."[71]
Lenin also noted,
"that that international exchange is a characteristic distinguishing feature of capitalism, but also that uneven development of individual enterprises and individual countries is inevitable under a capitalist system. Some capitalist countries will become rich from its monopolist position to create the 'superabundance of capital'. This 'superabundance of capital' has to be invested somewhere and capitalist will not invest it at home. Thus, the superabundance of capital' is exported overseas."[72]
During the period Lenin was writing his piece on imperialism (monopoly capitalist period), the export of capital was uneven and undeveloped. Much of the export was in the form of loans to countries and infrastructural development to get raw material to the center industries. After 1945, the export of capital took on a new form. The United States was in a strong economic position, Britain industries were destroyed and the UK was forced to ask US for a loan of $3.8 million and France asked for a $1 billion loan. To manage the free flow trade for the US and international finance the US sponsored the Bretton Wood conference to established the International Monetary Fund and the International Bank for Reconstruction and Development (IBRD) which later became the World Bank. The World Bank was capitalized with $10 billion to make loans and to issue securities to promote postwar recovery in Germany, France, Great Britain and Japan. The International Monetary Fund (IMF) was capitalized with $8.8 billion to grants loans to member's countries in financial difficulties. While, IMF and the World Bank were granting loans to countries, the US was using these institutions to export US capital in Europe and former European colonies. The US hegemony dominated the exporting of capital until 1970s. Not only did the US use the IMF and the World Bank as a means of exporting capital but also promoted structural adjustment programs and dependent aid. President Kennedy said,
"Foreign aid is a method by which the United States maintains a position of influence and control around the world, and sustains a good many countries which would definitely collapse, or pass into the Communist bloc,"[73]
In 2004, the United States provided $4.5 billion in some form of foreign assistance to about 150 countries. Israel and Egypt were the largest recipients, although Iraq, which received over $20 billion for reconstruction activities since mid-2003, is the biggest recipient in FY 2004.
Multinational banks found it difficult to compel a Maldeveloped country to change economic policy, but IMF and the World Bank were used as Trojan Horses to force countries to change. For example, many former colonies of European countries had won political independence but were nationalizing industries and promoting non-align economic development. Imperialist powers address the problem of former colonies economic independence by hiring economic mercenaries called Economic Hit Man (EHM). Economic Hit Man's were hired to convince developing countries to accept loans from IMF and World Bank; plus to accept subsidized loans that inevitably funnel back to U.S. multicorporations. A confessed economic hit man, John Perkins said,
"That is what we EHMs do best: we build a global empire. We are an elite group of men and women who utilize financial organizations to foment conditions that make other nations subservient to the corporatocracy running our biggest corporations, our government, and our banks." [74]
IMF and World Bank approved loans on the conditions that national industries are privatize and subordinated to the world capital market. IMF called this program the Structural Adjustment – 1) privatize the economy, 2) promote private investment, 3) restructure your economy to repay the debt, 4) open up your national market to imperialist trade and investment. In other words, become part of the capitalist global market or die.
The IMF and the World Bank, principally run by the United States, have been promoting a policy of global consensus – Washington consensus – imperialist consensus. In 1999, Michael D. Bordo and Harold James prepared a report to the US Congress which stated,
"The collapse of the communist economies, or (in the case of China) their transformation into market economies was the last stage in the creation of the new consensus. The consequence has been an increasing homogeneity of political outlook, as well as of the economic order. Indeed, one key insight is that the two are linked: that economic efficiency depends on a functioning civil society, on the rule of law, and on respect for private property." [75]
Today, the export of capital is dominated by the Foreign Direct Investment from multinational corporation/banks, but also aid and loans from the World Bank and IMF are also use. Today, imperialist countries are in the process of re-dividing the world.
The Re-Division of the World by Imperialist Countries.
"The capitalists divide the world, not out of any particular malice, but because the degree of concentration which has been reached forces them to adopt this method in order to obtain profits. And they divide it 'in proportion to capital,''in proportion to strength,' because there cannot be any other method of division under commodity production and capitalism. But strength varies with the degree of economic and political development. In order to understand what is taking place, it is necessary to know what questions are settled by the changes in strength. The question as to whether these changes are 'purely' economic or non-economic (e.g. military) is a secondary one, which cannot in the least affect the fundamental views on the latest epoch of capitalism. To substitute the question of the form of the struggle and agreements (today peaceful, tomorrow warlike, the next day warlike again) for the question of the substance of the struggle and agreement between capitalist combines is to sink to the role of a sophist."
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