Category Archives: China

08.17.18
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Trump’s delusional Iran oil gambit is decades too late

Trump is using everything he’s got to wage economic war on Iran. His problem is that ‘everything he’s got’ is not nearly enough, as the virtual monopoly power once wielded by the US has long since evaporated.

Last week, a senior State Department official announced the US’ intention to cut Iranian oil exports “to zero” by November 4th this year, by threatening to impose sanctions on any company still trading beyond that date. Brian Hook, director of policy planning at the State Department, told reporters on July 2nd that “Our goal is to increase pressure on the Iranian regime by reducing to zero its revenue on crude oil sales”.

Hitherto, experts had predicted US sanctions would see a reduction of around 500,000 barrels per day (bpd) by the end of the year – barely one fifth of the country’s current export of 2.4 million bpd. Even the sanctions that preceded the 2015 nuclear deal – which, unlike today’s unilateral effort, were supported by a broad alliance of world powers, including Russia and China – only succeeded in removing half Iran’s oil (1.2m bdp) from the market.

Hook reassured the world that “We are confident there is sufficient global spare oil capacity”, claiming Saudi Arabia alone could produce an additional 2 million bpd. Saudi Arabia and Russia have already agreed to increase production by 1 million bpd reversing the production quotas imposed in the wake of the oil price slump in 2016.

This determination to destroy Iran by any means necessary has, of course, been the Trump administration’s signature foreign policy since day one, with almost every member of his team harbouring a long-held and well documented vendetta against the Islamic Republic. What is new with Trump, however, is not this determination as such – let’s not forget that Iran has been on the official Pentagon hitlist since at least 2001 – as the means used to pursue it. As I argued in 2014, the nuclear deal was not, on the part of the west, a genuine rapprochement so much as a long term programme of western infiltration, based on the ‘Libya model’, aimed at building a pro-imperialist fifth column within the Iranian state in order to prepare the ground for ‘regime change’ in the future. The Trump team, of course, has no patience for the long game, and want to simply cut to the chase. The reason for this obsession with destroying Iran – shared by all factions of the western ruling class, despite their differences over means – is obvious: Iran’s very existence as an independent state threatens imperial control of the region – which in turns underpins both US military power and the global role of the dollar. And as South-South cooperation continues to develop, this threat grows every day, whilst the means to diminish it are reduced by the same measure.

At the same time, the US military encirclement of China – begun in earnest as Obama’s ‘pivot to Asia’, but, like so much else, undergoing major escalation under Trump – is intimately linked to a policy of cutting off China from its suppliers. In this sense, a policy of ‘isolating’ of Iran is aimed at isolating China also, as China is the largest market for Iranian crude.

Trump’s policy, however, is likely to get few buyers. Pepe Escobar has explained the likely response to Trump’s plans from each of Iran’s top customers: “India will buy Iranian oil with rupees. China also will be totally impervious to the Trump administration’s command. Sinopec, for instance, badly needs Iranian oil for new refineries in assorted Chinese provinces, and won’t stop buying. Turkey’s Economy Minister Nihat Zeybekci has been blunt: “The decisions taken by the United States on this issue are not binding for us.” He added that: “We recognize no other [country’s] interests other than our own.” Iran is Turkey’s number-one oil supplier, accounting for almost 50% of total imports. Russia won’t back down from its intention to invest $50 billion in Iran’s energy infrastructure.. And Iraq won’t abandon strategic energy cooperation with Iran. Supply chains rule; Baghdad sends oil from Kirkuk to a refinery in Kermanshah in Iran, and gets refined Iranian oil for southern Iraq.”

With European companies likely to be more nervous about insubordination to US diktat, this merely leaves more tantalising investments open to Russian and Chinese companies.  As Philip K. Verleger noted, “It’s a huge opportunity for China and Russia to cement relationships with Iran”.

At the same time, all this activity and uncertainty is bound to push oil prices higher, meaning that any reductions in export quantities may well be compensated by increased revenues.

Trump’s attempts to persuade the rest of the world to cut off its nose to spite its face, then, are likely to all on deaf ears. It is in this light that Trump’s igniting of a global trade war must be seen.

At midnight on July 5th, US tariffs on $34billion worth of Chinese imports went into effect, at a rate of 25%. Trump told reporters that tariffs on a further $16 billion worth were likely to follow in two weeks, fulfilling a pledge made in April to slap tariffs on 1300 products totalling $50 billion annually. These tariffs were designed to target the Chinese aerospace, tech and machinery industries, as well as medical equipment, medicine and educational material. The final total, however, he added, could eventually reach $550 billion – “a figure”, noted Industry Week, “that exceeds all of U.S. goods imports from China in 2017”. These China-specific tariffs follow tariffs on steel (25%) and aluminium (10%) imports imposed on the EU, Mexico and Canada four days earlier.

According to Fox Business, Canada stands to lose around $2billion per year as a result of these tariffs, with Brazil, Russia, China and South Korea each set to lose at least $500 million annually.

But this may be precisely the point: not only to ‘bring jobs back to the US’, but also to create new forms of leverage to be used against rivals and allies (and is there really a distinction between the two anyway these days?) alike. So far, of course, Trump has famously refused to offer waivers to his allies. But with Trump, nothing is forever – everything is leverage, to be played and bartered as seen fit. Could it be, then, that waivers may yet be offered to countries who manage to wean themselves off Iranian oil by the November deadline? And even if not, the very willingness to use trade as a weapon so openly and brazenly is a reminder that there may be further punishments on the way for those who do not toe the line on the strangulation of Iran. After all, as Louis Kuijs, chief economist at Oxford Economics, has pointed out, this ‘new era’ has only just begun: “Clearly the first salvos have been exchanged,” he said, “and in that sense, the trade war has started. There is no obvious end to this”.

Nevertheless, Trump’s bark may yet be well worse than his bite. For on thing, the counter-measures employed by the Chinese – a reciprocal 25% tariff on $50billion of US goods – will hit the US hard. One product subject to the new tariff, for example, is soybeans. China is the market for 25% of all soybeans grown in the US. Grant Kimberley, a soybean farmer with the Iowa Soybean Association, estimates that this tariff alone could lead to a 70% drop in exports.

But even, even apart from the Chinese counter-measures, the US-imposed tariffs themselves are likely to hurt the US as much as China. A report on NPR suggests that “for now, the blows are threatening to land hardest on non-Chinese companies like New Jersey-based Snow Joe/Sun Joe”, which – like so many other US companies, relies on Chinese imports for crucial parts of its supply chain. And in the end, of course, all of these increased costs will be passed on to the US consumer, directly depressing their real wages.

For China, however, the impact is likely to be – in the words of Ethan Harris, head of economic research at Bank of America Merrill Lynch – “quite small”.  Industry Week noted that whilst “In the past, the U.S. used its economic clout to win trade skirmishes with developing countries… China, whose economy has grown tenfold since it joined the World Trade Organization in 2001, poses a much more formidable adversary.” James Boughton, a senior fellow at the Centre for International Governance Innovation in Waterloo, Ontario, told the site that  “The dynamic is different from anything we’ve seen. China has an ability to ride out this kind of pressure, to weather the storm, that a lot of countries didn’t have in the past.”

 

Indeed, Trump has already been forced into retreat in some areas, given the likely repercussions. Ian Bremmer, president of the Eurasia Group consultancy, told CBS that  “Trump backed off a couple weeks ago on implementing what would have been significant measures against them. You’re familiar with the Chinese telecom firm ZTE. They were going to be made bankrupt by White House regulations what were being put in place. Trump himself intervened with a tweet saying, we don’t want to lose all of those Chinese jobs… [Trump] knows that China can hit back really hard and they can hit back in a targeted way against red states, against American farmers. So I would be very surprised if we saw significant escalation as opposed to significant rhetoric before elections in the U.S. in November, which is what we’re really talking about here.” Other possible Chinese retaliatory measures include limits on exports of rare-earth metals, essential for technologies such as smartphones, and of course the zero-option of dumping its holdings of US treasuries (although this would not be without serious pain to itself of course).

So the idea that trade war will somehow pressure China (and others) to dump Iran seems ultimately fanciful. The process of ‘delinking’ has already gone too far. China is already Iran’s biggest trading partner, and – with Chinese tariffs on US oil looming – is more likely to increase Iranian imports to replace that no longer coming from the US rather than vice versa. Iran already sells its oil to China in yuan, rather than US dollars, meaning that the entire US-controlled financial system is completely circumvented for the countries’ bilateral trade, and therefore outside the control of US-imposed financial sanctions. Looking forward, Iran is set to play a crucial role in the development of China’s mega Belt and Road Initiative, with a high speed railway planned to provide sea access to landlocked central Asia. And with French oil giant Total’s planned investment in the massive South Pars oil field in jeopardy, the contract is likely to now go to a Chinese company.

Economics professor Danny Quah noted back in 2009 that the dependence of China on US markets tended to be greatly overestimated in the west. By 2006, only 20% of Chinese exports were to the USA, with a far higher proportion going elsewhere in East Asia. In 2013, the US was not even the largest single customer for Chinese goods (it came second to Hong Kong). By 2o15, only 18% of Chinese exports were to the US; with almost half (48.5%) going elsewhere in Asia, 19.9% to Europe, 4.2% to Latin America, and 4.1% to Africa. In other words, the global South accounted for more Chinese exports than US and Europe combined. And, as is becoming clearer by the day, US and Europe are not combined.

According to the CIA’s world factbook, Chinese exports in total represent just under 20% of GDP. If we do the maths, then – 20% of 20% – it turns out that just 4% of Chinese GDP comes from exports to the US. Significant, but hardly the economic gun to the head that Trump seems to believe.

The days when loss of market access to the US meant oblivion for countries like China are long gone. The future now lies in South-South cooperation precisely along the lines of the multibillion Belt and Road Initiative. The US government understand that, and their attempts to simultaneously sabotage both China and Iran are last-ditch attempts to prevent the inevitable – further delinking, and a global economy in which the US is becoming increasingly peripheral. But the truth is, this effort is already too late.

This article originally appeared on RT.com 

07.31.18
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Is Russia facilitating Trump’s strangulation of Iran?

Image result for trump putin

Since the earliest days on the campaign trail, it has never been in doubt who Trump and his team have had in their sights. “Iran is the biggest destabilizing force in the Middle East and its policies are contrary to our interests,” Defence Secretary Mattis told his Senate confirmation hearing, having previously claimed the country posed a bigger security threat than either ISIS or Al Qaeda. Mike Pence called Iran the “leading state sponsor of terrorism” whilst new National Security Advisor John Bolton has for years called for Iran to be bombed. Trump himself, in his own little remix of Pence’s phrase, has called Iran “The Number One State of Sponsored Terror”, which presumably means something derogatory.

 

China, of course, was famously accused of “raping our country” by Trump in 2016, whilst White House aide Peter Navarro claimed the country was waging “economic aggression” against the US. Former National Security Advisor Steve Bannon announced this week that “we are at war with China”.

 

Iran and China, then, have been favoured rhetorical targets since day one – but this year that rhetoric has morphed into all-out economic warfare. This month alone, Trump has unleashed tariffs on $60 billion of Chinese goods, threatened to do so on $500billion more, and announced his intention to cut Iranian oil exports to zero by November. These weapons of financial destruction are openly aimed at crippling and sabotaging China and Iran in order to stymie their development and bring them to their knees. Yet at the same time as this is happening, the leader of Iran and China’s major geopolitical ally, Russian President Vladimir Putin, has continued to be courted and flattered by Trump. What is going on?

 

On the face of it, these hostile acts against two of Russia’s key allies have, as one might expect, been condemned by Putin’s government. Prior to Trump’s May announcement that he would intended to violate the Iranian nuclear deal by restoring sanctions, the Kremlin warned of “harmful consequences” should he do so. And following the recent Helsinki summit between the two leaders, Putin continued to back the deal (albeit on the grounds of limiting Iranian sovereignty rather than defending it) stating that “The Russian position remains unchanged regarding the Iranian nuclear program, and we believe that the JCPOA is an instrument that makes it possible to guarantee the non-proliferation of nuclear weapons in general and in the region in particular,” adding that the deal had turned Iran into one of the most heavily IAEA-monitored countries in the world. Russia similarly denounced the tariffs slapped on China earlier this month.

 

Yet, behind the rhetorical opposition, Russian actions are facilitating Trump’s aggression. Following 18 months of oil production cuts agreed by Russia and Saudi Arabia in 2016, which had successfully raised oil prices out of the slump into which they had fallen, Russia last month proposed an unexpected and immediate reversal of this policy. The low oil prices which had plagued oil markets before the 2016 cuts were agreed had caused huge problems for producer countries such as Russia, Iran and Venezuela, leading many to believe that the Saudis had been ordered by the US to flood the market in order to sabotage the economies of its geopolitical foes. The new production quotas, then, had given these countries some much-needed breathing space; yet, this June, Russia put forward a proposal to OPEC to increase production by 1.8million barrels per day (bpd) – and, unusually, proposed that these increases were to start kicking in within weeks. In the end, a pact to increase production by 1 million barrels per day – spearheaded by Russia and Saudi Arabia – was agreed by OPEC and non-OPEC countries in late June. The rise was opposed by Iran, Iraq, Venezuela and Algeria, with Iranian oil minister Bijan Zanganeh commenting ahead of the meeting that “OPEC is not the organization to receive instruction from President Trump … OPEC is not part of the Department of Energy of the United States”.

 

Within days of the adoption of the Russian-led production increase, the Trump administration announced its plans to “reduce Iranian oil exports to zero” by November 4th. Questioned on whether such a policy might cause disruption as countries scrambled to replace supplies, State Department policy director Brian Hooks remarked that “we are confident there is sufficient global spare oil capacity.” Russia’s push for increased production had, in effect, smoothed the path for the next round of Trump’s strangulation of Iran. It was precisely this deal which lay behind Trump’s brazen claim that world oil supplies would plug the gap created by the loss of Iranian crude; without the end to Russian-Saudi production limits, this would have been unthinkable. As things stand, however, all the pieces are in place for Trump to apply serious pressure on all importers of Iranian oil. Whilst the Russian-Saudi deal offers alternative sources of supply, the trade war now underway demonstrates Trump’s willingness to use tariffs against those who do not bend to his geopolitical will. Whilst Trump has openly threatened sanctions against those who do not heed his call to end their dealings with Iran, it is quite possible that those who do heed it will be rewarded with tariff exemptions. China, in particular – Iran’s biggest trading partner, and now threatened with tariffs on all $500bilion of their exports to the US – will be particularly under pressure.

 

On the surface, then, Russia’s actions appear self-defeating. The end to the, hugely successful, production quotas of the previous 18 months immediately triggered a drop in oil prices – Russia’s main export commodity – whilst facilitating the escalation of US economic warfare against key Russian ally Iran. Yet there are several reasons Russia may be supporting Trump’s moves.

 

Most obviously, Iran is a major competitor with Russia for oil export markets – especially in Europe. European hopes to reduce dependence on Russian energy supplies are likely to be seriously dashed if they can no longer turn to Iran as an alternative supplier. Quite simply, Russia will sell more oil without Iranian competition.

 

More than this, however, even Trump’s use of tariffs as leverage to push countries away from Iran could be to Russia’s benefit. If Trump does indeed make tariff-free access to the US market conditional on cutting investment and trade with Iran, China would face a major dilemma.

 

China has for some years been not only Iran’s major trading partner, but investment financier as well. In 2011, China  signed a  $20 billion  agreement  to  boost  bilateral  cooperation  in Iran’s industrial and mining sectors. Today, China is poised to take over development of the massive South Pars oil and gas field should the French company TOTAL pull out, as they are widely expected to do, whilst a $3billion deal was recently signed giving SINOPEC the right to expand the Abadan oil refinery in Khuzestan Province. Meanwhile, reports Fox News, “With the U.S. Treasury putting pressure on Western banks to not make any deals with Iran, the Chinese state-owned CITIC bank is extending lines of credit worth $10 billion for Iranian banks. This funding will finance water, energy and transport projects. To bypass U.S. sanctions, the lines of credit will use euros and yuan currencies”.

But most significant for Russia is the 2017 $1.5 billion deal made by the Chinese Export-Import Bank to finance a high-speed railway between Tehran and Mashhad. The railway is envisioned to become part of China’s ‘Belt and Road Initiative’ , creating a high-speed transit route between central Asia and Europe that will shave weeks off current travel times.

This May – in a clear act of defiance to the US – China opened a new train line between China’s Inner Mongolia Autonomous Region and Tehran, shortening travel time by 20 days compared to cargo ship. Once the full vision of  a Chinese built high-tech, high-speed rail network across central Asia is realised, however, the current ‘Northern route’ through Russia is likely to be rendered all but redundant.

 

Could it be, then, that Russia sees it as in its own interests to facilitate Trump’s quest to chase Chinese investment out of Iran in order to preserve its trade routes and access to European oil markets?

 

If so, it is likely to be disappointed. For Iran is central not only to the Belt and Road Initiative – China’s multi-trillion, multi-decade long ‘geoeconomic’ programme – but also to its defence strategy. As correctly observed in a recent piece published by The Diplomat, “Iran constitutes [China’s] true priority. China has nurtured bilateral relations with Tehran for decades, leveraging a common resentment toward Western dominance. This partnership has great geostrategic importance to both nations. Thanks to its oil and gas reserves, Iran could help Beijing withstand a U.S. attack on its SLOCs (Sea Lines of Communication).”

For China, much as it naturally seeks to avoid further punishment from the US, Iran is simply too important to be bargained away. Unfortunately not so, it seems, for Moscow.

Originally published in Middle East Eye, July 2018

06.08.18
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The Rambouillet ruse: is Donald Trump setting up his Korea talks to fail?

President Trump has set the bar of success so high for his forthcoming meeting with Kim Jong-Un, it is difficult to see how it could possibly be met. As the New York Times noted last month, “To meet his own definition of success, Mr. Trump will have to persuade Mr. Kim to accept ‘complete, verifiable and irreversible denuclearization’ of North Korea — something that Mr. Kim has shown no willingness to accept in the past, and few believe he will accede to in the future.” Such denuclearisation would involve “the actual dismantlement of weapons, the removal of stockpiled uranium and plutonium bomb fuel from the country and a verification program that will be one of the most complex in history, given the vastness of North Korea’s mountains.” Furthermore, Trump has suggested that the North Koreans will gain nothing in return for this one-sided destruction of their defences, until the process in all-but-complete; as one Trump official told the Wall Street Journal, “When the president says that he will not make the mistakes of the past, that means the U.S. will not be making substantial concessions, such as lifting sanctions, until North Korea has substantially dismantled its nuclear programs”. In other words – give up your leverage first; then we’ll see. What Trump appears to seek is nothing less than a completely disarmed Korea that will pave the way for the “Libya solution” his people have openly suggested is the goal.

 

Obviously, North Korea will not go for that. The whole point of their nuclear programme has been to ensure that their country avoids the fate of Iraq or Libya; which is why the intelligence community is generally united in their view that it will never be given up.  According to Ryan Hass of the Brookings Institution, “virtually no North Korea analyst inside or outside of the US government expect Kim Jong-un to relinquish his nuclear weapons”, quoting former CIA analyst Jung Pak that Kim views nuclear weapons as both “vital to the security of his regime and his legitimacy as leader of North Korea”. Meanwhile, the New York Timescomments: “ask the people who have seen past peace initiatives whether they think this one will work out any differently, and they have serious doubts that Mr. Kim will give up his nuclear program for any price”, whilst forStratfor, the complete denuclearisation of North Korea is “a lofty goal that will be nearly impossible to ensure”.

 

So what is Trump doing? Surely he knows what he is proposing would be completely unacceptable to any North Korean leader, let alone Kim Jong-Un?

 

But maybe this is the point. What if Trump, far from wanting to reach a deal, is actually deliberately pushing a proposal which issupposed to be rejected? After all, so long as he ensures his demands are unacceptable, he can offer the moon in return: recognition, technology, aid, lifting of sanctions, hell – why not? – even the removal of US troops from South Korea. Having such an offer rejected would allow Trump much more readily to be able to paint North Korea as the aggressor – unwilling to compromise, insincere in its desire for peace, etc etc.

 

This is, after all, a time honoured tactic.

 

In February 1999, in the French town of Rambouillet, a series of meetings were convened between representatives of Kosovo’s multiethnic population and the United States with the ostensible aim of resolving the conflict between Kosovan separatists and the Yugoslav government. For its part, the Yugoslavs had proposed a ceasefire, peace talks, the return of displaced citizens, and the establishment of a devolved assembly for the province, with a wide degree of autonomy. This would clearly have gone a long way to addressing the conflict; but that very fact made it completely unacceptable to the US, desperate to justify their coming onslaught against Yugoslavia. Instead, they needed a ‘peace deal’ that would be rejected by the Yugoslavs, who could then be painted as the aggressors, paving the way for war. To this end, the ‘Rambouillet Peace Agreement’ was formulated. Produced by the US State Department, the 90 page document demanded complete de facto independence for Kosovo, whilst still allowing the province to influence the rest of Yugoslavia by continuing to send representatives to its federal institutions. Yet, just in case even this one-sided arrangement was accepted by the Yugoslavs, in chapter seven of the agreement, the US inserted a crucial clause: that NATO “personnel shall enjoy . . . with their vehicles, vessels, aircraft and equipment, free and unrestricted passage and unimpeded access throughout the Federal Republic of Yugoslavia, including associated airspace and territorial waters”, whilst at the same time be “immune from all legal process, whether civil, administrative or criminal, [and] under all circumstances and at all times, immune from [all laws] governing any criminal or disciplinary offences which may be committed by Nato personnel in the Federal Republic of Yugoslavia”. In other words, Yugoslavia would have to not only submit to a full-scale occupation by NATO, but also give the occupiers the absolute and unaccountable right to abuse the population at will. Such a demand could never have been accepted by any sovereign country. But that, of course, was the point: this was an agreement penned precisely to be rejected, in order to paint the Serbs as the unreasoning aggressors. It worked perfectly: the ‘agreement’ was duly rejected, and the planned blitzkrieg of Yugoslavia followed, with 78 days of unrelenting aerial bombardment.

 

The same ruse was repeated the following year by US President Bill Clinton. At Palestinian-Israeli peace talks at Camp David, he made a proposal for a ‘final settlement’ of the conflict which allowed Israel to keep 80% of their illegal settlements – 209 in total, housing almost 200,000 settlers – along with sovereignty over a patchwork of roads linking them together and thereby cutting the West Bank into unviable bantustans – with refugees permanently denied the right to return to their homes in Israel. As former US president Jimmy Carter commented, “There was no possibility that any Palestinian leader could accept such terms and survive – but official statements from Washington and Jerusalem were successful in placing the entire onus for failure on Yasir Arafat”. Indeed, through the distortions of western media, a narrative emerged that Israeli President Ehud Barak himself had made this so-called ‘generous offer’, the spurning of which demonstrated the Palestinians hatred for peace and unwillingness to settle for anything less than driving the Jews into the sea. In fact, the Israeli side themselves had never accepted Clinton’s proposal, and had issued twenty pages of concerns they had with it. On the last of the Clinton-chaired meetings – the one from which Barak’s supposed offer emerged, held in Taba in 2001 – Barak later said that “it was plain to me that there was no chance of reaching a settlement… Therefore I said there would be no negotiations and there would no delegation and there would be no official discussions and no documentation”. Nevertheless, the official narrative, to this day, recalls that the Palestinians rejected the Israelis’ ‘generous offer’ – and therefore only have themselves to blame for their continued slaughter.

 

The EU set up Yanukovych in the same way. In 2008, the EU and Ukraine agreed to negotiate what was supposed to be a trade agreement. Five years in the making, the EU Association Agreement was finally unveiled in 2013. But by then, the EU had included a clause on defence cooperation with the EU, effectively turning the country into a unofficial NATO member. Such a measure was guaranteed – and designed – to tear apart a country like Ukraine, a multiethnic polity with deep and historic ties to both Russia and Europe, whose unity rested on strict adherence to a policy of neutrality in terms of East-West rivalries. Furthermore, Yanokovych had an explicit democratic mandate for such neutrality, having been elected on precisely this basis. The Association agreement was duly rejected, as it was presumably intended to be – setting the stage for the western-backed ‘Maidan coup’ and civil war which followed and which continue to this day.

 

So western governments certainly have form in crafting proposals designed to be rejected, in order to justify escalation. And the US have every reason for doing so with North Korea today.

 

Trump’s North Korea policy throughout last year was one of warmongering rhetoric and the ratcheting up of tensions. Whilst this was to some extent successful in bullying China and others into agreeing to harsher sanctions, this ‘consensus’ began to fall apart as Trump’s team stepped up their war talk at the end of the year, with defence secretary Mattis warning of “storm clouds…gathering” and national security advisor McMaster claiming that the odds of war were “increasing every day”.

 

This ramping up of tension did not go down well in either Korea, and rapid moves to de-escalate were undertaken, with North Korean involvement in the winter Olympics a symbolic, but important, signifier of greater North-South cooperation to come. Then, in his New Year address, Kim Jong-Un began a diplomatic charm offensive with the South which gained rapid results. A summit was set up between the leaders of the two Koreas, which eventually took place in April when Kim Jong-Un became the first North Korean leader to cross the border into the South since the Korean war. The summit agreed to pursue denuclearisation of the peninsula and to secure a formal Peace Treaty – with an outline peace arrangement to be reached by the end of the year.

 

This emerging detente between the two Koreas has hugely undermined Trump’s warmongering. In an article entitled“As Two Koreas Talk Peace, Trump’s Bargaining Chips Slip Away”, Mark Landlerpointed out that “the talk of peace is likely to weaken the two levers that Mr. Trump used to pressure Mr. Kim… A resumption of regular diplomatic exchanges between the two Koreas, analysts said, will inevitably erode the crippling economic sanctions against the North, while Mr. Trump will find it hard to threaten military action against a country that is extending an olive branch”. Landler went on to quote Jeffrey A. Bader, a former Asia advisor to Barack Obama, that, following the North-South rapprochement, “It becomes awfully hard for Trump to return to the locked-and-loaded, ‘fire and fury’ phase of the relationship”. Worse, “Inside the White House, some worry that Mr. Kim will use promises of peace to peel South Korea away from the United States and blunt efforts to force him to give up his nuclear weapons”.

 

Trump, therefore, urgently needs to snuff out this rapprochement if he is to return to the bellicosity that marked his Korea policy hitherto. As Landler wrote, “Mr Kim…made a bold bet on diplomacy” – and Trump needs to ensure that it fails. The best way of doing so is by putting himself at the head of it.

 

If Trump is indeed planning to use the Rambouillet ruse to reignite tensions against the North, it is important that he spin his designed-to-be-rejected offer as somehow incredibly generous. And in recent weeks there have indeed been moves in that direction.

 

First of all, Trump has appeared to accept that denuclearisation might not need happen in one fell swoop, telling reporters that whilst  “It would certainly be better if it were all in one…. I don’t think I want to totally commit myself.” Next, Trump went out of his way to guarantee Mr. Kim’s safety. “He will be safe. He will be happy. His country will be rich,” the president said. You can already imagine Trump’s words when his ‘generous offer’ gets rejected: “we offered him security. We offered him prosperity. We offered him phased elimination. And he rejected all of it”.

 

Fascinatingly, it turns out that Trump’s national security advisor John Bolton has actually already suggested precisely the Rambouillet ruse. According to the New York Times, “Two weeks before he was recruited as national security adviser, [Bolton] said a meeting between Mr. Trump and Mr. Kim was useful only because it would inevitably fail, and then the United States could move swiftly on to the next phase — presumably a military confrontation… ‘It could be a long and unproductive meeting, or it could be a short and unproductive meeting,’ he said on Fox News. …Even among officials who worry about war, there is sympathy for his view that “failing quickly” would be valuable.” Meanwhile,Stratfor’s analysis of the likely prospects for the forthcoming summit concluded that “it may also reinforce the idea that if the two leaders can’t negotiate a way out of the conflict, then perhaps a diplomatic solution isn’t possible and talk of a military solution to the United States’ North Korea problem could return…Without some change, we’ll probably find ourselves back on the path to containment, if not on a course toward military action to end the North korean nuclear and missile programme once and for all”.

 

Whether military action is realistically possible against North Korea, however, remains a serious question. Most analysts agree that the fallout from any retaliation – both against the 28,000 US soldiers stationed in South Korea, and against US allies in Seoul and Kyoto – would be unacceptably high. James Stavridis, former Nato supreme allied commander, is typical in hisview that there are “no military options which would result in fewer than several hundred thousand casualties and perhaps as many as 2m to 3m”.

 

So if war is not on the cards, to what end would Trump seek the rejection of his offer?

 

One answer has already been suggested – to scupper the emerging North-South co-operation that threatens to erode US influence on the peninsula. Summit failure would give Trump a perceived ‘moral right’ to bully the South into ending its outreach and returning to the US position of isolating the North.

 

But another reason could lie in Trump’s trade war with China, the opening shots of which have only just been fired. Any supposed North Korean intransigence could provide Trump with cover for initiating secondarysanctions against North Korea’s supposed ‘allies’. Congressional law already allows Trump to initiate secondary sanctions against anyone trading with the victim of primary sanctions, but with the current atmosphere of rapprochement, it is difficult for Trump to justify using these against China at present. A North Korean ‘walk-out’ would provide the perfect excuse for stepping up economic warfare against China under the guise of sanctioning Korea. Indeed, Trump has already been setting up China as a potential scapegoat for any failure to reach a deal, claiming that Kim’s position had hardened following his meeting with Chinese President Xi Jinping. “There was a different attitude by the North Korean folks after that meeting,” Trump told reporters recently, “I can’t say that I’m happy about it.”

 

The entire trajectory of Trump is, after all, not one of conciliation, but of escalation – on all fronts. Escalation against immigrants, against the working class, against Iran, against China, and even against his supposed chums in Moscow. There is absolutely no reason to think that North Korea is some kind of magical exception to this golden rule.

Setting up a deal guaranteed to be rejected, but which can be spun as incredibly generous, is, of course, no mean feat. This is especially true given that Kim has now repeatedly stated that he is willing to give up his nuclear weapons. Indeed, this possibility cannot be entirely ruled out: after all, North Korea’s conventional capacity alone – not to mention its mutual defence treaty with China – arguably provides as much deterrence as is necessary to prevent an invasion, as those casualty figures quoted above bear out. In this case, the devil will be in the detail – and more specifically in the timingsof the granting of concessions. Trump is likely, in my view, to offer what appear to be very generous concessions, but make them contingent on unacceptably obtrusive verification measures or unachievable levels of ‘proof’ before any of them kick in. Perhaps they will just copy and paste chapter seven of the Rambouillet Agreement in its entirety. A secret clause demanding NATO occupation of all of North Korea would probably do the trick.

04.18.18
by

Yes, a world war is imminent

Image result for warships mediterranean syria
Just over a quarter-century before the outbreak of the First World War, global capitalism was in the throes of a deep economic crisis. This original ‘Great Depression’, which lasted from 1873 to 1896, saw tens of millions perish from famine as the ‘great powers’ shifted the burden as far as possible onto their colonies; whilst, at home, anti-systemic movements such as the ‘New Unionism’ burst onto the scene in the capitalist heartlands, presenting a serious challenge to bourgeois rule. Africa was torn apart by imperial powers desperate to secure monopoly access to its riches, and rivalries between these powers constantly threatened to erupt into outright war. In the midst of all this, one particularly astute political commentator gave a disturbingly prophetic insight as to how the crisis would ultimately be resolved, predicting a: “world war of an extent and violence hitherto unimagined. Eight to ten million soldiers will be at each other’s throats and in the process they will strip Europe barer than a swarm of locusts. The depredations of the Thirty Years War compressed into three or four years and extended over the entire continent; famine, disease, the universal lapse into barbarism, both of the armies and people, in the wake of acute misery; irretrievable dislocation of our artificial system of trade, industry and credit, ending in general bankruptcy; collapse of the old states and their conventional political wisdom to the point where crowns will roll into the gutter by the dozen, and no one will be around to pick them up; the absolute impossibility of seeing where it will all end and who will emerge as victor from the battle; only one consequence is absolutely certain: general exhaustion and the conditions for the ultimate victory of the working class.”

The commentator was Marx’s lifelong collaborator Friedrich Engels. The accuracy of his prediction – right down to the numbers killed and the length of the war, not to mention the revolutions and collapse of empires that would result – is truly remarkable. Yet Engels had no crystal ball. What he foresaw was nothing more than the logical outcome of the workings of the global capitalist-imperialist system, which constantly and inexorably pushes towards world war.

The logic is basically this. Capitalism, with its combination of rapid technological progress plus derisory wage payments – both tendencies a ‘natural’ result of competition – leads to a situation where markets cannot be found for its goods. This is because capital’s capacity to produce constantly outstrips the capacity of consumers to consume, as these consumers are, in the main, the very workers whose wages are driven down, or who are made redundant altogether, by improved technology. Ultimately, this results in a crisis of overproduction, with markets glutted, and workers thrown out of work in their millions. Already in 1848, four decades before his prediction of world war, Engels (and Marx) had written that such crises tended to be “resolved” through “the enforced destruction of a mass of productive forces” – in other words, the wholesale closure of industry. Through closures of the most inefficient industries, surplus production would eventually be reduced, and profitability restored. But in so doing, capitalists were effectively increasing the concentration of capital in the hands of the most ‘efficient’ industries, whose productive capacity in the future would render the underlying contradiction yet more insoluble still, and were thereby “paving the way for more extensive and more destructive crises, and diminishing the means whereby crises are avoided”. For Engels, the crisis underway by the 1880s was so extensive that the destruction of capital required to overcome it would take more than mere closures – it would take all-out war.

The destruction of capital, however, is not the only means by which to overcome overproduction crises. The other option, said Marx and Engels, is “the conquest of new markets or the more thorough exploitation of old ones”. The period of the late-nineteenth century saw a renewed ‘Scramble for Africa’ as each imperial power sought to grab territories which might one day serve as both sources of raw materials and markets for surplus capital. In North America, the USA was completing its own colonisation of the West and South in imperial wars against the Native Americans and Mexico. By the close of the century, however, all the ‘available’ territories had been conquered. From then on in, argued Lenin, the capture of new colonies could only be at the expense of another colonial power – ushering in a new, imperial, phase of capitalism with an inbuilt drive towards world war.

We have now witnessed two episodes of this cycle of capitalist crisis mutating into world war, the second much more successful in terms of the destruction of capital than the first. Indeed it was so successful that it paved the way for a ‘Golden Era’ of capitalist prosperity lasting almost three decades. But then, once again, the inevitable crisis tendencies began to set in.

The colonial, imperialist nature of postwar capitalism has, to some extent, been disguised by the formal political independence of most of the formerly colonised world. With an unambiguous and unrivalled lead in technological capacity, the Western nations have not required direct colonisation in order to guarantee essentially ‘captive’ markets for their goods and capital. The former colonies have largely been dependent on products, finance and technology from the imperial world without the need for formal political control – and this dependence has been backed up with economic blackmail through international financial institutions such as the IMF and World Bank where possible, and direct military force against resistant nations where necessary.

Such dependence, however, has been decisively eroded since the beginning of the new millenium. The rise of China, in particular, has completely destroyed the West’s monopoly on finance and market access for the global South: African, Asian and Latin American countries no longer have to rely on US markets for their goods or on World Bank loans for their infrastructure development. China is now an alternative provider of all these, and generally on far superior terms of trade than those offered by the West. In times of continued economic stagnation, however, this loss of their (neo)colonies is entirely unacceptable to the Western capitalist nations, and threatens the entire carefully crafted system of global extortion on which their own prosperity is based.

Increasingly unable to rely on economic coercion alone to keep countries within its ‘sphere of influence’, then, the West have been turning more and more to military force. Indeed, the US, UK and France have been permanently at war since the eve of the new millennium – starting with Yugoslavia, through Afghanistan, Iraq, Libya, Mali, Syria and Yemen (to say nothing of proxy wars such as that in the Congo, or the ‘drone wars’ waged in Pakistan, Somalia and elsewhere). In each case, the aim has been the same – to create, as far as possible, conditions of total state collapse. For the creation of ‘failed states’ serves not only to thwart any genuinely independent development, but also to restrict the flow of resources to China (by disrupting nationally-controlled production and facilitating western-run private piracy), create new markets in private security, and provide liquidity for the western banking system through facilitating major criminal enterprises (such as growing heroin, recruiting private sectarian armies to use against other states, and people smuggling). And ultimately, state collapse is deemed a necessary imposition when even the CIA-favoured anti-communist strongmen of the past can no longer be relied on to snub China in favour of the West; indeed, it is entirely indicative of this new era of decreasing western economic power that several of these wars were waged against states whose leaders were once in the pocket of the US (Iraq and Afghanistan) or who they had hoped to buy off (Libya and Syria).

Thus, where it was once, at least in part, the product of productive superiority, the continued supremacy of the West in international affairs is increasingly reliant on military force alone. And even this military superiority is diminishing daily.

Predictions of the length of time left before the Chinese economy overtakes the US economy continue to shrink. In 2016, China’s share of the world economy had grown to 15%, compared to the USA’s 25%. But with a growth rate currently three times that of the USA, the difference is expected to decline rapidly; at this rate, the Chinese economy is on course to overtake that of the US by 2026. In fact, once adjustments are made for purchasing power parity and differential prices, the Chinese economy is already larger. Furthermore, Chinese manufacturing output has been higher than that of the US for over a decade, and exports are one third higher, whilst China produces double the number of graduates annually than the US.

Such developments, however, are not of economic significance only: for it is only a matter of time before economic superiority is converted into military superiority. And this gives the US and its hangers-on an ever-diminishing window of opportunity in which to actually USE their military superiority in order to preserve their deteriorating global power.

Clearly the strategy hitherto has been to avoid direct war with China and its key ally Russia, and instead to focus on ‘taking out’ its real or potential allies amongst states less able to defend themselves. But Russia’s role as a spoiler in the regime change operation in Syria has demonstrated to the US that this may no longer be possible. This has led to a split within the US ruling class on the issue of how to deal with Russia, with one side seeking to purchase Russian acquiescence to wars against Iran and China (advocated by the faction supporting Trump) and the other aiming to simply ‘regime change’ Russia itself (advocated by the Hillary faction). At the heart of both is the attempt to break the alliance between Russia and China, in the case of Hillary by pulling China away from Russia, and for Trump, pulling Russia away from China.

The point is, however, that neither strategy is likely to work, as clearly the breaking of the China-Russia axis is aimed at weakening both of them. Furthermore, even if Putin were prepared to ditch Iran, or even China, for the right price (such as lifting sanctions, or recognising Russian sovereignty over Crimea), there is no way Congress would allow Trump to pay such a price. Trump would dearly love to offer to lift sanctions – but this is not within his gift; instead he can merely offer sops such as withdrawal from Syria, or pre-warning of missile attacks on Russia’s allies – hardly enough to lure Russia into the suicidal severing of alliances with its most important allies.

This conundrum puts the unthinkable squarely on the agenda: direct war with Russia. The last month has shown clearly how, and how rapidly, this is developing. Britain’s carefully calibrated efforts to create a worldwide diplomatic break with Russia can now clearly be seen as a prelude to what was almost certainly planned to be – and may yet become – an all-out war with Iran on the Syrian battlefield. This scenario appears to have been averted for now by Russia’s refusal to countenance it, and the West’s fear of launching such an operation in the face of direct Russian threats, but such incidents are only likely to increase. It is only a matter of time before Russia will be put to the test.

It is easy to see how the Syrian war could lead to a major escalation: indeed, it is difficult to see how it could not. In Washington, there is much talk of the need to ‘confront’ Iran in Syria, and recent Israeli attacks on Iranian positions in Syria indicate that they are itching to get this confrontation under way, with or without prior US approval. Once underway, however, an Iranian-Israeli conflict could very easily draw in Russia and the US. Russia could hardly be expected to stand back whilst Israel reversed all its hard fought gains of the past two and a half years – whilst demonstrating the feebleness of Russian ‘protection’ – and would likely retaliate, or at the very least (and more likely) provide its allies with the means to do so. Indeed, Putin reportedly warned Netanyahu last week that he can no longer expect to attack Syria with impunity. And once Israelis start getting killed by Russian hardware, it is hard to see how the US could not get involved.

This is just one possible scenario for the kind of escalation that would lead to war with Russia. Economic war with China is already underway, and US warships are already readying themselves to cut off China’s supply lines in the South China Sea. Each specific provocation and escalation may or may not lead to a direct showdown with one or both of these powers. What is clear, however, is that this is the direction in which Western imperialism is clearly headed. It has built up its unparalleled armoury for one reason only – to protect its dominant world position. The time is soon coming when it will have to use it – and use it against a power that can actually fight back – whilst it still has a chance of winning.

An edited version of this article was originally published on Middle East Eye