A declining imperialism must "turn back from the catastrophic course that it has been going down. I am speaking here about the dangerous cuts which Congress wants to make in every lashes out
MILITARY and economic adventurism on the part of the
USA is quite possible. Its roots world's strongest power at a time when it is suffering a long-term decline. This article and the two which follow are taken from the September 13,
1990 issue of SoZ, paper of the
German United Socialist Party
(VSP).
WINFRIED WOLF T he new Gulf crisis is taking place in a period of massive changes in world politics and economics.
Since the mid-60s, the USA has been losing its dominant economic position in the face of competition from Japan and Western Europe.
This process is now being accentuated and speeded up. Until recently it seemed that the big winner in an increasingly competitive world economy would be Japan. On the other hand, Japan is a military lightweight and the US remained the uncontested military number one.
Since 1989, nowever, the sitauon for Since 1989, however, the situation for the USA has got dramatically worse. The indisputable victor in the current round of inter-imperialist economic struggles is German capitalism, the strongest power in Europe.
With the collapse of the bureaucratic regimes in Eastern Europe, and the annexation of East Germany, Germany will become the leading power on the world market and the leading challenger to the dominant position of the US.
### Deep conflicts among
Imperialist powers
In the slipstream of Germany are such countries as France, the Benelux contries, Austria and Switzerland, all due to benefit from the opening up of Eastern Europe. The Ridley affair in Britain this summer — in which Thatcher's trade minister (who has now resigned) compared Kohl to Hitler and the new united Germany to the Third Reich - was an expression of the deep conflicts even within the European Community itself.
It will take some years for the changed conditions, and above all the strengthened position of German imperialism, to work their full effects on the world scene. In such a situation the USA profits from taking a straight line towards war. The diplomatic efforts are probably only a way of passing the time until the US military build up has reached the necessary weight for an attack. The USA must "take into account the risk that an aggressive course may forfeit some international support." Thus Henry Kissinger, who, however, considers "the central question to be the precise and graded destruction of Iraqi military capacity" — meaning first and foremost the bombing of Iraq's nuclear and chemical warfare facilities (Welt am Sonntag, August 19, 1990).
Survival of "civilized" nations at stake
Former defence minister Caspar Weinberger, speaking in the name of "the civilized world", adopts an equally bellicose pose: "The only way to ensure the survival of the civilized nations, who want nothing more than peace and freedom, lies in the maintenance of military strength."
He states his closeness to the arms industry and demands that Washington defence budget". ...(Forbes, 9/90). This despite the fact that the USA had until 1990 raised its defence budget each year since 1979.
Time (September 9, 1990) quotes a "spokesman for the Bush administration" as saying: "We are not going to sacrifice the interests of 250 million US citizens for the freedom of 2,500 Americans" (meaning the hostages).
The representative states quite openly that US war aims cannot be restricted to getting Iraq out of Kuwait. "Any withdrawal that left the Iraqi war machine intact would be unacceptable."
US involvement will not be shortlived
It is also being openly stated that the US involvement in the region will not be short-lived and the issue of who will pay will be discussed.
The same issue of Time brings together "experts" to consider the question of "whether the USA's military presence in this region" should be "more or less permanent."
The Allies would be expected to pay the costs — including a billion dollars from West Germany, the same for Japan and so on.
Once again we find repeated evidence of the timely appearance of Saddam the Enemy — there is now a prospect of direct access to oil sources, new mineral rights, new negotiated agreements for oil companies — the fantasies are proliferating as fast as the troops. *
Precedent for US crusade
HISTORY has known similar Imperialist adventures to the present
Middle east crusade. The American historian Paul Kennedy comments in a round table In Time (September 9, 1990): "Great Britain was capable of a similar display of power in 1899/1900, when It got Involved in its bitter conflict with South Africa's Boers, 10,000 kilometers from home, London mobilized more than 300,000 soldiers from all parts of the world.
The Royal Navy ruled the waves, no other power was capable of such an effort... This Impressive military expedition.. changed the view of the weaknesses of the British great power.... It was these weaknesses, not the defeats in the military field, which were later to lead to the downfall of British power."
For Kennedy these weaknesses were economic: The USA relies on the fact that every quarter Japan buys some 514b of American government bonds, If Washington one day Irritates Japan and the Japanese government says to Its stock market makers, don't buy American government bonds, then the USA's military muscle is a thing of the past. A Great Power only remains truly great when It can provide the means for its own independent action. When the British could no longer do that, they lost their status as a first class power. The Suez crisis.
with its catastrophic fall in the pound — Is a good example." *
15 October 15, 1990 • #192 International Viewpoint lie in the strategic position of the
GULF CRISIS
War, Crash, Crisis ject just before the Gulf crisis.
All observers agree that such an austerity drive would unleash the recession in the USA and could lead to a new worldwide recession.
What this means is that before the Gulf
THE oil price rises of 1973 and 1979/80 played the role of catalyst in the recessions that followed. The present state of the world economy as a new "oil shock" strikes has some similarities, but also some important differences, with those experiences. WINFRIED WOLF T HE first similarity is that, until the middle of 1990, the economic cycle had gone through a long upturn, but from the turn of the year signs of recession appeared in a number of countries. The oil price rise in 1973 ended an upturn that had started in the middle of the 1960s, apart from a small setback in 1970/71. Subsequently, in 1974/75 there was a recession. Similarly the oil price rise of 1979/80 saw the end of the 1975-79 boom. The present boom lasted from 1982-89, with a slight setback in 1986/87. In the USA signs of recession began to accumulate in the last quarter of 1989, and in the first half of 1990 this tendency has been confirmed. In this period, most of the leading US firms and banks have seen a slump in profits, led by the crucial automobile sector. The same is true in Britain. In Japan, the economic climate is changeable. At the turn of the year there were collapses and a fall in profits — since then there has been a renewed upturn, but the onset of the Gulf crisis has once again darkened the skies. An important difference with 1973 or 1979/80 is this — other major imperialist groups are today destroyed or in the bankruptcy court. The costs of sorting out the US savings system - the "Savings and Loan crisis" - will cost some $1,000 billion, leading financial circles to talk of a "financial Vietnam". The institution specially created to finance bank collapses has run out of money.
The extremely nervous reaction of the stock markets when Iraq invaded Kuwait is an element with no parallels in 1973 or 1979/80. Then stock market reactions did not have an important impact on the economy as a whole. Now the panic shows the chronic instability of the financial sector. In September the business weekly Forbes carried the headline WAR - CRASH - CRISIS.
Boom based on war and credit
Connected to this, and part of the simmering crisis of the financial sector, the eight-year long boom was to a large extent brought about by the imperialist states' new debt policy. This policy has reached its outer limits, particularly in the USA. Thus, as Business Week wrote before the Gulf crisis: "If nothing is done to deal with the US budget deficit, then the public debt of the US government will reach $4 trillion in 1994 — twice as much as 1988. Current payments of interest on this sum would amount to $300 billion a year and devour more than half of all tax revenues. "The journal proposes a massive reduction of this deficit through severe attacks on social spending, and tax increases, above all of indirect taxes. Reductions in arms spending would also be part of the package. And in fact, President Bush, who was elected on a pledge of "no new taxes" ", declared that raising taxes was no longer a taboo subwhat this means is that before the Gulf crisis, there were unmistakable signs that the world's leading economic power was ready to enter on an economic course towards world recession. Unleashing an economic crisis through policy is clearly a tricky business from a political point of view.
It is at least thinkable that in such a mood, the leading capitalist circles have been ready to consider seriously any other way of introducing a recession, particularly one which can be presented as "external", as some kind of fate or historical challenge. Such a policy would be in the interests of certain important sectors of the US economy - in a way in which the "civilian" variant of an austerity policy would not be. Certainly two sectors - the US arm industry and the US and British oil multinationals — stand to gain by the way things have turned out. Arms spending, rather than being cut back, will be increased. President Bush is an oil man. War minister Richard Cheney and the Pentagon are close to the electronics and arms industry.
The bourgeois experts are openly discussing the catastrophic consequences of US policy.Time Magazine concludes that the forthcoming war would "make a recession in the US a certainty and it could be very deep." The magazine quotes Robert Holmats of brokers Goldman Sachs; "If the Japanese stock market has fallen four percent already, then if there was a real war, there would be a 40 to 50% fall. This would shatter the international financial system" (September 3, 1990). And the much-hyped historian Paul Kennedy shares some gossip with us in Der Spiegel (no. 36, 1990) : "I know leading New York bankers, Felix Rohatyn for example, who are saying; 'What we need is a proper crash on Wall Street, a financial disaster, to wake everybody up..."' countries, above all West Germany, found themselves in mid-1990 in a strong and continuing (but also over-heated) boom. One factor in this is the collapse of Comecon and the annexation of East Germany along with the extra profits to be gained, or which are expected to be gained - expectations being a crucial economic factor on stock markets. Thus we are seeing a de-synchronized economic situation.
Another difference concerns the financial sector of the world economy. For the first time since the 1920s, this sector is in an extremely volatile condition, shown by the stock market crashes of October 16 1987 and 1989 and of February 1990 in Tokyo. Big banks and entire banking
Iraqi gas made in Germany
THE poison gas used to decisive effect by Iraq in the war with Iran, as well as in Saddam Hussein's war on Iraq's Kurds, was provided by West Germany. The West German weekly, Der Spiegel (No. 33, 1990), explained that "No other nation helped Saddam Hussein like Germany to construct the largest and most comprehensive arsenal of chemical weapons in the Third World....Scarcely another country has lavished so much highly dangerous material on the wild elements in the Middle East." According to Rio Federico Fülgraf, in the leftist daily Tageszeitung (August 23, 1990), there is conclusive evidence that a West German-Brazilian-Iraqi connection has been providing Iraq for years with the means to develop nuclear weapons. On top of this, since the 1980s and until August 1990 the West German army and big business have been training Iraqi officers. This has been financed firstly by the Bundeswer (West German army), secondly by firms with armaments interests (Daimler-Tochter) and thirdly, by the Carl Duisberg society financed by Bayer Leverkusen. Carl Duisberg, together with Professor Haber, is known as the "discoverer" of poison gas prior to its use in the First World War. *
International Viewpoint #192 • October 15, 1990
T HE most recent analyses from
Shell suggest that, at current levels of production, those known oil reserves which can be exploited at a tenable cost will be exhausted in 40 to 50 years. This fact is a striking expression of the "after us the deluge" principle on which capitalist society works. The whole economy has been constructed around the presence of oil. Power stations, roads, bridges, tunnels have been built which will last 50 to 100 years and must be used for this period of time. This raw material, which ensures mobility and provides a large part of disposable energy, will only suffice for a few decades. The search for new sources will in all probability lead in short order to big price rises to cover investment requirements.
It is thus likely that a war in the Gulf, simply through creating a shortage of oil, will have a decisive influence on world politics and the world economy. When in 1973 the OPE states found themselves able to coordinate their policies, above all by lowering demand, it seemed at first that the law of the jungle which governs relations between imperialism and the Third World had been broken. This law states that the Third World shall sell cheap raw materials and buy expensive industrial goods from the industrialized countries. OPEC defied this law, imposing, or so it seemed, a sharply higher oil price.
Oil companies reap huge profits
The industrialized countries were in no position, at least in the short term, to find alternative energy sources, while OPEC had an effective monopoly on the world oil market. And since, furthermore, there was a certain community of interest between OPEC and the oil multinationals, these latter reaped huge surplus profits while the oil-producing countries accumulated hundreds of billions of dollars, the so-called "petrodollars". At the same time the cost to the imperialist countries was
UNLEADED -
GULF CRISIS Oil fuels drive for profits OIL HAS BEEN a basic factor in the world economy since the start of this century, when Rockefeller/Standard Oil became the leading capitalist group in the USA and thus In the world.
Oil, in all its forms, is the fuel which has driven the world economy since the end of the 2nd World War, both directly, and indirectly through its role in capital accumulation. In the postwar world, firms connected to oil — in oil-producing, oil processing, cars and chemicals - have formed the decisive imperialist cartel. WINFRIED WOLF passed on to the consumers, through oil price rises, and inflation.
The rise in oil prices had a terrible impact on the Third World. It had much to do with the massive borrowing of the 1970s and the subsequent debt crisis, with its concomitant "adjustments". For the imperialist countries, however, mechanisms were found to ensure that the petrodollars were "recycled". The first and most basic form of recycling was the transfer of the petrodollars to the imperialist centres via capital investments. This process showed that the OPEC countries, as well as Mexico and Nigeria, remained thoroughly capitalist countries, dependent on imperialism. Their ruling classes showed no interest in developing their countries, concentrating their efforts on maintaining their power and the accumulation of private fortunes. Under these conditions, the bulk of the oil profits found their way back into Western banks as capital deposits. The oil states engaged in speculative buying into such firms as
Thou shall have 10 chergy sourees before me.
***+
WINFRIED WOLF Krupp, Daimler, Fiat and so on.
Kuwait has been the model recycling state. Kuwait has over $100b invested abroad. Big stakes have been bought, for example, in West German firms such as Daimler (14%), Metallgesellchaft (20%) or Hoechst (a shareholding of some 20%), or in Britain the Midland Bank (10.2% shareholding), and the oil multinational BP (14% shareholding). The Washington Post claims that Kuwaiti assets in the US amount to $40-50b. Leading US brokers Morgan Stanley handle some $3b of Kuwaiti speculative capital. "If the Emir sells, the stock market will tremble" remarks Forbes (September 1990).
Kuwaiti economy in exile created
All this money will now be managed by the Kuwaiti Government in Exile, creating a sort of "economy in exile." The US government has been negotiating with the Kuwaiti leaders to get them to nav a nart Kuwaiti leaders to get them to pay a part of the cost for the US military operation.
The total foreign holdings of Saudi Arabia, Kuwait, Qatar and the United Arab Emirates were already worth $200b in 1986. Their current value can reasonably be rounded up to $250b. This form of recycling, as well as deposits in banks and stock market investments, has an important implication; these oil states hold further property titles in firms, share packages, bank deposits and stock market placements. A quite different form of recycling took place through the Iran/Iraq war. The war involved two further forms of recycling:
• Two of the leading oil states undertook a war to the death which used up hundreds of billions of dollars (as well as a million lives). This required huge arms EC countries, Japan and Brazil. The war clober 15, 1990 • #192 International Viewpoint
GULF CRISIS / GERMANY thus supported the international arms industry and the general economic situation in these countries.