Posts Tagged ‘Libya’

Criminal networks and donor conferences: bankrolling insurgencies and arming them

March 26, 2013

Sunday’s New York Times featured an article about the ‘secret airlift of arms and equipment for the uprising against President Bashar al-Assad’, overseen by CIA officers:

From offices at secret locations, American intelligence officers have helped the Arab governments shop for weapons, including a large procurement from Croatia, and have vetted rebel commanders and groups to determine who should receive the weapons as they arrive, according to American officials speaking on the condition of anonymity.

Arms shipments - Syria

Washington’s imperial caravan of weapons dealing and covert funding of political interference in other states proceeds via the aid of financial globalization. Its wheels are greased by the international role of the dollar as global reserve currency and source of aggregate demand.

Suzerainty means being able to fund your proxy wars in a roundabout way: by directing the Qatari, UAE or Saudi Arabian holders of your government liabilities (private agents as well as the central banks and sovereign wealth funds of net creditor countries) to do so.

In this respect, the provision of arms, loans and military training to proxy forces is another branch of ‘aid’ or development assistance. It regularly involves the same multilateral organizations, NGOs and donor conferences, and is justified publicly using the same messianic ideologies of imperial benevolence and munificence.

It is US indebtedness, however, that allows it to act as banker, arms supplier and instructor to the world’s jihadis and regime changers. An outflow of dollars is needed both to furnish ‘less-developed’ countries with the liquidity needed to service their debt obligations, and to allow an ‘opposition’ to purchase weapons from NATO and its allies and pay the salaries of rebels.

Since the 1960s the emission of dollars abroad through US external deficits has fuelled the growth of liquid international money markets (Eurodollar bank deposits) domiciled outside the US.

These offshore markets  with the City of London being the first and biggest  usefully supplement the domestic Fed-governed system’s supply of dollar-denominated credit with a private pool of dollar balances.

An immense volume of offshore transactions (the Eurodollar money market is the world’s most liquid) allows alternative funding routes to be designed when, for whatever reason (domestic regulations, international sanctions, arms embargoes, diplomatic amour-propre), official channels won’t do.

Offshore banking centres and tax havens flourish in jurisdictions that were created and now endure for the purpose of financial racketeering. These launder the blood-stained proceeds of arms trading, gold smuggling, drug trafficking, prostitution and gambling.

They include the City of London, Dublin, Switzerland, Luxembourg, Singapore, Hong Kong, the Cayman Islands, British Virgin Islands, the Channel Islands, Gibraltar, Antigua and Barbuda, Bermuda, the Bahamas, Sint Maarten, Panama, Cyprus, Malta, Vanuatu, the Cook Islands, Monaco, the UAE, Bahrain, Qatar, Oman and Kuwait.

Tax havens

The complexity and volume of transactions creates a lucrative niche for financial-services and other professionals (accountants, lawyers, ‘consultants’). Criminals and illicit firms also engage in ‘legitimate’ business ventures: real estate, construction and development, cash-intensive enterprises like tourism and hotels, and above all banking.

Dirty money can be converted into ‘clean’ capital gains by investing funds in highly liquid assets (e.g. gold or precious metals, fine art, bulk commodities like oil or wheat) which are anticipated to appreciate in price.

Thus transnational so-called ‘organized crime’ is not a distinct world. It is intertwined with, rather than divorced from, the ordinary economy, and overlaps with the political establishment, public officials and law-enforcement agencies.

It has intimate links with intelligence and diplomatic agencies: as shown by BCCI and Banco Ambrosiano; Iran-Contra; funding of the mujahideen in Afghanistan, Solidarnosc in Poland, and the KLA in Yugoslavia; Nugan Hand Bank in Australia; Khodorkovsky’s Menatep Bank and capital flight from Russia (abetted by Harvard advisors funded by the US State Department); and operations in Francophone central Africa and East Asia involving the French political elite, defence contractors (EADS and Thale), the oil company Total/Elf and the ‘Clearstream affair’.

‘Black market’ activities allow intelligence agencies to stretch their budget for covert operations, and to evade international sanctions and NATO-created embargoes (e.g. in the ex-Yugoslavia, Iraq, and now Iran and Syria). Civil wars, as Somalia demonstrates, provide ideal settings for profitable kidnapping, extortion and protection rackets.

Equally, accusations of participation in or association with organized crime can be made to strengthen the repressive power of law enforcement or intelligence agencies, pollute popular opinion, settle intra-elite scores, or move state policy in a desired direction by sidelining ‘tainted’ individuals or entities.

Nixon’s smashing of the ‘French connection’ had as its useful by-product the reduction of the Quai d’Orsay’s influence in Turkey and the Levant and the consolidation of the Maronite elite’s hold over the Lebanese state and local commerce (against the Muslim upstarts in the Intra Bank). British journalist Claire Sterling was the conduit for black propaganda associating Bulgarian intelligence with the assassination attempt on Karol Wojtyla.

And, since the late 1990s and especially after the World Trade Center and Pentagon attacks of September 2001, governments have enacted laws against ‘transnational organized crime’ and the financing of terrorism. Emergency circumstances, as they are officially described, have granted authorities the right to seize property and confiscate ‘proceeds of crime’ or terrorism.

In reality, it is the manoeuvres of imperialism itself (destabilization campaigns in preparation for armed interventions, regime change, IMF loan conditionality, financial liberalization and deflationary crises) that have criminalized the Balkan region and eastern Mediterranean. Together they have created a latitudinal band of turmoil, official corruption and mass pauperization that sweeps clear across central Asia.

These symptoms of entrenched crisis and misery in the peripheral zones of the world economy are the obverse of US external deficits. The reflux of dollars caused by global payments imbalances (from the surplus countries, to their US debtor, to ’emerging markets’) ensures that the disarray of the advanced capitalist countries is visited upon the hinterlands, since Washington itself faces no binding liquidity constraint.

Whole regions slide stealthily off the economic map as the promise of ‘development’ recedes.

Washington’s increasingly brazen militarism and belligerence over the past two decades is thus bound up with changes in the financial institutions, credit mechanism and monetary arrangements of world capitalism, which have also transformed the very nature of money.

By 1945, and especially after 1971, the best-quality money  as measured by the willingness of other central banks, sovereign wealth funds and private holders of foreign exchange to accept and accumulate it, and by the preparedness of private buyers and sellers to establish commodity prices denominated in terms of it   was the dollar liabilities of the United States government.

Institutions of money and credit are hierarchical: some promises to pay are more credible than others, and one specific form of money is acknowledged (generally by legal definition) as the best-quality measure of value and ultimate means of payment.

At the top of the monetary pyramid sit those agents whose liabilities (e.g. private promises to pay, commercial bills, state currency, Treasury bonds, central bank deposits) are most socially acceptable in transactions and are used as stores of value.

hierarchy of money

That the state issues the ultimate domestic money is natural because it has the best quality debt: a state with the power to impose tax obligations in its own currency faces virtually no liquidity constraint and is the most creditworthy borrower.

Its liabilities (i.e. currency or central-bank deposits) serve as the ultimate means of settlement for domestic payments.

But typically, most notably during the international gold standard formed after 1870, the ultimate international monetary unit has been the ‘outside money’ of gold, an asset of central banks that was no-one’s liability.

A government settling its external account with foreign counterparts needed gold. Alternatively (and increasingly during the late nineteenth century) it used some commonly accepted reserve currency or monetary standard such as the pound sterling (in which, thanks to the Empire and London’s role as world banker, governments typically held a portion of their external balances).

Changes to the monetary hierarchy and to the system of international settlements during the twentieth century (above all, shedding of convertibility of currencies to gold at a fixed rate) involved adjustments to the respective monetary space commanded by national currencies such as the pound sterling, the franc and the dollar, i.e. the domains of economic activity in which each of them circulated.

World capitalism’s discarding of a metallic standard to underpin its monetary system was an index of the strength of one imperial state.

This reflected the nature of the new global order, in which the US state (as well as claiming jurisdiction and tax authority over the world’s greatest concentration of productive resources) was able to suppress the foreign-policy independence and direct the regional and domestic affairs of other advanced capitalist state in a manner never before seen.

Imperial rivals, once subdued, could not pursue strategic objectives outside of US-dominated institutions  which is to say, scarcely at all.

Dean Acheson NATO

Deranged ambitions for a Kautskyite ultra-imperialism, dominated permanently by US arms, continue to receive a public airing, as with G.W. Bush in his 2002 address to West Point graduates:

We have our best chance since the rise of the nation state in the 17th century to build a world where the great powers compete in peace instead of prepare for war.

The history of the last century in particular was dominated by a series of destructive national rivalries that left battlefields and graveyards across the earth. Germany fought France, the axis fought the allies, and then the East fought the West in proxy wars and tense standoffs against the backdrop of nuclear armageddon. Competition between great nations is inevitable, but armed conflict in our world is not.

More and more civilized nations find themselves on the same side, united by common dangers of terrorist violence and chaos. America has and intends to keep military strengths beyond challenge. Thereby making the destabilizing arm races of other eras pointless and limiting rivalries to trade and other pursuits of peace.

Today the great powers are also increasingly united by common values instead of divided by conflicting ideologies. The United States, Japan and our Pacific friends, and now all of Europe share a deep commitment to human freedom embodied in strong alliances such as NATO. And the tide of liberty is rising in many other nations.

But Washington’s policymaking elite is under no illusions: US pre-eminence can only be prolonged at the expense of other imperial powers. Thus the historical emergence of dependence, cooperation and servility among Washington’s junior partners (West European states, Tokyo) merits investigation, not least for what it can tell us for about the ultimate lifespan or historical limit to this state of affairs.

For what underpins the ability of states to borrow, to have their liabilities (cash, deposit accounts at the central bank, Treasury bonds, etc.) accepted?

National currency is a token that can be used to discharge tax obligations, while state debt securities promise to yield a revenue stream of interest financed out of taxation.

But, today, Washington’s strategic primacy rests ever more directly on its use of military power to pursue its goals and subdue its competitors, rather than on its ability to mobilize real resources through taxation. For the moment, US military activities and armaments spending, undertaken without heed to any binding liquidity constraint, provide their own best guarantee.

Facing stark choices brought about by global imbalances, the US ruling elite has adopted political methods of last resort: permanent war financed by a colossal pyramid of dollar liabilities.

External holdings of US Treasuries

The volume of funds flowing into Eurodollar money markets swelled dramatically after 1973. At the insistence of Washington, a large share of oil-export receipts held by the central banks of OPEC countries were invested in US Treasury securities purchased outside the regular auctions.

In return for disbursing oil rents in the desired fashion, the obliging governments of Saudi Arabia, Kuwait and Iran received US military hardware, security training and guarantees of protection.

Some of the petrodollar inflow was recycled outward as loans to ‘developing markets’ (Argentina, Brazil, Mexico, Greece, Turkey, South Korea, Yugoslavia and the Philippines). The injection of credit to these economies sparked speculative bubbles in commodity prices or local real estate, rendering domestic producers less competitive and hollowing out industry before terminating in debt crises, inflation and currency depreciation – as in the Mexican crises of 1982 and 1994, the East Asian crisis of 1997-98 and the ruble collapse of the same year.

Today, these same dutiful energy-exporting Arabian peninsula members of the Gulf Cooperation Council (together with Turkey) are the proximate source of weapons wielded against the Syrian government on behalf of Washington.

Two days ago the Wall Street Journal published information from US officials that the CIA was ‘expanding its role in the campaign against the Syrian regime by feeding intelligence to select rebel fighters to use against government forces’:

The expanded CIA role bolsters an effort by Western intelligence agencies to support the Syrian opposition with training in areas including weapons use, urban combat and countering spying by the regime… The provision of actionable intelligence to small rebel units which have been vetted by the CIA represents an increase in U.S. involvement in the two-year-old conflict, the officials said…

Syrian opposition commanders said the CIA has been working with British, French and Jordanian intelligence services to train rebels on the use of various kinds of weapons. A senior Western official said the intelligence agencies are providing the rebels with urban combat training as well as teaching them how to properly use antitank weapons against Syrian bunkers.

The agencies are also teaching counterintelligence tactics to help prevent pro-Assad agents from infiltrating the opposition, the official said.

Among other U.S. activities on the margins of the conflict, the Pentagon is helping train Jordanian forces to counter the threat posed by Syria’s chemical weapons

Despite long-standing evidence of Washington and its allies’ efforts to ‘shape the outcome in Syria’, Australia’s Socialist Alternative has led cheers for the proxy forces of what it insists on calling the ‘Syrian revolution’:

Imperialism, in the sense of Western neo-colonialism, is not the main threat facing the masses of Syria, or of the Arab world as a whole.

This can seem a sacrilegious statement to anyone who got their political education on the left in the post-9/11 world. After the 9/11 attack, when the US went to war on Afghanistan, there were a tiny number of political voices who stood against the tide and protested against the war. We were denounced as “knee-jerk anti-imperialists”.

In those turbulent days we wore the “knee-jerk” accusation as a badge of pride. If the US military did it, we were against it. And we were right. In those years, anti-imperialism was a crucial starting point because US imperialism was the decisive element in world politics. The time for “knee-jerk anti-imperialism” has now passed. Not because US imperialism has disappeared from the Middle East, or shed its malevolent intent, but because the world has changed.

The Arab revolution has transformed everything. We now live not in a “post-9/11 world” but in a “post-Tahrir world”.

The characteristically puerile tone ought not to distract from the deplorable message itself. Intellectual infirmity is one thing, and political efficacy quite another. Many well-meaning but politically naive people will doubtless have thrown their support behind NATO-led regime change in Syria due to these ‘left’ arguments, which complement the liberal-humanitarian ones propounded by the mainstream media outlets. Thus an avowedly socialist organization partakes in a US and Israeli strategic move to advance their regional position.

US foreign policy is now hostage to the pursuit of oil in a way that resembles fascist Germany during the 1930s. The keystone of Washington’s global power is military control over West Asian oil, secured by US advantages in weapons systems and logistics that grant it control of sealanes, skies and communication networks while allowing it to establish land-based Eurasian protectorates.

Over the past decade the nexus of energy industry and imperial state has grown denser both in Washington and among its allies.

Thus yesterday a press release by the Australian Mines and Metals Association welcomed Julia Gillard’s appointment of Gary Gray as federal resources and energy minister. Gray, it said, was ‘highly regarded by the resources sector.’

Gray was national secretary of the ALP during the 1990s, and later became director of corporate affairs at Woodside Petroleum.

Between jobs, in 2001 he served as a lobbyist for Woodside when ‘Australia’s biggest oil and gas company’ sought to repel a bid by Royal Dutch Shell to acquire a controlling interest in the company.

In what was described as a ‘lobbyist’s heaven’, Gray reportedly earned a seven-figure bonus after Treasurer Peter Costello and the Foreign Investment Review Board refused the takeover on ‘national interest’ grounds.

Ashton Calvert, chief of the Department of Foreign Affairs and Trade from 1998 to 2005 (during which time Canberra undertook two military interventions in East Timor) later became a director of Woodside and Rio Tinto.

Timor Sea - oil and gas reserves

In 2004 senior DFAT official Brendan Augustin, now general manager of Woodside in East Timor, was granted two years leave from the government department to work for Woodside in Mauritania. After the Mauritanian government was overthrown by a military junta in 2005, Augustin negotiated a new production-sharing agreement for the Chinguetti offshore field.

Gray later claimed responsibility for Woodside’s request for a DFAT official:

We needed someone with French-Arabic cultural skills and we thought the arrangement would also benefit DFAT because at the end of it they would get back a person with knowledge and experience of the oil sector in western Africa. Brendan was an excellent candidate. He had experience in Dili. His wife, I think is a GP from East Timor. He knew the circumstances of living in the Third World.

Just like Socialist Alternative (and its international counterparts) today, in 1999 so-called left-wing organizations like Socialist Alliance and the now-defunct DSP provided a ‘progressive’ veil for Australian military intervention in East Timor. As with contemporary support for regime change in Libya and Syria, this is not to be explained by intellectual limitations or momentary confusion of the groups in question.

As imperialism grows more rapacious and belligerent, turning desperately to delinquent methods, dirty money and dubious individuals  as a seamless web of elite criminality forms to seize the world’s resources by the throat  at just this moment its ‘human rights’ chorus grows more supplicant and beguiling, its demands grow more insistent, and it seduces one after another ‘radical’ or progressive group.

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The right stuff

December 30, 2011

In a Washington Post feature article (‘Under Obama, an emerging global apparatus for drone killing’), Greg Miller writes that ‘no president has ever relied so extensively on the secret killing of individuals to advance the nation’s security goals.’

I’ve discussed this fact before and considered what the drastic expansion of executive power reveals about the policy objectives of the US elite and its allies. There’s more to think about, though.

Use of remotely-piloted aircraft (as well as cruise missiles and manned gunships) for weapons delivery requires the presence, midway along the ‘kill chain‘ between sensor and shooter, of human operators and analysts.

These people must watch, with sustained attention, live video feeds or surveillance imagery of death and destruction as human targets are found, tracked and exterminated with high-explosive anti-armour (blast and fragment) munitions.

In other words, Washington’s global death program entails the existence of an extraordinary sort of workforce.

Members must be able to withstand both prolonged and acute exposure to horribly unpleasant stimuli while maintaining vigilance and task-specific focus and without experiencing the kind of negative emotional states or overwhelming affective responses that lead to performance degradation (e.g. failure to determine whether a target has been successfully ‘neutralized’ or merely incapacitated, inability to discriminate between the remains of targets and those of bystanders or non-humans, unwillingness to detect subsequent targets, etc.).

One method people use ordinarily to cope with distress is avoidance: diverting attention from the source of aversion as a way to alleviate anxiety. This is impossible for the drone operator, whose job description requires him never to look away.

Wayne Chappelle and Kent McDonald at the US Air Force School of Aerospace Medicine in Ohio have undertaken studies, using surveys, tests and peer reports, into the personality traits and behavioural dispositions, as well as the cognitive and psychomotor skills, needed by successful operators of unmanned weapons-deploying aircraft and their sensors.

Among other things, this has involved rating participants along the Big Five personality dimensions (openness, agreeableness, extraversion, conscientiousness and neuroticism) and comparing results to those from the civilian population and the aircrew of manned gunships. (Other recent papers can be found here, here and here).

UAV crew members unsurprisingly must possess all the usual traits: self-confidence, assertiveness, excitement-seeking, internal locus of control, a high degree of intrinsic motivation, etc.

But given their specific combat role, the final attribute in the Big Five domains – emotional stability or composure in the face of induced transient stress – becomes especially important if personnel are to perform successfully and avoid burnout or impaired performance. (Predator/Reaper and AC-130 gunship operators both score lowest, relative to the general population, on neuroticism.)

According to McDonald and Chappelle, those who adapted to the ‘operational environment’ displayed ’emotional stamina’, lack of vulnerability to negative mood states, were ‘tough-minded’ and not prone to distress. They found that ‘higher than average levels of  resilience to stress (or other negative emotional states), need for excitement-seeking, and compartmentalization of emotions are required to adapt to the operational demands’:

According to SOs [sensor operators], the deployment of weapons also requires well-developed skills for compartmentalizing their emotions.

The rigors of training and operational demands of the RPA [remotely-piloted aircraft] platform (e.g., targeting and destruction of enemy assets, taking the lives of enemy combatants, as well as surveillance of battle damage) can be emotionally taxing.

SMEs [subject-matter experts, i.e. superiors] reported the ability to compartmentalize the emotional rigors of one’s job in order to conserve emotional reserves when returning home from work or interacting with others outside the military installation can be an important trait for long term stability.

It is well-known that resilience to stress and emotional difficulties (often known has psychological hardiness) is considered a core attribute of those within high risk military occupations.

Furthermore, some airmen may emotionally struggle with their role in the killing of enemy combatants.

Interviews with SMEs reported a small number of incidences (i.e., four to five) of SOs voicing their discomfort with their duties and/or requesting to leave the career field after their role in the deployment of weapons. They reported such SOs performed their surveillance and reconnaissance duties well, but emotionally struggled with their role in taking the lives of others, regardless of the threat enemy combatants posed to U.S. and allied forces.

SMEs reported such SOs experienced significant internal conflict with their role, and that such a conflict did not become apparent until the SO was faced with a real-life situation or fully educated about the nature of their combat-related duties.

It is important to ensure that airmen selected for RPA SO duties are fully aware of, and understand, their role in the targeting and destruction of enemy combatants and assets prior to entry into training. It is likely that some SO candidates will decline the opportunity to pursue such duties once they fully understand their role in precision strike operations.

In other words, remote operators of weapons-deploying aircraft must be unusual people, many of them several standard deviations from the population mean on various personality dimensions.

The most important of these dimensions is neuroticism and its components: susceptibility to sadness, regret and depressed mood. If they feel at all queasy, guilt-ridden or troubled when observing burnt and mangled corpses, they must manage to suppress such feelings and get on with the job without any noticeable decrement in performance or distraction from task engagement.

In seeking to retain incumbents and find suitable recruits to work as happy killers, Washington’s expanding assassination program thus must fish in shallow waters for rare species (certainly including sociopaths) displaying the desired personality traits.

One way of achieving sufficient numbers at the extremes (i.e. tails) of a distribution is to shift the population mean for the trait in question. If the average person becomes less prone to a negative affective response upon witnessing scenes of extreme violence and destruction, then the ‘less neurotic’ types will be more stoic still, and their numbers more plentiful than otherwise.

Similarly, such a population-wide shift would raise the stress threshold beyond which task demands (such as remote killing) were experienced by operators as unfamiliar, unbearable and exceeding the operator’s capacity to cope.

Finally, an increase in the median voter’s ability to withstand the sights and sounds of extreme violence, without lapsing into appalled paralysis or low moods, would presumably increase public tolerance for large-scale killing, by those at the extremes, in pursuit of elite objectives.

How might this be achieved?

Applicants with the desirable traits and states obviously self-select for the job. But the above quotation shows that candidate recruitment isn’t perfectly reliable.

In such cases, and generally, affective response and emotional disposition can also be modified and reinforced by training. People from the University of Central Florida psychology department (Mustapha Mouloua, Peter HancockEduardo SalasDeborah Billings, James Szalma, etc.) have explored how stress-exposure or stress-resiliency training can “harden” personnel who must use UAVs in combat, so that their ability to acquire and engage targets is not overwhelmed by emotional and physiological response.

The basic technique works via graduated-intensity exposure to battlefield stressors and realistic perceptual cues, including through high-fidelity simulation and games. The trainee is habituated to environmental cues that initially were aversive and debilitating, thus becoming ‘inoculated’ against combat stress.

Similarly, by exposing the general population to an unceasing barrage of (imagery of) extreme violence (e.g. by allowing it to saturate popular entertainment), one may presumably shift in a convenient direction the population distribution of relevant dispositions and attitudes, bestowing an everyday familiarity (sanitized, to be sure) and tolerability on what is pursued in secret.

This, too, I’ve discussed in greater detail in another post.

Revivalism

August 27, 2011

With the return of Great Power imperialism in something like its classic form, ghosts from the not-so-deep past are appearing.

In Libya today we see a revival of the means first used to achieve formal British domination over the energy-rich territory of the former Ottoman Empire.

During the First World War intelligence officers — most famously T.E. Lawrence — were used to infiltrate behind enemy lines, conduct reconnaissance, call in air support, liaise with, train, equip, fund (11 million pounds, mostly in gold) and organize Feisal’s irregular local rebel forces in the Hejaz into mobile combat units, and finally to set up puppet governments following the terms of the Sykes-Picot Agreement.

Thus the Arab Bureau in Cairo directed the Arab Revolt for the British Empire. Feisal got the Iraqi throne, the RAF got bases in Basra and Mosul, Anglo-Persian got Abadan, and the Royal Navy controlled all waters between the Red Sea and the Bay of Bengal.

During the Second World War a similar task was entrusted to the Long-Range Patrol/Desert Group and the newly-formed SAS commando regiments.

These ranged across North Africa, crossing the border from Egypt to conduct reconnaissance of Italian bases before war was declared, reporting on and interrupting enemy traffic along the Mediterranean coast, assisting with sea landings, and conducting raids on airfields, harbours, railway lines, etc.

This week British and US newspapers have sketchily detailed the role of British SAS and French and Qatari special-operations forces, US intelligence agents and assorted mercenaries, in arming, training and directing the rebels in Libya, providing intelligence for air strikes, and organizing the assault on Tripoli.

Of course we have seen something similar before with the KLA and Northern Alliance proxies. But here historical echoes of strategies from the British and French imperial past are uncanny, as when twelve years ago German aircraft flew sorties over the Balkans.

In fact, even the propaganda niceties used for public consumption are familiar.

From today’s perspective, the agents of European colonialism and pre-Wilson diplomacy often seem blunt and (almost refreshingly) candid, scarcely bothering to shroud their strategic aims in blandishments like our Responsibility to Protect. But the British imperialists of one century ago were themselves attentive to appearances and PR.

In September 1916, they decided that landing a brigade at Rabigh, on the Red Sea near Mecca, would be a bad look, especially around the time of the Hajj. As they hastily trained and armed indigenous troops, and directed Sherifian assaults on Jeddah, Medina and nearby cities, British ships and aircraft supported the irregulars by destroying Turkish artillery, against which the rebels were helpless. The Royal Navy then landed Muslim troops from Egypt to help the locals take Mecca. (The French sent 1000 Algerians.)

Two years later, Allenby insisted that British and French forces linger outside Damascus, allowing the Hashemites to enter as liberators and hoist the Hejaz flag.

As described in the previous post, the diplomatic objectives of Great Powers are increasingly being pursued by special forces personnel. These elite non-conventional units are used not just for so-called stability operations (counterinsurgency and ‘peacekeeping’) but also to foment and facilitate the move, where this is desired, from political instability to armed uprising.

By militarizing a protest movement, regime change in a strategic location can be achieved; through a judiciously applied assassination programme, covert or not so much, a friendly government can be propped up, etc. This dual role is shown most clearly by astonishing growth in the reach of US Joint Special Operations Command.

Italy’s place in the sun

March 8, 2011

Its table manners exquisite where Washington is concerned, the New York Times sometimes casts aside euphemism and speaks candidly about the foreign policy of other governments. On Friday the paper contained a worthwhile article.

Quoting a liberal politician, it described how direct commercial exposure to North African ‘unrest’ is concentrated in Southern Europe: ‘France has Tunisia; Spain, Morocco; and Italy, Libya.’

Of course, by ‘Libya’ the politician basically meant that country’s energy resources.

Mussolini’s colonial government, short of petroleum, may notoriously have squandered the plentiful reserves across the Strait of Sicily. Agip neglected to drill during the war, finding it more profitable to supply the North African colony with imported oil from Romania.

But postwar Christian Democracy was not so neglectful.

Under Enrico Mattei, the Italian state acquired energy concessions across the Maghreb during Italy’s economic-miracle decade. The energy holding company become a giant, and Mattei the country’s unofficial ambassador to the Non-Aligned Arab states in the post-Suez years.

Thus, today, by ‘Italy’ the Times’s quoted politician meant the giant firm Eni, which is heavily tied up in exploration, production, refining, transport (through its subsidiary Snam Rete), infrastructure (through Saipem), marketing and (as Agip) distribution of Libyan oil and natural gas.

Italy absorbs around one quarter of Libyan oil exports. The Greenstream pipeline, running across the Mediterranean to Sicily, delivers natural gas to mainland Europe. That supply route, together with Algerian natural gas, provides the chief alternative to Russian-fuelled electricity generation for those unlucky European countries without North Sea frontage.

Libyan exploration and operating concessions are also held by French supermajor Total, German companies Wintershall (a subsidiary of BASF) and RWE Dea, US supermajor ConocoPhillips, Russia’s Gazprom, Spain’s Repsol, and assorted smaller US, Austrian and other companies. (Australian firm Woodside recently announced it would not seek to renew its large exploration and production contract.)

The fate of these concessions, should Gaddafi fall, is uncertain. The official opposition, based in Benghazi, contains many old regime figures. That means already-existing close relationships, and also dirty laundry that no side will want aired. A TNC spokesman has pledged that existing contracts ‘cannot be changed.’

But the final say on the matter may well fall to the airpower of NATO and the US Sixth Fleet, Marine expeditionary units, the British and Dutch special forces, and the Bundeswehr.

As the NYT article says, Eni plays a decisive role in the formation of Italy’s geopolitical stance. Italian military involvement in Afghanistan’s ISAF, and in the invasion of Iraq, are unthinkable without it. The company has interests in the Caspian Sea oil basin, claims in the politically-sensitive offshore oil and gas fields in the Timor Sea, and soon a downstream role in liquefied natural gas production in Australia’s Queensland, destined for export markets in East Asia.

The operations of Eni and a few other major Italian firms may range far afield, with the resulting accrual of shareholder income and political influence back home.

But the political capacity of the Italian state in Europe has been diminished by the hollowing out of the country’s industrial base. Since 1979, the old heavy industry, capital-goods (transport, machinery, chemicals, electronics) and durable goods (automobiles, household appliances) sectors have shrunk alarmingly.

Competitive devaluation of the lira was prevented, first (and only partially) by the European Monetary System, then by monetary union during the past decade. Intra-European market share was consequently determined by the ability to minimize unit labour costs (i.e. to increase productivity faster than wages). Unfortunately for Italian exporters, technical innovation had slowed down as the share of profits that was productively re-invested in plant and machinery fell.

Europe’s productive activity was thus increasingly concentrated in Germany, away from its erstwhile industrial challengers in Italy and France. A corporatist state, and the opening of vast labour reserves to the east, allowed trade unions to impose deflationary conditions on German employees. The country thus developed huge surpluses in merchandise trade. So, to a lesser extent, did the Benelux countries (particularly the Netherlands), Austria, Scandinavia, Switzerland and the Czech Republic.

A rump of small and medium-sized manufacturing firms in Emilia-Romagna and Veneto did manage to survive and prosper. But their output was almost exclusively consumer goods (furniture, clothing, footwear, textiles, leather goods and food). These Italian producers had to compete for European markets with low-cost output from China, Japan, South Korea and Taiwan. Italy too has held wage costs down – in Western Europe, it was bettered only by Germany. But its export-oriented firms stood little chance of success against East Asian competitors. Italian furniture, textile, garment and footwear production was thus increasingly outsourced to Albania and Romania.

The reflux of dividends and interest payments was not sufficient to overcome the structural trade deficit. Accordingly, in the twenty-first century, Italy (together another former exporting power, France) developed systemic current-account deficits.

But France, unlike Italy and just like the UK, is home to a large and liquid financial sector (led by BNP-Paribas, Société Générale and other banks, rather than pension, mutual and insurance funds, as in other rentier-led economies).

This has been important as, given the combination of external deficits and sluggish private investment, these three countries have experienced over the last decade, government borrowing has been necessary.

Under the fiscal conditions for monetary union, laid down in the Maastricht framework and Stability and Growth Pact, the European Central Bank is barred from financing public borrowing. The private liquidity shortage of Italy’s smaller money market has therefore meant a lesser domestic capacity to absorb government deficits.

Large quantities of Italian public debt are accordingly held by banks and mutual funds in Germany and France. Following the credit crunch of 2008, Italy thus came increasingly to resemble the ‘insolvent’ peripheral economies of Spain, Portugal, Greece and Ireland.

At 116% of GDP, Italian public debt was the highest in the Eurozone. Borrowing costs rose and goodwill evaporated. Bond-yield spreads between Italy and German long-term sovereign debt securities rose to their highest-ever level. Governments of the PIIGS countries, as they now were called, were recast as debt collectors for private investors.

Italy’s status as a continental power had evaporated.

There’s one more aspect of Italy’s external relations that deserves attention at the moment: immigration. Following demographic transition, Italy’s birth rate has dropped below replacement level. As France’s workforce growth has stagnated, Italy’s employed population had, by the turn of the century, begun to decline.

Italian firms have thus grown increasingly reliant on immigration from Africa and eastern Europe. And their needs have been obliged: thanks to immigration from less-developed countries, Italy’s resident population is now growing at its fastest rate since the 1960s. The fertility rate too has crept slightly upwards over the past decade.

The supposed need to deal with this flow of immigrants has publicly legitimized an ominous growth in the arbitrary powers of the Italian state’s executive branch and its repressive apparatus.

In 2008, Prime Minister Berlusconi deployed 3000 troops on Italian streets to deal with the ‘national emergency’ of illegal immigration and street crime.

The Italian ruling elite thus proclaims its commitment to Festung Europa.

In reality, it is reliant on large-scale immigration for its current and future labour supplies. The aim of its “border protection” policies obviously is (1) to create a pliant low-wage workforce by hounding immigrants into a semi-criminal, degraded condition; (2) demogogically to blame the problems of Italian economy, administration and society on foreigners; (3) to use the supposed crisis as a means to normalize repressive measures that may be used in other circumstances.

Over the past decade, Libyan and Tunisian governments have assisted in this task, financed by Rome and Frontex.

As the productive capacity of the Italian economy stagnated over the last thirty years, so did the wages and employment prospects of the broad population. At the same time, slowed growth of the capital stock raised the rate of return on fixed investment, and thus increased the capital income of the propertied classes. External influence and great-power status – a time-honoured means of broadening popular support – was diminished.

How was the stability of Italy’s social order assured under such conditions?

The path followed elsewhere was barred.

Deindustrialization in other countries (US, UK, Australia etc.) had been accompanied by a ‘big bang’ in the financial sector. The employed population’s compulsory subscription to pension funds channelled savings into capital markets. As a result of this inflow, assets prices were bid up. The appreciation of paper wealth then provided collateral for increased household borrowing (the ‘wealth effect’). Consumption standards were thus maintained despite precarious employment and wage deflation. This was portrayed as the spoils being shared.

In Italy, the decline of industrial sectors did not coincide with a financial explosion. The broader population straightforwardly did not share in the prosperity of the wealthy elite.

The stupefying crassness of Italian media culture must be viewed in this context. So too should the open criminality of the political elite. The Prime Minister’s tycoon lifestyle of bacchanalian excess, exhibited publicly, gossiped over and scolded, has become the object of vicarious enjoyment. It thus contributes to political solidity, rather than, as commonly is supposed, undermining it.

Finally, so too does the scapegoating of foreigners (Roma, Africans, Chinese) as the cause of Italy’s social ills, just as the misure urgenti of the government’s austerity programme cut service provision, reduce public-sector wages and jobs, and lower corporate tax rates for “competitive” purposes.