Posts Tagged ‘United States’

Promises, promises: Turkey as borrower and proxy

December 9, 2014

In 1936, two months after arriving at Istanbul University from Hitler’s Germany, the philologist Erich Auerbach reported back to Walter Benjamin in Paris, offering his first impressions of Kemalist Turkey.

Charmed by his ‘glorious’ new house on the Bosphorus, Auerbach viewed the cultural policies of the ‘sympathetic autocrat’ in Ankara more warily.

Official replacement of Arabic by Latin script, and the ‘purification’ of alien loanwords from the language, seemed to the German scholar to have brought cultural deracination.

The Turkish young had been severed from any link to their Persian, Ottoman and Arabic past:

They have thrown all tradition overboard here, and they want to build a thoroughly rationalized—extreme Turkish nationalist—state of the European sort.

The process is going fantastically and spookily fast: already there is hardly anyone who knows Arabic or Persian, and even Turkish texts of the past century will quickly become incomprehensible since the language is being modernized and at the same time newly oriented on “Ur-Turkish,” and it is being written with Latin characters…

According to official mythology Turks were, indeed, the very originators of human language and spreaders of civilization to the world.

A few months later, Auerbach sketched out the programme of the Kemalist state and its ‘fanatically anti-traditional nationalism’:

Rejection of all existing Islamic cultural heritage, the establishment of a fantastic relation to a primal Turkish identity, technological modernization in the European sense, in order to triumph against a hated and yet admired Europe with its own weapons: hence, the preference for European-educated emigrants as teachers, from whom one can learn without the threat of foreign propaganda.

Result: nationalism in the extreme accompanied by the simultaneous destruction of the historical national character…

Istanbul itself was a ‘a wonderfully situated but also unpleasant and rough city consisting of two different parts’:

The old Stambool, of Greek and Turkish origin, which still preserves much of the patina of its historic landscape, and the “new” Pera, a caricature and completion of the European colonization of the 19th century, now in complete collapse.

A year later Auerbach again complained, this time to Johannes Oeschger, of ‘a purist nationalism that destroys the living tradition, and that bases itself in part on completely fantastical conceptions of ur-times, and in part on modern-rationalist ideas’:

Piety is combated, Islamic culture despised as an alien Arabic infiltration, one wants to be at the same time modern and purely Turkish, and it has gone so far that through the abolition of the old script, through the elimination of Arabic loan words and their replacement by Turkish neologisms and partly by European loan words, the language has been totally destroyed: no young person is any longer able to read the older literature — and there reigns a spiritual lack of direction that is extremely dangerous.

In 1926 Kemal had notoriously imported Mussolini’s penal code from Italy, embracing it as ‘compatible with the needs of our century’.

Abolition of the Caliph, suppression of dervishes, etc., was necessary, Kemal proclaimed, ‘in order to prove that our nation as a whole was no primitive nation, filled with superstitions and prejudice.’ The fez had ‘sat on our heads as a sign of ignorance, of fanaticism, of hatred to progress and civilization.’

Thus spoke the great Gazi (the term itself a religious honorific) in his six-day, 36-hour speech to the Turkish assembly.

He is pictured below at a blackboard marked with the new alphabet.

Kemal 1928 blackboard

By the mid-1930s, placed in European context, Turkish autocracy presented alarming signs to the émigré Auerbach.

What was ‘not yet a certainty for everyone’ in fascist Italy and Germany, ‘steps forth here in complete nakedness’:

The language reform—at once fantastical ur-Turkish (“free” from Arabic and Persian influences) and modern-technical—has made it certain that no one under 25 can any longer understand any sort of religious, literary, or philosophical text more than ten years old and that, under the pressure of the Latin script, which was compulsorily introduced a few years ago, the specific properties of the language are rapidly decaying…

I am more and more convinced that the contemporary world situation is nothing other than the cunning of providence to lead us along a bloody and circuitous route to the Internationale of Triviality and Esperanto culture.

I thought this already in Germany and Italy, especially in the horrifying inauthenticity of Blut und Boden propaganda, but here for the first time it has become a certainty for me.

Such was not merely the familiar tendency of German exiles, easily discomposed, apt to detect worrying similarities to Hitler’s regime in places of refuge.

Across Europe, the invented traditions of late-Victorian nationalism — the ceremony of flags, anthems, rituals and insignia — as well as compulsory schooling in a common language, the fusing of national markets by domestic transport and communication infrastructure, and the assumption by national bureaucracies of administrative and tax-raising power over a henceforth homogenized territorial jurisdiction, had famously converted peasants into Frenchmen.

In both the European metropoles and their colonial possessions, ‘modernization’ proceeded through the dragooning of diverse peoples into a unitary national culture. ‘Annihilate the patois!’ ran the project.

Yet the particular grandiosity and vacuity of Turkish nationalism after 1923 rested on a blank slate, both territorial and cultural, created by erasure and ethnic cleansing.

In the same year that Kemal abolished the Caliphate, launched his Kulturkampf and imposed the Turkish Republic’s enlightened new constitution, he addressed an audience in Adana:

The Armenians have no rights whatsoever in this fertile land. The country belongs to you, the Turks. This country has been Turkish in history, and thus is Turkish and will eternally live as Turkish…

The Armenians and others have no rights in this place. These fertile places are a profoundly and quintessentially Turkish country.

In 1916 the grand vizier Talaat Pasha had issued an edict concerning the ‘Turkification’ of assets confiscated from Armenians deported and killed during the genocide.

Looted wealth was to be assigned to the local Muslim elite, urban merchants and peasantry:

The movable property left by the Armenians should be conserved for long-term preservation, and for the sake of an increase of Muslim businesses in our country, companies need to be established strictly made up of Muslims. Movable property should be given to them under suitable conditions that will guarantee the business’ steady consolidation.

The founder, the management and the representatives should be chosen from honourable leaders and the elite, and to allow tradesmen and agriculturists to participate in its dividends, the vouchers need to be half a lira or one lira and registered to their names to preclude that the capital falls in foreign hands.

The growth of entrepreneurship in the minds of Muslim people needs to be monitored, and this endeavour and the results of its implementation needs to be reported to the Ministry step by step.

The plunder of Armenian property in Anatolia included farms, houses, livestock, factories, workshops, plantations, shops, schools, churches, tools and equipment — all officially designated as ‘abandoned properties’ after the land had been denuded of Armenians, massacred under cover of war.

Confiscated Armenian buildings by province 1Confiscated Armenian buildings by province 2

Under Kemal, agents of genocide were rewarded for services to the fledgling nation, with the president’s own official residence lifted from an Ankara merchant:

[The] family of district governor of Muş, Servet Bey, who in 1915 had annihilated the Armenians of that city, was awarded a composite package of Armenian property.

The family of Cemal Azmi, the murderous governor of Trabzon, was also assigned considerable ‘reparation’, specifically from Armenian properties.

Hafız Abdullah Avni, a hotel owner who had collaborated in the genocide in Erzincan, was executed for his crimes in 1920 by the Istanbul tribunal. His wife, Hatice Hanım, was compensated with a house and a field from the Armenian villages of Şuhe and Kani.

The fanatical district governor of Boğazlıyan, Mehmed Kemal Bey, had left behind a family in Yozgat. They received a large apartment and a house from the available Armenian property in that area.

Dr. Bahaeddin Shakir Bey’s family received a house in the upmarket Şişli district of Istanbul.

The former district governor of Urfa, Mehmed Nusret Bey, had played a key role during the genocide and was executed in 1919 for his crimes. His wife, Hayriye Hanım, was compensated with a shop and a house in Istanbul’s Beyoğlu district, on Cadde-i Kebîr (the current İstiklâl Caddesi) on numbers 264 and 266. The property was located in the Aznavur Han and originally belonged to a merchant named Bedros.

Cemal Pasha’s heirs and family were compensated with the property of Vicken Hokachian, a merchant in Istanbul. A shop and a strip of land in Beyoğlu across the French cemeteryas large as 1,450 square metres, was assigned to his wife Senice, his daughter Kamran, his sons Ahmed Rüşdü, Hasan Necdet, Hasan Behçet, his big sister Şaziye and little sister Bakire.

The list is long…

All are signed by President Mustafa Kemal Pasha and his cabinet of veteran Young Turks…

Along with the local Turkish population, new Muslim settlers to Anatolia (from the Balkans and Caucasus) picked over the booty left behind in suddenly vacant Armenian villages:

In 1915 the amount of property allocated to settlers was 20 545 buildings, 267 536 acres of land, 76 942 acres of vineyards, 7 812 acres of gardens, 703 491 acres of olive groves, 4 573 acres of mulberry gardens, 97 acres of orange fields, 5 carts, 4 390 animals, 2 912 agricultural implements, 524 788 planting seeds.

Forced expulsion across the Aegean of nearly one million Anatolian Greeks in 1923 was capped off, in 1955, by Istanbul’s anti-Greek pogrom.

The objective, in the words of the Turkish Army in 1922, was that Greek and Armenian ‘material ties to Anatolia will be disconnected.’

By 1924 the non-Muslim population of Anatolia, 20 percent in 1912, was down to 2 percent.

Kemal in Smyrna 1922

Kemal in Smyrna 1922 more

One upshot of this severing was that Turkish nationalism, inheriting razed earth, would be likewise unbound by preexisting constraints or obstacles.

Kemal’s state-led modernization, leaving property relations untouched and making no attempt at agrarian reform, would aim to drive an ethnocultural clean sweep through the smouldering Ottoman ruins.

The fanciful mythology of ur-Turkey, about which Auerbach complained, was both compensation and boast by a new state whose territory had been emptied at birth by the killing of one-tenth of its inhabitants, whose founding act was the expulsion of another tenth, followed by the internal displacement, ‘Turkification’ and bloody repression of Kurds, another one-fifth of the population.

Dersim massacre 1937

While adulation of the national founder remains a mainstay, over the decades other elements of the Kemalist recipe have been trimmed, adapted and discarded according to the exigencies of the hour.

Yet the homogenizing element in the republic’s founding ideology has endured as a bedrock: official pursuit, according to the Interior Minister in 1934, of ‘a country speaking with one language, thinking in the same way and sharing the same sentiment.’

The confessional turn in the electoral scene, most pronounced since the 1980 military coup and the premiership of Turgut Özal, has brought sharp modifications to Turkey’s public life: growing numbers of religious schools, flagrant displays of devoutness, the Crescent rivalling the sword for symbolic preeminence, as a powerful executive branch stamps its mark on all agencies and directorates of the state.

Movement towards EU membership, meanwhile, has obliged some ecumenical gestures and concessions to Kurdish and Alevi cultural rights. Erdoğan lifted the state of emergency in the southeast, and wound back language proscription in 2004.

But the basic formula is unchanged, Copenhagen criteria notwithstanding. Education, bureaucracy and media remain zones free of linguistic or cultural impurity. The Armenian genocide, likewise, is officially a non-topic.

In today’s Turkey, the decidedly post-secular AKP leadership nonetheless vaunts an integralist slogan of ‘one nation, one flag, one religion, one language’, and a notorious penal article that makes ‘insulting Turkishness’ a criminal offence.

This detour through the recent history of Turkish nationalism helps to clarify current arrangements, explaining how matters reached such a pass in the Caucasus, Black Sea and Caspian basin, Cyprus and eastern Mediterranean, Balkans and Levant.

These are the former contested borderlands of Russian tsar, Ottoman sultan and Persian autocracy.

Today, in the words of its prime minister, the AKP’s former foreign minister and eminent grand strategist, Turkey is ‘a country with a close land basin, the epicentre of the Balkans, the Middle East and the Caucasus, the centre of Eurasia in general and is in the middle of the Rimland belt cutting across the Mediterranean to the Pacific.’

Turkey Stratfor

Within elite circles this view, at least publicly, has its detractors.

Turkey, Nicolas Sarkozy once declared on the campaign trail, ‘is in Asia Minor’:

I will not explain to little French school children that the borders of Europe extend to Iraq and Syria.

Once safely installed in the Élysée Palace, Le Pen’s voters having been tossed a few verbal sops, the French president’s pedagogic concerns evaporated.

Sarkozy treated his population to a demonstration of Dassault’s aerial might over North Africa, later striking a triumphant pose atop a Benghazi podium.

His Socialist successor extended the Libyan campaign to Mali and the Central African Republic.

A ‘Europe of values’ (Blair’s oily phrase, found useful by Cameron and Sarkozy) acknowledges few boundaries. If the Maghreb, why not Thrace?

The European continent, the concept a recent invention, may be demarcated however you like. But the frontiers of Christendom are firm. They do not extend to the Euphrates.

Ocean littorals, on the other hand, are free to expand or retreat as required, the North Atlantic Treaty Organization supplemented with whatever ‘add-on’ Washington wishes for its Eurasian beachhead.

Turkey’s frontiers with Syria, Iraq and Iran thus present NATO with a boundless operational vista in the Mashreq and beyond.

Referring to ‘challenges we’re facing in the east and the south’, today’s incoming secretary-general says: ‘NATO has a strong army after all. We can deploy it wherever we want to.’

US Patriot missiles may thus be placed east of Jerusalem in the name of European and North American security. (The US air base at Incirlik is itself built on expropriated Armenian land. The Air Force’s approved history of the site ends discreetly in 1921).

And, if today’s armed conflict in the Levant threatens Ankara’s security, ‘NATO will be there’, says the secretary-general.

The ‘post-Cold War enlargement of NATO and EU’, said the US Vice President earlier this year, ‘is not complete, in my view.’

What task remains undone, what destiny unfulfilled?

To the post-1923 status quo that had prevailed in the Black Sea-Caucasus-Central Asia region following the collapse of Ottoman and tsarist empires, the retrenchment of Moscow’s power since 1991 has threatened disruption.

Washington’s objective, laid out unblushingly by its strategists, is to hinder the local powers from reaching convivial terms, and to prevent, at all costs, any state outside its own military alliance structure — Moscow, Tehran, Beijing — from attaining regional predominance.

Brzezinski Turkey Russia Iran

There exists, explained Turkey’s current prime minister Davutoğlu to the US Council on Foreign Relations, ‘a compatibility’ between this need of the United States and Ankara’s ‘unique’ ability, arising from its convenient location.

Washington is a non-Eurasian power that hopes to remain the dominant power on the Eurasian continent. Turkey can help ‘close this gap of geographical discontinuity’:

Turkey is right at the center of Afro-Euro-Asia, having multidimensional characters of geopolitics. Turkey is a European country, an Asian country, a Middle Eastern country, Balkan country, Caucasian country, neighbor to Africa, Black Sea country, Caspian Sea… all these geopolitical challenges are in the agenda of American global strategy…

The United States needs allies in Africa-Eurasia, and Turkey needs a cooperation with a global power.

Thus has Europe’s Eastern Question been resolved, if only temporarily and after a fashion.

To the apparent satisfaction of the continent’s elite and with Washington’s benevolent approval, Ankara’s EU candidature was placed in prolonged abeyance, even as Turkey assumed new regional prominence, becoming NATO’s geographic fulcrum for ‘out of area’ missions in the eastern Mediterranean, Caucasus and West Asia.

On its eastern border, the Turkish state acts as faithful proxy in Syria, seeking to overthrow Assad’s Iran-friendly government. In the Black Sea basin, it facilitates continued thrusts and harassing operations against Moscow.

Washington, seeking to conduct a proxy war at two removes in Syria, has relied on its local agents in Ankara and the Gulf monarchies to supply weapons, funds, training and cross-border transit.

Turkey’s intelligence chief was recorded, in conversation with Davutoğlu, musing over how best to ‘make up a cause of war’ with the Syrian government by staging a false-flag operation against Ankara.

Atmospherics from the US Vice President, aimed plainly at a domestic rather than diplomatic audience, convey the nature of Turkey’s helpful efforts in the Levant:

The Turks, who are great friends — I have a great relationship with Erdoğan , whom I spend a lot of time with. The Saudis, the Emiratis, etc. What were they doing?

They were so determined to take down Assad and essentially have a proxy Sunni-Shia war, what did they do? They poured hundreds of millions of dollars and thousands of tons of weapons into anyone who would fight against Assad — except that the people who were being supplied were al-Nusra and Al Qaeda and the extremist elements of jihadis coming from other parts of the world…

Now they’re sealing their border.

To Ankara’s role as NATO proxy is added that of ’emerging market’ debtor.

Since 2002, under the AKP Turkey has become increasingly dependent on short-term external borrowing, mostly portfolio investment in search of speculative gains. This has increased financial fragility, exposing Turkey to asset-price inflation and the risk of worse if capital is withdrawn.

International borrowing rests ultimately on a promise to pay US dollars. Issues of the Turkish domestic currency are a form of debt: the credibility of the borrower depends on its ability to pay the ‘best’ money: the liabilities of the global hegemon.

hierarchy of money

Should Turkish growth founder, capital inflow cease, and local banks become unable to refinance their debts, international creditors will no doubt be found in a compassionate mood. A stabilization loan, arriving swiftly, will come attached with less onerous conditions than those applied to Cyprus.

Turkey, as a ‘geopolitical pivot,’ is too important for the IMF (behind it the US Treasury) to countenance domestic upheaval on any great scale.

Just as credibility of the Turkish lira rests on a promise to pay US dollars (the ultimate international means of settling debts), behind Turkish arms Washington sits in poised reserve, ready to back up its NATO proxy whenever Ankara’s Ostpolitik in the Mediterranean and Levant goes awry.

In NATO parlance, this is known as ‘extended deterrence.’ US solicitude is manifested in the form of radar installations (since 2011) and (since 1961) nuclear missiles deployed on Turkish territory, aimed at Russia and Iran.

On this foundation, grandiose regional ambitions flourish. The latter focus on Turkey’s strategic potential as an energy corridor, reducing Moscow’s bargaining power in Europe.

Turkey is Iraq’s ‘gateway to the European Union’, Davutoğlu has noted. And ‘Erbil is our gateway to Basra.’

In Istanbul, three months ago, the World Economic Forum held a Special Meeting on Unlocking Resources for Regional Development, the Turkish president and prime minister contributing to that noble cause by demanding, in keynote addresses, armed overthrow over the Syrian government.

There an Emirati oil CEO, with investments centred on Iraqi Kurdistan, suggested that ‘if Turkey became a price-setting centre for the region [that] could really bring on much more supply from Middle East resources, which would not only meet Turkish needs, but go on to meet European needs as well.’

Ankara’s energy minister deplored political difficulties in Iraq and Iran: ‘You can’t have a growing economy and a shrinking energy sector.’

A fortnight ago the Atlantic Council held its Energy and Economics Summit in Istanbul.

There the Turkish Mediterranean port of Ceyhan, long touted by the Energy Ministry as ‘the natural direction for exports of hydrocarbons from the region [of Iraqi Kurdistan] to the world’s market’, received a boost.

Alongside President Erdoğan in Ankara, the Russian leader announced that Gazprom’s planned South Stream pipeline was to be abandoned, after EU thwarting efforts and US sanctions.

The US Vice President was on hand to salute the news, calling for ‘development of a strategic pipeline from Basra to Ceyhan.’

The Turkish state, its line of strategic credit secure in Washington, has leveraged its momentary good fortune to pursue regional initiatives otherwise beyond its reach. A permanent military presence in Cyprus has been declared not negotiable. EU accession, less urgent, has been allowed patiently to simmer, safe for another day.

Yet what realities lie behind the salesmanship about ‘Anatolian Tigers’ and a ‘boom on the Bosphorus’?

In the past three decades, the Turkish economy’s capital-labour ratio, or capital intensity, rose at a distinctly lower rate (6.6% annually from 1964-1978, compared to an average of 3.7% over the next thirty years).

Capital intensity Turkey

Taking account of the business cycle, there has been a steady fall in the output-capital ratio, or what may be termed ‘capital productivity.’

Capital productivity - Turkey

Technical change has followed a labour-saving, capital-using pattern familiar elsewhere.

Labour productivity and output-capital ratio in Turkey

Turkey’s development, all in all, has been modest. Agriculture retains a high share of employment (24%); female labour-force participation is abysmal (29%, below Sudan and well below Armenia).

State-led modernization by a republic descended from one of Europe’s largest imperial powers, with a population greater than France or Britain at its disposal, has produced unscintillating results.

Not needing to displace a landlord class in any agrarian revolution (small independent farms long predominated), nor did industrialization of the classical modernizing sort follow.

The Turkish army — the most numerous in Europe besides Russia’s, and occupying Cyprus since 1974 — and a traditionally hefty state officialdom absorb much of the investible surplus. The familiar features of the externally indebted economy — credit expansion, consumption growth, speculative bubbles in real estate and asset prices — further discourage productive expenditure. Patronage networks and political clientelism siphon the residue, all impeding local formation of a substantial capital-goods sector.

Small wonder, amid such frustrations, that the consoling appeal of religion plays a growing part in Turkish electoral politics.

Yet not every plan has gone awry.

Kemal’s language reforms were recently described as a ‘catastrophic success’. A linguist noted, amid the general poverty of Turkish expression, that a mere 26 years after it was delivered, Kemal’s great speech already needed to be ‘translated into the present-day language’ so that it could be intelligible to the young.


Swimming in it

September 18, 2013

From Part Six of Paul Carell’s Hitler Moves East, 1941-1943:

In the economic field Hitler’s obsession was oil. Oil to him was the element of progress, the driving force of the machine age.

He had read everything that had ever been written about oil. He was acquainted with the history of the Arabian and American oilfields, and knew about oil extraction and refining.

Anyone turning the conversation to oil could be sure of Hitler’s attention. Goering was put in charge of the economic four-year plan because he was playing Hitler’s favourite card: oil.

Typical of Hitler’s attitude is an attested remark he made about an efficient civil servant in the Trade Policy Department of the German Foreign Office: “I can’t bear the man — but he does understand about oil.”

Hitler’s Balkan policy was based entirely on Rumania’s oil. He had built into the Barbarossa directive a special campaign against the Crimea, merely because he was worried about the Rumanian oilfields, which he believed could be threatened by the Soviet Air Force from the Crimea.


Every one of Hitler’s idées fixes played its fatal part in the war against Russia — but most decisive of all was his obsession with oil.


From a lengthy secret report produced in 1946 by the British Defence Ministry, titled ‘Oil as a Factor in the German War Effort, 1933-1945’:

Bent upon the total mobilisation of all domestic resources, the National Socialists, from the moment of their seizure of power, did everything possible to expand crude oil production.

The Mining Laws were immediately altered to permit large-scale exploration and a comprehensive geophysical survey was set on foot. A large programme was worked out for increased drilling and exploration with public funds and, in addition, industry was compelled to spend large sums of its own for the same purpose.

As a result of these measures total drilling increased from 62,000 metres in 1932 to 220,000 metres in 1938, the exploration drilling in virgin areas increasing from 13,000 to 100,000 metres. The effect was a 150 per cent, growth in crude oil output.

Addendum to Hitler’s Directive No. 34, addressed to the Army’s High Command (OKH) on 15 August 1941:

The most important missions before the onset of winter are to seize the Crimea and the industrial and coal regions of the Don, deprive the Russians of the opportunity to obtain oil from the Caucasus… rather than capture Moscow.

Case Blue

Hitler to Friedrich Paulus and other members of the OKH, 1 June 1942, at the Ukrainian headquarters of Army Group South: ‘If I do not get the the oil of Maykop and Grozny, then I must end this war.’

Hitler’s table talk from August 1942, speaking from his new HQ Werwolf:

We must at all costs advance into the plains of Mesopotamia and take the Mosul oil-fields from the British. If we succeed here, the whole war will come to an end, for the British have now only Haifa as their sole loading port for oil.

As regards oil, statistics show that the Russians until quite recently obtained 92 per cent of their oil from the Caucasus.

Carell on Operation Blue (see Hitler’s directives number 41 and 45), June 1942:

[Hitler] had decided to try something entirely new after the unfortunate experiences on the Central Front in the previous year, and to seek the decision in the south by depriving Stalin of his Caucasian oil and by thrusting into Persia. Rommel’s Africa Army played a part in this plan.

The “desert fox,” who was just then preparing his offensive from Cyrenaica against the British positions at Gazala and against Tobruk, the heart of the British defence of North Africa, was to advance right across Egypt and the Arabian Desert to the Persian Gulf.

In this way Persia, the only point of contact between Britain and Russia, and after Murmansk the greatest supply base of US help for Russia, would be eliminated. Moreover, in addition to the Russian oilfields the very much richer Arabian oilfields would fall into German hands.

German military intervention in Iraq had commenced the previous year, threatening what Time magazine called ‘the carotid artery of the British Empire, the Mosul-Haifa oil pipeline.’

Hitler’s Directive No, 30 announced support for ‘forces hostile to England in the Middle East’, while Rommel undertook ‘an offensive against the Suez Canal, finally to break the British position between the Mediterranean and the Persian Gulf.’

Directive No. 32 then envisaged the ‘despatch of a motorized expeditionary force from Transcaucasia against Iraq’.

Meanwhile British and Soviet forces had occupied Iran to secure oil wells, refineries and export terminals in Khuzestan, and preserve their supply lines through Central Asia.

Iraq petroleum company pipeline

Persian Corridor

Hitler in August 1942, after Maykop was taken: ‘In the East it will be all over once we have cut their communications to the south and to Murmansk. Without oil they are finished!’

The opportunities for plunder offered by the Ukraine and Caspian oil excited particular giddiness and dreams of autarky:

There are here a million tons of wheat in reserve from last year’s harvest. Just think what it will be like when we get things properly organised, and the oil-wells are in our possession! …

When the war ends, the German people need not bother its head about what it is going to do during the next fifty years!

We shall become the most self-supporting State, in every respect, including cotton, in the world. The only thing we shall not have will be a coffee plantation — but we’ll find a coffee-growing colony somewhere or other! Timber we shall have in abundance, iron in limitless quantity, the greatest manganese-ore mines in the world, oil — we shall swim in it!

And to handle it all, the whole strength of the entire German man-power!

NY Times Maykop 1942

The German chancellor, dazzled by cornucopian visions, anticipated the realization of Generalplan Ost, the most ruthless of 1930s imperial projects, which had succeeded the earlier visions of the Pan-German League and the September Program.

The fertile and mineral-rich East would supply German enterprises with raw materials, and German farmers would populate a soon-to-be denuded steppe:

The river of the future is the Danube. We’ll connect it to the Dnieper and the Don by the Black Sea. The petroleum and grain will come flowing towards us.

The canal from the Danube to the Main can never be built too big.

Add to this the canal from the Danube to the Oder, and we’ll have an economic circuit of unheard-of dimensions.

Europe will gain in importance, of herself. Europe, and no longer America, will be the country of boundless possibilities. If the Americans are intelligent, they’ll realise how much it will be to their interest to take part in this work.

There is no country that can be to a larger extent autarkic than Europe will be. Where is there a region capable of supplying iron of the quality of Ukrainian iron? Where can one find more nickel, more coal, more manganese, more molybdenum? The Ukraine is the source of manganese to which even America goes for its supplies.

And, on top of that, so many other possibilities! The vegetable oils, the hevea plantations to be organised. With 100,000 acres devoted to the growing of rubber, our needs are covered.


Through the Black Sea and up the Danube will come iron, manganese ore, coal, oil, wheat — all in an unending stream.

In 26 July 1942 one could find Hitler daydreaming over lunch about the discovery of vast new oil deposits:

The presence of oil in the Caucasus, in the vicinity of Vienna and in the Harz leads one to suspect the existence of an oilfield of whose magnitude and importance one had not the least idea. This is not in the least surprising. As in the case of mineral wealth, the trusts would immediately buy up any newly discovered oil-bearing territories, with the intention of restricting their development to a degree compatible  with their other interests; in this, their primary object would be to prevent exploitation by others.

One must give the Russians their due and admit that, in this respect, they have succeeded in limiting the power of monopolies and eliminating private interests. As a result, they are now in a position to prospect throughout their territory for oil, whose position and probable extension are studied by experts with the assistance of very large-scale maps. In this way, they have not only been able to trace the course of the oil-veins, but have also verified their  facts and extended their knowledge by test borings carried out at the expense of the State. There is a lot we can learn from them.

There is no limit to what we could have extracted from the sources in the vicinity of Vienna, if the State had undertaken the necessary exploitation in time. This, added to the oil-wells of the Caucasus and Rumania, would have saved us from all anxiety for the future. One must not, however, forget that oil-wells are not inexhaustible; and that is why I am still in favour of gas-driven public vehicles, and particularly of gas-driven vehicles for the Party.

Yet these lofty goals were prompted not by grandiose delusion but by simple exigency.

Hitler’s private fixation on oil wasn’t simply a matter of his personal idiosyncracies or predilections. It met the most remorseless, pressing imperative facing the German elite: to secure oil for the Wehrmacht and deny it to the Red Army and British Empire.

Oil lay at the root of Hitler’s notorious difficulties with the Army’s High Command (OKH), whom he said ‘know nothing about the economic aspects of war.’

Germany had abundant supplies of coal in the Ruhr and Silesia, but other strategic materials were less plentiful. For their ongoing supply to be assured against interruption or blockade, it was vital to assert military control over these sources and transport routes, both maritime and overland.

Thus Berlin’s attempt to annex the iron ore of France’s Lorraine basin during the First World War, and the last-ditch lunge for Caspian oil by General Ludendorff in 1918.

In November 1918, the British war cabinet could boast it had ‘floated to victory on a wave of oil’. Later, when describing the actions of Hitler’s government from 1933, the British Defence Ministry would recall this remark of Curzon’s, and the lessons it had imparted to Berlin.

In 1938 Göring’s Reich Office for Economic Development, chaired by the IG Farben’s Carl Krauch, had conducted technical studies into the volumes of raw materials and inputs — oil, rubber, chemicals, tungsten, copper and nickel — that Germany would need for sustained military mobilization.

It estimated that the armed forces would need 485 000 tons of oil products per month, and the entire war and armaments machine would consume almost 700 000 tons.

Estimates of German oil consumptionYet Germany had limited domestic production and refining capacity (200 000 tons per month) and deficient stocks of strategic reserves: only 2.1 million tons, barely enough to cover a few months of civilian commercial activity.

By contrast, Britain had 6.7 million tons of oil in storage at the outbreak of war. The United States, meanwhile, produced 164 million tons of crude oil in 1938, and the Soviet Union 32 million tons.

For aerial warfare, which consumed vast quantities of fuel, Berlin was dependent on unconventional, high-cost sources of energy. The Luftwaffe depended for its aviation fuel on synthetic oil produced from coal via the Bergius hydrogenation process (an alternative to the Fischer-Tropsch process).

In addition, the diesel-powered and fuel oil-driven ships and submarines of the Kriegsmarine would also need ready supplies of crude oil. So would the petrol-fuelled trucks, tanks and motorized artillery of the army divisions.

The territorial boundaries of the German state did not contain the wells and refineries sufficient to meet these needs. In 1939 Germany’s net imports reached 5.2 million tons.

Moreover, Germany’s weak balance of payments position on the current account, and the legacy of Versailles, meant that it had acquired few net assets abroad during the 1920s.

German energy firms therefore lacked the stock of external oil investments held by their continental rivals in France, Belgium and the Netherlands.

German oil production 1944

Given this deficit between its domestic oil production and consumption, and the predictable wartime imposition of naval blockades, interdictions and disruption to overland supply routes (imposed by the British and French from September 1939), German oil stocks would be rapidly depleted.

This meant that the German government’s fuel would have to come from abroad, and would need to be seized.

The Wehrmacht would capture its own oil supplies and deny them to the Red Army and British Empire:

Four days after the [June 1940] signing of the Franco-German Armistice the Office of the Four-Year Plan produced a “Petroleum Plan for Europe.” This plan foresaw a Continental oil deficit, exclusive of the requirements of Great Britain and Russia, of 18 500 000 tons a year. This deficit was to be met by 18 200 000 tons of oil from the Middle East. It is interesting that this plan made no allowance… for any consumption by Great Britain which was presumably envisaged as either standing in unconquerable isolation or as a vassal State no longer worthy of the benefits of oil.

This 1940 plan, drafted by Alfred Bentz, Göring’s plenipotentiary for petroleum, concluded: ‘To keep Europe supplied it is essential to secure the petroleum of the Middle East.’

German oil consumption

As it turned out, in 1941 the Luftwaffe consumed about 100 000 tons of oil per month, the Kriegsmarine about 100 000, and the army 200 000, for annual oil consumption of 4.8 million tons.

To meet these needs, in 1940 the Romanian oil interests of recently conquered French, Dutch and Belgian firms were acquired by German firms like Deutsche Bank, and Romanian exports were redirected to supply German industrial needs.

German shareholders had owned 0.2 percent of Romanian oil assets in 1939; by 1941 this figure reached 48 percent. One million tons of Romanian oil went to Germany in 1940 and 2 million in 1941 — by then, being distributed directly to the Wehrmacht on the eastern front.

Meanwhile ‘the effect of the German occupation,’ wrote Adam Tooze in his Wages of Destruction, ‘was to throw France back into an era before motorization. From the summer of 1940 France was reduced to a mere eight per cent of its pre-war supply of petrol.’

But this wasn’t nearly enough.

In October 1940 the Wehrmacht’s military-economic office reflected on its economic platform after the fall of Paris:

Current favourable raw-material situation (improved by stocks captured in enemy territory) will, in case of prolonged war and after consumption of existing stocks, re-emerge as bottleneck. From summer 1941 this is to be expected in case of fuel oil as well as industrial fats and oils.

Early in 1941, before the attack on the Soviet Union, the Wehrmacht’s chief of war economy Georg Thomas warned Göring that the German armed forces only had enough fuel for a few more months of operations:

It is crucial to seize quickly and exploit the Caucasus oilfields, at least the areas around Maykop and Grozny… If this is not successful, we must expect the most serious repercussions, with unpredictable consequences for military operations after 1 August and for the survival of the economy.

Göring replied that the oil resouces of Baku would soon be seized ‘at all costs.’ His notorious Green Folder, a June 1941 OKW directive setting out priorities for the Soviet operation, read:

To obtain the greatest possible quantity of food and crude oil for Germany – that is the main economic purpose of the campaign.

The same month, Thomas drafted a memo for Göring’s Economic Organization East:

The military leadership has again and again to be reminded that a campaign against Russia has largely economic motives and that in this campaign the demands of the economy must be taken into account more than is usually the case.

When winter fell early, Hitler instructed his armies to secure a position on the lower Don and Donets, and prepare for a spring offensive against the Caucasian oilfields.

Soviet Marshal Timoshenko, charged with protecting the latter, observed in late 1941: ‘The only thing that matters is oil… [We] have to do all we can (a) to make Germany increase her oil consumption and (b) to keep German armies out of the Caucasus.’

Meanwhile the Wehrmacht was attempting to seize the shipment ports and airfields of the Black Sea, to protect the Romanian oilfields on its western shore.

In Tehran in 1943, in one of his pithy wartime toasts, Stalin acknowledged that Moscow and its US and British allies were engaged in ‘a war of engines and octanes’.

In the preparation and conduct of this conflict, the supposedly private fixations of the German leadership – Hitler’s obsession with oil, which he shared with Churchill, Roosevelt and Stalin – was most propitious for German imperialism.

The interwar years had brought fragmentation of the capitalist world economy. The benevolent, positive-sum game of the Pax Britannica and the Gold Standard had broken apart into rivalrous autarkic blocs, each armed to the teeth and engaged in zero-sum competition for resources, colonial possessions and markets.

Then, as now, in any conflict between territorial states the winner would be the party that could mobilize the greatest volume of economic resources to squander on war: that could tax, requisition, procure, conscript or plunder the largest surplus from its domestic economy or external sources.

Raymond Goldsmith - WW2 munitions production

Mark Harrison - Military spending as proportion of national income

In this contest to expand war production, certain commodities, in particular oil, presented a strategic bottleneck for each contending power.

Petrol, lubricants and other oil products and distillates (POL) limited a state’s productive (and military) capacity since they were a necessary input for armament production, chemicals, transport and logistics, and military operations themselves.

A state that would advance its interests through extra-territorial aggression was therefore condemned to stalk the earth with heaving breast and slavering mouth, thirsty for oil, sequestering oil reserves from its rivals, and asserting control over supply routes.

That is why US president Roosevelt, in his April 1939 telegram to Hitler, had asked the German chancellor to ‘give assurance that your armed forces will not attack or invade the territory or possessions’ of several European states as well as ‘Turkey, Iraq, the Arabias, Syria, Palestine, Egypt and Iran.’

If Berlin would publicly commit to a ‘a minimum period of assured non-aggression – ten years at the least – a quarter of a century, if we dare look that far ahead’, then:

The Government of the United States would be prepared to take part in discussions looking towards the most practical manner of opening up avenues of international trade to the end that every nation of the earth may be enabled to buy and sell on equal terms in the world market as well as to possess assurance of obtaining the materials and products of peaceful economic life.

After 1945, Washington itself would successfully prise open the European colonial empires and, through the Atlantic Charter and Bretton Woods institutions, secure ‘equal access’ to raw materials.

In the past, once or twice I’ve mentioned Nazi Germany’s preoccupation with oil, and its central place in Hitler’s grand strategy and war aims.

But I suspect these little asides and brief allusions haven’t been very useful, since the topic is now familiar to few people.

Back in 1973, Martin Van Creveld could write that it was ‘fashionable’ to see oil as the chief motivation behind Germany’s Balkan campaign, as well as in North Africa and the Soviet East.

Who today retains this impression?

General historiography remains more fascinated than ever by the Innenpolitik of Nazi racial doctrine, the microhistory of ‘everyday life’ under Hitler, and, in the (mostly Anglophone) scholarly backwaters, the psychology of political leaders.

For Hans Mommsen, ‘the regime’s foreign policy ambitions were many and varied, without any clear aims’: merely the haphazard outcome of domestic contingencies.

Thus, for the most part, the striving for oil in Hitler’s Drang nach Osten is judiciously left to the narrow and specialized attention of military historians. The recognized scholarly monuments afford oil a passing mention, at most.

‘Left-wing’ histories, like Ernest Mandel’s The Meaning of the Second World War or Clement Leibovitz’s In Our Time: The Chamberlain-Hitler Deal, do little better.

Meanwhile, military historians writing for a popular audience (Antony Beevor’s Stalingrad or William Craig’s Enemy at the Gates) deliberately divorce their precise ‘soldier’s-eye view’ descriptions of famous battlefield ‘showdowns’ from any broader historical context, strategy, antecedents or consequences.

Thus the thirst for oil is absent from today’s conventional view of Hitler’s wars of aggression. Such an obvious elision of historical fact was not necessary until recently.

Robert L Baker 1942

Today, however, Washington is itself engaged in a full-scale drive to secure military control over the world’s energy installations, transport networks and sea lines of communication.

Once again, a desperate and predatory imperial power is trying to sweep through Iraq, Iran, the Caucasus, Central Asia and North Africa.

As this project has proceeded, it has been necessary to obliterate a prior stock of nationalist myths, wartime slogans, popular knowledge and historical interpretations, in order to sustain ‘the Allied victory over Nazi tyranny’ as an enduring ideological symbol supporting the institutions of US hegemony.

Even respectable, mainstream British historians of Nazi Germany have noted this deliberate cleansing of the historical record.

Thus Richard Overy observed, with reference to the US-led invasion of Iraq, how ‘popular ignorance about the nature of oil politics’ had been encouraged via the ‘view that oil is some kind of Marxist red herring’.

Yet, deplorably, such political confusion and historical ignorance has been spread with the help of several self-described Marxists, including the historian Robert Brenner and his epigones like Vivek Chibber.

These academics, linked to the group Solidarity, have derided as un-Marxist the idea that the 2003 invasion of Iraq was a ‘war for oil’:

With respect to neo-liberalization, the Bush offensive was, at best, beside the point, an unnecessary distraction. At worst, it could conceivably endanger the globalization project…

Because the Gore administration would have sought both to sustain the post-Cold War status quo and to further the neo-liberal offensive, it would almost certainly have confined itself to attacking Afghanistan, most likely via NATO, but eschewed a military campaign in Iraq. Against this background, the shift in US policy represented by the attack on Iraq was not even conceivable apart from 9/11…

Given the already achieved level of US geo-political hegemony — in the sense of legitimized dominance — there was so little to be gained in terms of standard US geopolitical and pro-capitalist goals, that the risk-adjusted cost — especially taking into account the multiple ways in which things could go disastrously wrong — ruled out any campaign to significantly revise the world political order.


Because the goals of the Bush administration are, in effect, so sweeping, they are not remotely capable of being put into practice. Because, in so far as they are practicable, they speak to such narrow interests, they are not easy to sell to the US elite as a whole (although it must be admitted that they command major support within the Republican Party, precisely because those interests are disproportionately represented there). In the end, in view of its meager foreign policy payoffs, how the program of these adventurers could achieve such a powerful grip upon the US state constitutes a real conundrum, from the standpoint of both theory and history.


The paradoxical conclusion of the foregoing analysis is that very broad sections of US capital support, or at least acquiesce in, a new, and breathtakingly ambitious, imperialist project that, in itself, speaks in no obvious way to their interests.


In terms of the premises that had underpinned US postwar foreign policy, there seemed little requirement, or motivation, for the sort of global campaign that the Bush administration has now unleashed.

Brenner again:

Is it really conceivable that world oil, today capitalism’s most globalized and profitable industry, would be subjected — in its production, pricing, distribution, and so forth — to government regulation by the most free-market, oil industry-dominated régime in American history? …

On the other hand, any attempt by the US to use control over the oil spigot as a geopolitical weapon, by withholding oil from an opponent to extract concessions, would be considered tantamount to war — as in World War II, when the US sought to close off the supply of oil to Japan. But if the US were willing essentially to declare war by preventing another nation from accessing Middle-East oil, there would be no need to invade the Middle East in order to do so. It could merely use its control of the air and the sea to interdict the flow from that region.

And, repeatedly, from the economist Cyrus Bina:

[Why] do people find it necessary to appeal to anachronistic and misleading phrases, such as “No Blood for Oil”? Would it not be better for the Left, and for the global peace-movement in general, to re-examine the meaning of their actions and slogans? Isn’t it worthwhile for the Left to study the stigma of commodity fetishism behind this phrase?

Such remarks bespeak a view in which imperialist war constitutes an unnecessary, regrettable and messy diversion from the ordinary, clean, peaceful business of capitalism.

Today such a view is even less sustainable than it was in 1938.

Credit where it’s due

September 8, 2013

Let’s recognize the bashful philosophers and coy Just War theorists at this, their hour of professional triumph. Pay no heed to their mortified glares and expressions of humility.

To be sure, Michael Walzer had already announced victory back in 2002:

The triumph of just war theory is clear enough: it is amazing how readily military spokesman during the Kosovo and Afghanistan wars used its categories, telling a causal story that justified the war and providing accounts of the battles that emphasized the restraints with which they were being fought.

‘Moral theory, said Walzer, ‘has been incorporated into war-making as a real constraint on when and how wars are fought.’ It was no longer merely a concern for clerics, jurists and professors, but of generals too. Just as the careful and delicate missile strikes of the first Gulf War had been an improvement on earlier bombardments of Korea and Vietnam, so NATO’s pummelling of the Balkans and Central Asia had granted ‘just war theory a place and standing that it never had before.’

Walzer – speaking at a New School conference alongside Richard Holbrooke, Michael Ignatieff, Samantha Power, David Rieff and Marty Peretz – denounced a ‘doctrine of radical suspicion’ that would ‘condemn and oppose’ any and all ‘American military actions.’ The role of the philosopher was not to carp and criticize from the sidelines, but was ‘internal to the business of war.’

Walzer therefore looked forward to Just War theory developing ‘a description of legitimate occupations, regime changes, and protectorates’.

Of course, the father of a scholarly sub-field is rarely a reliable guide to its future direction and preoccupations. But in 2002 little clairvoyance was needed to see that the war-legitimation business was about to expand.

Larry May Aggression and Crimes against Peace

Thus it has been a busy decade in the professional lives of Larry May, the guys and gals at the Centre for Applied Philosophy and Public Ethics, and all the under-appreciated thinkers tucked away in international relations departments at Anglophone universities, military academies, NGOs and policy think tanks around the globe.

These are the ‘little screws and bolts’ of Washington’s war drive.

These folks – they know who they are, even if you don’t – have helped to make it all possible, jurisprudentially and ideologically speaking. Preemptive strikes, ‘limited punitive actions’, the lot.

John Kerry’s big reveal, his statement laying out a casus belli for Syria, was strikingly desultory and underwhelming, even by recent standards. (‘I’m not asking you to take my word for it. Read for yourself, everyone, those listening, all of you, read for yourselves the evidence from thousands of sources, evidence that is already publicly available.’)

Essential for the State Department’s ‘credibility’, therefore, were the prior efforts of policy intellectuals straddling academia, journalism and the security state. Despite the implausibility of Kerry’s claims and the listlessness of his performance, respectable public opinion has long since adopted the view that power projection and military expeditions in the name of human rights and ‘international norms’ are, after all, a rather airy and vaporous business, in terms of actual legal constraints or even normative prohibitions.

For this we can thank the scholars of ‘global governance’. With official imprimatur and government funding, they have spent the past two decades undermining the prohibition on aggressive war that was codified in the Kellogg-Briand Pact, Nuremberg judgements and UN Charter.

Territorial sovereignty, these intellectuals have insisted – post-Desert Storm, post-Walzer – does not necessarily bind or impede the activity of other states. It is instead a conditional licence granted to lesser states by powerful ones – that is, by the ‘international community’.

Its transgression does not per se make a crime: its revocation may be warranted, at some moments, if Washington so desires.

Larry May (2008):

My view is that crimes of aggression are deserving of international prosecution when one State undermines the ability of another State to protect human rights [i.e. only under this particular condition].

This thesis runs against the grain of how aggression has been traditionally understood in international law.

Previously, it was common to say that aggression involved a State’s first strike against another State, where often what that meant was simply that one sovereign State had crossed the borders of another sovereign State. In this book I argue that the mere crossing of borders is not a sufficient normative rationale for prosecuting State leaders for the international crime of aggression.

At Nuremberg, charges of crimes against humanity were pursued only if the defendant also engaged in the crime of aggression. I now argue for a reversal of this position, contending that aggression charges should be pursued only if the defendant’s acts involved serious human rights violations. Indeed, I argue that aggression, as a crime, should be defined as not merely a first strike against another State but a first wrong that violates or undermines human rights.

If there are to be prosecutions for crimes against peace (or the crime of aggression) that are similar to prosecutions for crimes against humanity and war crimes, then there must be a similarly very serious violation that aggression constitutes. Mere assaulting of sovereignty does not have the same level of seriousness and is not as universally condemned as are the other crimes. For this reason, among others, I argue that aggression, as a crime, needs to be linked to serious human rights violations, not merely to violations of territorial integrity.


If a given State is not generally protecting human rights, it will be less clear that war waged against such a State is indeed best labeled aggressive and unjustified war. Indeed, if States systematically violate the basic human rights of their citizens, then those States have no right to insist that other States respect their sovereignty


Of course, there are States that have been massive violators of human rights, and wars waged to stop such States are not generally aggressive in my view.


What made the Nazi case stand out was the scale and viciousness with which it was fought, not that it was a case of aggression. So, the value of Nuremberg as a “precedent” for future trials of leaders for aggressive wars is here also unclear.


It is odd indeed to call the humanitarian actions of a State by the name “aggression” since that implies that there is some hostility behind the intervention. If the intervention is truly motivated by humanitarian concerns, then calling it aggression and therefore also hostile seems out of place.

It is also hard to see that humanitarian interventions constitute wrongs at all, let alone the most important of wrongs in the international arena, and hence we have reason to think that crossing State borders is not always wrong. Humanitarian intervention may indeed often be ill advised since anything that contributes to the horrors of war is to be avoided at nearly all costs. But if the motivation for the humanitarian intervention is to stop genocide, then the war may not be ill advised even though there is a serious risk of the major loss of civilian life that occurs in most wars. Here we might do some rudimentary utilitarian calculation to see that stopping genocide by means of a war could be justified.

Humanitarian wars can at least be prima facie defended in such circumstances as the genocide in Darfur. Such wars might be technically aggressive – at least, according to traditional doctrine – in that they involve invasion by one State against another State that is resisting rather than consenting to the invasion. Yet, since no “hostility” motivates the invading State and the international community in effect consents to allow the invasion, it seems as if the designation of aggression is the kind of technical characterization that doesn’t bear much normative weight. Aggression, as traditionally understood, is not itself a trigger of normative disapproval; some aggression, such as that form that stops worse aggression, could be a very good thing indeed, as theorists from the Just War tradition and contemporary international law have claimed. This is one reason I urged that we abandon the traditional way of understanding aggression.

Take that, Putin! Suck it, Pravda! Take a seat, Benjamin Ferencz and Sundus Shaker Saleh!

We might also take this moment to mention the Responsibility to Protect people, such as Power, except that they’ve already had their moment in the Saharan sun.

Making the world unsafe

April 11, 2013

Yesterday’s Financial Times included an interview by its Beijing correspondent with a senior executive from the Chinese-owned engineering and construction firm Sinohydro.

In it, Wang Zhiping lamented the billions in dollars of asset write-downs and lost contracts suffered by Chinese firms due to ‘political instability’ (i.e. US-promoted regime change, state failure and secession) in Libya, South Sudan, Mali, Central African Republic, Iraq, Afghanistan and Burma.

FT April 10 2013

The article described the fallout – regrettable and inadvertent, of course – from NATO’s recent African military ventures, diplomatic intrigues and assertions of force majeure:

After years of expansion into emerging markets and developing a reputation along the way for taking on projects in difficult environments, experiences such as Libya are prompting a change in the way that Chinese companies assess risk. The shift – backed by Beijing – comes as Chinese companies increasingly compete with Bechtel, Hyundai Engineering, Leighton and other international contractors.


Chinese engineering companies last year produced $117bn in revenues from contracts outside China – a 10-fold increase over the past decade, according to the Chinese government. Five of the world’s top 10 contractors are now Chinese, according to the Engineering News Record, a trade publication.

While Chinese contractors can compete on technological prowess, they face a big challenge dealing with political risk, particularly after hard-earned lessons through kidnappings in war-torn areas such as Libya, Mali and Afghanistan.

Many of Sinohydro’s overseas projects – from mines and roads to power stations and football stadiums – are funded by Chinese loans to the host country, which are repaid with resources such as crude oil.

While the model has helped cash-strapped governments that might otherwise shy away from building needed infrastructure, it has left Chinese companies exposed in many of the world’s conflict zones.


“If the risks are too high, we just won’t go there [now],” says Mr Wang. “Our greatest concern is the instability caused by political risk in overseas markets, including armed conflict.”

Sinohydro’s “caution” list includes Iraq, Afghanistan and Myanmar, where the military junta unilaterally suspended a $3.6bn hydropower project in 2011.

The shifting attitude reflects some costly lessons. Mr Wang says the conflict in Libya cost Sinohydro $1.2bn in suspended contracts and $200m in writedowns.

“That is just an estimated figure,” says Mr Wang. “For other losses, like how many cars have been blown up, or exact losses for every physical asset . . . it is very difficult to get an exact number.”

Sinohydro has also been caught up in other conflicts with workers either killed or kidnapped in South Sudan and Afghanistan. And the current conflict in Mali threatens to jeopardise one of its hydropower projects.

construction and engineering industry

To these methods of overt US aggression and tortious interference, we can add the less objectionable corporate watchword of ‘green growth.’

In recent years, the need to invest in ‘clean energy’ has supplied public justification for the state-assisted efforts of US- and European-owned engineering, construction and mining firms (Bechtel, ABB, RWE, Skanska, etc.) to secure infrastructure contracts and fasten down supplies of raw materials ahead of their Chinese competitors.

But these developments aren’t the real interest of the FT article.

What the piece quietly makes clear is that the sovereign needs of the US government now conflict with the system-wide needs of world capitalism.

Washington’s exercise of its imperial power is no longer the benevolent, positive-sum game of yore, in which it could pursue its own interests while acting as guarantor of private property rights, monopolizer of force, keeper of civil peace and manager of the global division of labour on behalf of the world’s governments and propertied elite.

Rather than satisfying the wishes of the world’s investors for stable political institutions, Washington’s need to maintain strategic pre-eminence now leads it to create continent-wide zones of political turmoil, state failure, secession and insecure property rights.

Amidst such basic uncertainty, where one’s assets may be seized, obligations repudiated or agreements turn out to be worthless, how is stable global accumulation possible?

Such questions, no doubt, rankle the editorial board at the FT.

But the options for elite decisionmakers are bleak. They are faced with a structural impasse, since demographic and resource constraints, and economic and political factors, militate against any prospect of imperial succession with Beijing or any other power supplanting US hegemony. There will be no repeat of 1945 and no escape from prolonged disorder.

The institutions of world capitalism are therefore in acute and probably terminal disarray.

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.

Some more antiquarianism

March 21, 2013

From Clarence Darrow’s closing summation in the 1924 Leopold-Loeb murder trial:

Now, your Honor, I have spoken about the war… For four long years the civilized world was engaged in killing men… It was taught in every school, aye in the Sunday schools. The little children played at war…

We read of killing one hundred thousand men in a day. We read about it and rejoiced in it – if it was the other fellows who were killed. We were fed on flesh and drank blood. Even down to the prattling babe.  I need not tell your honour this, because you know; I need not tell you how many upright, honourable young boys have come into this court charged with murder, some saved and some sent to their death, boys who fought in this war and learned to place a cheap value on human life. You know it and I know it. These boys were brought up in it. The tales of death were in their homes, their playgrounds, their schools; they were in the newspapers that they read; it was a part of the common frenzy – what was a life? It was nothing. It was the least sacred thing in existence and these boys were trained to this cruelty.

It will take fifty years to wipe it out of the human heart, if ever…

Your Honor knows that in this very court crimes of violence have increased growing out of the war. Not necessarily by those who fought but by those that learned that blood was cheap, and human life was cheap, and if the State could take it lightly why not the boy?

Terror Tuesdays - Obama's kill list

Short of force: US debt diplomacy in the 1920s

February 27, 2013

‘During the latter half of the nineteenth century’, wrote Keynes in his Treatise on Money, ‘the influence of London on credit conditions throughout the world was so predominant that the Bank of England could almost have claimed to be the conductor of the international orchestra.’

By 1919 the baton had been wrested away, though not all of its attendant privileges were yet conceded.

Washington found itself in the novel position of global creditor, thanks largely to the enormous wartime growth of intergovernmental liabilities.

War had left several of the European imperial powers as broken reeds, while the victorious Allies  Britain, France and Italy — incurred heavy debt obligations to the US Treasury.

Inter-Ally loans

Over the next decade, with the US Federal Reserve now holding nearly half the world’s gold reserves, the US State and Treasury departments used this privileged status as a lever to intervene in the fiscal and monetary affairs of debtor governments, most notably in Europe, and thereby to shape their foreign and security policies.

Despite the conventional picture of aprèsguerre ‘isolationism’, it was this hypertrophy of the US state during the 1920s  extra-territorial incursions of its policymakers into other jurisdictions, including encroachments within the world’s developed European core  that provided both a staging post and testing ground for later expansionism.

Washington’s political domination of its European ‘partners’ during this earlier epoch would eventually allow imperialism, after 1945, to take the new institutional forms henceforth associated with Wilson, Franklin Roosevelt and Clinton’s ‘liberal internationalist’ foreign policy.

Dawes London Conference 1930

In 1921 the new Republican administration announced that a swiftly growing pool of US overseas assets was ‘assuming an increasing importance’ for ‘foreign political relations’.

Proclaiming official ‘alarm’, in mid-1921 President Harding, along with Treasury Secretary Mellon, Commerce Secretary Hoover and Secretary of State Hughes, met in Washington with representatives of JP Morgan & Co. and other investment houses and banks.

Hoover described the result:

It was finally agreed that all proposals for new foreign loans should be submitted to the State Department for its opinion, and a public notice to that effect was issued on March 3, 1922. The State Department in turn was to submit these proposals to Commerce and Treasury. The Commerce Department gave advice to the promoters, as to security and reproductive character. The State Department advised upon political desirability and undesirability. We made no pretense of authority, but relied upon cooperative action.

In 1926, writing in Foreign AffairsJohn Foster Dulles would describe the ease with which cooperation ensued: ‘There is, generally speaking, a real willingness on the part of American bankers to subordinate their interest in aid of the attainment of important national objectives in the field of international relations.’

Indeed the US foreign policymaking elite  which from 1921 found permanent organization outside the State Department via the Council on Foreign Relations  was heavily populated by J.P. Morgan & Co. partners like Henry Davison, Thomas Lamont, Dwight Morrow and Russell Leffingwell (the CFR’s inaugural president was Morgan’s legal counsel John W. Davis).

(Other New York investment banks like Lazard, through figures like Frank Altschul, also contributed personnel straddling the business elite and foreign-policy formation.)

Lamont attended the Paris Peace Conference as a Treasury Department delegate; he and Morrow served as diplomatic envoys to the 1924 Conference of London, where Whitehall and Paris agreed reluctantly to the Dawes Plan.

In 1922 Lamont confided to Jack Morgan that Mellon appeared to think ‘that if we keep alive all these notes owing to us from dinky little countries all over Europe, the fact that we are holding these notes will give us a sort of stranglehold politically on some of those countries and enable us to tell them what they shall and shall not do. Herbert Hoover has the same benevolent idea.’

The CFR’s 1928 Survey of American Foreign Relations described how federal supervision of foreign loans worked:

The [State Department’s] attitude is expressly one of watchfulness in the country’s larger interests of foreign relationships. It seeks (and has obtained) the cooperation of bankers, and its checks are applied so informally as to rely upon telephonic and verbal communication…

No matter how mild it is, any government action has unique and dominant implications. A request becomes a command when it emanates from a government department. To the bankers the request for cooperation was agreeable enough, for, apart from their desire not to impede the attainment of national objectives in the domain of foreign policy, the imprimatur (if the action of “passing” a loan application may be so called) of the State Department on any issue would connote a certain, if ambiguous, standing for the bonds to be marketed. It follows that any other course than acquiescence in the department’s wishes or acceptance of its ban would make it difficult for the issuing house to dispose of its loan to the American investor.

The pattern of formal objections and refusals of permission conformed exactly to strategic considerations.

With the suppression of Bolshevism being the foremost concern of postwar diplomacy, an embargo (not airtight) was imposed on lending to Soviet Russia.

And from 1924 the French government was unable to refinance its sovereign debt until it agreed to negotiate a repayment schedule with Washington’s World War Foreign Debt Commission (a three-year moratorium on interest had expired in October 1922).

The State Department’s refusal of permission to float a $100 million French loan through J.P. Morgan had the desired chastening effect on the Quai d’Orsay. It was soon brought to heel amid the Ruhr Crisis, rapid depreciation of the franc (one-fifth its prewar value), and the effective closure of the London capital market before Britain’s 1925 return to the gold standard.

The annual US Treasury Department report describes the calculated, sharp and precisely-timed application of pressure:

Early in 1925, after much consideration, it was decided that it was contrary to the best interests of the United States to permit foreign governments which refused to adjust or make a reasonable effort to adjust their debts to the United States to finance any portion of their requirements in this country. States, municipalities, and private enterprises within the country concerned were included in prohibition. Bankers consulting the State Department were notified that the government objected to such financing.

Henry Bérenger was sent to Washington to negotiate repayment terms with Mellon. In April 1926 he cabled back to Paris that  the ‘salvation of the franc and of the credit of France’ demanded their swift ratification.

By 1924, having wrested away effective control of the Inter-Allied Reparations Commission from Paris, business ‘experts’ from Wall Street and advisors from the US departments of Treasury and State were granted the right to monitor public expenditure in several Central European states.

These included Germany (via the Dawes Plan), parts of the former Austro-Hungarian Empire and newly created (and solidly anti-Bolshevik) states carved out from the former Tsarist Empire.

Following episodes of hyperinflation, the Hungarian ($50 000 000) and Austrian ($100 000 000) governments each borrowed stabilization funds from the League of Nations.

Conditionality attached to these loans compelled the indebted parties to undertake various institutional changes decreed by the creditors – including establishing central banks.

Under the borrowing protocols, these central banks would be constitutionally forbidden from refinancing government debt. (Adherence to this principle would later see the Reichsbank’s Hjalmar Schacht incur the ire of Hitler for refusing to finance 1930s armaments spending. The same prohibition would be included in the 1992 Maastricht Treaty of the European Union).

The terms also obliged the borrowing governments to submit to the oversight of a League of Nations Commissioner-General, who would monitor and adjust government expenditure to enforce compliance with the repayment schedules and other binding loan conditions.

The League Commissioner-General in Budapest, described by Time magazine as ‘the financial dictator of Hungary’, was the US’s Jeremiah Smith. Earlier attempts to have Roland Boyden, the US representative on the Reparations Commission, deployed to Vienna had been scuttled by the State Department.

Meanwhile S. Parker Gilbert, Mellon’s undersecretary at the US Treasury Department and later a J.P. Morgan & Co. partner, was installed as Agent-General for German reparations under the Dawes Plan.

The Polish government, recently turned over amid hyperinflation to the military strongman Jozef Piłsudski, also avoided League of Nations financial administration. Ignoring the imprecations of the Bank of England, Warsaw preferred oversight by a Wall Street ‘money doctor’.

The US ambassador in Warsaw had greeted Piłsudski, following his 1926 coup, as ‘the only man… who can prevent a Communistic uprising.’ Meanwhile he wrote to New York Federal Reserve Bank governor Benjamin Strong: ‘The net result of the revolution will be a strong and honest government which will lean towards America and American ideas rather than towards France.’

Upon consultation with Strong at the New York Fed, the new Polish government turned to the US economic advisor Edwin W. Kemmerer. Kemmerer and his ‘commission of American financial experts’ undertook a review of the Polish economy and its institutions.

Bank of England officials affected to find it ‘incredible’ that the Polish government would accept loan controls administered by  ‘a more or less irresponsible body of American bankers.’

The Kemmerer group’s policy advice for attaining ‘stability’ strayed far and wide: ‘As long as Poland’s international problems remain as they are … a strong army must, of course, be maintained.’

But above all, to stabilize its currency and return to gold convertibility, the Polish government was enjoined by Kemmerer’s experts to abandon its traditional reliance on French creditors:

Since the war the great bulk of the foreign loans floated throughout the world have been floated directly or indirectly in the American market; and this situation is likely to continue for some years to come. A large part of the world today is zealously seeking foreign capital. The United States is the principal source of such capital. A country that appoints American financial advisers and follows their advice in reorganizing its finances, along what American investors consider to be the most successful modern lines, increases its chances of appealing to the American investor and of obtaining from him capital on favorable terms.

Kemmerer was followed in Warsaw by US Treasury official Charles S. Dewey, who became a director of the Bank of Poland.

A 1927 publicity pamphlet written by John Foster Dulles for Bankers Trust read: ‘Polish stabilization is the first such operation to be realized under distinctively American leadership in all its phases.’

Poland loan 1927

Historians have drawn attention to how these ‘financial reconstruction’ programs, involving administration by external creditors, precociously anticipated features of later IMF structural-adjustment programs (compare, for example, the conditions imposed in Britain following its 1976 balance of payments crisis).

But installation of a debt-collection agency within the domestic state, staffed by foreign agents of the imperial powers and with the authority to directly control excise or customs revenue, might also be compared to the Chinese Imperial Maritime Customs Service, the Ottoman Public Debt Administration, or Greece’s International Financial Commission.

In 1922 the US State Department sent Arthur Milspaugh to Tehran as administrator-general of Persian finances; Jeremiah Jenks had travelled to China in 1904 to collect indemnities on behalf of the imperial Powers following the Boxer Rebellion.

Similar US outposts had been installed throughout the Caribbean basin and Central America over previous decades. The most notable case came from the Dominican Republic, where the Santo Domingo Improvement Company assumed the fiscal functions of state in 1893. Backed by warships, the Roosevelt administration took over Dominican finances in 1905.

Following this precedent, and after the announcement of the so-called Roosevelt Corollary to the Monroe Doctrine, US officials and New York bankers assumed administrative control of the customs houses of Nicaragua in 1910, Honduras and Guatemala in 1911, and Haiti in 1915.

In 1918 the Austrian economist Schumpeter had observed that ‘the budget is the skeleton of the state, stripped of all misleading ideologies’.

Thus Washington’s administrative control over the fiscal resources of its debtors, European as well as Latin American and Asian, allowed it to alter the substance of the domestic politics and internal social order of those countries.

German aspirations for a continental Mitteleuropa were thus exposed as idle daydreams, as were French hopes for a Europe threaded together by the loans of Société Générale and the Parisian bourse.

In 1927 the poet Paul Valéry observed mordantly: ‘Europe visibly aspires to be governed by an American commission. Its entire policy is directed to that end.’

September 1924 - S. Parker Gilbert - Agent General for German Reparations

In January 1923 a British delegation, led by Chancellor Stanley Baldwin and the Bank of England’s Montagu Norman, travelled to Washington to negotiate a settlement of Britain’s sovereign liabilities with Treasury Secretary Mellon and the World War Foreign Debt Commission.

Lloyd George remarked:

A business transaction at that date between Mr. Mellon and Mr. Baldwin was in the nature of a negotiation between a weasel and its quarry. The result was a bargain which brought international debt collection into disrepute… [This] crude job jocularly called a settlement, was to have a disastrous effect upon the whole further course of negotiations on international War Debts. The United States could not easily let off other countries with more favourable terms than she had exacted from us… Equally the exorbitant figure we had promised to pay raised by so much the amount we were compelled to demand from our debtors… I cannot help saying that I think in this matter of Debt Settlements Great Britain has had very shabby treatment, and had Great Britain been the creditor… I should have been a little ashamed as a Britisher if we had treated in this fashion a country so closely linked with ours in language, history and race.

Mellon boasted of having ‘made for the United States the most favourable settlements which could be obtained short of force… The only other alternative which they might urge is that the United States goes to war to collect.’

At this time, the US, UK and Japan were in fact engaged in an arms race. Each rival power was frantically increasing the size of its naval fleet, in particular capital ships.

Washington used its position as global creditor to demand that its European debtors reduce their military spending.

Hoover deplored how Allied governments were channelling national resources towards armaments instead of repaying wartime debts to the US Treasury: ‘loans that are dissipated… in military expenditure or in unbalanced budgets, or in the bolstering up of inflated currencies, are a double loss to the world.’

Following the 1922 announcement of the new policy on State Department oversight of external investment, Hoover explained to Benjamin Strong of the New York Federal Reserve Bank that a ‘governmental interest lies in finance which lends itself directly or indirectly to war or to the maintenance of political and economic stability’:

We are morally and selfishly interested in the economic and political recovery of all the world. America is practically the final reservoir of international capital. Unless this capital is to be employed for reproductive purposes there is little hope of economic recovery. The expenditure of American capital, whether represented by goods or gold in the maintenance of unbalanced budgets or the support of armies, is destructive use of capital. It is piling up dangers for the future of the world…

The most pertinent fact with regard to Europe today is that the whole political and economic life is enveloped in an atmosphere of war and not of peace. Restrictions on loans made from the United States to reproductive purposes will at least give the tendency to render impossible that form of statesmanship which would maintain such an atmosphere.

The Washington Naval Conference was held from November 1921.

There, the Five-Power Treaty (which included France and Italy) imposed limits on construction of new capital ships (aircraft carriers) while in the Four-Power Treaty the state parties (UK, Japan, US and France) agreed on bases and territorial possessions in the western Pacific. The Nine-Power Treaty sought to hold other powers to the terms of Washington’s Open Door Policy, forbidding dismemberment of China.

The combined outcome reduced the relative weight of British naval power, and broke the Anglo-Japanese naval alliance in the Pacific.

In 1923 British military spending fell by £50 million.

Meanwhile US-British strategic rivalry proceeded along several fronts.

An Anglo-French condominium (established through Sykes-Picot, the San Remo conference and secret protocols to the Treaty of Sèvres) had divided the oil-rich territory of the former Ottoman Empire and excluded US interests.

British armed forces had captured Mosul after signing the armistice with Turkey.

Lloyd George’s Cabinet Secretary Maurice Hankey had noted that ‘oil in the next war will occupy the place of coal in the present war, or at least a parallel place to coal’:

The only big potential supply that we can get under British control is the Persian and Mesopotamian supply. [Therefore] control over these oil supplies becomes a first-class British war aim.

‘I do not care under what system we keep the oil’, Lord Balfour had said of northern Mesopotamia and Iraqi Kurdistan in 1918. ‘But I am quite clear it is all-important for us that this oil should be available.’

The ‘system’ settled upon was a British League of Nations mandate over Mesopotamia, and the enforcement of an oil exploration and production concession granted in 1914 by the Ottoman government to the Turkish Petroleum Company (in which Anglo-Persian held a 50% stake, Royal Dutch Shell 25%, and the remaining 25% formerly held by Deutsche Bank was re-allocated after the war to the French government).

The US State Department was naturally displeased by the Anglo-French monopoly, seeking to open the region to investment by US-owned oil firms.

Secretary of State Frank Kellogg remarked to the Navy Secretary:

In view of our probable future dependence upon foreign reserves of petroleum, the importance of keeping the Government of the United States in a position consistently to support and assist American interests… will be appreciated.

Open Door principles of equal commercial opportunity were thus invoked, while Allen Dulles of the State Department’s Near Eastern Division insisted that the Turkish Petroleum Company’s concession was invalid.

In September 1919 Standard Oil of New York (Socony) sent geologists to undertake exploration in Mesopotamia:

One of them incautiously sent a letter to his wife telling her “I am going to the biggest remaining oil possibilities in the world” and “the pie is so very big that whatever had to be done should be done to gain us the rights which properly belong to American citizens.

The British Foreign Office intercepted the letter and the geologists were detained in Baghdad.

Several years of diplomatic acrimony followed between Washington and London. By October 1920 the British ambassador in Washington commented: ‘At the moment there is an hysteria of hatred against England and all her works.’

Throughout early 1921 the Foreign Office’s intransigent response to US State Department appeals continued. But in mid-1921 members of the British political elite suddenly decided to accommodate US oil interests in Iraq.

Cabinet declared that: ‘Britain cannot quarrel with the United States.’ Winston Churchill wrote to Lord Curzon that ‘so long as the Americans are excluded from participation in Iraq oil we shall never see the end of our difficulties in the Middle East… The importance of reconciling American oil interests… is so great that we may well pay a high price for it.’

In March 1922 Stanley Baldwin personally met the president of New Jersey Standard Oil, and Cabinet agreed to send John Cadman as Whitehall’s envoy to the US to arrange a deal.

Following extended negotiations, Standard Oil of New Jersey, Socony and Gulf Oil were granted an equity stake (a combined 23.75%) in the Turkish Petroleum Company (renamed the Iraq Petroleum Company).

Iraq petroleum company pipeline

But this obviously was a pragmatic and limited retreat by the British empire  reculer pour mieux sauter  rather than a broad assent to Open Door principles that might further crack open the British and French spheres of influence to US firms.

Plainly it was not true, as Keynes claimed, that since the war the United States could ‘influence the international situation’ to suit itself.

The British, French and other colonial empires still remained as exclusive economic zones. Meanwhile the gold-exchange standard agreed at the 1922 Genoa Conference had retained the role of the pound sterling as a reserve currency.

As suggested by Keynes’s opening quotation, this conferred privileges on the City of London and authority on the Bank of England, and partially immunized Britain from balance-of-payments problems.

Between 1870 and 1914 the international payments regime, nominally a gold standard, had effectively been a ‘sterling exchange standard’, with foreign governments holding much of their external balances in sterling reserves, and international payments settled using British state liabilities and adjustments to the London discount rate.

‘Pax Britannica’, said Polanyi, frequently ‘prevailed by the timely pull of a thread in the international monetary network’, with London sucking in capital flows through a tweak of the discount rate.

But during the 1920s London and Paris faced balance-of-payments pressures that they had avoided during the Belle Époque.

With the British and French states now struggling, by the mid-1920s, to maintain convertibility of their debt into gold at a fixed rate, their currencies lost safe-haven status and automatic acceptability as a means of payment. Unchallenged pre-eminence as world financial intermediaries and sources of credit was also lost.

The political authority of the Bank of England and Banque de France in European capitals was reduced as European borrowers, traditionally reliant on loans underwritten and floated in London by Barclays or in Paris by Société Générale, now turned increasingly to Wall Street investment houses to secure financing.

British and French involution thus heralded, for the US business and political classes, a glorious morning of national extroversion.

What hitherto had been domestic agencies like the Federal Reserve Bank of New York suddenly acquired an international policy reach, expanding their perimeter of influence to Warsaw and Budapest, as well as Tehran and Bogotá.

Across central and eastern Europe during the mid-1920s, currency stabilization, emergency loans and ‘reconstruction’ programs allowed US officials and economic advisors to take over administrative functions of debtor states (e.g. Horthy’s Hungary, Piłsudski’s Poland) that, a few years earlier, had faced the threat of socialist revolution and now were bulwarks of anti-Bolshevism.

Washington was thus able to affect the balance of forces within the propertied classes and governing elites of other countries.

US rulers could encourage the British and French states to promise to maintain convertibility of their debt into gold at a fixed rate, then watch as their governments enacted the wrenching policies needed to defend gold convertibility. (During the 1920s the Federal Reserve sterilized gold inflows, inflicting deflationary pressure on other economies.)

In 1920s Britain, as described by Keynes, deflation expressed the social supremacy of banks, financial institutions and the saving classes over the interests of borrowers  industrial and commercial firms  and their employees.

The result of credit restriction, besides stuffing money ‘into the pockets of the rentiers’, was that during Britain’s interwar years net additions to the stock of productive fixed capital (buildings, equipment, machinery) were meagre.

Capital intensity in interwar Britain

Since a higher level of output per unit of capital, alongside a lower share of value-added going to wages, raised profits, the domestic propertied classes were satisfied with this arrangement and a stable elite coalition persisted in Britain as it did not throughout much of Europe.

Interwar British profit rate

Yet the absorption of the surplus product by unproductive expenditure (dividends, interest payments, luxury consumption, etc.) prevented investment in new technology and impeded productivity growth.

Britain’s postwar technological backwardness would have lingering effects, the absence of an advanced and large-scale capital-goods sector (and the export weakness and chronic external deficits that resulted) providing an enduring economic basis for London’s ever deeper military-political submission to Washington.

The events of the 1920s would have lasting consequence for all the European powers that had been left weak by accumulated wartime liabilities and the social crises of the immediate postwar years.

In conditions that approximated Washington’s later imperial tutelage of ‘less-developed’ countries, personal connections were established and ideological affinities were cemented between a generation of US and West European financiers, businessmen, lawyers and state officials.

Individuals like John Foster Dulles, Jean Monnet, John J. McCloy and Dean Acheson  the first two of whom met at the 1919 Paris Peace Conference then worked intimately together in 1927 on a Polish stabilization loan underwritten by Bankers Trust and Chase National  would later emerge during the 1940s as eminences of the Atlantic alliance and ‘the father of Europe’ (Monnet).

John Foster Dulles funeral 1959

It would take the Second World War, the Atlantic Charter, Lend Lease and the Bretton Woods agreements (if not the Suez Crisis) before the institutions of world capitalism were finally remade to fit the designs of the US propertied classes.

But the 1920s laid solid foundations for Roosevelt’s later renovation: establishing circuits of financial, productive and commercial capital, and nurturing the personnel (technical advisors, diplomatic officials, etc.) and the intra-elite channels that would eventually guide Bretton Woods negotiations, the Marshall Plan, NATO, the European Coal and Steel Community and the Treaty of Rome.

Here, in the years of so-called isolationism, was the seedbed for the protection racket established after 1945, and never dissolved.

In this latter development, the other advanced capitalist states of Europe and East Asia were subordinated within a US-controlled Cold War military and security ‘alliance’: a hub-and-spokes network of ‘partners’ in which Tokyo was reduced to a diplomatic underling and European strategic goals could find no independent expression, being corralled within NATO integrated command.

Dean Acheson NATO

At the crossroads

October 16, 2012

Thomas Pynchon’s 2006 novel Against the Day is set in a typically fantastic version of the period 1890-1915.

In his pre-release synopsis, Pynchon joked: ‘With a worldwide disaster looming just a few years ahead, it is a time of unrestrained corporate greed, false religiosity, moronic fecklessness, and evil intent in high places. No reference to the present day is intended or should be inferred.’

This Gilded Age is also (like our own) an era of intense Great Power rivalry. Each character seems to have his or her own Lewisian counterpart, a spectral double working for the enemy.

This is the case, for example, with the novel’s two geographers, British and German, modelled on the real-world figures H.J. Mackinder and Karl Haushofer:

[A] pair of rival University professors, Renfrew at Cambridge and Werfner at Göttingen, not only eminent in their academic settings but also would-be powers in the greater world.

Years before, in the wake of the Berlin Conference of 1878, their shared interest in the Eastern Question had evolved from simple bickering-at-a-distance by way of professional journals to true mutual loathing, implacable and obsessive, with a swiftness that surprised them both. Soon enough each had come to find himself regarded as a leading specialist, consulted by the Foreign Office and Intelligence Services of his respective country, not to mention others who preferred to remain unnamed. With the years their rivalry had continued to grow well beyond the Balkans, beyond the ever-shifting borders of the Ottoman Empire, to the single vast Eurasian landmass and that ongoing global engagement, with all its English, Russian, Turkish, German, Austrian, Chinese, Japanese – not to mention indigenous – components, styled by Mr. Kipling, in a simpler day, “The Great Game.”

[…Over] their cloistering walls and into the map of the megacosm, the two professors continued to launch their cadres of spellbound familiars and enslaved disciples. Some of these found employment with the Foreign Services, others in international trade or as irregular adventurers assigned temporarily to their nations’ armies and navies – all sworn to loyalties in whose service they were to pass through the greater world like spirit presences, unsensed by all but the adept.

Later one of the protagonists visits Renfrew at Cambridge, allowing the professor to rehearse his/Mackinder’s Heartland Theory. This strategic outlook was distilled by the actual Mackinder into the dictum ‘who rules the World-Island commands the World’.

In Pynchon’s fictional version:

[Renfrew] motioned Lew to a smaller room, where a globe of the Earth hung gleaming, at slightly below eye-level, from a slender steel chain anchored overhead, surrounded by an ether of tobacco smoke, house-dust, ancient paper and book bindings, human breath…. Renfrew took up the orb in both hands like a brandy snifter, and rotated it with deliberation, as if weighing the argument he wished to make. Outside the windows, the luminous rain swept the grounds. “Here then – keeping the North Pole in the middle, imagining for purposes of demonstration the area roundabout to be solid, some unknown element one can not only walk on but even run heavy machinery across – Arctic ice, frozen tundra – you can see that it all makes one great mass, doesn’t it? Eurasia, Africa, America. With Inner Asia at its heart. Control Inner Asia, thefore, and you control the planet.”

“How about that other, well, actually, hemisphere?”

“Oh, this?” He flipped the globe over and gave it a contemptuous tap. “South America? Hardly more than an appendage of North America, is it? Or of the Bank of England, if you like. Australia? Kangaroos, one or two cricketers of some discernible talent, what else?” His small features quivering in the dark afternoon light.

“Werfner, damn him, keen-witted but unheimlich, is obsessed with railway lines, history emerges from geography of course, but for him the primary geography of the planet is the rails, obeying their own necessity, interconnections, places chosen and bypassed, centers and radiations therefrom, grades possible and impossible, how linked by canals, crossed by tunnels and bridges either in place or someday to be, capital made material – and flows of power as well, expressed, for example, in massive troop movements, now and in the futurity…”

The Chums of Chance, meanwhile, are a group of young balloonists. They are employed or contracted by a shady organization that accepts missions from various governments and private detective agencies.

The Chums are commanded to set out for Bukhara, on the Silk Road. Ostensibly in search of Shambhala, the balloonists learn that their true mission has to do with Great-Power rivalry between Britain, Russia, Japan, China and Germany.

The historical reference here is to covert expeditions, across central Asia and into northwest China, made by imperial envoys such as the Tsar’s military-intelligence offiicer Mannerheim (who set off in 1906).

Soon the Chums are visited by a mysterious figure from the future:

“We are here among you as seekers of refuge from our present – your future – a time of worldwide famine, exhausted fuel supplies, terminal poverty – the end of the capitalistic experiment. Once we came to understand the simple thermodynamic truth that Earth’s resources are limited, in fact soon to run out, the whole capitalist illusion fell to pieces. Those of us who spoke this truth aloud were denounced as heretics, as enemies of the prevailing economic faith. Like religious Dissenters of an earlier day, we were forced to migrate… We might ask you to accept a commission from us now and then – though, regrettably, with no more detailed explanation than you currently receive from your own Hierarchy.”


“So this is supposed to be like Squanto and the Pilgrims,” Chick reported to the plenary session called hurriedly next morning. “We help them through their first winter, sort of thing.”

“And suppose it isn’t like that,” said Randolph. “Suppose they’re not pilgrims but raiders, and there’s some particular resource here, that they’ve run out of and want to seize from us, and take back with them?”

Confused but unwilling to turn back, the Chums see prophetic visions of the terrible events due to take place, soon, in the grasslands, deserts and tundra of central Eurasia:

“Whatever is to happen,” [the visionary] reported upon his return, “will begin out here, with an engagement of cavalry on a scale no one living has ever seen, and perhaps no one dead either, an inundation of horse, spanning these horizons, their flanks struck an unearthly green, stormlit, relentless, undwindling, arisen boiling from the very substance of desert and steppe. And all that incarnation and slaughter will transpire in silence, all across this great planetary killing-floor, absorbing wind, stell, hooves upon and against earth, massed clamor of horses, cries of men. Millions of souls will arrive and depart. Perhaps news of it will take years to reach anyone who might understand what it meant…”

…”Who are they?”

“German or Austrian, would be likely, though one mustn’t rule out the Standard Oil… Make your way to the surface, get back to England at all cost. They must be told in Whitehall that the balloon is up… Go! find someone in the F.O. intelligence section. It is our only hope!”


Meanwhile, for days, weeks in some places, the battles of the Taklamakan War were raging. The earth trembled. Now and then a subdesertine craft would suddenly break the surface with no warning, damaged mortally, its crew dead or dying… petroleum deposits far underground were attacked, lakes of the stuff would appear overnight and great pillars of fire would ascend to the sky. From Kashgar to Urumchi, the bazaars were full of weapons, breathing units, ship fittings, hardware nobody could identify… which all the Powers had deployed. These now fell into the hands of goat-herders, falconers, shamans, to be taken out into the emptiness, disassembled, studied, converted to uses religious and practical, and eventually to change the history of the World-Island beyond even the unsound projections of those Powers who imagined themselves somehow, at this late date, still competing for it.

Here  with the description of an apocalyptic military engagement in Central Asian Turkestan, as the contending imperial powers nurture and suppress various local ethnic separatists  the book’s reference to contemporary realities is obvious.

China’s northwestern frontier (bordering Afghanistan, Pakistan, Kyrgyzstan, Kazakhstan and Tajikistan) is a gateway for locally-owned firms (and a bridgehead for Beijing’s armed forces) to the energy resources of the Caspian basin and southwest Asia.

On the far side of the Central Asian republics, along China’s western flank, sit deepwater oil and gas fields off Azerbaijan and Turkmenistan, and the giant Tengiz, Karachaganak and Kashagan fields in Kazakhstan.

Slightly to the south is the greatest prize of all: the vast bounty of the Persian Gulf, along with access to Indian Ocean ports like Karachi.

From the 1990s an increasingly dense supply network of railways, roads and pipelines has been laced across the central Eurasian steppe. As ever, commercial trade routes do double duty as military lines of communication. They are available, if needed, to provide logistic support linking combat units with bases of supply.

Xinjiang itself contains uranium and coal reserves, and its Tarim Basin apparently has non-trivial hydrocarbon deposits.

Since the 1960s Lop Nur in Xinjiang has been the site of a nuclear weapons test range, missile storage facility, production complex and an air base with launch facility.

As discussed on this blog many times before, one key plank of US grand strategy, over the past few decades, has been to establish client governments and military protectorates in parts of the world where large deposits of energy and raw materials are found.

Washington has pursued this agenda through various violent means: ‘preventive’ regime change, humanitarian intervention and so forth.

The US state leadership no longer enjoys the clear-cut strategic primacy granted to it, as in decades past, by the competitive ascendancy of US-owned firms; nor is it able to prevent rivals with strong balance-of-payments positions from gradually gaining international influence through outward flows of investment and cheap loans. Therefore it has been forced to rely on the one dimension in which its supremacy remains unchallenged: military power, in which the international gradient is steep.

But, as well as planting garrisons near the world’s largest oilfields themselves (in southwest Asia, the Caucasus and Caspian basin in Central Asia), Washington has also sought to achieve military control over the energy supply corridors and transit routes that link them to China, Russia, Europe, Japan and India.

This ability to interrupt the flow of oil and gas, and thus to cut off the supply of fuel available to competitive rivals for use in industrial activity and for military purposes, is of the utmost strategic worth.

As Churchill, Hitler and Stalin insisted to their generals (who listened with varying degrees of buy-in and obtuseness) sequestering and controlling energy supplies is decisive during war. The ability to disrupt supplies is also useful during peacetime as a means of gaining leverage during commercial and diplomatic negotiations. (Among other things, it now sustains demand for US Treasury securities and thus underpins the liquidity of the world’s deepest financial markets.)

Since 1945, Washington’s naval pre-eminence has granted it control of the world’s sealanes and made the US state the ultimate guarantor of global maritime trade (and sea lines of communication). If necessary, these shipping channels may be closed and the maritime commerce (including energy supplies) of rivals interdicted.

But the ability to deny its rivals’ land-based transit (and military logistics) has been another matter, one inherently more difficult. Advancing its position there, at the centre of the Eurasian landmass, has been the chief goal of US militarism since the end of the Cold War.

Thus the oft-stated focus from US policy strategists on bringing Poland and Ukraine into NATO. During the 1990s, Zbigniew Brzezinski, RAND’s Stephen Larrabee and Sherman Garnett from the Carnegie Endowment stressed that Ukraine was the ‘keystone in the arch’ of Washington’s Drang nach Osten.

NATO’s eastward expansion would not only create a cordon sanitaire between Germany and Russia, and allow US missiles to be placed up against Russia’s western border. It would also secure Washington’s military-strategic position in the Black Sea (Moscow retains a naval base in Sevastopol). And with this the US ruling elite would completely dominate the Caucasus and energy-rich Caspian basin.

Meanwhile, from the south, Washington has sought strategic control over the Transcaucasus transport corridor for oil and gas products  (which the EU-funded TRACECA styles as ‘the Silk Road of the 21st century’). In a bid to destroy Moscow’s influence over this southern export route, the US State Department has struck security ‘partnerships’ and helped to foment a sequence of ‘revolutions’ in the GUAM countries (Georgia, Ukraine, Azerbaijan and Moldova). The Kremlin has attempted to stall Washington’s advance by encouraging separatism in Moldova (Transnistria), Georgia (Abkhazia and South Ossetia) and Azerbaijan (Karabakh).

Most obviously, the invasion and decade-long military occupation of Afghanistan has created a Central Asian buffer that separates the Persian Gulf from the US’s competitive rivals.

And, over the past decade, Turkey’s status as Washington’s energy broker between the Caspian and Europe has been elevated. This has assumed particular importance lately during Syria’s slow-motion regime change.

The overall result fulfils what Brzezinski in The Grand Chessboard (1997) presented as the basic desiderata of Washington’s Eurasian geostrategy:

To put it in a terminology that hearkens back to the more brutal age of ancient empires, the three grand imperatives of imperial geostrategy are to prevent collusion and maintain security dependence among the vassals, to keep tributaries pliant and protected, and to keep the barbarians from coming together.

This means (1) preventing the European ‘vassal’ states from developing any autonomous capacity, outside the NATO security umbrella, for projecting military-strategic power (and similarly for Japan); and (2) obstructing those potential peer competitors that are not integrated into Washington’s set of hub-and-spokes military ‘partnerships’, namely Russia and China, from striking alliances with each other and with energy producers and regional powers such as Iran.

(An identical outlook, from a different wing of Washington’s policymaking elite, was laid out in the Pentagon’s 1992 Defense Planning Guidance. This document decreed that post-Cold War ‘strategy must now refocus on precluding the emergence of any potential future global competitor’ and ‘preventing the domination of key regions by a hostile power.)

To help resist this agenda, Moscow and Beijing have formed the Shanghai Cooperation Organization with Central Asian republics. The two imperial powers have managed to build a few bilateral and regional instances of diplomatic, commercial and military cooperation. But within the ‘strategic partnership’ the conflicting interests of the parties are insurmountable. And even the slightest move towards a regional military-political bloc is enough to induce hysteria in US security-policy circles. In 2010 an alarmist article written by Robert Kaplan for the CFR magazine Foreign Affairs featured the following map. It purported to display the geographic scope of Beijing’s strategic influence.

The tendencies described above  and above all the belligerence of the US state elite  presage another terrible global conflagration between imperial rivals.

I therefore want to conclude this post by returning to the period written about in Pynchon’s long novel.

I wrote an earlier post here regarding the lead-up to the First World War. It described the decades of self-delusion and obliviousness before general war arrived abruptly, like ‘a clap of thunder in the summer sky’. Yet the plot of Against the Day, over the course of 1000 pages, reveals the slow accretion of countless minatory signs, clear evidence pointing to the coming catastrophe. It is not merely in fiction or in retrospect that these clues appear: contemporary observers, properly equipped, were indeed alert to a looming showdown between the contending powers.

What then accounted for the mass confusion and unpreparedness that was revealed when war eventually arrived?

Next month marks the 100th anniversary of the Second International’s Basel Congress. This extraordinary congress was called following the outbreak of hostilities on the Balkan peninsula. The manifesto agreed upon by social-democratic delegates in Basel declared the ‘complete unanimity of the Socialist parties and of the trade unions of all countries in the war against war’:

[Each] section of the international has mobilized the public opinion of its nation against all bellicose desires. Thus there resulted the grandiose cooperation of the workers of all countries which has already contributed a great deal toward saving the threatened peace of the world. The fear of the ruling class of a proletarian revolution as a result of a world war has proved to be an essential guarantee of peace…

The Congress records that the entire Socialist International is unanimous upon these principles of foreign policy. It calls upon the workers of all countries to oppose the power of the international solidarity of the proletariat to capitalist imperialism… Let the governments remember that with the present condition of Europe and the mood of the working class, they cannot unleash a war without danger to themselves… It would be insanity for the governments not to realize that the very idea of the monstrosity of a world war would inevitably call forth the indignation and the revolt of the working class…

The Congress therefore appeals to you, proletarians and Socialists of all countries, to make your voices heard in this decisive hour! Proclaim your will in every form and in all places; raise your protest in the parliaments with all your force; unite in great mass demonstrations; use every means that the organization and the strength of the proletariat place at your disposal! See to it that the governments are constantly kept aware of the vigilance and passionate will for peace on the part of the proletariat!

Mainstream historians have compared this resolution from November 1912 to the social democrats’ spectacular embrace of the national cause in August 1914. In these scholarly examinations, the later treachery is presented as an abrupt reversal of the earlier position. But these events, and the history of subsequent antiwar and ‘pacifist’ movements, hold another great lesson for today:

It is not possible to prevent war by ‘mobilizing the public opinion’ of a nation against the ‘bellicose desires’ of its leaders. Neither the strengthening of trade unions, nor the placement of social-democratic representatives in parliament, nor ‘great mass demonstrations’, not the raising of protests nor loud proclamations of the common people’s desire for peace are adequate. None of these contributes a ‘great deal toward saving the threatened peace of the world’, nor provides an ‘essential guarantee of peace.’ The ruling classes’ fear of ‘the indignation and the revolt of the working class’ will not stay the hand of capitalist imperialism  only the latter’s complete annulment will do.

Though it may be ‘insanity not to realize’ that ‘they cannot unleash a war without danger to themselves’, the governing elite of the various rival states cannot be swayed by pleas for them to see reason, any more than than they can be persuaded by appeals to their better nature.

By allowing the working population of Europe to hope for ‘the possibility of normal progress’, the social-democratic parties and the trade unions misled their class constituency, and gave advance warning of their eventual opportunism.

In 1911 Rosa Luxemburg sought to dispel the mirage of what she called ‘peace utopias’:

[The] friends of peace in bourgeois circles believe that world peace and disarmament can be realised within the frame-work of the present social order, whereas we, who base ourselves on the materialistic conception of history and on scientific socialism, are convinced that militarism can only be abolished from the world with the destruction of the capitalist class state.


To explain this to the masses, ruthlessly to scatter all illusions with regard to attempts made at peace on the part of the bourgeoisie and to declare the proletarian revolution as the first and only step toward world peace – that is the task of the Social Democrats with regard to all disarmament trickeries, whether they are invented in Petersburg, London or Berlin.

In other words, the consolations of parliamentary reformism, activism and ‘protest politics’ (as described in the previous post) are dangerous illusions. They themselves threaten ‘the annihilation of the flowers of all peoples’.

Keeping a lid on it: maintaining political stability under austerity conditions in Australia

October 7, 2012

As described in the previous post, Australian’s business press has recently featured several prominent communiqués from the economist and Labor government advisor Ross Garnaut, declaring that the coming decade must bring a decline in popular living standards.

Lower wages and salaries and ‘public fiscal restraint’, insists Garnaut, will be maintained over a ‘long period’.

Local ruling layers  for whom the economist’s media bulletins serve as a spine stiffener  should therefore ‘brace’ for ‘difficult times.’

Luckily for its purposes, Australia’s governing elite has had five years, since mid-2007, to prepare for ‘fiscal consolidation’.

Meanwhile it has had the luxury of observing, elsewhere, the public response to the austerity programs that have lowered popular living standards across the north-Atlantic countries.

Australian state leaders have had plenty of time, therefore, to plan and enact measures to increase the resilience of existing institutions.

They have known for some time, and Garnaut merely reminds them, that in coming years the entire social order will be placed under strain. Political stability will be threatened amid growing inequality and mass despondency induced by the denial of life chances.

In May 2010, the historian Simon Schama warned in the Financial Times that ‘in Europe and America there is a distinct possibility of a long hot summer of social umbrage. Historians will tell you there is often a time-lag between the onset of economic disaster and the accumulation of social fury.’ A ‘dangerously alienated public’ was being forced to ‘take stock of the brutal interruption of their rising expectations’. A ‘raw sense of victimisation’ hung in the air like sulphur: ‘we face a tinderbox moment’, Schama told the readers of the FT.

Citing 1789 as an example of where events could lead, he advised ‘our own plutocrats’ to ‘channel mass unhappiness’ into safe directions, before ‘fearful disorientation’ turned into the ‘organised mobilisation of outrage’.

I’ll come eventually to some of the safe channels, useful diversions and political blind-alleys into which the Australian state leadership and propertied classes will seek to shepherd people over the coming years, in order to ‘contain calamity’.

But, firstly, strategic planning has also proceeded along other fronts.

Over the past three decades, Australia’s domestic state has been reconfigured into a tool that can more readily impose unpopular measures (as unelected ‘technocratic’ administrations have recently done, on behalf of creditors, in Italy and Greece).

While many other federal and state government organs have atrophied, Treasury and Finance departments, along with the central bank and associated agencies (APRA, ASIC and the Productivity Commission), have been enlarged and empowered. Initiation and veto powers over government policy rests entirely with these finance-linked bodies, plus with the departments overseen by the prime minister and attorney general.

More generally the executive branch of the state (especially senior Cabinet and the administrative apex of the public bureaucracy) has been strengthened. Old restrictions on its power, held by the other (legislative and judicial) governmental arms, have been removed.

In particular, the counter-terrorism measures of the past decade have allowed a hypertrophic growth in the personnel, resources and repressive powers available to the security, intelligence and police agencies. (Or, as the government’s 2011 review of the Australian intelligence community put it, an ‘important adjustment’ has been made to the ‘balance we have struck as a nation between individual rights and the security of our community.’)

Legal instruments like ‘control orders’ and ‘preventive detention’ have been created, while other entities have been given the power to compel evidence from witnesses.

On several matters of great importance, a few cabinet ministers and high-level civil servants, located mostly in the four or five federal departments and agencies listed above, have acquired freedom from substantive or procedural restrictions on their exercise of authority.

A very small number of individuals has been granted personal control, free of former limits or serious oversight, over matters like the domestic call-out of the armed forces, the detention of individuals and the proscription of entire organizations.

Last year Australian Federal Police Commissioner Tony Negus confided to ABC radio that AFP officers were liaising with London police, to examine the latter’s response to urban riots that had taken place there.

The AFP was preparing for the possibility of local outbreaks:

There are a range of different communities who are feeling um, somewhat left out  and this is a very broad question for government in many ways, and the social issues attached to this, education issues and welfare and a range of other things…

I wouldn’t want to profile particular groups but there are young people in this country who are feeling disassociated with what’s happening in a broader sense. And I think that we saw some of that with the Cronulla riots many years ago where people have come together, and we’ve seen just recently in London with the riots over there.

I think we’ve all got to be very careful and examine very carefully as a society what that means for Australia, and what we can do to prevent such actions happening here. ..

I’ve spoken to the Prime Minister personally about this. It’s something she has a great interest in and we’ll be doing our best to contribute to that whole of Government response to make sure that we’re appropriately ready here in Australia to prevent these things

The hysterically intolerant reaction from ruling circles to an innocuous recent political demonstration in Sydney gives a clue as to how any serious expression of dissent or unrest, should it arise in future, will be met. (Ardent support for repression is guaranteed from liberal quarters. ABC television presenter Leigh Sales preposterously introduced a recent report on the Sydney demonstration: ‘Everybody’s still talking about the violent and unpredictable Muslim uprising that took place in Sydney on the weekend. Police are starting to piece together who was responsible and they’ve found some alarming links to Islamic extremism’).

In September 2011, ASIO Director-General David Irvine told the Safeguarding Australia conference how ‘change in some of the most important drivers of our security posture is going to require us to recalibrate and reprioritize’:

We can all see change and fluidity in world events that matter to our security swirling around us… changes in the fortunes of war in Afghanistan and ongoing unrest in Iraq… groundswells of change in the ‘Arab Spring’… widespread unrest in Syria, Yemen and some Gulf states… the ousting of regimes in Tunisia Libya, Egypt, bringing with it all the uncertainty of the ‘new’… Economic shocks closer to home … unprecedented riots and lawlessness in the UK.

So state power has become increasingly concentrated at its executive pinnacle. This new political setup also corresponds, independently of intention or design, to the existing narrow allocation of wealth and social power, which it exists to protect, and which nowadays accrues to a tiny financial aristocracy.

But too great a compression of political and social power may limit the stability of status-quo institutions.

If Australia is about to have, as Ross Garnaut warns, a decade like the 1930s (replete, so he says, with spending cuts like the Premiers’ Plan!), then preservation of the existing order will demand assistance from sources outside the propertied classes and the state leadership.

Creating what members of the policy elite call ‘consensus on the need for reform’ requires the active participation, connivance and unwitting support of various other social fractions.

Treasury Secretary Martin Parkinson has suggested that the policy elite must draw lessons from the 1980s, when ‘a general agreement had formed among academics, policymakers and commentators’ on ‘the need for reform.’ The ‘government of the day then identified, prioritised and built community support for particular initiatives’.

Similarly Garnaut, for his part, mentioned in his recent interview with the Financial Review how under the Hawke-Keating Labor governments a ‘long period’ of ‘public fiscal restraint and incomes [i.e. wage and salary] restraint’ was made ‘politically possible’. This political feasibility derived, he said, from the willing participation of various ‘sectional interests’ in a common project.

Who were these ‘sectional interests’ that provided ‘community support’, and what did the latter consist of?

During the 1980s Garnaut was a senior economic advisor to Hawke. What he and Parkinson now laud about this period, and present as an exemplary model for the present day, involved (as I’ve written several times recently) the fulsome participation of the trade-union leadership, including key Stalinists, in a deliberate elite project (the Prices and Incomes Accord) to reduce the wages, job security and working conditions of Australian employees.

Three decades later, union officials still play the same parasitic foreman or overseer role. They suppress the political activity of employees and help to control the production process on behalf of owners.

Yet their part has waned somewhat following changes during the intervening years: the recomposition of Australian industry and the workforce (especially the reduction in heavy industry and manufacturing, and the rise of casual and intermittent work), the changed place of ‘corporatist’ institutions in negotiations over wages and conditions, the enhanced level of direct monitoring and supervision of workers allowed by new technology, the steep reduction in trade-union membership, and the acquisition by top union officials of social privileges that make plain the incentives governing their backroom efforts ‘on behalf’ of employees.

This removal of the social-democratic safety valve has increased the importance, for the pursuit of elite aims, of various other political diversions, theoretical casuistries and intellectual blind channels. These are presented to the working population by avowedly critical, ‘progressive’, left-wing, ‘radical’ and even ‘socialist’ groups and perspectives.

Some of the latter will, over the coming years, amid an ‘accumulation of social fury’, help to harmlessly usher any popular ‘sense of grievance’ into Schama’s ‘safe channels’, preserving the existing distribution of property rights.

First of all is the familiar, time-honoured presentation of Labor (and its partners among the Australian Greens) as the ‘lesser evil’ to an Abbott-led Coalition. Once in power, it is said, the latter will inflict truly swingeing cuts, courtesy of a ‘budget razor gang’ (for whom state conservative governments have provided a ‘dress rehearsal’). To prevent this, the only prudent course of action available to a ‘progressive’ person is electoral support (holding one’s nose, if one must) for Labor or the Greens.

This cynical position is regularly coupled with the suggestion that austerity measures are imposed only because the ruling elite (or a portion of it) is in the grip of a misguided ideology. Rather than knowing their own interests and ruthlessly pursuing them, state managers and the propertied classes are said, on this argument, not to know what’s good for them. They are indulging, in fact, a bizarre ideological whim or fashion (‘neoliberalism’, etc.) from which they may conceivably be freed.

This conception is, in turn, related to an ‘activist’ brand of politics. An extra-parliamentary protest milieu has existed since the 1970s (when e.g. The Wilderness Society, Australian Conservation Foundation and Nuclear Disarmament Party were born). During this time it has served a useful purpose for the ruling elite, absorbing discontent and trafficking in various political illusions.

In these circles, the ALP and trade-union leaders are considered susceptible to being ‘pushed leftward’ by protest, suasion, cajoling, appeals to their reason or better nature, importuning, threats, urging, petitioning, etc. The ascent of a new ALP government or leader, the occurrence of an election, or the holding of a party or union conference, is inevitably presented by these groups as an ‘opportunity’ for activists to apply ‘pressure’ from below for better and more progressive policies.

Thus, even while the senior state officials of Australia (and the US, France, Italy, UK, Spain, Ireland, Greece, Portugal, etc.) insist in unison that existing living standards cannot be maintained, these activist groups imply that salvation may yet be won under the prevailing order. This licenses ‘left-wing’ political strategies based on that goal. Their upshot is to prevent any kind of ultimate break with the parliamentary system or independence from the political agents of capitalism.

These views thrive amongst well-meaning but politically confused and uneducated people, such as those students who make up the recruiting pool for various campus ‘radical activist’ groups.

But the persistence of these political illusions isn’t explained by the ignorance and gullibility of young people. There are social layers whose entire existence depends on such illusions enduring, and on the resulting perpetuation of existing institutions.

The role of full-time union officials, for example, has already been described. But we must look more widely.

Among these circles also dwell the practitioners of identity politics.

The most blatantly ambitious branch of this species is devoted to the particularist pursuit of careerist benefits for individuals on the basis of gender or ethnic identity. (The spoils may include a larger share of public-service jobs, parliamentary seats, procurement contracts, cheap loans, entry to university courses leading to professional accreditation as lawyers, doctors, etc.)

This lucrative arm of the business calls forth, and cross-subsidizes, its own pressure-group penumbra of lobbyists, journalists, ‘radical’ activists, etc.

The latter encourage or participate in protest politics, as described above. In this they insist on the political exclusivity of the oppressed group in question, which is held to possess its own specific goals  derived from the supposedly unique and shared interests of members  pursuit of which requires independence of ‘movement’ or organization. The fundamental interests of group members (e.g. women, young people, Dalits, ‘yellow people’ or Indigenous people) are held to conflict, in one way or another, with the interests of non-members of the category (e.g. men, old people, non-Indigenous people, etc.). The common interest of all group members, so it is said, is best served by supporting the advancement of suitable group representatives. Once in a position of authority or wealth, the latter will bestow favours that benefit the entire group.

In present Australian conditions, identity politics assumes an especially crucial role.

Of the meagre public goodwill that exists for Julia Gillard’s Labor minority government, a large share is accounted for by appeals to professional feminism. A recent opinion column published in Fairfax newspapers, written by a national coordinator of EMILY’s List, shows the depths of toadying, deceit and self-abasement to which members of this milieu must descend.

This type of article will be familiar to US readers of The Nation. The likes of Katrina vanden Heuvel and Katha Pollitt can always be relied upon to concoct a pressing need for women to support the current Democrat candidate.

Political leaders, in Australia and globally, are announcing themselves ever more brazenly as the servants of banks, creditors and the asset-owning classes. This service will now come, they declare, at the cost of the living standards of employees, their dependants and the broad population.

In pursuit of this project, the propertied classes form as ever a natural constituency. The massed machinery of state repression stands by, ready for use if a ‘dangerously alienated public’ threatens to turn the world upside down. For the moment, various symptoms of political ignorance and disorientation lead restless elements among the propertyless class into traps, diversions and crippling delusions. Meanwhile, in these circumstances, from outside elite layers, practical support for the prevailing order must increasingly depend on the adherence of political constituencies mobilized via flimsy ‘identity-based’ campaigns.

‘Border protection’ and nationalization of the high seas

September 19, 2012

On any reckoning, the Australian government’s militarized ‘border protection’ regime has now endured for over a decade. Initially viewed by journalists and decried by left-liberal critics as a mere electoral manoeuvre, to be extended or retracted according to the public mood or change of government, it has instead hardened into a permanent standing feature.

It has resisted disbanding or reform, despite widespread opposition and notable failure to achieve the ends publicly adduced for it. Maritime patrols have multiplied and detention camps become encrusted. How to explain their emergence and survival?

Most discussions neglect a crucial aspect. ‘Border protection’ is made possible, and appeals to Canberra, thanks to the recent spread of state jurisdiction over parts of international waters.

The latter development, which has allowed ‘privatization of the oceans’ and extension of ‘national security’ bailiwicks, was described in the previous post.


How exactly have legal arcana about fisheries management, by swelling Canberra’s maritime jurisdiction, led to the Australian government’s ‘new regime’?

  1. Since the 1970s, the acquisition by states of limited jurisdiction and exclusive economic rights over adjacent coastal waters and extended continental shelves has meant growth in that portion of the world’s territory in which states can (practically speaking) restrict the movement of people.
  2. Non-nationals have kept legal rights to innocent passage through these (international) waters, and vessels there remain under flag-state law.

    But coastal states have gained implicit authority to regulate almost every other activity  including transit with the aim of arriving in a country to seek refuge there. (The explicit authority to prevent and punish infringement of domestic immigration laws begins outside a state’s territorial sea, in its contiguous zone.)

    This has implied a paring back of the right to seek asylum from persecution.

    This right had always, from the beginning, been heavily circumscribed and sparingly awarded, and was trumped whenever it was held to conflict with any other prerogative. The provisions of refugee law, according to one Australia High Court judge, do not impose any ‘limitation upon the absolute right of member States to regulate immigration by conferring privileges upon individuals… [No] individual, including those seeking asylum, may assert a right to enter the territory of a State of which that individual is not a national.’

    ‘Border protection’ policies have thus been a predictable result of circumstances in which the free movement of people conflicts with the sovereign right of states to determine who may enter and remain within their territorial borders  and in which state jurisdiction has been extended into places where it didn’t previously apply.

    Creation of exclusive economic zones (EEZs) has endowed states with maritime interests of high strategic worth. These naturally have become matters of ‘national security’, to be preserved if necessary by the armed forces.

    Within their respective EEZs, states have been obliged to place their coercive instruments at the service of locally owned firms, to pursue and protect these firms’ property claims in assets (fisheries, offshore oil and gas reserves, elevated platforms, drilling rigs, etc.) against interference, encroachment, seizure, expropriation or unilateral transfer of ownership.

    This has licensed states to undertake enforcement measures within maritime zones: patrols, emplacement of sensors, surveillance, reconnaissance, interception, forced boarding, detention and confiscation of vessels, declaration of ‘exclusion zones,’ declaring approved sealanes, etc.

    No dramatic leap of logic or political principle has been involved, therefore, when it has been declared that EEZs, contiguous zones and territorial waters, those beleaguered redoubts of ‘national sovereignty’, should also be protected against ‘unauthorized maritime arrivals’.

  3. Nonetheless the much-stated need to protect Australia’s vulnerable maritime approaches against ‘boat people’ has been a pretext which state leaders have deliberately used to pursue Canberra’s strategic objectives.



I’ll say a little more about the implications of this first point towards the end of this post, but will explain the second point firstly.

In 2004 Canberra announced creation of a Joint Offshore Protection Command (now Border Protection Command) comprising ADF and Customs personnel. It would be responsible for Operation Resolute, a joint patrol of Australia’s EEZ.

The Navy website for this program boasts that its ‘Area of Operations covers approximately 10% of the world’s surface.’

Along with these operations  centred on the energy-rich Timor Sea and the northwest coast abutting the Indian Ocean, off the Pilbara and Kimberley  the BPC was to oversee a Maritime Identification Zone.

The latter would cover all vessels passing within 1000 nautical miles of Australian coastline. It would oblige all vessels seeking to enter Australian ports, as well as those merely having strayed inside the Australian EEZ, to provide Australian authorities with information regarding location, speed, crew, cargo and course of transit.

International law provided no basis for imposing such requirements on foreign-flag vessels. The area involved stretched into the territorial waters of Indonesia, Papua New Guinea, East Timor, New Zealand and New Caledonia.

The strategic considerations underlying such policies are pointed to in the ADF’s 2012 force posture review. Canberra’s military planners note that, amid shifts in the ‘Asia-Pacific strategic balance and great power competition’, including Washington’s regional ‘pivot’, Australian forces must be prepared to take part in ‘coalition operations in the wider Asia-Pacific.’

They note that ‘securing sea lines of communication and energy supplies will be a strategic driver for both competition and cooperation in the Indian Ocean region to 2030, and Australia’s defence posture will need to place greater emphasis on the Indian Ocean, as indicated in the 2009 Defence White Paper.’

Defence Minister Stephen Smith spoke of developing a ‘force posture that can better support operations in our northern and western approaches, as well as operations with our partners in the wider Asia Pacific region and the Indian Ocean Rim.’

And what might such joint operations be?

In 2010, military strategists from the US Center for Strategic and Budgetary Assessments presented Pentagon planners with a ‘candidate’ air-sea battle campaign for use in ‘potential conflicts involving China that could arise in the Western Pacific.’

In the envisioned theatre-wide combat, US naval forces would focus on ‘high-priority’ anti-submarine, anti-surface, anti-missile warfare and area denial in the East China and South China seas.

Washington would depend on allies (with Japanese and Australian forces foremost) to engage in ‘distant blockade’ and interdiction against China-bound seaborne trade:

In the event of a protracted conflict, choking off Chinese seaborne commerce to the maximum extent possible would likely be preferred to conducting large-scale operations in China itself.

Indonesia maritime chokepoints

US and allied forces ‘could exploit the Western Pacific’s geography, which effectively channelizes Chinese merchant traffic’:

Traffic bound for China would be intercepted as it tried to enter the southern portions of the South China Sea, i.e., beyond range of most PLA A2/AD systems, from the Malacca, Singapore, or major Indonesia straits…

Australian and other allied forces would thus have three key tasks:

      1. Securing “rear areas” by neutralizing any PLA units forward-deployed to such areas;
      2. Establishing a “distant blockade” to interrupt Chinese seaborne commerce; and
      3. Cutting off or seizing Chinese offshore energy infrastructure.

Australian equipment and personnel would be useful for such maritime interception operations ‘since they generally would not involve major combat, allied aircraft and ships too vulnerable for employment against the PLA’s A2/AD battle network… These forces would patrol key chokepoints in Southeast Asia as the central element in a distant blockade’:

Lastly, “distant blockade” operations could also require two additional operations: disrupting Chinese undersea telecommunications lines; and seizing or destroying of Chinese undersea energy infrastructure and/or disrupting undersea energy flows to China.

Carrying Out Peripheral Operations to Secure “Rear Areas”

Over the past several years, China has helped develop port facilities in places like Gwadar (Pakistan), Chittagong (Bangladesh), and Sittwe (Burma) that could be used for military purposes. It recently deployed naval forces off Somalia in conjunction with anti-piracy operations for the first time, and PLA officials have floated trial balloons about acquiring access to forward bases. It continues to wage vigorous “dollar diplomacy” with various statelets in Oceania that could eventually translate into access to facilities for military purposes. In short, China appears to be developing options for creating a network of overseas military bases stretching from Africa to Oceania. Such presence would be consistent with the actions of many other rising powers throughout history; however, it could have serious implications for the military balance and consequently for US security and the security of its allies.

Preserving a stable military balance under these conditions would necessarily require the United States and its allies to maintain the capability to neutralize PLA bases outside the Western Pacific. This would involve removing the threat of diversionary PLA operations.

Such peripheral operations could take some time to complete, given the large distances between theaters of operation. Still, the United States and its allies would enjoy two important advantages. First, assuming the US fleet controls the seas, allied forces could take the lead in many of these peripheral operations, with US forces in support. For example, Australia is the most powerful state near Oceania, and has highly capable military forces that could conduct operations to neutralize any small PLA forces in the region.

Thus Canberra’s strategic focus has, since the 1990s, been on establishing its military capacity for sea control and power projection in nearby regional straits (several of them key global maritime chokepoints) and on countering Beijing’s so-called ‘string of pearls‘.

Strategists such as Ross Babbage (in 1988) have noted the convenient placement, for this purpose, of Australia’s Indian Ocean External Territories:

Christmas and the Cocos Islands could serve as convenient forward refuelling and staging points for aircraft and ships in the north-western approaches… [Access] to these territories would also extend Australia’s reach into the surrounding region for surveillance, air defence and maritime and ground strike operations. The islands could, in effect, serve as unsinkable aircraft carriers and resupply ships.

For public consumption, politicians cite the geographic location of Australian offshore oil and gas reserves and the proximity of ‘failed states’.

Refugee boat arrivals to the Cocos Islands, Ashmore and Cartier Islands and Christmas Island also provide a useful pretext for militarizing the portions of the Indian Ocean, Timor Sea, Arafura Sea and Coral Sea that fall within the Australian EEZ.

The transit of ‘boat people’ has granted Australian authorities a convenient and plausible reason to undertake patrols and inspections, place sensors, conduct surveillance and reconnaissance, engage in interception and forced boarding, detain crews and seize vessels in these areas.

Meanwhile the ‘fine strategic location’ of Australian offshore detention facilities in the Admiralty Islands and Nauru is apparent from a ‘cursory glance at a map of the Pacific’, or some acquaintance with naval history.

Manus Island RAN

manus 1948

Of course, Australia’s state leadership does not spell out publicly, before a mass audience, its strategic goals and its tactics for meeting them.

Nonetheless it sometimes, for various reasons, finds it necessary or expeditious to allow certain matters to appear, through reliable media conduits,  ‘in front of the children’, if only to rouse electorates in their support.

One of the basic tasks of electoral politics (and its satellites in the media and academic worlds) is to mobilize and harness a mass constituency behind narrow elite objectives. In the present context, stoking of anti-refugee attitudes, among its other benefits, allows such a happy convergence of popular feeling with ruling-class aims.

Left-liberal critics of ‘border protection’ policies attribute their introduction to  ‘perennial’ Australian popular chauvinism and anti-immigrant racism. In reality, public attitudes on such matters have no existence outside of their shaping by professional opinion makers, and exercise no independent influence on the initiation of state policy.

Mass opinion, and particularly that of ‘activist’ groups, may nonetheless provide a useful tool or lever for achieving elite objectives, when the latter conflict with goals held by the ruling elite of another state.

Thus the respectably ‘progressive’ concern for threatened whales and endangered southern bluefin tuna may help satisfy Canberra’s strategic purposes, in another region mentioned in the ADF’s recent force-posture review:

Increased pressure on resources may see interest in engagement in the Antarctic continent… Increased resources for relevant agencies, not just Defence, will be necessary to strengthen Australia’s presence in Antarctica and the Southern Ocean in the face of likely future challenges.

Or consider Australian 1999 military intervention in Timor-Leste, which various activist groups conceived as supporting local ‘self-determination’, and thus worthy of salute. This operation (repeated in 2006) secured maritime control over the deepwater Ombai-Wetar Straits, a vital avenue off the northern Timor coast for US submarines passing between the West Pacific (and East Asia) and the Indian Ocean.

The East Timor matter illustrates what concerns lie behind Canberra’s attitude to maritime law and seaborne traffic.

In 1973 the UN Convention on the Law of the Sea convened in New York, with US delegates holding the following strategic priorities:

Because of dependence on oil and other resources, and the need of the military to pass through and over straits and in zones of economic jurisdiction, one of the primary security objectives of the United States may become the achievement of working relationships with coastal developing states.

The U.S. Government maintains that the invulnerability of its nuclear missile submarines depends on their ability to pass through international straits submerged and unannounced. International agreement on a 12-mile territorial sea would place dozens of international straits under the “innocent passage” regime of the territorial sea unless the demands of maritime states for unimpeded passage are agreed upon. (The legal regime of “innocent passage” permits transit by all ships except those which threaten the peace, good order or security of the coastal state. The lack of a more precise definition has left coastal states in a position to determine for themselves what is or is not “innocent passage.”)

Five international straits have been identified as essential for passage by U.S. missile submarines: Gibraltar, Malacca, Lombok, Sunda and Ombai-Wetar. Two of these are too shallow for underwater passage, the other three are controlled by states with which the United States maintains good relations and working modus vivendi, and which have and probably will continue to permit passage for submerged U.S. submarines.


The navy has been concerned that the breadth of the continental shelf under national jurisdiction might limit the freedom of the United States to place listening devices off the shores of foreign countries.


In addition to the questions of transit through straits and submarine tracking, a third strategic concern is that zones of extended coastal state jurisdiction will curtail conventional naval operations.

It was declared ‘essential’ for the passage of US ballistic missile submarines between the Western Pacific (and Northeast Asia) and Indian Ocean that these straits be ‘controlled by states with which the United States maintains good relations and working modus vivendi, and which have and probably will continue to permit passage for submerged U.S. submarines’:

The two Indonesian straits, Lombok and Ombai-Wetar, might be closed to unannounced underwater passage of U.S. SSBNs in any case because according to Indonesia’s interpretation of the archipelago principle of enclosed waters, they are considered internal rather than international waters.

On the other hand, the United States seems to have a working arrangement with Indonesia for passage of SSBNs through its straits though the Indonesian government has argued that the archipelago principle does not infringe on innocent passage, it requires prior notification of transit by foreign warships and has raised questions about the innocence of supertanker passage because of the danger of pollution.

In spite of Indonesian jurisdictional claims, the United States maintains that the Indonesian straits are international. According to press accounts and Indonesian sources, however, the United States routinely provides prior notification of transit by surface ships and presumably (if only as a practical convenience) relies on some special bilateral navy-to-navy arrangement for submerged passage, consistent with the requirements of concealing the details of SSBN passage from foreign intelligence.

Although this modus vivendi is rather contingent, it satisfies America’s needs as long as an Indonesian government as friendly as that of Suharto is in power.

Such concerns were impressed upon the Australian prime minister, visiting Washington in 1976 after Jakarta had annexed East Timor. The Fraser government’s negotiating position at UNCLOS dutifully aimed to ‘bridge the differences’ between the United States and smaller littoral and archipelagic states.

And, with that, I’ll now finish this post by returning to the first point mentioned at its beginning.

The gradual postwar development of the international law of the sea (culminating in the 1982 UNCLOS), under which states have extended jurisdiction into their adjacent coastal waters, took place during the same decades as codification of international refugee law. As long ago as 1930, at the League of Nations Conference for the Codification of International Law held in The Hague, delegates addressed the issues of territorial seas and nationality laws.

This historical coincidence does not imply complementarity. People’s right to free movement conflicts with the territorial sovereignty of states, and with the latter’s jurisdiction over borders and immigration. The first right retreats when the other privilege is advanced, just as personal (citizen) rights and property rights generally move inversely.

In recent decades, the acknowledged right of individuals to seek asylum from persecution has been limited and rolled back by governing elites worldwide. Political leaders have each asserted their state’s pre-eminent authority to control who may enter and remain within the territories over which it holds jurisdiction. (From this follows matters such as the incarceration of asylum seekers during the ‘process’ of status determination.)

The notorious 2001 assertion by the Australian Prime Minister  ’We will decide who comes to this country and the circumstances in which they come’  expressed both a positive fact and a normative position: the state has sovereign authority over its territorial borders, and can set limits to migration flows.

Though a chorus of left-liberal groups and bien-pensant commentators shrieked at Howard’s words, none of them ever voiced a fundamental objection to the notion that a state has the sovereign right to determine who can enter and remain within its territory, and can set restrictions on numbers and categories of immigrants.

Seeking to make the best of this principle, rather than rejecting it, these ‘progressive’ voices merely plead that the state’s decisions (on refugees and immigration) should be made in more ‘humane’ fashion. (Thus the Australian Greens have repeatedly insisted that an increase in Australia’s ‘humanitarian program’ for refugees and family reunions should be balanced by a reduction in the intake of ‘skilled’ migrants, whom they have described as ‘queue jumpers’.)

Similarly, as described in the previous post, the Greens and associated conservationist groups uphold Canberra’s contested jurisdiction over portions of international waters (e.g. Australia’s Antarctic EEZ). They merely suggest that this control could be exercised better, e.g. total allowable catch of various fish species should be set at a ‘sustainable’ level.

On the other hand, the principled position  for socialists and for even minimally ‘left-wing’ people  is that the world’s oceans and their resources are not susceptible of appropriation by any state or private party  and that territorial states are not entitled, by virtue of their jurisdictional claims, to restrict the free movement of people (whether that movement involves flight from imperial violence, national dismemberment and state breakdown, or the pursuit, in a world of wage differentials between regions of varying levels of development, of a decent life in a country with jobs, roads, schools and sanitation).