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President Trump’s tariffs and duties and the transformation of the world economy

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The 45thPresident of the United States, Donald J. Trump, keeps on repeating he wants to make America “great again”.

Hence, first and foremost, he wants to reindustrialize his country which, in fact, is currently the world champion in  the loss of productive, manufacturing or industrial companies.

The birth of a country that now consumes without producing much, namely the USA, materialized initially under Reagan’s Presidency, but continued rapidly with the successive Presidents.

For example, at the end of the 1960s, the US industrial labour force was at least 35% of the total number of people employed, while currently this labour force is only 20%.

Since 2001 over 70,500 companies with more than 500 employees have been closed down definitively.

The Gospel of Matthew (4:1-11) perfectly clarifies the situation of the post-productive post-economy – if we can use this expression.

Jesus Christ, who was hungry after having fasted forty days and forty nights in the desert, was tempted by the devil who told him: “If you are the Son of God, command these stones to become loaves of bread”.

Jesus answered to the devil: “Man shall not live by bread only, but by every word that comes from the mouth of God”.

Hence Jesus – as a great economist – explains to the devil that we must not change the Creation and replace God, but  instead follow Smith’s liberal and socialist labour theory of value.

Without the processing and transformation of materials – according to their laws – there is no value and therefore not even price.

Only manual or intellectual work, in fact, does transform materials, but never creates and hence does not even destroy them.

Hence we should produce only those goods and services that the market really asks for, without useless miracles, which are already incorporated in the Being as it is.

But let us revert to the economy of the powerful and stable North American de-industrialization process.

However, some sectors of US companies are still active, such as semiconductors and electronics, while clothing, for example, has fallen by 60% despite the US population has almost doubled since 1950.

When this happens, high value-added work increases, while all productive activities having a low incidence of unit value have definitively been delocalized outside the  USA (and the EU – although in this case, the debate has a political, military and strategic nature).

It is worth recalling that immediately before the first subprime crisis of 2016, the US industrial production had fallen by 15% – and this was certainly not by mere coincidence.

Later it started to grow again by approximately 4% – with many sectoral differences -in the years in which the United States managed to move their financial crisis elsewhere.

But let us revert to the factories that the US President deems necessary to make America great again, and to the specific policy of import and export duties imposed by President Trump in record time.

In fact, on March 1, 2018, the President announced it would imposed a 25% customs duty on steel imports from China and a 10% additional one on aluminium imports from China.

This, however, increases the production costs of the aforementioned US sectors that still handle and stand up to global competition, which obviously recoup the money lost from end customers, by increasing prices.

If – like the USA, but perhaps not for much longer – a country still lives on electronic manufacturing and components, the increase in the factory unit prices leads to an increase in the final price and, hence, restricts domestic or foreign markets.

Any price increase, albeit small, leads to a decrease in the buyers of those goods. Pareto taught this to us ad nauseam.

But clearly it was not enough.

Later, on April 3, President Trump announced he would  impose further 25% duties on additional 50 billion Chinese imports of electronics and aerospace products, as well as  machine tools.

This means that – paradoxically, but not too much –  President Trump wants to slow down precisely the  productive sectors that China deems strategic for the future, as shown in its Plan for 2025.

In 2017 China produced a total of 23.12 trillion US dollars, calculated on the basis of power purchasing parity (p.p.p.).

Currently the EU only ranks second, with 19.9 trillion US dollars, again calculated as p.p.p. In 2016 it was the world’s top  producer.

The United States only ranks third, with a yearly product of only 19.3 trillion dollars.

Financial stones cannot be turned into loaves of bread.

In spite of everything, China has a yearly per capita income of 16,600 US dollars, while the US yearly per capita GDP is equal to 59,500 US dollars.

Scarce domestic consumption, all focused on exports, is the Chinese model that has developed since Deng Xiaoping’s “Four Modernizations”, which survives only in an area in which all macroeconomic variables are not left to some “market” invisible hands, but to a central authority.

However, this is exactly the reason why China is the largest world exporter.

Hence it rules end markets.

In 2017, it shipped abroad 2.2 trillion US $ worth of goods and services.

Currently 18% of Chinese products are exported to the United States.

This much contributes to the US trade deficit, which currently amounts to 375 billion US dollars.

China is also the second largest importer in the world, to the tune of 1.7 trillion dollars in 2017.

The mechanisms of interaction between China and the United States, however, are even more complex than we could guess from these scarce data and statistics.

It is not by mere coincidence that China is still the largest holder of US public debt.

In January 2018, China held 1.2 trillion in US government debt securities, i.e. 19% of the US public debt held by foreign investors.

A very powerful monetary, political, strategic and even military leverage.

Obviously China buys US securities to back the value of the dollar, to which the yuan is pegged.

However, it devalues its currency (and hence the US dollar) when Chinese prices need to be kept competitive.

Therefore, while the United States wants to increase the yuan value, with a view to favouring its exports, China threatens to sell its US public debt securities immediately.

The dollar increased by 25% between 2016 and 2016, but since 2005China has devalued the yuan.

A very clear example of aggressive monetary pegging.

Moreover, the issue of China’s unfair commercial behaviour is now long-standing and it was also raised by many candidates to the US presidential elections.

In fact the success of Paulson, the former US Treasury Secretary, was to reduce the American trade deficit with China and to later ask for opening to foreign investment in key sectors of the Chinese economy.

For example in the banking sector, thus putting an end – in some cases – to the Chinese practice of export subsidies and administered and capped prices.

Just deal with realism and intelligence and Chinese Confucianism can find solutions to everything.

The other side of the Chinese miracle, however, is the very high debt of companies and households, which is obviously  still connected to the balance between the yuan and the US dollar.

In this case, however, the programmed slowdown of the Chinese GDP growth and the limits on strong currency exports, as well as the control of wages and profits are enough.

But let us revert to President Trump’s tariffs and duties.

In fact the US President has imposed these new tariffs and duties on Chinese imports to force China to remove the  foreign investors’ obligation to transfer technology and patents to their Chinese partners.

Nevertheless China trades many productsit could also manufacture on its own just because it wants to fully open Western intellectual property rights for its companies.

A few hours later, however,  China responded to President Trump with a 25% increase in duties on 50 billion dollars of US exports to China.

On April 6, President Trump further reacted by stating he would call for the imposition of other duties on additional  100 billion dollars of imports from China.

It is worth noting, however, that this accounts for only  a third of total US imports from China, which is considering the possibility of responding harshly to President Trump by steadily increasing tariffs and duties for all US products entering Chinese markets.

Besides the issue of relations with China, however, the other side of the US tariff and duty issue is the NAFTA  renegotiation, officially requested by President Trump on August 16, 2017.

It should be recalled that the North American Free Trade Agreement is the largest commercial agreement currently operating in the world, signed by Canada, USA and Mexico.

Firstly, President Trump wants Mexico to cut – almost entirely – VAT on imports from the USA and put an end to the programme of maquiladoras, i.e. the factories owned by foreign investors in Mexico, in which the components temporarily imported into that country under a duty-free scheme are assembled or processed.

The maquiladoras programme started in 1965 to reduce the huge unemployment in the North Mexican regions, but currently there are at least 2,900 such factories between Mexico and the USA producing 55% of total Mexican export goods.

They mainly manufacture cars and consumer electronics, which are exactly the sectors that – as already seen – President Trump  wants to revitalize.

Obviously the current US Presidency wants to dismantle the maquiladoras on its Mexican border, where 90% of such companies are located.

Thanks to these special factories, Mexico competes directly with US workers, considering that the local Central American workforce is much cheaper.

Thanks to this mechanism of cross-border production outsourcing – between 1994 and 2010 alone – 682,900 US jobs moved to Mexico, with 80% of US jobs lost in the manufacturing sector.

Moreover, again due to NAFTA, as many as 1.3 million jobs in Mexican agriculture were lost.

In fact, following the removal of duties between the USA and Mexico, the latter was flooded with US produce below cost and subsidized by the State.

All this happened while the Central American administration cut agricultural subsidies – which will soon happen also in the crazy EU – and focused the little State aid left for agriculture to the big haciendas, thus destroying and ruining small farmers.

Liberal and free-trade masochism.

NAFTA, however, also has many advantages for the United States.

Without the tripartite inter-American agreement, North American food prices would be significantly higher, while also oil and gas from Mexico and Canada would be much more expensive for US consumers.

As Carl Schmitt taught us, the American Monroe Doctrine (epitomized by the slogan “America to the Americans”) was developed above all against Europe. Nevertheless, the agreements like NAFTA allow to share – at least partially – the benefits of increased trade between the USA, Canada and Mexico in a less asymmetric way than usual.

The US primacy theorized by Monroe in 1823 and later rearticulated by Roosevelt in his State of the Union address in 1904, with the Roosevelt Corollary whereby  “chronic wrongdoing may in America, as elsewhere, ultimately require intervention by some civilized nation and force the United States, although reluctantly, in flagrant cases of such wrongdoing, to the exercise of an international police  power”, holds true also at economic level.

But are we currently sure that the most civilized nation is still the Northern one?

Just to better understand what we are talking about, it should be noted that the NAFTA agreement is made up of 2,000 pages, with eight sections and 22 chapters.

As such, it is currently worth 0.5% of the US GDP.

Since the official implementation of this agreement in the three countries which have adopted it, North American exports have created as many as 5 million jobs, with the creation of 800,000 additional jobs in the USA alone.

Nevertheless approximately 750,000 other jobs have also been lost in the United States alone, mainly due to the transfer of US activities to Mexican maquiladoras.

Hence a slight surplus.

Moreover, NAFTA has anyway ensured the status of “most favoured nation” to Canada and Mexico and has removed all tariffs and duties for the goods produced in one of the three Member States. It has finally established certain and clear procedures for settling trade disputes between the companies of every country belonging to it.

But above all NAFTA enables the United States to better compete with EU and Chinese products, by reducing the prices of the NAFTA goods wherever they are produced.

Also in this case, however, President Trump has threatened to walk out of the inter-American trade treaty and impose a 35% duty on imported Mexican products.

The aim is obviously to bring back investment in the maquiladoras to the United States.

Is this useful, also with regard to an evident trade war with the EU, Japan and China, as usual?

Is there currently sufficient real liquidity in the United States to back the supply increase which is thus created, with the return of all these productions back home?

Or is the idea prevailing of having everything be bought on credit, with all the consequences we can easily imagine?

Or is it possibly a matter of sending the NAFTA productive surplus back to European, Chinese and Asian markets?

Moreover, with specific reference to another multilateral trade agreement, the Trans-Pacific Partnership (TPP), President Trump announced he would like to establish a series of new bilateral trade relations that the US President likes more than the multilateral ones.

It is worth recalling that the TPP applies to the USA and to other 11 countries around the Pacific Ocean, namely Australia, Brunei, Canada, Chile, Malaysia, Japan, Mexico, New Zealand, Peru, Singapore and finally Vietnam.

All these countries together account for 40% of the total global GDP, which is currently equal to 107.45 trillion US dollars annually. They are also worth over 26% of world trade per year and as many as 793 million global consumers.

Obviously the list does not include China and India, considering that the TPP architecture has been designed to surround, close or at least limit the growth of the two great Asian countries.

President Trump also wants to renegotiate the TPP, which  by2025 is expected to increase trade among all Members States to the tune of 305 billion us dollars per year.

Hence if President Trump walks out of the TPP, many Member States will look to China for replacing the USA – and, indeed, many of them are already doing so.

Therefore the US President’s idea is to make the United States grow – through this wave of various forms of protectionism – by at least 6% a year, with an expected 3% net tax increase.

Too much. It would inevitably lead to high inflation and the classic boom-bust cycle.

If the economy grows by 2-3% a year, the cycle can expand almost indefinitely.

Conversely, if there is too much money looking for too few goods to buy, inflation will always come and the booming phase will stop all of a sudden.

Hence the bust materializes, with the quick reduction of wages and credits, as well as with an increase in prices and interest rates.

Therefore President Trump’s very dangerous idea is that –  in such a monetary and economic context -the United States can keep on borrowing all the liquidity needed because, as he said recently, “we never default, because we can print our currency”.

This is true. But if too many green bucks are printed, interest rates will rise immediately and this new version of Reagan-style supply-side economics will be stopped.

Finally a very serious recession would materialize, which currently would not be so easy to export to “friendly” countries.

Recently the dollar area has much shrunk.

It is no longer true –  as the former US Treasury Secretary John Connally once told to his European colleagues – that “the dollar is our currency, but it is your problem”.

So far, however, President Trump has decided 29 commercial or financial deregulation operations and over 100 internal guidelines and directives to the Administration, as well as other 50 new global market rules discussed by the Congress.

On February 3, 2017, the US President also decided to reform and almost repeal the rationale of the Dodd-Frank Wall Street Reform Act, with rules and regulations further reducing checks and audits on banks, which are no longer obliged to send to the Treasury Ministry data and information about the loans granted.

Moreover the banks with clients’ deposits lower than 10 billion US dollars must not even abide by the Volcker Rule, which forbids banks to use clients deposits to make profit.

Therefore, since 2015, banks cannot hold hedge funds and private equity funds.

Nowadays, however, with the reform of the Dodd-Frank Act, many credit institutions can avoid these difficulties and restrictions and play roulette with clients’ deposits.

For the new US lawmaker, Volcker’s and Greenspan’s policy was a way to avoid the implosion of the US financial system, after the fatal end of the Glass-Steagall Act which had been lasting since 1933.

It is worth recalling that the Glass-Steagall Act had come into force when the Roosevelt’s Presidency decided to imitate the Fascist legislation of the new separation between deposit banks and merchant or investment banks.

Banks did not want the Glass-Steagall Act because they wanted to be “internationally competitive”.

They also wanted to create money at will, regardless of the relationship between investment and collection.

What happened is before us to be seen.

President Trump wants to abolish even the Departments of Education and Environmental Protection, with an increase in military spending that is supposed to lead to a total public deficit of 577 billion US dollars.

Hence, in this new context, can the US Presidency avoid the Chinese commercial pressure and also ensure that the jobs repatriated to the USA from NAFTA, from negotiations with Japan, from the TPP and the rest of the multipolar trade system are such as to back the dollar without creating excessive inflation?

Moreover, all international trade experts agree that it is not the simple and traditional tariff barriers – but rather the non-tariff ones, which are very fashionable today – to cause real problems.

In short, we need to consider trade policy together with  strategy: if US protectionism increases, the growth of peripheral economies will decrease.

Thust here will be increasing possibilities of crisis in developing countries, while China’s desire to replace the USA in multilateral economic mechanisms that directly affect it may increase enormously.

Also the desire of global US competitors, such as the EU, to replace US exports at unchanged rates – at least for a short lapse of time – may increase.

There is no need for dumping – non-tariff transactions and the quality standard of made-in-Europe products are enough.

Therefore, nowadays, nothing is certain.

Certainly not US protectionism, of which we have noted  the dangers for North America and also for its geo-economic partners. Not even universal free trade, which does not consider the political evaluations and the economic, monetary and military planning of the various world commercial areas, is feasible and practicable.

Indeed, as in military policy, a great agreement – as the initial GATT was – is required in the current world market, with a view to establishing – for at least ten years – the areas and spheres of economic and productive influence and their possible future changes.

There is no free trade without planning.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

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How terrible the consequences of the Cold War can be

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Image source: kremlin.ru

After World War II, the conflict over superiority between the United States and the Soviet Union began. The US-led NATO and the Soviet-led Warsaw Pact were formed. Apart from this, of course, NAM is also formed. As a result, the world is divided into three parts. NATO and Warsaw Pact are in competition with each other. It caused widespread conflict and violence around the world. In many countries there is a change of power. Most countries increase military power. In this situation, the Soviet Union collapsed in 1991. As a result, America became the sole superpower and imposed arbitrary capitalism, free trade and domination in the world. With China’s unimaginable economic and military progress these days, it has inevitably come to dominate the United States. As a result, the United States considers China as its main rival.

It has already taken steps to suppress China by declaring its main enemy, the main tool of which is sanctions. China is also responding to America’s every move. Yet America did not give up. New President Biden has formed an anti-China military alliance – QUAD and AUKUS.  The QUAD formed on March 12 with the United States, Australia, India and Japan. On September 15, the top leaders of the United States, the United Kingdom and Australia signed the AUKUS Agreement. As a result, Australia will be able to build a nuclear-powered submarine for the first time, much faster than conventional submarines, harder to identify, submerged for months, and capable of launching long-range missiles.

Earlier, the United States gave this technology only to the United Kingdom in 1958. Currently, only six countries have nuclear submarines. Namely: 70 from USA, 40 from Russia, 19 from China, 10 from UK, 9 from France and 3 from India. Australia is going to be associated with it. In addition, there are nuclear bombs in the United States, China, Russia, the United Kingdom, France, India, Pakistan and Israel.

However, many countries, including Russia and China, have strongly opposed AUKUS. Russia says AUKUS is basically a hostile move against China and Russia. The alliance’s infrastructure puts the whole of Asia at risk. China says the deal poses a serious risk of nuclear proliferation. It will also threaten regional peace and stability. This is contrary to the spirit of the Nuclear Non-Proliferation Treaty. Earlier, the two countries had strongly opposed the two QUAD’s. Malaysia has said it will cause tensions in the Indo-Pacific region.

Pakistan says the establishment of AUKUS reflects the mentality of the Cold War. This alliance could bring a cold war to Asia. However, Indonesia has backed AUKUS. Extreme tensions have arisen between China and Australia since the establishment of AUKUS. France is also extremely angry. That’s because France and Australia signed a 90 billion deal in 2016 to build 12 submarines, which Australia scrapped after the establishment of AUKUS. So France is extremely angry with Australia. In this regard, the Foreign Ministers of the European Union have expressed their support and solidarity with France. France is also furious with the United States.

French Foreign Minister says President Biden is pursuing former President Trump’s one-sided policy, short-sightedness, brutality and disrespect for partners. America is trying to resolve this anger of France. After the establishment of AUKUS, it seemed that the QUAD was over. But no it didn’t. The top leaders of the QUAD met at the White House on September 24. In addition to these two alliances, the United States is creating a military zone in the Middle East. The US Fifth Fleet in the Middle East announced on September 8 that the United States was forming a joint naval drone task force in the Persian Gulf with Israel and several Arab countries in the Persian Gulf. It will include airborne, naval ships and underwater drones. Apart from this, America has good relations with some other countries. Notable among them are South Korea and Taiwan.

European countries have been members of NATO since its inception. But due to the unilateral policy of the United States, the EU is now talking about leaving NATO and building its own security system. The president of France said on September 28 that the EU must build its own security system. In addition, the EU countries have good relations with China. Speaking at the 11th China-Europe Strategic Dialogue on September 28, Borel, the EU’s chief security officer, said developing relations with China was an important EU agenda. Maintaining close and smooth communication between Europe and China is very important. In this situation, the EU will not be easily involved in anti-China activities at the instigation of the US. So is Turkey, a NATO member and longtime ally of the United States. Relations between the two countries have recently deteriorated over Russia’s S-400 air defense system. Turkey is importing these weapons from Russia despite US objections.

According to the Turkish president, if the United States had sold the Patriot missile system to Ankara, Turkey would not have bought the S-400 from Russia. In this situation, the presidents of Russia and Turkey met in Russia on September 30. During the meeting, Putin said that Russia-Turkey cooperation is running smoothly. Pakistan has become closer to China by severing its long-standing friendship with the United States. The United States has withdrawn all troops from Afghanistan after losing the war to the Taliban.

In addition, it has decided to withdraw all troops from Iraq this month. The country’s foreign minister has called for the withdrawal of all foreign troops from Syria. There are many American troops there. Iran’s Supreme Leader Khamenei has called for an end to foreign military intervention in the region. On the other hand, the United States is talking about a return to Iran’s nuclear deal. Even so, Iran-US relations will not be good. Because America has done the most damage to Iran. Meanwhile, America’s relations with most countries in South America, North America and Africa are not good. Many countries, including many Muslim countries, are unhappy with the United States for its blind support for Israel’s aggression. Many countries have been hit hard by America’s war on terror since the infernal events of 9/11. Muslim countries have suffered the most.

These countries will not easily forget that. The United States has stockpiled the Coronavirus vaccine. As a result, poor countries have been deprived. So they are extremely angry with America. In terms of global relations, the opposition is heavier than the United States. Second, the war on terror has cost the United States nearly 9 trillion over the past 20 years, in addition to killing and injuring many soldiers. But the result of this war is zero. As a result, the Americans have become extremely angry. That’s why President Biden told the United Nations on September 21, “The US military should not be used as a solution to every problem in the world.” Above all, there is NATO. In fact, President Biden’s comments seem to be deceptive. In fact, America is still pursuing a belligerent policy.

Iran, Russia, China, Syria, Palestine, North Korea, Venezuela, Cuba, Algeria, Angola, Belarus, Bolivia, Cambodia, Eritrea, Laos, Nicaragua, Saint Vincent and the Grenadines Islands have formed an alliance with these 16 countries. The motto of this alliance is equality, peace and prosperity. This alliance is basically anti-US. On the other hand, after the defeat of America by the Taliban, an undeclared alliance has been formed between China, Russia, Pakistan, Iran, Uzbekistan, Turkmenistan and Tajikistan. Apart from China and Russia, other countries are also anti-US. These two anti-US alliances could become one in the future. Other anti-US countries may also be involved. It is pertinent to note that in recent times, China’s activities in the field of relations, investment and trade have increased tremendously in the world. According to a BBC report, China is paying twice as much as the United States and other major world powers for development assistance.

Extremely hostile two-polar military alliances have intensified lobbying to strengthen their sphere of influence. At the same time, the military power is increasing.  According to a report by the Stockholm International Pitch Research Institute, ‘global military spending increased by 2.6% to 1,981 billion in 2020, even in the wake of the Corona epidemic. Military spending continues to rise this year. Above all, the military powers are constantly testing new modern weapons. For example, last month the United States conducted a successful test of a hypersonic missile, which is five times faster than sound. That is 6,200 km per hour.

Earlier in July, Russia said it had successfully tested a Zircon hypersonic cruise missile, which has no rival in the world, the country’s president said. China last month unveiled its state-of-the-art air defense technology, the CH-6 drone, which is used in intelligence and military operations. In addition, WZ-7 drones and J-16D fighter jets used in border surveillance and sea patrol have been flown. The J-16 aircraft is capable of creating jams in enemy electronic equipment. China has already prepared its troops to lead the global cyber war. North Korea, Iran and Turkey have occasionally conducted successful tests of sophisticated missiles.

North Korea recently conducted four successful missile tests in a week, which is a hypersonic. Greece signed a 5.8 billion arms deal with France on October 2. Turkey says the deal will pose a threat to regional stability. The Iranian military conducted a military exercise in Sanandaj province on October 1. The lawmakers called it an “extreme warning” against the presence of Zionist Israel in neighboring Azerbaijan. Recently, China has been increasing the number of troops on the Line of Control (LoC) in Ladakh.  Indian Army Chief Naravane said the matter was a matter of concern.

So far, however, four US-led military alliances and one Sino-Russian-Iranian military alliance have emerged. In addition, an alliance initiated by the EU could be a peace alliance. Countries that are reluctant to join a military alliance can join it. After all, NAM is still there. The current trade and regional alliances may be broken by the push of these alliances. The current Cold War could turn into a world war in the future. It is difficult to say who will win then. However, Russian President Vladimir Putin has said that no one will survive to see the consequences of a future world war. That is why the UN Secretary-General has warned the United States and China about the “Cold War” and called on the two countries to rebuild their relations.

Whether it is the Cold War or the World War, it is necessary to abandon that path and focus on the solution of the current global crisis such as the rise of the atmosphere, the Corona epidemic, the global recession and the increase in poverty, and peace and prosperity. Last year, a global conference was held at the initiative of the United Nations, involving more than one million people from 193 countries. In it, 90 percent of the negotiators called for resolving the current common crises in the world through multilateralism. In the interest of world peace and security, world leaders need to pay attention to this.

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The U.S. Might Finally Be Ready to Back Down, to Avoid WW III

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Recently, tensions have been rising between, on the one hand, America, and on the other, both Russia and China. A nuclear war that includes the United States would destroy the entire world, because it would be not only nuclear, but major-power nuclear, which would entail so many nuclear explosions (perhaps all within less than an hour), so that nuclear winter would extend over not only all of the northern hemisphere, but probably also over all of the southern hemisphere (though more slowly there). Unfortunately, no scientific study has been published analyzing what the result would be of such a war, but studies have been published of likely outcomes from minor-power nuclear wars, and the results have indicated nearly as catastrophic outcomes as I’ve summarily indicated here for a major-power nuclear war.

The culminating public event displaying that a U.S. backdown has occurred would be Biden’s granting Putin’s bottom-line red line (which, if not granted but instead crossed, would precipitate a Russian attack against the U.S.), committing the U.S. to never crossing that line, and this back-down would consist of a mutually accepted and implemented agreement regarding Ukraine and its two break-away regions (the currently independent Donbas, and Russian Crimea). In the case of China, Biden would also need to grant Xi’s bottom-line red line, which would be for Biden publicly to accept the 28 February 1972 U.S.-China agreement called the “Shanghai Communique”, in which the U.S. Government agreed with China to the promise and commitment that “The United States acknowledges that all Chinese on either side of the Taiwan Strait maintain there is but one China and that Taiwan is a part of China. The United States Government does not challenge that position. It reaffirms its interest in a peaceful settlement of the Taiwan question by the Chinese themselves.” However, there would also need to be an addendum made to the Shanghai Communique, to the effect that if the Government of Taiwan refuses to publicly and officially acknowledge that it is part of China — no longer a colony of Japan, such as it had been during 1895-1945 (and it had been a province of China during 1683-1895), and also not a separate (i.e., independent) nation — then the United States will not oppose a militarily imposed restoration of Taiwan as being a Chinese province.

The Shanghai Communique goes considerably further than that, however, to commit the U.S. Government to never doing some other things that, during the past decade, the U.S. Government has increasingly blatantly violated (done); and, so, the three most crucial Shanghai Communique commitments regarding Taiwan will be specifically quoted here (and one of them has just been quoted but will be quoted again, in the context of the other two, so that readers may more clearly recognize the blatancy with which the U.S. Government has recently been violating the Shanghai Communique):

“the two sides agreed that countries, regardless of their social systems, should conduct their relations on the principles of respect for the sovereignty and territorial integrity of all states, nonaggression against other states, noninterference in the internal affairs of other states, equality and mutual benefit, and peaceful coexistence.”

“Both sides are of the view that it would be against the interests of the peoples of the world for any major country to collude with another against other countries, or for major countries to divide up the world into spheres of interest.”

“The U.S. side declared: The United States acknowledges that all Chinese on either side of the Taiwan Strait maintain there is but one China and that Taiwan is a part of China. The United States Government does not challenge that position. It reaffirms its interest in a peaceful settlement of the Taiwan question by the Chinese themselves. With this prospect in mind, it affirms the ultimate objective of the withdrawal of all U.S. forces and military installations from Taiwan.”

For the United States to accept either of those two red lines — Russia’s and/or China’s — (i.e., to agree that the U.S. accepts it, and will not oppose it), would be for the U.S. to back down in order to avoid a WW III. In other words: it would display the U.S. Government’s current decision that its #1 national-security goal isn’t to expand its current empire, but to avoid any WW III (avoid any U.S. war against either Russia or China).

This now seems likely to happen regarding Russia’s red line, as was indicated by Russia’s RT News on October 13th, under the headline “Kremlin says US & Russia agree Ukraine must give Donbass special autonomous status”. That would be Biden’s granting compliance with Putin’s bottom-line red line regarding Donbass. The next day, RT headlined “Strained relations between US & Russia could soon be on mend, Moscow says”. It stated that, after meeting with Kremlin officials in Moscow, “Victoria [Nuland] took with her to Washington a rather long list of those issues that were identified by the Russian side for the need to resolve them as soon as possible.” Nuland is the queen of the neoconservatives (or U.S. imperialists, or “super-hawks,” or “MIC darlings”), and had been sent to Moscow in order to push as hard as possible to get concessions from Russia. She was previously instrumental in the 2014 U.S. coup against Ukraine that captured Ukraine for military training and aid, and potential inclusion in the EU and in NATO — which coup (that she principally organized) actually sparked the current active restoration of the U.S.-Russia Cold War. This is probably why Biden chose her for that assignment. (It’s like sending a victim’s torturerer to find out what what the victim needs.) Whether Biden will decide in accord with her recommendations is unknown. If he does, then he will be continuing with President Obama’s plan (that she had designed) to ultimately place U.S. missiles on Ukraine’s border with Russia, so as to achieve “Nuclear Primacy”: the ability for the U.S. to destroy Moscow within less than ten minutes — too short a time for Russia to launch any retaliation. This would also indicate that China likewise is in severe jeopardy; it would warn China that it needs to presume the worst about the U.S. Government’s intentions.

If the United States will not comply, then one possible result would be that Russia and China will, then, jointly, and publicly, announce that any invasion against either, will be dealt with as constituting an invasion against both.

On the other hand, if Biden caves regarding Russia, then China, too, would likewise be much safer. For him to cave would be for him to accept not only that Ukraine must comply with the Minsk accords regarding Donbass, and that Crimea (which the Soviet Union’s dictator had arbitrarily transferred from Russia to Ukraine in 1954) is a province of Russia, but also that Taiwan is a province of China. (If Biden were to comply with Russia’s demand but not with China’s, then his subsequently invading China would almost certainly be met by Russian forces, and not only by Chinese ones, and thus America will likely experience yet another defeat — or else the entire world will, by means of a nuclear war between superpowers.) If he won’t agree with at least those three requirements (red lines), then avoiding WW III will be unlikely, if not impossible. That refusal would indicate the U.S. Government’s placing higher priority upon expanding yet further its empire, than upon avoiding a global nuclear war. 

Neither Russia nor China will accept being a part of the U.S. empire. The question now is whether or not the U.S. Government will finally accept that fact. For it to do so would violate all U.S. international policy since FDR died on 12 April 1945. This would be a turning-point in world history — the apogee of the American empire, which was first imposed by Truman and Eisenhower (mainly via coups). But, so, too, would Biden’s continuing forward with the Nuland-led Obama policy on Ukraine produce the apogee, which then would mean WW III (effectively, the end of human history). The American empire might end by the U.S. Government’s accepting that it’s downhill from here on, and the empire’s gradually fading away. Or else, it will end with WW III. This is the choice that now faces Biden. That decision will probably come under this President — and maybe very soon.

On October 15th, the highly informed and extraordinarily honest analyst of geostrategic diplomatic affairs, Alexander Mercouris, headlined “Nuland’s Moscow Trip Ends with Disagreement on All issues, Russia Considers Freezing Relations with US”, and he provided an extensive description of the results from Nuland’s negotiations this past week in Moscow with the Kremlin (and of the U.S. news-media’s virtual blacking-out of even the fact that she was there — and the little U.S. coverage that there was, was mocking Russia, and presented nothing of what the Russian negotiators had said, but only what Russia’s enemies were saying, such as “Apparently, Moscow’s misogynists would rather not deal with a woman at all”). Mercouris’s take on the matter was that Biden will likely continue doing what Nuland and other extreme neoconservatives against Russia want to be done. If Mercouris is correct, then we’re now at the brink of WW III. But whether that war would start against Russia, or against China, one can only guess.

If this sounds crazy, WW I also started as being crazy, and the publics in the respective combatting countries were kept in the dark about everything except the propaganda. The publics overwhelmingly believe the propaganda, no matter how consistently it has subsequently become documented to have been based on lies. For example: this news-report is being simultaneously submitted to virtually all news-media in the U.S. and allied countries. Let’s see how many of them publish it. After all: it’s definitely not propaganda. Everything in it is documented via the links, all of which are to extraordinarily relevant and reliable sources. Propaganda does not do that. But few people even notice this. That’s how imperialists routinely get away with mass-murders, such as in Iraq, Syria, and Ukraine.

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How The West Subdue Us: An Approach of Colonial and Development Discourse

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Talking about development and colonial discourse, I am reminded the story of John Perkins in his book “Confessions of an Economic Hit Man”. This book was written in 1982 when the tension between the west and east blocks is heating up. Two blocks are vigorously fighting to get influence over third world countries. The book contains a dramatic confession. He told how the financial donors institutions together with America conspired, regulated, and designed in order to control the resource in third world countries. John Perkins himself worked at one of these institutions. He was tasked with seducing leaders to accept debt loans through the World Bank, USAID, and other foreign aid organizations. This mission was carried out with a group called as the Economic Hit Man.

Further, the Economic Hit Man (EHM) have to ensure the targeted countries fall into the debt trap. After they owed were no longer able to pay the debts, it were obliged to surrender the concession of their natural resources. The trap which EHM uses to capture prey include: by making misleading financial reports through economic calculations and predictions, manipulating fraudulent elections by supporting candidates Pro-American interests, bribery, extortion, sex, and even murder. The last case happened to Jaime Roldos, the former President of Ecuador who was nicknamed “Castro” in his country. He was killed in a helicopter accident that he was riding. The helicopter crashed and caught fire on May 24, 1981. Many media at that time accused the CIA behind the murder.

Besides Ecuador, other countries that finally entered America’s debt trap were Indonesia. After the crisis hit Indonesia’s finances between 1997-1998, inevitably it signed a new IMF debt pact with various provisions and conditions were detrimental to the country. The pact which reflected on the Washington Consensus is an American strategy to subjugate troubled economic countries.

Ecuador and Indonesia case is only a small example of how the world condition after colonialism ended. It does not mean they reached independence as a whole since the occupation is no longer focused on exploitation and physical violence rather through structural hegemony and various infiltration. To understand how hegemony works comprehensively, there are two discourses framing the history of subjection namely colonial and development discourse.

Understanding Discourse

Discourse is a term created by Foucault. Foucault defines it as a way and means to uncover what is not visible with the naked eye. In the discourse, there are knowledge and strength which form a shared power. The hidden power in it was unconscious to hegemony the subject for how they act as expected. Discourse itself does not come from a vacuum, it exists and is produced, organized, deliberately controlled by the authorities and disseminated as an instrument of subjugation (Arturo Escobar, 1984). It was spread by the west to the third world countries through forced civilization. Western try to place the third world as a slave over their prevails values and knowledge imposed since the colonialism period. So that many countries in the third world fall into the western grip. Then its image becomes an elegant illustration in the mind people of the third world. From here, discourse appears as a tool for hegemony and it was intensively launched along with the colonial and post-colonial period.

How Do Colonial and Developmet Discourse Run

Gradually, discourse topic was inspired many scholars to examine and uncover the hidden interests of such submission processes. One of them is Edwar Said. Edwar Said wrote about what he called in the colonial discourse as Orientalism. For him, Orientalism is a study about eastern world carried out by western people (Europe) with a focus not only on their history and culture but also to a phenomenon political epistemology that contains broader historical consequences ( Eiman Osman, Postcoloniality and Development: Development as a Colonial Discourse). In short, colonial discourse is an extension of the narrow meaning of oppression. Colonial is not just physical exploitation rather attacks and deprivation of the cultural, political, economic and institutional values towards the colonized countries where local values are replaced by the new one brought and instilled by western. They lose their identity. Then they were born with a new “western” identity. It was considered as a strategy to perpetuate the power relations of western state over third world countries. This is clearly illustrated for example in the process of institutionalizing English language education in India and South Africa and it was a part of colonial government politics, as examined by Gauri Viswanathan (1990) and David Johnson (1996).

While colonial discourse emphasizes aspects of attack on culture, ideas, value systems in society – which go hand and become an inseparable part of physical violence, development discourse is a prolongation of new style of occupation beyond physical coercion. It was a new form of conquest. The expansion of this kind of discourse is rife after the cold war in which the West turned to focus on providing economic stimulus to third world countries, as well as a counter to communism.

Explicitly, development discourse is a western manipulation strategy that frames their good intentions by pretending to participate and help the third world in post-colonialism. The debt bondage which occurred in Ecuador and Indonesia that described above is a simple model of how development discourse works. It is a new imperialism under development guise.

Therefore, to understand a whole about development discourse is the best way to realize how western perceives the third world or vice versa. In fact, the perception as most civilized country had encouraged western to be a patron to control economic, political, social, and cultural systems within these countries. Its aim is not only to degrade the progress of development but also to shape the reality and self-image of the third world according to western will. Escobar neatly defines development discourse as follows: In this way, development will be seen, not as a matter of scientific knowledge, a body of theories and programs concerned with the achievement of true progress, but rather as a series of political technologies intended to manage and give shape to the reality of the Third World (Arturo Escobar, 1984).

Dismantling Development Discourse

According to Escobar, there are three important factors to analyze and dismantle development discourse in third world countries. First, through historical conditions, second, restructure of discourse, and third, the deployment of development.

Historical conditions lead us to the portrait of the world at the end of the cold war where capitalism holds control of the course of the global economy. The third countries which are now adopting the same political system (imposed by the west) were initially given the hope that they would be assisted by international institutions that would deal with development issues in their country. Economic studies in newly independent countries are actively carried out. This is the initial phase of transition control in a more subtle direction. In this stage, many of them volunteered to receive program and debt assistance offered by international financial institutions before finally entering the trap of their power.

While restructure of discourse is operated not only to change the old structure that applies in third world countries as well as to focus on the economic structure but to touch all aspects, including social and politics so that these aspects will become institutionalized which perpetuate and sustain western domination over the lives of third world. This happens at all levels, from rural to urban, local-regional, national-international.

In the deployment of development, there are several main strategies. First, through a variety of labeling. Initially by perceiving that the third world is backward, uneducated, abnormal, and embedding other negative terms. Second,  through the formation of professional fields. Here various types of specialization are formed which are directed at their respective fields. Specialization in the field of science, including economics, politics, is intended to make science look neutral so the course of development which is much assisted by elements of science is not deemed politically. The third is through the institutionalization of development. As Escobar calls it “This process took place at various levels, ranging from the international organizations and national planning bodies to local level development agencies. These institutions became the agents of the deployment of development, the network of new sites of power which, taken as a whole, constituted the apparatus of development “(Arturo Escobar, 1984).

In short, everything that we believe so far is the fruit of our past and the cultivation of western values. So do not be surprised if some of us still consider the west as the center of civilization orientation.

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