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The crisis in Venezuela and its strategic significance

Giancarlo Elia Valori

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Venezuela’s economy – in a country that has better oil reserves than Saudi Arabia and Iran – began with the OPEC oil price crisis, when Chavez was still alive, until the heavy fall in oil prices in 2013.

  The social spending of Venezuelan “Bolivarianism” was very high and a country living on oil permanently needs stable and growing markets. This is inconceivable with the current dislocation of strategic roles within OPEC and in the context of the struggle between Iranian Sunnis and Shiites.

  Saudi Arabia will decrease production as soon as prices fall – and this will be the rule for everyone.

 With Maduro, the primary choice for oil – i.e. Venezuela’s true economic policy -has remained in the wake of Bolivarianism. Oil resources, however, have fallen to less than half of those recorded during the Chavista boom and inflation has quickly grown to such a point that it is currently the largest in the world. It reminds us of the Weimar Republic and for the same reasons. The State of Caracas prints money with the same criterion with which newspapers in crisis print more copies.

 At the beginning of the Chavista era, the inflation rate was already 29.5%. In 2005, when the oil market was still bullish, the inflation rate dropped to 14.4% instead.

 Eight years after the former city bus driver in Caracas, namely Chavez, had risen to power, food prices in the capital city were nine times higher than at the beginning of Chavez’ new Bolivarian regime, while salaries had decreased by 40%.

 The full nationalization of the oil company PVDSA was the first step that Chavez made down to the road for total economic disaster.

 Currently the oil companies operating in the Orinoco Basin – which is one of the largest in the world – do no longer make the necessary investment to make extraction possible, and nowadays oil extraction has leveled off at merely one million barrels a day.

 Certainly, we need to consider the US sanctions on exports, but extraction could still halve down to half a million by the end of 2019.

 Companies such as Malaysia’s Petronas and even the Russian Lukoil already left Venezuela in 2014. The Iranian company Petropars did the same in early 2015 and PetroVietnam in late 2015. Finally Exxon and Conoco had to leave quickly under the threat of Venezuela carrying out a punitive nationalization, with both companies’ related and immediate starting of formal proceedings before the international courts.

 Moreover, there is no legal framework – not even in Venezuela-delimiting possible operations, in the case of ongoing confiscations of foreign capitalists’ assets or of nationalizations. Hence those who remain, paying bribes left and right, obviously do not extract the amount of oil they could. This also applies to the Venezuelan non-oil economic sector.

 Even PDVSA – the always open coffer of Bolivarianism – has reduced its oil production from 5 million barrels a day to the current one million barrels a day. Later, with the embargo imposed by the United States, this trend will continue.

 The national oil company has long been heavily indebted with China and Russia, as well as with other countries, such as Iran.

 China has already requested the quick and full payment of its credits. China is not used to the structural inefficiency of Latin American countries.

 It is a process that China has started also with Brazil.

 Furthermore, Russia has already granted a rescheduling of its Venezuelan debt, which is already three billion and seven hundred million US dollars.

 Obviously, from a strategic viewpoint, Russia is interested in maintaining its own area of influence in a Latin American continent that, after Bolsonaro’s victory in Brazil, is fully siding with President Trump’s policies.

  Hence, where possible, it is subject to Russian specific pressures.

As can be easily imagined, Venezuela’s weight in the OPEC area is now less than minimal- and this creates further difficulties.

 But the entire oil producers’ organisation, whose relations of its Sunni area with Trump’s America are currently very strong, has now a fixed rule we have already clarified: cutting production when the oil barrel prices decrease –  exactly the opposite of what Venezuela currently would like to do.

 Moreover, Venezuela keeps on exporting only 800,000 oil barrels a dayto the United States.

 Here not only geopolitics, but also the first global commodity, namely oil, has a role to play in this respect.

 For the United States, buying oil from Venezuela means trying to counter Russia’s weight – although with increasing difficulty.

 The United States clearly sees how Russia and China still support Venezuelan Chavism – also to recover their huge credits. Hence a geopolitical rather than economic clash between opposing blocks emerges in the country with the largest oil and gas reserves in the world.

 Inter alia, with shale oil and gas the United States is becoming a net oil exporter. Hence it is ever less interested in the fate of the countries that were once powerful suppliers, but are currently only tired competitors.

 Even the deep crisis of Madurism could favour the US oil and natural gas export market. Hence there is not much desire in the USA to solve the Venezuelan crisis, but only the desire to prevent Venezuela from choosing Russia, Iran, China or even the crazy and silly European Union.

 Moreover, the United States has an extreme need for high oil barrel prices, so as to recover the extraction costs which are still higher than the traditional ones.

 Hence, paradoxically, a regional production crisis near the US territory could even be good for the United States in the medium term.

 Therefore, apart from the usual creation of petrodollars, the United States is entirely in favour of an increase in the oil barrel price- and hence indirectly in favour of tension in Venezuela.

 The United States does no longer even need Venezuelan oil – as was the case in the past.

 There is no more room for Venezuela to even export its oil to the Caribbean at the usual low prices – a clear sign of an old and now impossible local hegemony.

 Hence, as is currently the case, the Hezbollah – currently guarding also Maduro – set in, while the Cuban intelligence services have defined a precise program for opposing Guaido’s possible “counter-revolution” and also the Russian contractors of the Wagner group are present, in force, in the Venezuelan territory to defend the wells and the other nerve centres of the former Chavista regime and, currently of Maduro’s regime, for which Russia has no esteem.

 The relationship between Hezbollah and Chavez was very complex – and it is still so currently with Maduro.

 At the beginning of Guaidò’s campaign against Maduro, the members of the Lebanese militia – that was Imam Khomeini’s “eye – hoisted a poster with Chavez’ and Maduro’s faces alongside that of Hassan Nasrallah, the leader of the Lebanese Shiite militia.

 Furthermore, the Hezbollah were the first to advertise and make public the US hidden presence in favour of Guaidò in Venezuela.

 The reason for this particular relationship between the pro-Iranian Lebanese Shiites and the “Bolivarian” regime is simple and concrete: right from the start, Chavez and Maduro gave carte blanche for the laundering of Hezbollah’s secret funds in Venezuela, especially through drug trafficking activities.

  Furthermore, the Lebanese group operating in Venezuela collected essential data on international crime, which was useful exactly for Hezbollah to find its place into the global cycles for money laundering and acquisition of illegal funds.

 Even Cuba – which, despite the all-too-touted “liberalization” of the post-Castro regime, kept on serving as air passage of drugs to the United States – used the Venezuelan “Bolivarians” for money laundering activities, as well as a basis for the operational shift of South American drugs to the ever more drug-addicted United States.

 Some Hezbollah’s people also have important positions in Maduro’s government.

 Just think about Tarek el Assaimi, the 28thVice-President of Venezuela and later Oil Minister, who currently “covers” many of the Lebanese from Hezbollah that very easily acquire a Venezuelan passport.

 El Assaimi has also been reported to the US Drug Administration since 2017.

 Why does Iran need Venezuela?

 Firstly, to avoid US trade restrictions. Iran sees the US support for Guaidò as a direct threat to its interests in Latin America, which are manifold and very widespread.

 Coincidentally, the Venezuelan gold – that was said to have so far been exported to Turkey for security reasons -is currently heading for Iran.

Cuba’s drug system has been essential to maintain Castro’s regime as early as the time of Ochoa, who had supported the Medellin cartel in the cocaine shipments to the United States. At the time, however, the proceeds were in the banks of Noriega, the President of Panama who laundered 80% of Cuban illegal cash flows.

 Now the system works in favour of Venezuela, which no longer has the financial controls that were previously unavoidable in a fully pro-American country like Panama.

 Certainly, for Cuba, the Medellin cartel’s drug transfer to the United States was also a purely political operation to plague the American society and make it powerless and unproductive.

  It has largely already succeeded to reach this goal.

 After Noriega’s fall, that network has largely moved to Venezuela and is currently operating at full capacity and in full swing.

 Meanwhile, the Cuban intelligence services were directly connected to the Colombian FARC and later to the Venezuelan security forces, formerly regional leaders of drug trafficking at the time.

 As is the case today, since then the Cuban secret services have trained the Bolivarian intelligence services. In fact, at the time, the former eliminated most of the Venezuelan opposition to Chavez.

 Indeed, after the Cuban training, Chavez’ intelligence services established the Cartel de los Soles(the “Cartel of the Suns”) and in fact the name comes from the “sun” insignia of Venezuelan generals.

 Currently, it is precisely corruption and the illegal drug trafficking led by Maduro’s generals to directly support the regime and to strengthen and fund the fight against Guaidò’s forces.

 The Venezuelan narcomilitaries know all too well that, if they lose power, they will soon be judged by some US or international court.

 This kleptocracy removes from Venezuela’s coffers an officially declared sum worth around 70 billion US dollars, but some Latin American security services speak of about 300 billion US dollars taken away for paying bribes inside the kleptocratic regime in Venezuela.

 Hence an inflation triggered and maintained only by the criminal kleptocracy of those who also organize a highly lucrative drug trafficking, even within the regime and the whole country.

 Furthermore the controls on money and prices, introduced by Chavez in February 2003, quickly turned Venezuela into a Mafia-State.

 At the time of the founder of “Bolivarianism”, the illegal system created by those price controls, was even larger than it currently is.

 It should be remembered that in 2002 a military coup  ousted Chavez from office for 48 hours only.

 With a view to avoiding the return of the military, Chavez delegated most of the State functions to criminal gangs – and also to the very inefficient Armed Forces.

  The illegal gangs were mainly two, namely the Colectivos and the Pranes.

 The Colectivos took power mainly in the suburbs of Caracas.

 Currently, despite having been supported and often created by the government, the Colectivos are not answerable to anyone – much less to the opposition.

 The democratization of kleptocracy.

 They live mainly on extortion and drug dealing.

 Currently, however, they have been essential to repress Guaidò’s insurgency and make some areas of Caracas  support Maduro again.

 The Pranes are instead criminal gangs operating within the Venezuelan prison system.

 However, they have also expanded outside prisons, in collaboration with the so-called megabandas.

 The “peace zones”, reached after a long negotiation between criminal gangs and what remains of the police, are just eight in Venezuela.

 Nowadays, the most widespread illegal activities among criminal gangs are those relating to the smuggling of subsidized fuel to Brazil and Colombia.

 There is an ever more limited market for this fuel in the countries of arrival and an increasing number of buyers in Venezuela, which experiences the paradox of being a huge oil producer, but with empty pumps for its citizens.

 Other key sectors, left in the hands of the bandas, are the smuggling of food and pharmaceutical products. This was the reason why the Red Cross aid could not work at the beginning of the crisis.

 In Caracas people die very easily: 89 murders per 100,000 people a day.

 In 2017 there were 26,616 murders – over 5,535 of which carried out by the security forces, while the others were carried out by the gangs of the Operativos para la Liberacion del Pueblo.

 A network created exactly by Maduro.

Furthermore, as already seen, Venezuela is the favorite base for the Colombian narcocrime, while the hungry e Venezuelan proletariat is pushed right out of the cities of Bolivarianism towards Colombia, where the Venezuelan poor people become members of the “cartels” or victims of them.

 In just one year, the last for which we have complete statistics, namely 2017-2018, at least one million Venezuelans fled to Colombia alone, with a rate of at least 37,000 citizens of the Bolivarian State who crossed the border with the territory of Bogotà everyday.

 Panama, which now has no interest in the survival of Maduro’s “Socialist” regime, also included 37 “big shots” from the current Venezuelan regime into a “high-risk list” for money laundering, including Maduro himself, as can be easily imagined.

 That list also included Diosdado Cabello, the No. 2 of Venezuela’s regime and Party, as well as other figures, well known to the Venezuelan public, such as Gustavo Gonzales Peres, the former Head of the Bolivarian Intelligence Service.

 Panama is also part of the “Lima group”, an organization of 14 Latin American countries in the region, which is above all opposed to maintaining the Maduro system in Latin America.

 Even the European Union – with its well-known quick decision-making in foreign policy – imposed personal sanctions on figures such as Interior Minister Nestor Revarol, the President of the Supreme Court, Maikel Moreno, and even the Head of the External Intelligence Service, Gustavo Gonzales Lopez and, finally, to the aforementioned No. 2 of the regime’s Party, Diosdado Cabello.

  They can no longer travel to EU countries and their bank funds deposited there will be frozen.

 The appeal for a general upheaval that interim President Juan Guaidò had announced on the morning of April 30th – together with the recently-released military Leopoldo Lopez, and with a military group from La Carlota air base – seems to have failed.  In a country like Venezuela, the “Arab Spring” model does not work at all.

 US intelligence services’ greater intellectual imagination would be needed.

 Meanwhile Lopez has recently taken refuge at the headquarters of the Spanish embassy in Caracas, while the Spanish government has declared it will never release Lopez to the Maduro government.

  25 other rebel military applied for asylum at the Brazilian embassy, but it should be noted that Lopez had previously addressed to the diplomatic offices of Chile, although he declared – after being accepted by the Spanish diplomacy in Venezuela – he had never asked for political asylum.

 Nevertheless many Venezuelans have anyway agreed to take to the streets, where two other young people have recently died, thus rising to 55 the number of victims of Maduro’s repression since the beginning of this year.

 Meanwhile, the opposition denounced a toll of other 74 severely injured people, followed by 168 arrests, including at least a dozen journalists.

 Meanwhile Guaidò goes from one hiding place to another, but he was seen by the crowd on May 1stwhen he called for a strike of all Venezuelan workers in the short term.

 Maduro responded to Guaidò’s call to strike only the day after, but it was a clearly recorded TV broadcast.

 Shortly afterwards, in his official capacity as Trump’s National Security Advisor, John Bolton – an old heir to the neocon foreign policy – informed the international media that Defense Minister Valentin Padrino Lopez, Supreme Court President Maikel Moreno and the Director of the DG for Military Counterintelligence, Ivan Hernandez Dala, had negotiated directly with the USA to oust Maduro.

 Instillation of suspicions in Maduro’s elite, or also truth? Hence evident psychological war or US indecision between the choice of staging a coup inside Maduro’s Party, with some US trusted elements, or the reaffirmation of US trust in Juan Guaidò?

Mike Pompeo, Trump’s Secretary of State and former CIA Director, also stated that Maduro was already on a plane to Cuba, immediately after the May 1st demonstrations, but that Russia harshly ordered him to stay in Venezuela.

 Could the reason underlying the US support to Guaidò’s attempted coup – which is now not matched by the same support it had gained at the beginning of the insurgency – beoil, as usual?

 With the oil barrel price around 50-60 US dollars, the price of Venezuelan oil is still acceptable, but we are talking about heavy hydrocarbons, which need successive and obviously expensive further refining.

 Exxon-Mobil is still trying to acquire the Essequibo extraction area, where sovereignty over it is still being discussed between Venezuela and Guyana.

 In Venezuela, there are still 15 billion barrels a day of not extracted oil, in addition to as many as 42 trillion cubic feet of natural gas.

 It should be considered that Venezuela is still the second country – if not the first, depending on explorations- in terms of oil and gas reserves available.

 The USA, however, is mainly exploiting its national basins and is selling natural gas and oil, by sea, even to some European countries.

 Hence, currently for the United States the issue of Venezuelan oil and gas is not to acquire them – although the oil barrel production cost in Venezuela is still lower than the shale oil and gas of the US Permian basin – but above all to prevent those oil and gas reserves from being used by China and the Russian Federation.

 In fact, in the years of the sharp drop in the oil barrel price, until 2016, Maduro chose to assign as much as 49.9% of a PVDSA subsidiary, namely CITGO, to Russian Rosneft – in exchange for a loan against the transfer of the company shares to the tune of 1.5 billion dollars directly to the Venezuelan State.

 Also Russia, however, is a net exporter, and Goodness knows how powerful that country is in terms of oil and gas, with a primary focus of its markets on the EU.

 In this case, however, for Russia the Venezuelan oil could be a strong way to put pressure on the United States – exactly due to the lower price of the Venezuelan crude oil – with a view to reducing the negative impact of the US (and EU) sanctions on Russia for the Ukrainian issue.

 Hence, by spending a relatively little sum, namely 1.5 billion US dollars, Russia became the true arbiter of Venezuelan oil to use it as a leverage over the United States – indeed, really for purposes of blackmail against the United States.

 In fact, it is by no mere coincidence that, in February 2018, a group of US investors of unclear complexion tried to buy back the Russian shareholding of CITGO, asking the Venezuelan government to accept payment to them of the remaining Russian loan and also asking Rosneft to transfer the remaining amount of the loan already granted in Venezuela to the new CITGO.

 Needless to say, the offer was declined.

 As always happens in these cases, the United States is also operating with economic pressures and embargoes.

 It is imposing a further embargo for Petroleos de Venezuela SA, namely the whole PDVSA, which legally began in early January 2019.

 This means that the proceeds from Venezuelan oil will be very limited, as if Venezuela were an economic hostage.

 With a view to favouring – even among the elites of the “Maduro system” – the shift to the US camp, instead of remaining within the sphere of Russian economic control (and of Iranian control for the non-oil criminal economy).

 President Trump’s desire to invade Venezuela is now well-known to the international public, at least based on his statements of June 2018, when, at a meeting in the Oval Office, President Trump expressed that clear desire to the then Secretary of State, Rex Tillerson, former President of Exxon-Mobil, and also to the then National Security Adviser, General MacMaster.

 It should be clarified that neither of the two advisors was favourable to the operation.

 In late 2018,Maduro – increasingly under pressure as a result of the international economic crisis and of the huge internal crisis, particularly heavy for the oil-dependent countries – gave to the companies of the strong Russian mining sector access to the Venezuelan gold mines – those that had created the myth of Eldorado in Spain in the  seventeenth century.

In Venezuela there are also mineral reserves of nickel, diamonds, iron, bauxite and aluminum.

  Clearly, however, Latin America’s new strategic and political positioning – especially after Bolsonaro’s victory in  Brazil – is fully in favour of the United States and, specifically, of President Trump, while the assets in favour of the Russian Federation are diminishing.

   This means that Russia, along with its traditional allies, such as China, will keep Venezuela very close, especially for geopolitical purposes and ever less for strictly economic ones.

  While the real strategic variable will soon be China. Will it accept to participate in Russia’s very interested support for Maduro’s regime, taking what remains of the Venezuelan economy, or will it accept the US proposal of taking a large part of Venezuela after breaking China’s ties with Russia, at least in Latin America?

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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Americas

Just What Is An American?

Rahul D. Manchanda, Esq.

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The greatest mistake any leader, or moneyed powerful individual, or even masses of people (all 3 of which tend to have the loudest voices) is to culturally appropriate unto themselves, just exactly what it means to be an American, based on their own selfish notion of what it means.

The fact remains that the ideal of Americanism is a concept – a truly growing, organic, ever changing, and ever expanding idea that is enshrined within its founding documents and laws.

For example, the Declaration of Independence, Bill of Rights, US Constitution, Civil Rights Act, and the Equal Rights Amendment, among scores of other acts of legislation, point to an ever growing ongoing journey to forge a new nation, just like ancient Rome did, united by a common destiny, and drawn from different experiences, cultures, cuisines, religions, ethnicities, races, nationalities, and world views.

So when President Trump on July 15, 2019 told four minority female congresswomen in sum and substance to “go back to there they came from” if they “didn’t like America,” he trampled over their own views, ideals, and experiences as Americans.

Quite simply his statement was an appropriation of what it means to be an American, from the point of view of a German/ Irish American senior citizen male, to a group of Latin/ Somali/ Palestinian/ African-American younger females.

Perhaps President Trump should re-visit his own people’s racial history, wherein the Irish were systematically excluded by the previously arrived and established Anglican Protestants, or even with the Germans in America who were actually interred in camps during the periods of World War I & World War II.

The German-American Experience

During World War II, the legal basis for this detention was under Presidential Proclamation 2526, made by President Franklin Delano Roosevelt under the authority of the Alien and Sedition Acts.

With the U.S. entry into World War I, German nationals were automatically classified as “enemy aliens.”

Two of the four main World War I-era internment camps were located in Hot Springs, N.C. and Fort Oglethorpe, Georgia.

Attorney General A. Mitchell Palmer wrote that “All aliens interned by the government are regarded as enemies, and their property is treated accordingly.”                                              

The Irish-American Experience

In 1836, young Benjamin Disraeli wrote: “The Irish hate our order, our civilization, our enterprising industry, our pure religion. This wild, reckless, indolent, uncertain and superstitious race have no sympathy with the English character. Their ideal of human felicity is an alternation of clannish broils and coarse idolatry. Their history describes an unbroken circle of bigotry and blood.”

Nineteenth-century Protestant American “Nativist” discrimination against Irish Catholics reached a peak in the mid-1850s when the Know-Nothing Movement tried to oust Catholics from public office.

Much of the opposition came from Irish Protestants, as in the 1831 riots in Philadelphia, Pennsylvania.

After 1860, many Irish sang songs about “NINA signs” reading Help wanted – no Irish need apply.

The 1862 song “No Irish Need Apply” was inspired by NINA signs in London.

Alongside “No Irish Need Apply” signs, in the post-World War II years, signs saying “No Irish, No Blacks, No Dogs” or similar anti-Irish sentiment began to appear as well.

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Billionaires, Vanity and Modern Democracy

Dr. Arshad M. Khan

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The bullying in Washington is the current trend.  On Monday, the British ambassador resigned his post after Trump refused to deal with him.  Well-liked in Washington and the halls of Congress, his downfall was an honest assessment of the Trump administration as ‘inept’ and ‘dysfunctional’.  The letters were leaked in the U.K.

Suppose the president tweets comments contrary to current established policy, does that mean a policy change?  Do departments adapt promptly.  Nobody knows.  That’s dysfunctional, and everyone knows it.  In the meantime, he has enjoyed 17 golf outings since February averaging three a month.  No wonder he is that rare president who does not seem to age in office from the stresses of the job.  Obama’s hair turned gray.

But then a lighter hand on the tiller has kept us out of war, whereas Obama, the Nobel Peace Laureate, destroyed Libya and escalated in Afghanistan.  The consequences are still being felt in Southern Europe particularly, through the hordes of refugees still continuing to arrive.  Also in the resurgence of anti-immigration political parties in northern Europe.

The supreme irony is the fact of refugees being rescued from ramshackle boats and dinghies or often dying in one part of the Mediterranean while the Obamas cruise on a billionaire’s luxury yacht in another.  Is that a metaphor for democracies in the modern world?  One is also reminded of Mr. Modi’s specially woven pinstripe cloth repeating his name endlessly on the stripes in the material. 

Fortunately, the current president does not like the sea, or we would never see him in Washington.  As it is he has had 14 visits to golf clubs (not as much time on the course however) since the beginning of June.  He once had a small yacht that lay anchored in New York until he sold it.  His pleasures have generally centered on the more mundane:  cheeseburgers and women — the younger the better, although perhaps not as young as those that have gotten his friend Jeffrey Epstein in trouble again.  To be fair, Trump had a falling out with him ‘about 15 years ago’ he said recently.  ‘I was not a fan of his, I can tell you,’ he added although he called him a ‘terrific guy’ in 2002.

At least one party had 28 girls to a so-called calendar-girl party at Mar-a-Lago (Trump’s estate and club) in Florida, meaning selection of a calendar girl.  The male celebrities attending, according to the man assigned the task of finding the girls, happened to be Trump and Epstein, and no one else!  So surprised, the man still remembers the story.  The falling out between Trump and Epstein was rumored to have been a business deal.

It brings us to the second resignation, that of Alex Acosta the Labor Secretary.  A Harvard-educated lawyer, Mr. Acosta was the US attorney for the Southern District of Florida when he made a generous agreement with Epstein who had been charged with sex crimes.  For a 13-month sentence of mostly community work, usually from his mansion, Mr. Epstein was protected from further prosecution.  In a clear rebuke to Acosta, the case has been re-opened with a new charge of sex-trafficking minors.

As a result, Mr. Acosta has had to bow to the chorus of calls for his resignation.  The real question:  How ever did Trump get elected?  A mainstream press failure?

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Americas

What has happened to Western liberal idea?

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In the recent interview with President Putin, the Financial Times seems to have launched a discussion on liberalism only at its own peril. Inadvertently, a real problem was touched upon, whose pressing nature is no longer denied by anyone in the West. The newspaper had to admit it in its Editorial of 29 June. Its authors claim that the threat to liberalism comes from within, including President Trump and his policies, Brexit and, certainly, the rise of “populist nationalism”. They refer to voters’ disillusionment with liberalism and loss of confidence in the economic system and trust in political elites. The latter are invited to redouble their efforts to take into consideration issues raised by voters and “to renew liberalism”.

Hence, the Russian leader has only identified a problem that Western elites are unable to acknowledge, desperately defending the status-quo as having no alternative. But where is the problem?

The systemic crisis of Western society, if we are to call a spade a spade, has its roots in Reaganomics and Thatcherism. In early 1980s, disregard for the lessons of the Great Depression led to Anglo-American attempts to sort of try the pre-1929 Pure Capitalism. This unleashed the forcers of a “self-regulated market” with the state playing a minimal role – a key concept of liberal economics. The idea of social accountability of business had no place in that system.

At the same time, financial sector was deregulated through the step-by-step repeal of the Glass-Steagall Act, which was one of key elements of Franklin D. Roosevelt’s New Deal. Its architect was British economist John Maynard Keynes. It was only natural that the 2008 crisis also started in the financial sphere which had practically lost touch with the real sector of economy.

Then neoliberalism (as it became known) came to be imposed by Anglo-Saxon nations on the whole of the EU through the Lisbon agenda. The then Prime Minister Tony Blair was pretty good at it. When asked what she considered as her key legacy, Margaret Thatcher pointed to Blair who continued her economic policies under the “New Labour” slogan.

For instance, everyone knows what the nationalization of British railways led to. Profits are reaped by operators, while costs are borne by taxpayers who finance UK Rail, the state-run company responsible for railroad infrastructure. And this is not the only way to privatise profits while collectivising costs. In fact, globalisation has become one such practice for Western elites. Its original motive was quite liberal and far from being altruistic or even geopolitical (Donald Trump has reassessed this part of it when he blamed globalisation for China’s economic rise). It was about cheap labour for increased profits. The jobs  that were to be transferred abroad should have been compensated for by a new technological revolution. But it’s not happening, not even in the second generation. Information technologies do not create as many jobs, and we are already talking of robotisation and artificial intelligence, as well as a universal minimum living allowance as a solution to the problem of poverty and unemployment. It was Keynes who said: “Free trade assumes that if you throw men out of work in one direction you re-employ them in another. As soon as that link is broken the whole of the free trade argument breaks down”.

Liberalism in politics, especially after the end of the Cold War, has degenerated into averaging and alternative-free policies in the “end of history” spirit. Even Henry Kissinger admitted in his “World Order” (2014) that Western elites had again relied on automaticity, as was the case with the market. But as it was shown by Karl Marx supported by modern economists (Joseph Stiglitz, Paul Krugman, Thomas Picketty and others), free markets always give advantage to the investing classes, which only leads to more inequality.

In this respect, the 45-year post-WW2 period was an exception to the rule due to the creation of a social welfare state – the one that is now being destroyed by the neoliberal economics. Along with it the middle class is being destroyed – the pillar of Western democracy. For these reasons the real discourse of democracy is being substituted in the West by a discourse of liberalism. This involves labelling all protest voters as “populists” and “nationalists”, allowing to side-step the issue of the inability of the actual political system to represent this silent majority. Yet, that is what’s going on when differences blur between the Right and the Left, Tory and Labour in Britain, Republicans and Democrats in the US, or Christian Democrats and Social Democrats in Germany’s “Grand coalition”. Is it any wonder that when an opportunity arises to have a say, this majority votes for Brexit, Trump, or newly-created anti-system parties and movements, often with marginal ideologies?    

In social terms, as BBC is trying to explain in this ongoing debate, liberalism is about protecting the rights of minorities of all kind, including transgender persons. It turns out that there’s nobody to protect the interests of the majority. Yet, we are speaking of the post-war “social contract”, which simply does not work in liberal economics. Anglo-Saxons are on the path of further liberalisation, which the continental Europe cannot afford. Boris Johnson, contributing to the discussion, has said the other day that Brexit is precisely aimed at giving a new lease of life to it by following the US in income tax reductions for business and private individuals.    

British political analyst David Goodhart (in “The Road to Somewhere: The Populist Revolt and the Future of Politics”, 2017) shows another perspective of the issue. In his opinion, the elites have become cosmopolitan, but the majority has remained rooted in their own countries, regions and communities. In other words, the majority sticks to its national identity, unlike the elites. Even the European middle class, united by similar living standards and occupations, becomes aware of its nationality when hit by bad economic times.

Those who accuse Russia of meddling in internal affairs of Western countries are essentially denying their voters the right to vote, while the genesis of the liberalism crisis clearly points to its roots and origins inside the system. It was no-one else but Angela Merkel who in 2010 spoke of failure of multiculturalism in Germany, while calling for intensifying efforts at integrating immigrants into German society.

It was not Moscow that drew the attention to this problem. As early as 2007, the Economist wrote of a “secular overreachl” in the West, while today many are voicing concerns over a “liberal overreach”. Speaking broadly, it can be said that in the absence of a competitive environment in the realm of ideas after the end of the Cold War (which ended up doing a disservice to Western elites), liberalism has mutated into a dogma, a totalitarian ideology which does not tolerate dissent or pluralism of ideas. No wonder that the elites have resorted to political technologies, media control and political correctness to tighten the grip on the freedom of speech and generate semblance of an alternative-free existence. Social media have put an end to this, becoming a tool for politically alienated electorate to self-organize. As a measure to protect the status quo, the elites are now constructing an artificial dichotomy of liberalism vs authoritarianism, i.e. if not one, it’s definitely the other.

It is, therefore, not about the end of the liberal idea, just as President Putin pointed out, but that it cannot claim to be a one-size-fits-all model negating the wealth of ideas in Europe and the world. The problem is that any ideology, as history has shown, is always aggressive when it claims the ultimate truth, exceptionalism and, as a result, becomes a threat to the world. The notion of a “liberal world order” has also been introduced only recently, as a defensive reaction of the West when its dominance in global politics, economy and finance is coming to an end. Everything could have been different, had Western elites bothered to make this order, Bretton Woods institutions included, truly liberal, open and inclusive. Nobody was preventing them from doing so.

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