AUSTRALIAN MARXIST REVIEW Journal of the Communist Party of Australia

ISSUE 41NOVEMBER 1999

WHERE DO WE GO FROM KOSOVO?

by Erna Bennett

THREE AND A HALF HOURS OF INFAMY
A short extract from a CHRONICLE OF SHAME
April 6, 1999 (exactly two weeks after the launching of the NATO attack on Yugoslavia)

The NATO war from the air continued, with massive loss of life and destruction, in spite of similar peace offers, for another 66 days.

Why Kosovo?

The air attacks launched by US-NATO forces on Kosovo and Yugoslavia on 24 March, 1999, mark more than just another infamous milestone in the history of modern imperialism.

In spite of the long-drawn-out theatricals of discussions by diplomats and "contact groups" that preceded the war and, it was claimed, were intended to prevent it, these, instead, paved the way for NATO intervention. They were phases of a carefully stage-managed, step-by-step preparation for a long-premeditated aggression.

What is new, however, in the guided succession of events leading to the war is that it has been directed and executed by aggressors no longer subject to the constraints formerly imposed by the presence on the world stage of the USSR and other socialist countries, and their vigilance.

The Cold War, or at least a major phase of it, is over. Its objectives have been attained.

The Soviet Union and a great part of the socialist world, which were powerful enough to challenge the might of the United States, have been defeated and reduced to economic and political chaos.

In passing, it should be noted in this connection, that those who speak of the "collapse" of the socialist world rather than its defeat lend a helping hand to those who still wish to cultivate the impression that an entire social system has "failed".

Such views also overlook the abundant evidence of the price socialism's enemies are prepared to pay and the extent to which they are prepared to go to overthrow it.

Quite apart from the major role played in the overthrow of the Soviet Union and the socialist countries by a motley assortment of internal enemies who aspired, and conspired, to defeat them from within, it is revealing to note that the published part alone of the CIA budget for activities in the Soviet Union and Eastern Europe for 1991 amounted to US$15 billion.

No major systematic challenge to US economic, political and military world domination any longer exists.

The US and its allies may now concentrate on their task of proceeding with the continued marginalisation and impoverishment of a Russia struggling for its very survival, the dismemberment of those few socialist states as still remain, the encirclement and containment of China and, finally, the absolute control of the world's energy resources.

Inevitable questions such as "why Kosovo?" reflect a widely disseminated notion created by NATO's media control machine that the present military intervention in the Balkans is a humanitarian exercise. But questions like this also express an urgent and much-felt need for an attentive analysis of the origins of this latest act of aggression by the US-NATO alliance.

Why Kosovo, indeed? Why Yugoslavia? To which we may logically add, when we have taken the time to reflect on other dramatic events of the past decade, "why Bosnia?" And "why Croatia?" "Why Iraq?"

And we may also ask, "Why Panama, why Grenada?" — for behind this series of repeated and apparently unrelated aggressions runs a single connecting strand of imperialist purpose.

Since 1990 the US has rampaged through the constraints of established international law like a bull through a china shop. It has done so on the slenderest and most unconvincing of pretexts, many of them transparently false even to the friendliest of its most faithful allies.

But from the 1964 Tonkin Gulf incident that precipitated the Vietnam War (or the even earlier June 27, 1950 Truman declaration ordering US military cover and support to South Korean troops that launched the Korean War and was put to the UN Security Council as a fait accompli only a few hours later¹) to the Rambouillet meetings and ultimatum of 1999,² it is possible to trace a common ancestry and a common purpose.

The NATO attack on Yugoslavia of March 1999 is seen not only by those who have opposed it but by its protagonists also as a watershed in international relations.

A few weeks ago the Sydney Morning Herald reprinted an article by the former US Secretary of State Henry Kissinger which first appeared in the Los Angeles Times.

Kissinger is apparently still at a loss to understand the European Union's mixed reactions to the 80-day war and its consequences, but he does not hesitate to express his opinion that "the allied leaders are correct in treating Kosovo as a watershed."³ We need to be very clear, however, about the kind of watershed we are speaking about.

What kind of milestone have we passed? What new conditions now face us? How have they changed? In what way does history now present a new face and raise new problems? Are these different problems, or simply bigger ones? And to confront them and resolve them, what now needs to be done? What might we learn from the ample warnings of the past decade?

Warning bells have been sounding for a long time. The attack on Yugoslavia over the "Kosovo question" is not a recent, last minute invention. It has been carefully prepared over many years and it is the natural sibling of many similar aggressions. It is neither humanitarian in scope, as it is claimed, nor is it a trial of strength.

How can destruction of the homes of millions of people in Kosovo, who are then ordered to return to them, or sent to camps in the farthest corners of the earth, be described as humanitarian?

How can the hi-tech slaughter of thousands of unknown and innocent people be presented as anything other than it is — mass murder?

And how, in so grotesquely unequal a conflict as this between the earth's most powerful military machine and the already critically weakened and fragmented remnant of a small Balkan state sick from the effects of years of harsh blockade, can a massive and unprovoked attack on Yugoslavia be seen as a trial of strength — if not as a bully's demonstration to his cronies that he's tough and that they, too, had better watch out.

This war is, rather, a trial of legitimacy and a blatant and deliberate display of defiance of national and international laws. Treaties, constitutions, laws have been torn to shreds while the world watches, and without even the least attempt to conceal or excuse such behaviour, if not behind the ever more threadbare screen of "humanitarianism".

But with what ultimate aim?

Certainly the massive attacks on the Yugoslav Federation, or such of it as remains, and Yugoslav citizens, have little if anything to do with Serb- Albanian relations in Kosovo or the sufferings of ethnic minorities in the Balkans or elsewhere, and have little or no meaning if not measured against more distant and much more ominously ambitious horizons.

The roots of contemporary imperialism

NATO's attacks on Yugoslav cities and their populations mark the consummation of a process which, if we wish to construct a coherently reasoned account, can trace its earliest stages as far back as the 1940s, clearly identifiable as parts of a grand strategy for world domination.

In 1945 the United States emerged from World War II as the world's most powerful economy, enjoying a degree of hegemony comparable to Britain's during its age of imperial grandeur in the 1800s.

The US "virtually monopolised or controlled the three sources of power in the modern world: nuclear weapons, monetary reserves and petroleum. [They] alone had the atomic bomb and the knowledge to produce what at that time was called the absolute weapon. American factories produced more than 50 per cent of the world's output, and America held approximately 50 per cent of the world's monetary reserves. With respect to petroleum... American companies controlled the world's supply of oil."⁴

Unlike Britain's in the 19th Century, however, the US dream of world supremacy was inhibited, even threatened, by the presence and the challenge of the USSR and an increasing number of socialist countries.

These moreover, formed a vast and coherent landmass that stretched, without interruption, from Central Europe to the Pacific coast.

With a deeply-rooted class hostility towards communism, and in full accord with the Cold War launched in 1947 by Truman and Churchill at Fulton, Missouri, the US ruling class met what it saw as a socialist threat to its power by building a global network of military bases and alliances, armed with nuclear and other high-tech weapons, backed by high-altitude aerial espionage and satellite surveillance, and equipped with sophisticated electronic communications and weapons guidance systems.

The network was backed up by economic and military aid to numerous corrupt and complaisant regimes.

The first trial of this strategy came the same year with the implementation of the Marshall Plan and, later, the Truman doctrine.

In Greece, EAM, the national resistance movement led by a broad alliance of communist, socialist and other smaller parties, enjoying an overwhelming degree of popular support, drove the Nazi occupation troops from the country in 1945. EAM's victory was interpreted by Britain and the US as a communist threat to their imperial supremacy in the eastern Mediterranean.

Even while World War II was still ravaging Europe, Britain launched a savage military campaign against its Greek ally. The US entered the fray in 1947. Greece became the testing ground for weapons which would be used later in Korea and Vietnam.

More than US$2,500 million (as high as US$ 2,950 million according to some estimates), the bulk of it for military aid, were pumped by the US into Greece from May 1947 to June 1956 — "the highest per capita aid to an underdeveloped country in the post-war period"⁵ — to restore the fascist- tainted pro-US status quo ante.

NATO, founded in 1949, and the US-Japan Security Treaty of 1960, saw formal global consolidation of US-dominated and explicitly anti-communist alliances, definitively replacing Britain's "Pax Britannica" of the 19th Century.

But unlike British hegemony, which was based on empire and an unchallenged naval supremacy, the US world system which now emerged was constructed on technical, economic and, above all, military supremacy.

Already in the 1930s, when the socialist economy in Soviet Russia was developing rapidly, the same problem of US global power had engaged the attention of the US Council on Foreign Relations (CFR), a highly influential industry "think tank" with important government connections.

It asked, "was the [capitalist] western hemisphere self-sufficient, or did it require trade with other world areas to maintain its prosperity?"

In the 1940s, the same question urgently surfaced again, and while World War II was raging and Europe lay under the Nazi occupation, the CFR wanted to know, "how self-contained was the western hemisphere compared to German- occupied Europe?

"How much of the world's resources and territory did the US require to maintain power and prosperity?"⁶

Following a minutely comprehensive study it concluded that, "as a minimum, the US national interest involved free access to the markets and the raw materials of the British Empire, the Far East and the entire western hemisphere."

Subsequently, a CFR recommendation to President Roosevelt and the Department of State, in October 1940, set out the results of detailed surveys by panels of experts on "the political, military, territorial and economic requirements of the United States in its potential leadership of the non-German world area, including the United Kingdom itself, the western hemisphere and the Far East."⁷

The realisation of plans based on this recommendation was frustrated by Japan's own ambitions to control the south-west Pacific and foiled by the Japanese pre-emptive strike on Pearl Harbour which precipitated a state of war between the US and Japan.

The projected US-controlled non-German bloc was given the title of the "Grand Area". Initially, it was regarded as a temporary measure, but the early recommendations were then followed, in June 1941, by a memorandum outlining a plan for a "world economy dominated by the United States".

This led, in turn, to CFR proposals to establish an International Monetary Fund and World Bank. These were made public in February 1942.

Here, then, we can trace the beginnings of the US drive for global economic and military supremacy. Certainly, if plans for US world domination ever founder, it will not be for want of long-term planning!

The distant roots of the present crisis which are traced here in the patterns of a grand strategy for capitalism in search of world supremacy coincided at the same time with other developments within the capitalist system itself.

In keeping with its inherent propensity for generating gross inequalities in the distribution of the social product, leading to the concentration of capital in fewer and fewer and larger and larger enterprises, already described by Lenin in his 1917 study on imperialism, post-World-War II US capitalism saw this process greatly accelerate from 1945 onwards.

In the first two post-war decades, between 1945 and 1965, the US Federal Trade Commission recorded more than 11,600 mergers in the mining and manufacturing sectors alone, the rate of concentration accelerating rapidly year by year.

The concentration of capital has occurred in every capitalist state but its rate and extent have varied from country to country, though invariably at an accelerating pace.

Value added holdings of the top 100 US companies increased from 30 per cent of total holdings to 33 per cent from 1954 to 1970. This has continued to increase.

Corresponding data for Britain showed an increase from 1953 to 1972 from 26 to 41 per cent.⁸

In the US, "merger activity was concentrated among the largest corporations, the largest 120 corporations being responsible for 50 per cent of the mergers," affecting two-thirds of the total assets involved.

Other changes were taking place. War profits saw the US economy emerge greatly enriched from World War II, having suffered none of the physical damage that war brought to Europe, the USSR, China and Japan.

It was awash with the accumulated wealth of four years of war trading, the great bulk of it held by giant corporations with little interest in investing in the already saturated US economy. High wartime wages and still relatively high corporation taxes were a further disincentive.

Corporate interest turned to countries where tax concessions and low wages offered a better investment climate, and "the weakening of the Western European economies and the creation of Atlantic security ties after World War II ... opened up the European economies themselves to American corporate expansionism."⁹

By the end of the 1970s, the total sales of US subsidiaries abroad exceeded by four times the value of exports from US-based industries.

By the mid-1980s, total foreign capital under the control of mostly US transnational corporations amounted to more than $600 billion, six times more than in the late 1960s, and US foreign direct investment in corporations of this type by the end of 1990 amounted to $1.5 trillion.

The growth of foreign direct investment and the TNCs led to a massive in crease in inward capital flows, without effect, however, on the economic instability, unemployment, poverty and idle factories that plagued the domestic scene.

The TNC-based economy's need for free trade stimulated a US drive to liberalise world trade relations, even though this favoured America's European and Japanese competitors. The economies of underdeveloped countries depending on exports of primary products, however, suffered severely.

In these conditions military capacity to impose and maintain "stablity" for US investments, and to guarantee the secure control of strategic resources, such as oil, came to assume a growing importance. Economic supremacy alone was no longer sufficient to protect US "national interests".

As strategic resources grew in importance, military and political factors came to play at least as decisive a role in the maintenance of US hegemony as economic and technical supremacy, and were maintained through a global network of bases, institutions, and corporations.

The interaction of economic and political factors "ushered in a period of unprecedented economic growth and affluence that proved to be a fertile environment for the expansion of the multinational corporation [an entity now more generally known as a transnational corporation, or TNC].

In short, dramatic overseas expansion of American corporations and of American political influence reflected political, economic, and technological forces at work within the United States itself, and in the larger international system."¹⁰

Corrupt and docile governments, tax concessions, a plentiful supply of low- paid and poorly organised labour boosted the outward investment flow. By the 1960s the flow had become a flood.

Gilpin summarises the process: "... growth [brought] a variety of changes in the core [economy] — rising wage rates, diseconomies of scale, the exhaustion of resources or their rising cost, or both, the shift to a service economy, and a falling rate of profit due to capital accumulation — encouraging industry and economic activity to migrate."¹¹

The decisive shift from a manufactures-based to a services-based economy coincided with the flight of US investment abroad. By the 1970s twice as many were working "in services (such as transport, commerce, education, health services, and government) as were employed in the production of goods (manufacturing, construction, mining and agriculture).

This is a remarkable shift when one compares these figures with the situation prevailing at the end of World War II when, in 1947, the American work force was divided equally between these two sectors."¹²

The transformation was paralleled by an increasing shift of US exports to managerial services, capital and technology.

Part of this shift saw an increasing share of US foreign investment directed and controlled by transnational banking corporations. Lenin described, in his 1917 study on imperialism, a similar trend to the increasing dominance of finance capital under imperialism.

As a result of these developments, therefore, "by the early 1970s the United States had become more a foreign investor than an exporter..."

Also, "... a substantial proportion of American exports of manufactured goods were really transfers from American branches of MNCs to their overseas branches. In 1969 American multinationals alone produced approximately $140 billion worth of goods, more than any national economy except those of the United States and the Soviet Union."¹³

In 1971, estimated world stocks of foreign direct investment (FDI) amounted to $165 billion. Four countries accounted for 80 per cent of this, but more than half of it was US-owned.¹⁴

Contrary, too, to the common belief that most FDI goes to underdeveloped countries (UDCs), much of it is directed to developed, industrialised countries, and almost half of US foreign investment went to the European Union.

In the immediate post-war years, fully half of US FDI went into manufacturing, much of this high-tech and electronics. Already by the end of the 1960s, however, 30 per cent went to oil.

Even more pertinent to our present discussion, 90 per cent of the petroleum produced in the Middle East was US-controlled, as was also, directly or indirectly, almost the entire capitalist world's oil production.

Oil

And here we come to the heart of the matter. To control the flow of petroleum is to control the most vital processes of modern industrial society.

Oil is an essential resource for transport and the generation of electricity.

But it is also the raw material for a whole range of multi-billion dollar industries of primary importance, such as the manufacture of fertilisers, herbicides, pesticides, detergents, explosives, paints and, not least, plastics and synthetic fibres.

Oil's strategic as well as economic importance is immeasurable. More than any other resource, it has aroused imperialist armies to mass murder in many distant corners of the earth.

It is a Banquo's ghost that is never absent from the ardent discussions of "humanitarian" problems that appear so much to trouble contemporary gatherings of western warlords.

Some suggest that Yugoslavia's mineral wealth was a motive for the US-NATO attack in the Balkans. Certainly, Serbia and Kosovo possess important reserves of coal, lead, chromium, copper and other metals, but it would be a great mistake to assume that these have played a significant role in NATO or US calculations. Their sights are set on more lucrative and distant targets in the extensive oilfields of former Soviet Central Asian republics.

Certainly, Yugoslavia, fragmented though it now is thanks to the secessions of Slovenia, Croatia and Bosnia provoked and assisted by NATO member states, still sticks in the gullet of imperialism, even if Yugoslavia today is but a shadow of the state that once, in spite of its imperfections, managed to unify the Balkans for half a century.

But its dismemberment and destruction serve a wider purpose than the simple elimination of a last remaining "socialist example".

The re-balkanisation of the Balkans into a number of small, squabbling client states where a non-aligned state once hindered imperialist expansion eastward is, for the US and NATO, an essential step towards strategic control of the ex-Soviet oilfields of the Caucasus and Central Asia, the value of whose deposits has been estimated to be between US$1,500 and US$3,000 billion.

It is equally important that the break-up and occupation of the discordant fragments that now make up the Balkans allows the US and NATO to deploy their armed forces more closely around Russia's borders.

However passionately the capitalist world may sing the praises of Russia's market economy, it is still a potentially enemy economy. This is no surprise; in the capitalist world all countries are competitors, whether capitalist or not, and so are potential enemies.

Subjugation of the severed and battered centre of the once powerful USSR does indeed mark an important watershed in the US search to impose global hegemony, and a Russia tamed and on its knees has a special flavour. The enormity of so momentous an event is only now, belatedly, being realised both in Russia and elsewhere.¹⁵

While NATO's purpose in the Balkans has been and remains that of gaining access and establishing control of Central Asian oil, the separation of a totally demoralised Russia from the energy resources without which it can never hope to regain major industrial status is also a cardinal factor in NATO and US calculations on the attack on Yugoslavia.

Russia has been catastrophically destabilised. It is down, but not yet out. If the US and NATO get their way, it will now be kicked to death on the ground.

The US-NATO attack in the Balkans serves yet another purpose — NATO imperialism's much hoped-for final destruction of Russia.

The gap between the predominantly NATO investment of US$50 billion in oil- rich Kazakhstan and the considerably smaller US$39 billion invested in Russia is a telling one, and reflects NATO's real priorities.

Imperialism's aim in the USSR was, and still remains, the destruction of communism, not the restoration of capitalism. There are already too many competitors in the capitalist world.

We have become too accustomed to thinking of war as originating in ideological difference to remember that all the major wars of the past two centuries, and the scores that have been fought overtly or covertly since 1945, have been imperialist wars, in the last analysis for the control of resources.

The constantly present tensions between the US, European and Japanese economies are profound enough without the additional complication of a capitalist Russia.

The fate reserved for Russia by the US and its NATO "allies" is not a capitalist one.

Their aim is that Russia will become, rather — as it is in the process of becoming — a vast and underdeveloped territory for colonial penetration, greater even in extent and potential than the territories that were "opened up" in Africa and Asia in the 19th Century by the imperialist powers of the day.

Russia, in other words, is undergoing an enforced process of de- industrialisation and colonisation.

And a final bonus conferred by the break-up of the Balkans is that it puts US anxieties of wider European unification at rest. Balkanisation and US- dominated protectorates in the Balkans, hopefully, will finally eliminate any possibility of such a development, feared since 1990 by the US.

Corridor 8 and the Golden Road from Samarkand

Till now, Central Asian oil has been carried by pipelines to the industrial centres of the USSR by way of the Caspian Sea and Baku. From there it has been piped to the Black Sea port of Novorossisk, and then north, mainly through the Ukraine.

Since the defeat and breakup of the USSR, systematic efforts have been made to divert these supplies south by opening new terminals at Supsa on the eastern coast of the Black Sea and others at Pakistani and Turkish ports, by-passing Russia.

As part of this plan, Pakistan armed and financed, with US assistance, Taliban and other counter-revolutionary forces in Afghanistan to destabilise and overthrow the country's communist government, already weakened by the activities of feddayin groups operating from bases in Pakistan and armed and financed by CIA-organised arms-for-drugs deals.

Turkish and Iraqi campaigns against the Kurds have been encouraged and supported in the same way.

In Albania, at the western end of this projected southern oil route, Berisha, darling of the west, the president of post-communist, "democratic" Albania until ousted in 1996 after the collapse of the pyramid "investment" schemes which saw US$2 billion of small savers' money disappear¹⁶, is still active behind the scenes.

It was he who stirred the dreams of greater Albanian nationalism that led to the formation of UCK (the so-called Kosovo Liberation Army), financed from the profits of arms, drugs, petrol and clandestine labour deals run by the Albanian mafia in association with, among others, the Shquiponja cartel that is directed by Berisha's Democratic Party.

During his presidency, harsh anti-communist legislation was introduced, air bases and port installations were put gratis at the disposal of US forces, military treaties were signed with the US and Turkey, public services were privatised and a flood of mainly US and EU investment swamped the country.

The massive US military presence there and in the adjoining former Yugoslav republic of Macedonia was a decisive element in the success of NATO's Kosovo operation.

Years of such activities have prepared the southern Balkans for their role in US oil strategies. They form a background to what is known as the "Corridor 8 Project" which provides for a major oil supply route to Ceyhan on the Mediterranean coast in southeast Turkey and the Albanian ports of Durazzo and Valona in the Adriatic.

A major strategic west-east highway running from Durazzo in Albania through the southern Balkans to Asia Minor, still known as the Egnatian Way, was begun by the Romans in 145 BC.

It branches south to the sea at Thessaloniki in northern Greece. It still provides an arterial link between the Black Sea and the Adriatic. Greece has invested heavily in its modernisation. Greece, however, is one of the less reliable members of NATO, suspect because of its generally slavophil sympathies and its "political instability".

Consequently, what is known as the Egnatia Bis, which will run through politically more reliable territories, is the subject of enormously heavy EU investments.

Running parallel to, and often only a few kilometers distant from the Greek section of the Egnatian Way but outside Greek territory, it is intended to provide a high-speed rail link and arterial highway as well as a route for gas and oil pipelines that will link oil terminals in the Black Sea with the Albanian ports in the Adriatic.

According to US and NATO strategic plans, the Corridor 8 oil supplies will reach their western terminal at the Albanian Adriatic ports of Durazzo and Valona.

Here lies Albania's importance in the wider imperialist picture. Here, too, a reason for the political, economic and military control that will ensure investment stability there.

Here, again, lies the explanation for the powerful economic presence of US and TNC interests in the Balkan micro-states that have been created on the ruins of the former Yugoslav Republic.

In Albania, some 25 US corporations and TNCs, many of them petrochemical, are operating. The corresponding data for Croatia show the presence of 22 such corporations, while 60 are operating in Slovenia.

Here, responding to the call of mammon rather than that of humanitarian concern, is the real reason for the US-NATO intervention in Kosovo, Yugoslavia and the Balkans.

Here, too, the global significance of this and the many other wars that have marked the past decade.

"Contained" or "local" as these wars may be described, their significance is global, an indispensable part of imperialism's New World Order. They also point ominously to what will almost certainly become an intensifying future trend.

The Changing Face of Hegemony

Since 1990 more than 20 countries have experienced civil war and internal conflict.

Among these were Algeria, Angola, Ruanda, Somalia, Democratic Republic of the Congo, Sudan and Congo-Brazzaville in Africa, Colombia, Peru and Mexico in Latin America, and the Philippines, Indonesia, Afghanistan, Cambodia, the Caucasian republics and Tadjikistan in Asia, and Yugoslavia, Turkey and Lebanon.

There is a tendency for these conflicts to become endemic, involving armed groups, often ethnic in origin, often drug and criminal cartels, contending for a monopoly of violence and beyond the reach of the law.

In many ways they resemble the wars between the barons of late feudalism.

Most of these conflicts are a product "of economic crisis and a model of development that reflects sharpening global competition, a debt crisis, the disastrous policies of 'adjustment' imposed by the World Bank and the IMF, and relentless devaluation of the only resources these countries possess — raw materials and unqualified labour."¹⁷

All this has led to a frightening degree of social marginalisation and an intense sharpening of political, ethnic and religious differences.

Whole countries and regions have become, in UN-ese, "chaotic non-governable entities" under the care of the Red Cross, UN agencies and NGOs. Some are not only non-governable but are without governments. Among them are Ruanda, Burundi, Liberia, Somalia, the Democratic Republic of the Congo, Afghanistan, Cambodia, Tadjikistan and some other former Soviet Central Asian republics, as well as Bosnia and Albania.

These are symptoms of a global crisis in which US hegemony is floundering out of its depth. The dream of a US-dominated world order is already out of control.

The post-war economic supremacy of the US lasted only a few decades. It is already threatened by world-wide instability and the rapidly growing European and Japanese presence on the world economic stage.

US hegemony was already in decline by the late 1970s. "With capital accumulation far exceeding the political capacity to regulate its rhythm, the US economy entered a long series of crises which have lasted to the present day.... Its imposing trade deficit has become structural, tending to increase.... With the lowest rate of savings in the world, the US consume all [and more than] they produce. As a result, in the past two decades, in order to finance their public debt, acquired in great part during the Reagan era ... they have amassed the largest foreign debt in the world of approximately $1,200 billion."¹⁸

"This disequilibrium in their external accounts is only in part financed by an inward flow of interest capital from US FDI in the rest of the world.

"This comes not only from Japan and Europe, but also in great part from the underdeveloped countries. The flow has continually increased, amounting in 1995-1997 to about $600 billion a year."¹⁹

But at the same time, domestic production has remained sluggish or stagnant, financial and social instability are largely out of control, and foreign trade deficits have soared disastrously.

It reveals a major and very significant trend that while in the mid-1970s, the "securities listed on American exchanges constituted 61 per cent of the world total, fully five times as much as the 12 per cent share represented by Japan", by 1981 this had fallen to 55 per cent "and by 1987, Japan had moved ahead.

"In mid-1988 the Tokyo market's share of world equity capitalisation was about 42 per cent, while New York's was roughly 31 per cent."²⁰

By late 1988, both Japan and Germany had overtaken the US as top foreign investors; "nearly 20 per cent of bank assets in the United States were already foreign-owned and roughly 14 per cent were in the hands of Japan alone."²¹

Driven by an economy consuming more than it produces, and increasingly dependent on income from foreign investment and the nature of the dollar as a "reserve currency", the US saw FDI-derived income fall below outgoing investment income in 1987.

It was clear, said some observers, that the US economy was suffering from "imperial overreach".

The economic foundations of the US-dominated New World Order rest on the activities of TNCs whose profits serve, in part, to counteract the growing national debt and hold it within controllable levels.

Foreign direct investment which drives them is disincentived by political and economic instability, but TNC operations are, in themselves, a source of political tension and instability such as frequently to require direct political, and often military intervention or, at the very least, indirect support for repressive regimes. Such are the problems that are inherited from the increasingly insoluble contradictions of the US New World Order.

British global hegemony lasted half a century before it had to yield to its accumulating contradictions; that of the US has lasted barely 30 years, so rapidly have the many internal contradictions within the world's richest capitalist society matured.

Immense wealth lives side by side with widespread, extreme poverty, idle factories with a runaway consumerism, reductions in public spending on health, education and other services with astronomical and rapidly expanding spending on what, in our age of double-talk, is called defence spending.

The US economy, notwithstanding many protestations to the contrary voiced by optimists and apologists, is undeniably in decline.

Clearly this will have consequences at a level of US global strategy that it is important to understand if effective responses to that strategy are to take form and gather strength.

The NATO "Alliance" and the EU

No longer in a position to assert economic hegemony without the added need for the use of military force, the US faces a double dilemma.

On the one hand, it encounters increasing dissension and pressure from "allies" whose economic power now equals and surpasses its own. On the other hand, there will be (indeed there is already evident) a growing tendency to assert leadership of the "New World Order" by recourse to costly and risky military expedients.

The same dilemma is reflected in contrasting US attitudes to Russian economic recovery, discussed in the April 1999 issue of Le Monde Diplomatique.

As far as the US is concerned, there are two possible approaches to this question. One, by denying economic assistance to Russia, would create the same dangers of chaos and nationalist resentment that followed the 1919 Versailles Treaty.

The second option, to integrate Russia into a Europe progressively more unified as was the case with Germany after World War II, could have the effect of restraining excessive German influence within Europe but it would also certainly limit external (that is, US) influence on the region.

The US, in the early 1990s, had already rejected this latter option. It would undermine US control of NATO and therefore, through NATO, of Europe.²²

NATO allows the US to maintain a high military presence in Europe; 300,000 US troops are stationed in Germany, dramatically highlighting how US world economic supremacy is dependent to an increasing degree on its military supremacy, whatever the risks associated with this.

For reasons of their own, neither France nor Germany share this US view of the issues at stake.

To begin with, France is "particularly interested in achieving more co- operation in defence and security. For decades its key objective had been to diminish US influence in Europe and gain more French and European autonomy... In particular France wished to reduce the central role of NATO, which in the French view was a mechanism for US dominance in Europe, and replace it with European-controlled structures..."

In a series of meetings "beginning in 1989, Paris sought to bind Germany more firmly to French-influenced European institutions".²³

For its part, Germany, occupying the eastern frontiers of Europe, is particularly sensitive to the consequences of social and economic chaos in Russia and the former socialist countries

German trading relationships are concentrated heavily on Europe, west and east, and Germany has very good reasons to be both fearful and critical of US and NATO policies that endanger European stability.

Italy, too, and for similar reasons, is less than enthusiastic about NATO policies that they see to be charged with many dangers.

To Europe's frontline states, among which Greece must also be numbered, US-dictated NATO policies carry serious risks of escalation of so-called "contained" local conflicts into serious crises of much more dangerous dimensions which could flare into open conflicts.

These states therefore represent an increasingly fragile component of the NATO alliance — a fragility that became glaringly evident during the Yugoslav-Kosovo adventure, with intra-governmental discord in France, Germany, Italy and Greece leading to the resignation of a number of cabinet ministers and the public rebuke of others.

Not by chance did Secretary of State Baker choose Berlin in December 1989 to make a major policy statement that called for a new architecture for a new era, which hoped to see NATO become a more general alliance which, in addition to its security role, should increasingly concern itself with wider political and economic issues that would "ensure a continued role for NATO, and therefore for the US, in Europe."²⁴

Now, a decade later, in spite of growing signs of unease in the NATO alliance, the Washington meeting marking NATO's 50th anniversary, which took place at the height of the 80-day war, radically revised its 1949 founding principles under heavy US pressure.

These principles, already negated by the decision to attack Yugoslavia, stressed the defensive nature of the NATO alliance.

It now assumes the right to act "non-defensively", that is, as an aggressor, and to do so on a global scale. In a document presented to but not discussed at the meeting, NATO is to become an instrument of "global policy ... particularly towards the Middle East and Eurasia."²⁵

It cannot now be excluded that future actions such as the Gulf War may be conducted under NATO rather than a UN cover.

And immense consignments of military equipment to Turkey, at first supplied gratis, and now sold to the tune of more than US$1bn every year for use against the Kurds, extend NATO's reach as far as Turkey's eastern frontiers, where they are used against Kurdish villages.

Nor is it by mere chance that both US air-raids on Iraq and Turkish attacks on the Kurds intensified during the attack on Yugoslavia under cover of the screen provided by the intensely publicised Balkan war.

Within such a context, therefore, it is not surprising that US military spending has rocketed to unprecedented levels.

Since World War II it has averaged more than US$300 billion annually, at 1997 values, and totalled US$ 1,600 trillion. In 1997 the US exported US$23.5 billion worth of arms, or 45 per cent of the whole world's arms trade.

The same year the US arms industry spent US$49.5 million on "lobbying costs".

And since the admission of Hungary, Poland and the Czech Republic into NATO, these three countries have spent US$653 million on arms.

A further indicator of the danger of militarism in search of global hegemony is Clinton's proposal to increase "defence" spending over the next six years by US$112 billion, a figure that awakened so much domestic opposition that it has been trimmed and re-trimmed downwards in search of a political consensus to support it so as to reach levels that are no longer believed by anyone.

Will Any Other Consensus Please Stand Up?

What other forces are in a position to exercise constraint on US-NATO imperialist arrogance?

The only body with formal power to do so, the United Nations Organisation, has been conspicuously reluctant to do anything, and the US and its NATO allies have equally conspicuously sought, or given their consent to, the overthrow of the UN and the rule of law.

They have ridden roughshod over international law. They have flaunted their own constitutions. They have by-passed their own legislatures. They have chosen to overrule NATO's own founding principles. And they have done all this with only the merest ripple of protest from the offended institutions of government of its often lukewarm but obedient allies.

As for the UN and the Security Council, it has never been a secret that the UN has been a thorn in US imperialism's side for many years. US intransigence in opposing the re-election of the sometimes weak, but principled Boutros Boutros Ghali in favour of the candidature of Kofi Annan was nothing but a logical stratagem in a consistent policy of interference in UN affairs.²⁶

In the UN's earliest years, the US fought vigorously against the proposed ruling of "one nation, one vote".

The Security Council's permanent "great power" members' right of veto, so long portrayed as a cynical instrument employed by Soviet or Chinese representatives to curb the Council's effectiveness, first saw the light of day in a proposal presented by the US delegation to the Three Power Yalta Conference, in February 1945.²⁷

It has been exercised by both the US and Britain on many occasions but adverse publicity has always been reserved for its use by the Soviet Union and China.

Again and again, the UN have been manoeuvred by US diplomacy into lending their name to military actions and to sanctions that serve US but not UN policy.

Again and again the US has sought to impose its own hegemony supported by an "official UN seal of approval", as in Iraq, Somalia, and Bosnia. This has precipitated a growing crisis within the United Nations Organisation itself.

The NATO attack on Yugoslavia was made without even the pretence of consultation with the UN. NATO claimed that it was enforcing resolutions 1160 and 1199 of the Security Council, though the latter had already notified NATO, in June 1998, that any resort to force in the Balkans would need authorisation from the UN.

By attacking without consultation, much less authorisation, NATO has effectively usurped UN powers.

The UN has long been the fly in imperialism's ointment. In General Assembly debates opposition to US policies has often been fierce, and wherever and whenever it has been possible to circumvent the UN or exclude it, the US has not hesitated to do so. This it has now successfully achieved once again, with the help of its NATO allies.

The acquiescence of NATO's European member states before its blatant disregard of national and international institutions and laws has surprised and confused some observers, but this too has a consistent logic of its own.

In the first place, a protectorate such as that planned by NATO can, they believe, serve their significant economic interests in the new Balkan states.

NATO's European member states, in search of stability in the Balkans, hope to see this provided by US-NATO control of oil supplies and the imposition of a military occupation by NATO forces.

Albania, a major source of tension in the area, but essential to US-NATO oil supplies, must, according to NATO plans, remain the immense military base that it is.

It can be stabilised, says NATO, by conceding to "Greater Albanian" ambitions that demand the annexation of Kosovo.

Stability is further guaranteed at the same time by the creation there of a NATO-occupied protectorate.

This sort of reasoning, with its shift from considerations of the defence of common territory to those of "defence of common interests" has, for the present, apparently convinced the US's European allies that the plans to set aside the UN and to provide NATO with enlarged, global powers are worthy of their support.

Lacking the military might to assert their own power, they are prepared to accept a US-dominated New World Order that is "stabilised" and policed by NATO, with all the risks that this involves.

They bring to mind an observation made by Ilya Ehrenburg in the 1950s at the time of the Stockholm Peace Appeal to which some noted western figures had declined support. Of these he said that their eyes are fixed so fervidly on the palaces of the mighty that they are prepared to do anything that will give them a place there — if only as fleas in the tails of the emperor's peacocks.

For now the NATO alliance holds, in spite of the many cracks that have appeared and the reservations its members refrain from voicing too ardently. But reservations persist.

They are numerous, and reflect fundamental contradictions within the alliance itself. They are held only temporarily in check by purely opportunistic considerations.

The EU have hitched their fate to the NATO star, but it is a declining star, because US hegemony is in decline. The US, in their bid to retain it, show themselves to be ready and willing to resort to an increasing degree to the state terrorism they like so much to accuse others of.

This has been all too evident in the slaughter of the Gulf War, the immeasurable inhumanity of the Iraq blockade, and the appalling extent of the war on the Kurds that has seen 6,000 villages destroyed, created two million refugees and claimed 30,000 lives, of which the media tell us next to nothing. To which must be added NATO's use of cluster and graphite bombs and depleted uranium.

All this speaks of a force which, if it cannot earn the loyalty of actual or potential allies or enemies, will not hesitate for a moment to ensure their submission by whatever means. This, however, is the argumentation not of hegemony, but of crisis management.

None of this comes without very heavy budget commitments, as is clear from Clinton's problems with his proposed military spending increases. Necessity is, as always, the mother of invention, and one solution is the ancient one of passing a large part of the burden of war costs on to its minor (or defeated) contestants, a tendency which is already evident and growing in NATO. This, in itself, lies at the roots of a great deal of dissatisfaction within the NATO alliance.

Another is the use of so-called "access agreements" between governments, which call for only minimal permanent military deployment.

They are made possible by the availability of rapid mass transport facilities and of small but specialist, highly-trained counter-insurgency groups in strategically located areas. Significantly enough, these groups are mostly located in Third World countries.

"While reducing its presence in Europe, Washington has increased its pre- Gulf War military presence in the Gulf more than ten times from 2,000 to 23,000 troops, has concluded or expanded defence co-operation agreements with three Gulf countries (Kuwait, Oman and Bahrein) and is currently nego tiating with three others.

"The same report also notes that the deployment of US Special Forces Units in Africa has tripled in 1991."²⁸

Is this global deployment of strategic forces an omen? Will it fall to NATO to carry out these global tasks, and when?

And whether it does or not, to what extent will the conduct of "managed warfare" in the four corners of the globe be a commitment to be decided by elected governments?

Or will it be decided, as the attack on Yugoslavia was decided, behind the backs of elected governments?

The mere need to ask such questions provides a measure of the degree to which government of the people by the people has given way to "managed democracy".

Real life has become a spectator sport. Summit discussions, as often as not with unpublished agendas, have taken the place of participatory democracy, which has been reduced to the status of a mere catch phrase of the New World Order.

Now Where? And How?

Tellingly, the study on trilateralism already referred to reveals some warning signs.

In a report, The Crisis of Democracy, a group of Trilateral Commission experts state a case to support their view that the crisis of which they speak comes not from too little democracy, but from too much.

The report's sub-title — Report on the Governability of Democracies — gives the game away.²⁹ What is needed at the present time, according to its authors, is a greater degree of moderation in democracy. More democracy, they say, is not the answer: "applying that cure at the present time could well be adding fuel to the flames."

And how do these savants propose to make democracy a more governable system?

They home in with some insistence on the crucial role of the media in making society governable. The media, they say, must reach the "hearts and minds" of the people.

Indeed! But the media they have in mind is clearly something less than the journalism that needs courage and honesty, and in return usually earns official censorship and condemnation.

In search of governability, these experts and ruling class ideologists clearly hope to reach the hearts and minds of the people through something more like the US-NATO media machine which operated with such notable aplomb and such precarious honesty in the Gulf War and Yugoslavia.

Far from the reality of life and war, media representatives were briefed by US or NATO representatives, who in turn had been briefed by officials who in their turn (though they did not need to know what the facts were) knew exactly how much they were permitted to say — it was all very entertaining, complete with moving pictures and diagrams, but truth, and the possibility of truth, were edged farther and farther off stage and into the shadows.

The lessons to be learned from the NATO war on Yugoslavia are few but clear. The interests of aggressors are served by the managed democracy and summit politics that have become a part, and a dangerous part, of the cultural climacteric of late imperialism.

Its ideologists would like to bend minds to a distorted reality, but politics is people and its only place is where people are — in the streets, in workplaces, in the schools and universities, in the homes. Politics has been displaced from its realm by a universal spectatorism and dis involvement.

There is evidence of a growing awareness of the need to return to former values assumed destroyed by the cultural decadence of consumerism and individualism.

During the NATO war on Yugoslavia, the newspapers were filled as they rarely were before with letters from thousands who had never before written to the press.

Many thousands of names below hundreds of passionately reasoned statements of political opposition to NATO actions filled the newspapers. The numbers of these, and their unequivocal stance, created a deep impression of a new sense of involvement, and re-awakened debate on issues that had been long neglected.

Calls for an end to summit politics stood side by side with appeals to intellectuals that they, too, should debate issues of universal concern. Debate enjoyed a fiery renaissance.

How long, people were asking, can imperialism's new world order survive before it irreversibly destroys human society? How long before the cracks on its facade open wide and the whole structure crumbles?

Will it disintegrate from within, or must it be dismantled from outside? When it goes will it go quietly, or will it drag the world with it? Will it add war to the disasters already set in motion by the ecological maelstrom that capitalism has created?

Is there still time to avoid the destruction of both the contending classes in modern society? How can imperialism be fought? How defeated? Can we destroy it before it destroys us?

Everything depends on the extent to which popular forces can be mobilised and overcome the cynicism and disunity that the capitalist system has nourished.

A new situation exists. It is a situation full of dangers. It poses great problems, and new problems, that call for a new, and urgent approach. In other times, time was on our side. It no longer is.

A final comment is in order. NATO aggression in the Balkans institutionalised international illegality. State terrorism was enshrined as a norm.

Most of the governments that have given this their support are labour and social democratic governments.

The situation reminds us of the parties of the Second Socialist International which, in 1912, spoke out so strongly against working class participation in ruling class wars. The working class should make such wars, they argued, the opportunity to strike decisively against capitalism.

When it came to the crunch, however, and war broke out in 1914 between Europe's ruling classes, the labour and social democratic parties (with a few but honourable exceptions) betrayed their earlier declarations and gave their support enthusiastically to patriotic campaigns that conceded them seats in governments and mercilessly devoured millions of workers' lives in the most barbarous conflict the world had seen until that time.

Workers killed workers at the bidding of their masters in a bloody struggle which had the single aim of establishing imperialist hegemony over as much of the world's economy as possible.

Some socialists refused to be drawn into the universal slaughter. In Ireland, Connolly saw the imminent war in 1914 as a signal.

"The signal for war", he said, "ought also to be the signal for rebellion".

Lenin, in The Collapse of the Second International, observed in 1915 that "every crisis in history, every great disaster and every sudden turn in human history stuns and shatters some, enlightening and hardening others".

History once again repeats itself. Today, social democrats are, as in 1914, once again among the fiercest supporters of war. They are the fiercest defenders of NATO aggression in the Balkans.

They are false to socialism because they have never understood it, nor wanted to. Wretchedly, they have sold themselves and the class they claim to represent for "a handful of silver".

They are among the most feverish of NATO's sabre rattlers. They are among the most abject of Clinton's faithful followers.

History repeats itself both as tragedy and as farce.

As NATO's dirty war unfolded, mirroring whole generations of earlier imperialist aggressions, it reminds us of those earlier social democratic betrayals that sent millions of workers to their death.

Once again they have given their support to a war that has sown death and destruction among the innocent to serve the interests of their imperialist masters.

With this final betrayal they have forfeited social democracy's last remaining claim on history. That claim has lost all credence in the eyes of the world.

Their page in history has closed. New forces are waiting to take their place.

1. Stone, I.F. (1952) The Hidden History of the Korean War. London. Turnstile Press. Ch.12. Stampeding the United Nations. pp.75-81.
2. Berlinguer, Marco, et al. (eds) (1999) Il Ricatto di Rambouillet. in "Dalla Guerra nei Balcani un nuovo sistema imperiale". Roma. MRC. pp.30-36.
3. Kissinger, H. Where now, NATO? Sydney Morning Herald, 23 August 1999.
4. Gilpin, R. (1975) U.S. Power and the Multinational Corporation: the Political Economy of Foreign Direct Investment. London. Macmillan. pp.103,10
5. Couloumbis, T. (1966) Greek Political Reaction to American and NATO Influences. New Haven. Yale Univ. Press. p.28.
6. Shoup, L.H. and Minter, W. (1980) Shaping a New World Order. in Trilateralism: The Trilateral Commission and Elite Planning for World Management (ed. H. Sklar). Boston. South End Press. p.138
7. idem. pp 138,139.
8. The data in this and the following paragraphs are from Long, F. (1981) Restrictive Business Practices, Transnational Corporations and Development. Boston. Martinus Nijhoff. pp. 14, 49, 55-61.
9. Gilpin. loc.cit. p.6
10. Gilpin. idem.
11. Gilpin. loc.cit. p.53.
12. Gilpin. loc.cit. pp.164, 165.
13. Gilpin. loc.cit. pp.17,18.
14. ?
15. See Chiesa, Giuletto. (1999) La Russia allo specchio. in Supplemento speciale to Limes: Rivista Italiana di Geopilitica, no.1, pp.109-112.
16. Four times greater than Albania's national debt and six times greater than the country's entire foreign reserves.
17. Berlinguer et al. loc.cit. p.63.
18. Berlinguer et al. loc.cit. p.64.
19. Berlinguer et al. loc.cit. pp.64-66.
20. Phillips, K. (1990) The Politics of Rich and Poor. New York. Random House. p.132.
21. Phillips. loc.cit. p.136
22. Achcar, Gilbert. (1999) Ever more to the East, but far from Moscow. Le Monde Diplomatique. April. pp.4,5.
23. Baun, M.J. (1996) An Imperfect Union: Maastricht Treaty and the New Politics of European Integration. Boulder, Colorado. Westview. pp.83,84.
24. Callinicos, A. (1991) The Revenge of History: Marxism and the East European Revolutions. Pennsylvania. Pennsylvania State Univ. Press. p.77 et seq.
25. Berlinguer et al. (1999) loc.cit. p.70.
26. A short report on how intrigues have lacerated the UNO was published by The Guardian, of Sydney, in its December 2, 1992, issue with the title "Reclaiming the UN: A dream that went sour? — Or Malice Aforethought?"
27. See, for example, "Documents on the Tehran, Yalta and Potsdam Conferences". Moscow. Progress. pp.80-90.
28. Schirmer, D.B. (1993) Access: Post Cold-War Imperialist Expansion. Monthly Review, 45 (4) pp. 38-50.
29. Trilateral Commission. (1975) The Crisis of Democracy: Report on the Governability of Democracies. cited in Sklar, H. Trilateralism: Managing Dependence and Democracy: an Overview. in Shoup and Minter, loc.cit. pp. 1-57.

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