TTIP: The Suicide of Nations

September 12, 2016

The TransAtlantic and TransPacific Trade and Investment Partnerships (TTIP and TTP) are trade agreements between the US and the EU conducted behind closed doors, shrouded in mystery. In this article, the author discusses what this means for us as citizens, and why we should be scared when armed with the necessary information to truly understand exactly why these “partnerships” exist.

The TransAtlantic and TransPacific “partnerships” are the economic and financial counterpart to Washington’s military and foreign policy push for world hegemony. TTIP and TPP are neither partnerships nor trade agreements. They are instruments of financial imperialism that, if they come into effect, subordinate the sovereignty of countries to the profits of global corporations.

The reason the “partnerships” are negotiated in secrecy without public discussions and the participation of the national legislatures is that the so-called agreements cannot stand the light of day. The reason is simple. The agreements make global corporations immune to laws and regulations that can be said to adversely impact their profits. It makes no difference whether the laws protect the environment, the safety of food and workers or are part of the social fabric. If the laws impose costs that reduce profits, corporations can sue the governments in “corporate tribunals” in which the corporations themselves serve as judge and jury.

This is no joke. Public Citizen reports that the agreements would greatly expand the privileges given to foreign corporations by the North American Free Trade Agreement under which $350 million has been paid out by governments to corporations because of costs of complying with toxic waste and logging rules, with $13 billion in claims pending.
(http://www.citizen.org/documents/Leaked-TPP-Investment-Analysis.pdf)

Economist Michael Hudson cites a British study that public provision of health care, such as the UK’s National Health Service, is a TTIP target on the grounds that not only health care regulations but also public provision of health care harms the commercial interests of corporations. (http://www.counterpunch.org/2016/05/11/the-dangers-of-free-trade-agreements-ttips-threat-to-europes-elderly/)

TTIP and TPP are tools for disenfranchising electorates and overturning democratic outcomes and for looting taxpayers via damage suits against governments for the costs of complying with health, safety, environmental, and social laws and regulations. The agreements place corporations above the laws of countries. The agreements have the potential of producing a worldwide sweatshop with starvation wages devoid of environmental and safety legislation.

The question jumps out: How could any country’s trade representative agree to give foreign corporations control over his country’s laws? The answer is money. The reason a person wants appointment as trade representative is to be made rich by serving the interests of corporations. “Fast track” makes this easy. There are no legislators or reporters looking over the trade representative’s shoulder as he sells out his country for his price. The corporations stand to gain so much that they will pay large sums.

The question jumps out: How could any country’s trade representative agree to give foreign corporations control over his country’s laws? The answer is money.

When the agreements are completed without anyone’s participation except the corporations, the national legislatures are only permitted to vote the agreement up or down. The legislators are told that years of hard work went into reaching the agreement and that it would be irresponsible not to support all the hard work that benefits everyone. Environmental and other public interest groups can expose the corrupt agreement, but they cannot match the corporations’ political campaign contributions or bribes. Like the trade representatives, the legislators go with the money.

We can see this already. When the TTIP negotiations began, the European Commission put a 30-year ban on public access to the proceedings. When Greenpeace secured and leaked secret TTIP documents, Ignacio Garcia Bercero, the EU’s chief negotiator, rushed to the defence of TTIP, claiming that no health, safety, or environmental standards would be harmed. EU Trade Commissioner Cecilla Malmstroem also defended TTIP against itself, as did the Independent’s Sean O’Grady in a public debate with me, despite the fact that his own newspaper published the Greenpeace leak in an article that said that the TTIP “documents show that US corporations will be granted unprecedented powers over any new public health or safety regulations to be introduced in future. If any European government does dare to bring in laws to raise social or environmental standards, TTIP will grant US investors the right to sue for loss of profits.”

It is not only the giant global US corporations who are lobbying strongly for TTIP. So are large European corporations as they also benefit. What TTIP and TTP do is to create corporate governance over nations. The New World Order will be run by corporations that sit above the laws of nations and extract money from those countries that try to protect the environment and the health and safety of citizens.

TTIP is not merely the biggest power grab in world history. It is the biggest power grab imaginable.

If accurate records were kept and released—perhaps NSA has it all—I would not be surprised if the records revealed that the main thing negotiated was the price paid to each trade representative for agreeing to sign his country up to be looted by global corporations.

Western capitalism is no longer productive and no longer serves any valid social purpose. In the US the two largest sectors, the military/security complex and the mega-banks, exist on public subsidies. The US manufacturing corporations no longer manufacture. They outsource the work and offshore the jobs. Apple Computer, for example, does not even own the Chinese factories that produce the products that Apple markets.

So many American manufacturing and middle class jobs have been offshored that the real median family income has been declining for decades. Without growth in real consumer incomes, consumer demand was maintained by the expansion of consumer debt. However, debt growth is limited by the absence of income growth and both have come to an end. Consequently, family formation is floundering. More Americans age 18-34 live at home with parents than with spouses or partners. The jobs simply do not exist to provide the income necessary for independent existence.

Western capitalism is kept going by privatisations in which public assets, such as the British postal system, are sold to favoured friends of the government for pence on the pound. Privatisation has become the rage because it is a way of producing capitalist profits by looting public assets.

In the US the laws are written by powerful private interest groups. In Europe, EU membership destroys the sovereignty of member countries whose parliaments are subordinated to the EU.

Capitalism has also been kept alive by Western banking systems indebting other countries and then looting them through IMF-imposed austerity programs that require the sell-off of public assets, always at bargain prices, to Western corporations. John Perkins in his Confessions of an Economic Hit Man, explains how this operates. Currently, Greece and Portugal are the poster-children for how capitalism loots countries.

With the coup against the elected government of Brazil, that country is being set up for renewed looting by Wall Street which has succeeded in having its agents appointed to Brazil’s key monetary and financial positions. http://www.globalresearch.ca/wall-street-behind-brazil-coup-d-etat/5526715

Michael Hudson explains in his recent books the rise of “financialisation.” Financialisation capitalises largely untaxed “economic rents,” such as monopoly profits and land values, into debt instruments that pay interest and fees to banks. These income-flows into banks deprive the consumer economy of purchasing power and result in the decline of productive activity.

Having little left to loot, the purpose of TTIP and TPP is to set up governments for looting. This, of course, means the looting of the hard-pressed taxpayers of the countries whose “trade representative” got his price and signed his country up for looting.

TTIP and TPP also extend the payoff mechanism to legislators. Those who have vocal doubts can expect payments in exchange for being quiet. The obvious result of TPIP and TPP is to destroy any integrity that might still exist in government.

Some economists now advocate that not only should government functions, such as the postal service and health care, be privatised, but also that governance itself should be privatised. However, it already is. In the US the laws are written by powerful private interest groups. In Europe, EU membership destroys the sovereignty of member countries whose parliaments are subordinated to the EU. With few exceptions formerly sovereign countries are deprived of the ability to finance themselves as only the European Central Bank can create euros.

Thus, most EU members are dependent on private banks, usually foreign, for their financing. Lacking financial sovereignty, EU members are reduced to the status of ordinary debtors of private creditors and are treated as such, as the looting of Greece and Portugal testifies.

TTIP takes privatisation to a higher level outside of politics itself and places power in the hands of corporate tribunals that are accountable only to global corporations.

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About the Author
Dr. Paul Craig Roberts attended four of the finest universities, studied under two Nobel Prize-winners in economics, authored 20 peer-reviewed articles in journals of scholarship, and published four academic press peer-reviewed books, including Harvard and Oxford Universities, and seven commercially published books. His most recent book is The Neoconservative Threat to World Order: Washington’s Perilous War for Hegemony.

Is the Russian Economy Finally Tilting East?

September 2, 2016

By Vladimir Popov

It may well be that in the next decades, with the benefit of hindsight, it will be only too obvious how Russia had sidestepped its Asian opportunities until 2014. Russia is lucky to border China – an emerging world economic leader – but it has not benefitted from this proximity as its primary policy goals have been Western-oriented, at least until the Ukraine conflict.

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The Duterte Whirlwind: The Reawakening of the Philippines

August 22, 2016

By Dan Steinbock

The new Philippine president is waging a tough drug war, pushing economic growth domestically and greater pragmatism in foreign policy that could contribute to Southeast Asia’s future.

Internationally, Rodrigo Duterte, the new president of the Philippines, has been portrayed as a “dangerous populist”. That’s a gross caricature. In the elections, he leaned on the nationalistic, social-democratic PDP-Laban (lit. Philippine Democratic Party-People’s Power). He is a tough pragmatic realist who focuses on actions and results, not talks and formalities.

After two decades as Mayor of Davao, the country’s second-largest city, Duterte won the elections with a tough stand on crime. He has a track record. When he took over in Davao in the 80s, it was regarded as a dangerous economic backwater. Today, the city is booming and crime is down. Now he would like to “davao” the nation.

True, Duterte’s macho rhetoric tends to blur the substance of his actions. Sheer authority earns his respect. Allegedly molested by a priest as a boy, he has been vocal for the rights of women, and ethnic minorities, including Muslims. He wants to unleash inclusive growth in the Philippines. He supports the US-Philippine alliance, but would lean more toward China and does not believe Washington would honour its defence obligations.

With a pace of a whirlwind, Duterte seeks to transform the Philippines for the better – or perish in the process of doing so.

Liberalising the Economy

As international media has focused on the Philippine drug war, it has ignored the dramatic rejuvenation of the archipelago nation’s economy that Duterte would like to serve more ordinary Filipinos. After election, Davao businessman Carlos G. Dominguez, Duterte’s finance secretary and childhood friend disclosed the new administration’s 10-point economic agenda. The basic idea is to maintain current macroeconomic policies, while instituting progressive tax reform.

Unlike his predecessor, President Benigno Aquino II, Duterte wants to accelerate annual infrastructure spending to account for 7% of GDP, mainly with public-private partnerships. Budget deficit is likely to increase and he has suggested raising the ceiling to 3 percent of GDP. Unlike stagnating advanced economies, the Philippine economy can manage deficits with future growth. To attract foreign investment, Duterte also hopes to relax the economic provisions of the constitution to adjust the foreign ownership cap of local companies to 70%; a task in which the previous Aquino administration failed.

In the past half a decade, manufacturing has accounted for more than half of FDI applications, which is vital to absorb labour growth as rural workers leave for cities, and to diversify economy away from low-skill services.

Duterte supports the US-Philippine alliance, but would lean more toward China and does not believe Washington would honor its defense obligations.

These policies have potential to accelerate modernisation. Unlike his predecessor, Duterte will promote increasing agricultural productivity and rural tourism. Industrialisation has still a long way to go as less than 20% of the population is employed by industry. The urbanisation rate is only 50% and behind Indonesia. Internationally, the growth potential of the economy has been assessed at around 6.5% per annum, the bulk of which comes from services, construction, and manufacturing sectors. The future of IT business services is bright.

Recently, research firm Nielsen found Philippine consumer confidence to be at an all-time high, buoyed by the promise of future reforms. In the second quarter, GDP growth soared on the back of election-year spending to 7.0%, the fastest in Asia. Indeed, structural growth potential of the economy could be closer to 8 percent, if growth would be more inclusive.

Like Brazil a decade ago, Duterte wants growth to improve social protection programs, including the government’s conditional cash transfer program. He is a secular no-nonsense politician dedicated to strengthening the reproductive health law. In a Catholic country, where divorce can be as tricky as in the Vatican, such goals are controversial but hold a great potential for living standards.

Unlike his predecessors, Duterte supports greater decentralisation and autonomy for the south. To him, federalism is the antidote to bureaucratic centralism; a legacy of colonial powers and ruling political dynasties that cultivate corruption and patronage. Moreover, federalism is vital to defuse a long-lasting communist insurgency and Muslim separatism in the south – and the spread of Jihadism in the future.

The starting point is favourable. The Philippine economy has a strong balance sheet and is well positioned to cope with global shocks. An economy of 100 million people is characterised by solid domestic demand, youthful demographics, but low exposure to global trade. Comprising one of the world’s largest Diasporas, 12 million Filipinos live abroad, while their remittances bring in vital foreign exchange.

Like other promising emerging economies, the Philippines has its downside risks. Thanks to its geographical location, large-scale natural disasters can cause major property loss, population displacement and disrupted food supply in storm-prone nation of 7,000 islands. Internationally, an earlier than anticipated Fed rate hike could hurt the Philippine peso. In turn, weaker-than-expected growth in China could harm exports and erode the current account balance.

War Against Drugs and Crime

Since the election, the drug war has claimed more than 1,800 lives. The bloody bodies of alleged dealers and users have been left on sidewalks with cardboard placards suggesting involvement in the drug trade. Rights groups opposed Duterte backing death squads when he was still mayor of Davao and Time nicknamed him “The Punisher” Today, Human Rights Watch calls the situation “extremely alarming”.

Drastic times call for drastic measures, argue the proponents of the administration. By early August, Duterte had linked more than 150 judges, mayors, lawmakers, police and military personnel to illegal drugs ordering them to surrender: “I’m giving you 24 hours to report to your mother unit or I will whack you”, he said at a military camp. Reportedly, nearly 600,000 people have surrendered to authorities, trying to avoid getting killed. Prisons have turned into overcrowded, sardine-pack nightmares.

As far as critics are concerned, Duterte is undermining human rights, despite his statements against extrajudicial killings. This argument has been directed against Duterte by the UN, the United States and the Philippine rights organisations. Yet, he considers the critics naïve. Let’s illustrate the point: One of his most vocal critics has been Senator Leila de Lima; a former human rights commissioner, who had a stint as Aquino’s Justice Secretary and whose statements have often been taken at face value by well-meaning observers. As de Lima accused Duterte for human rights violations, he dropped a bombshell alleging that de Lima was linked to the illegal drugs trade inside the New Bilibid Prison (which is under the DOJ); that she had bought a mansion to her driver who is also her lover; and that the driver collected drug funds for her during her senate campaign. Duterte struck a nerve. Last March, Discovery Channel’s Lou Ferrente, a former Gambino mobster, took a closer look at the world’s largest prison, which held 20,000 inmates and was run by drug lords who lived like royalties and seemed to have a close relationship with de Lima. While de Lima blames Duterte for character assassination, she is now under investigation for alleged links to illegal drug syndicates. According to the new DOJ, the investigation covers the top to the bottom ranks of the previous DOJ that de Lima headed.

Despite rights organisations’ criticism, Duterte has the support of most Filipinos. In July, his trust rating soared to 91%.

As far as Duterte is concerned, he feels he is not moving fast enough. The Mexican drug cartel Sinaloa, the largest source of illegal drugs to the US, is already using the Philippines as an intermediate destination. Due to challenges in directly reaching America, the cartel is operating in the Philippines via transshipment. These activities were discovered around 2013 when a Mexican operation worth almost $100 million was confiscated. Duterte’s concern is that Manila has only a few years to curb illegal drugs and to avoid the fate of Mexico’s border regions.

These dramatic exchanges and tough measures have unleashed much debate in the Philippines. What actually happened in era of President Aquino? Despite substantial funds and the presidential crime commission, why so little was done to fight the drug lords and the cartel.

Despite rights organisations’ criticism, Duterte has the support of most Filipinos. In July, his trust rating soared to 91%. After two long decades of Marcos and after another two decades of anti-Marcos politics, reforms have not been accompanied by inclusive economic growth. Today, ordinary Filipinos are tired of waiting.

Duterte would like to “destroy the oligarchs that are embedded in government”. He describes them as “guys who just sit in their airplanes or their mansions. Their money adds up like the fare adding up in a taxi’s metre.” In early August, he singled out Filipino tycoon Roberto Ongpin; one of the 50 richest Filipinos in 2015 with a net worth of $900 million, according to Forbes. Duterte described him as a businessman close to people in power and implied he used political influence to foster his businesses. The oligarch ties go way back. Ongpin started his career as the trade secretary of Ferdinand Marcos.

The Fall From Grace

After the relinquishment of US sovereignty over the Philippines in July 1946, the Philippines was one of the most promising economies in Asia. In 1950, its living standards were still twice as high as in Taiwan or South Korea. However, as industrialisation took off in Japan and spread to tiger economies in East and Southeast Asia, the Philippines fell behind. Today the Philippine living standards are about 15% relative to Taiwan and 20% in comparison to South Korea.

In the postwar era, the US retained military bases in the Philippines, as well as commercial privileges regarding Philippine imports and natural resources. As economic growth and development began to intensify in the mid-1960s, Ferdinand Marcos won the election. During his first term, industrialisation increased, infrastructure was created and schools were launched. Meanwhile, Marcos steered increasing funding to the military, while sending more than 10,000 Filipino soldiers to Vietnam to support the US.

In his second term, Marcos began to create a personality cult, amid increasing economic and political turmoil. When he declared Martial Law in 1972, Washington looked the other way. Thanks to heavy borrowing, the economy grew. But by the 1980s, foreign debt servicing and mismanagement of key industries caused a major downturn and the Philippines became known as the “sick man of Asia”.

The 2010 election win of President Aquino was buttressed by the legacy of his father, an opposition leader allegedly assassinated by Marcos, and his mother, the first post-Marcos president. During his rule, Aquino began his struggle against corruption and good governance, but growth did not filter down. Every third or fourth Filipino continues to live below the poverty rate, while drugs and crime thrive in slums.

While Aquino failed to achieve inclusive growth, he did get US forces back to the Philippines.

The Role of Washington: Security Assurances

Since the postwar era, Manila has been Washington’s major non-NATO ally in the region. The American-Filipino relationship rests on the 1951 Mutual Defense Treaty (MDT), the 1999 Visiting Forces Agreement (VFA), and the 2014 Enhanced Defense Cooperation Agreement (EDCA), which has allowed the US Navy to return to Subic Bay. Leftist parties consider the return of US troops a violation of Philippine sovereignty, while pro-US Filipinos hope to join the US-led Trans-Pacific Partnership (TPP) in the next round of expansion.

The new alliance with Washington was designed by President Aquino and his foreign minister Albert del Rosario. In Washington’s view, it complemented US’s pivot to Asia, including the plan to move the majority of US warships to Asia Pacific by 2020. However, as Rosario resigned for health reasons in the spring and Aquino is no longer in office, Chinese-Philippines rapprochement has begun which has not escaped unnoticed in Washington.

Leftist parties consider the return of US troops a violation of Philippine sovereignty, while pro-US Filipinos hope to join the US-led Trans-Pacific Partnership (TPP) in the next round of expansion.

In the past few months, there have been several diplomatic rows between Duterte and US ambassador Philip Goldberg. A recent one followed a meeting between State Secretary John Kerry and Duterte who said that “I’m fighting with [Kerry’s] ambassador. His gay ambassador, the S.O.B. He pissed me off.” In the US media, the debate focused on the homophobic slur; it should also have been focused on efforts to influence the election. Before the vote, the US Navy sent its third warship in less than seven months into the waters of the disputed South China Sea. Meanwhile, ambassador Goldberg made it clear that Duterte was not Washington’s choice and supported Aquino’s favourites. “[Goldberg] meddled during the elections,” says Duterte. “He was not supposed to do that.”

Historically, the distrust between Duterte and Washington goes back to the Meiring case, which US mainstream media has portrayed as a psychological melodrama that “fuels Rodrigo Duterte’s ‘hatred’ of the US”, as the New York Times put it amid the Philippine elections. However, the case may have more to do with US covert operations in Southeast Asia. The story goes back to Davao in May 2002 when a metal box exploded in the hotel room of Michael Terrence Meiring and mangled his legs. The police found in the room powerful high-tech explosives and “highly-confidential” documents. Meiring had spent millions of dollars and had close ties with well-placed government authorities in Southern Mindanao, as well as Muslim separatists, Communist insurgents and jihadists, such as Abu Sayyaf; the feared terrorist organisation, which Senate President Aquilino Pimentel Jr. once described as a “CIA monster” because the agency helped to train the group.

After Meiring was taken to the hospital, he vanished as men representing the FBI took him in the dark of night and flew him out of the country, with facilitation by the US Embassy. Subsequently, Duterte blocked US requests to base drones or spy planes at Davao’s old airport.

In Washington, the Meiring case is discounted as conspiracy speculation. Yet, since the Bush era, Washington’s neoconservatives have promoted the use of “regional states in developing a hedge against the possible emergence of an overly aggressive China”. To Duterte, the Meiring debacle was an infuriating violation of Philippine sovereignty.

The Role of Beijing: Economic Cooperation

On July 12, the Hague international court ruled in the dispute between China and the Philippines over the South China Sea. Internationally, the ruling of the Permanent Court of Arbitration (PCA) has been characterised as a sweeping rebuke of Chinese claims in the South China Sea. But in international relations, the impact is more ambiguous, which means greater uncertainty and possible volatility in the region.

China refused to participate in the arbitration because in Beijing’s view the tribunal had no jurisdiction over the case. Despite the focus of the UN Convention on the Law of the Sea (UNCLOS), the PCA is not a UN agency. Nor is its ruling enforceable. The US has strongly supported international arbitration and the rule of law. Yet, US record on international law is highly mixed; it has often acted unilaterally against international law, including through regime change, invasions and coups d’etat. Washington still has not ratified the UNCLOS, which in Beijing creates an impression that US wants China to abide by rules it rejects. Historically no permanent member of the UN Security Council has complied with a ruling by the PCA on an issue involving the Law of the Sea.

Currently, China and the Philippines have opted for a cooperative stance, which is predicated on Sino-Philippine dialogue that could reduce the weight of geopolitical issues, while supporting mutual gains in economic development. In the long-term, this is the most preferable trajectory to Manila, Beijing, Washington and ASEAN.

Despite significant pressures, Duterte is hedging his bets between US security assurances and Chinese economic cooperation, as evidenced by former President Fidel Ramos’s informal talks recently in China, which may result in a formal dialogue. Intensified bilateral cooperation could increase China’s participation in infrastructure investment and Chinese multinationals in economic zones; financing possibilities vis-à-vis the Asian Infrastructure Investment Bank; agreeing on “joint development areas” in South China Sea; possibly even joint potential in anti-corruption and anti-drug activities.

The Great Awakening

In the past few weeks, international media has “rediscovered” the Philippines, mainly thanks to the drug war, which ensures dramatic footage and great headlines, and are sometimes politically convenient. However, the structural trends of the beautiful island nation – rapid growth and great economic potential, a huge infrastructure push and rising foreign investment, the quest for law and order, and the effort to finally end futile friction with insurgents and to focus on economic development – continue to be largely ignored.

Opposition critics argue that Duterte’s rule could deteriorate into autocratic mismanagement that will penalise the gains of the Aquino years. Still others understand the need for tough policies, but remain concerned about unintended rights violations and collateral human damage.

In contrast, Duterte’s supporters ask why the war against drugs and for law and order did not start six years ago in the Aquino era when it would still have been easier; while others wonder why corruption was permitted, despite multiple high-profile cases that have been recently disclosed in the public and private sector. To them, the Duterte era is a great reawakening – a second People’s Power Movement, if you will.

Duterte hesitated for months before he began to compete for the presidency, and for a reason. He is taking huge personal and security risks to achieve his objectives. Like Lee Kuan Yew once in Singapore, he is determined to clean the government, the bureaucracy and the private sector, while defusing external conflicts.

In emerging Asia, prosperity can only be built on peace and stability.

Featured image courtesy of: Reuters

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About the Author

Born in Europe and spending much of his time in the US and China, Dr. Dan Steinbock is an internationally recognised expert of the nascent multipolar world. He is also Guest Fellow of Shanghai Institutes for International Studies (SIIS) and the commentary is based on his SIIS project on “China and the multipolar world economy.” Dr. Steinbock has lectured widely in China and recently in the Philippines Foreign Service Institute. For more about Dr. Steinbock, see http://www.differencegroup.net/ For more about SIIS, see http://en.siis.org.cn/

What if Clinton Wins: US Presidential Election 2016

August 18, 2016

By Dan Steinbock

According to polls, the race to the White House is over. Clinton has won, Trump has lost. If that proves the case, US economic erosion will slow but imperial foreign policy may escalate, which has critical repercussions in Asia.

The polls reflect the new status quo. Despite her high unfavourability ratings, Clinton now has the support of every second registered voter, whereas Trump, with his high unfavourability ratings, can rely only on every third. As a result, Clinton’s likely voters nationwide amount to 45-50 percent, as against Trump’s 35-40 percent.

Campaign financing tells the same story. By early August, Clinton had raised $365 million in big money financing, almost a third of it outside money. In contrast, Trump had barely $100 million, only a tenth of it outside money. Four of every five dollars in the Clinton campaign has come from large corporations and Wall Street, big lobbyists and big unions, not ordinary Americans.

How did we get here?

Questionable Choices

By suppressing the dissent of Bernie Sanders’s centre-left opposition in the Democratic convention, Hillary Clinton consolidated leadership, while attracting some dissatisfied Republicans and Reagan Democrats who favour hawkish foreign policy but progressive social policy. But afterwards, Clinton faced huge political headwinds as FBI Director James Corney testified that she had shown “reckless” disregard with highly-classified emails, while multiple FBI investigations (which the Obama administration sought to deter) are underway into the Clinton Foundation.

The rising public storm paved way to a triumphant Republican convention in which Trump could have sustained a semblance of unity. Instead, he stumbled on his mouth by quarrelling about a US Muslim soldier killed in action and with the Speaker of the House Paul Ryan, lost voters in several swing states and polarised division among Republicans.

Here’s the contradiction in a nutshell: In November, most Americans will knowingly vote for a president they do not particularly like, don’t really trust and who they believe will continue to take America in the wrong direction.

The pessimist take is that the Trump campaign is amid a meltdown, while Trump seeks to save his face and might withdraw. In turn, Republican leaders such as Mitch McConnell are considering a replacement. According to party rules, it would be a logistical nightmare, but technically possible. In that case, Trump would have to remove himself; or the GOP would have to remove Trump. That would pave the way for Trump’s Vice President Mike Pence, or Paul Ryan. While conservative Ted Cruz might try, he would not get majority support. There would also be many dark horses.

Of course, die-hards cannot believe that Trump could be fired. Besides, Trump shows no signs of resignation. Consequently, they expect Trump to stage a “fantastic” comeback.

Intriguingly, the shifts in the polls do not reflect voters’ perceptions about America’s direction and priorities. Most Americans believe that the top priority in the 2016 election is economy, while two thirds believe that America is heading in the wrong direction.

Here’s the contradiction in a nutshell: In November, most Americans will knowingly vote for a president they do not particularly like, don’t really trust and who they believe will continue to take America in the wrong direction.

If this scenario will materialise, what kind of economic and foreign policies will the Clinton administration opt for?

More Economic Erosion

Clinton has promised to create 10 million new jobs in America in the next four years. In reality, that does not require miracles. Thanks to demographics and output potential, US economy should create some 200,000-250,000 new jobs on a monthly basis, which means 2.4-3 million annually; that is, 9.6-12 million new jobs in four years. Ironically, it could be undermined by the kind of assertive foreign policy that Clinton supports.

Clinton has promised to expand programs for poor Americans and to increase contributions from the prosperous. Her discretionary spending relies on $1.1 trillion for infrastructure, universal pre-school and tuition assistance, paid family leave and so on. To alleviate America’s income polarisation, she advocates 4% surtax on incomes above $5 million, raising rates on medium-term capital gains and estate tax rate to 45%.

According to consensus estimates, Clinton plan could generate $1.1 trillion in the next decade. However, it is a centrist plan that will not overcome US inequity. Drastic times call for greater ambition.

Today, US economy faces a massive sovereign debt burden, which amounts to $19.4 trillion (105% of the GDP). Nevertheless, Washington still lacks a credible, bipartisan, medium-term debt plan. Clinton believes that rising debt is a national security risk and her economic program would reduce it in relative terms by 2026. Like Sanders, she would probably reduce the deficit through tax increases, with limited cuts to discretionary spending; unlike Sanders, she would not challenge the Wall Street’s financial aristocracy or reduce military spending.

In relative terms, this is comparable to the Greek burden at the eve of its sovereign crisis in 2009. The tiny Greek crisis shook Europe; the huge US debt crisis would rock the world.

In view of consensus projections, by 2026 US debt will soar by half to $29.3 trillion (106% of GDP), assuming fairly ambitious real GDP growth rate of 1.7% next decade. But it does not include downside risks, such as monetary exhaustion, immigration decline, recession, or geopolitical crises. Instead, a less ambitious growth rate of 1.2% would cause the debt-to-GDP ratio climb to 115-120%. In relative terms, this is comparable to the Greek burden at the eve of its sovereign crisis in 2009. The tiny Greek crisis shook Europe; the huge US debt crisis would rock the world.

Toward Military Friction

After his Nobel Peace Prize in 2009, President Obama was widely expected to scale back America’s commitments overseas, particularly George W. Bush’s long wars in Afghanistan and Iraq, and shift responsibilities to allies. Instead, the Obama White House has authorised deployments in Syria, is rethinking troop drawdown in Afghanistan, considering sending more troops to Iraq and Syria, expanding the fight with ISIS to North, West and East Africa (e.g. Nigeria, Libya, Somalia), and spending more for sending heavy weaponry to Eastern and Central Europe to counter Russia. The US military is now actively engaged in more countries than when Obama took office.

In the Clinton era, US military policy would be more costly, assertive, and global. She is unlikely to cut military spending even though the US already spends $600 billion on defence – more than the next seven countries combined, according to SIPRI.

If the massive US military transfer is really meant for stabilisation, it would contribute to peace. If not, it will split the region, slow China’s rise and the catch-up of emerging Asia.

While the US pivot to Asia began in Obama’s first term, it was first framed by Clinton, as foreign secretary. In that role, she promoted the Trans-Pacific Partnership (TPP); but to beat Sanders, she turned against it. As president, she might flip-flop again and support it. She also supported the shift of 60 percent of US military ships to Asia Pacific; a decision that has toughened attitudes in China and contributed to increasing rearmament and conflict escalation in the region.

That’s why neoconservative leaders, led by Robert Kagan, have rushed behind Clinton’s campaign. That’s also why 50 former GOP national security leaders recently slammed Trump who would like to renegotiate US pacts with its allies. They wanted to ensure the continuity of US “military-industrial complex” and the expansive foreign policy – but Clinton will reap the political benefits.

Even after the global crisis and China’s growth deceleration, Asia may have generated wealth amounting to twice the size of Germany into the world economic map. In the 21^st century, the world’s economic future relies on peace in the region.

If the massive US military transfer is really meant for stabilisation, it would contribute to peace. If not, it will split the region, slow China’s rise and the catch-up of emerging Asia. That, in turn, could undermine the promise of the Asian Century.

The original, slightly shorter commentary was published by South China Morning Post on August 16, 2016.

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About the Author

Dr. Dan Steinbock is an internationally recognised expert of the nascent multipolar world. He is also Guest Fellow of Shanghai Institutes for International Studies (SIIS) and the commentary is based on his SIIS project on “China and the multipolar world economy.” For more about Dr Steinbock, see http://www.differencegroup.net/ For more about SIIS, see http://en.siis.org.cn/

Olympic Creed Over Olympic Cost Overruns

August 16, 2016

By Dan Steinbock

Olympics celebrate struggle for excellence, not costs. As more emerging economies are hosting Olympics, it is time to recall the Olympic Creed.

When Brazil won the right to host the Summer Games over six years ago, its economy was booming after years of President Lula’s successful economic policies. Today, Brazilian economy is struggling amidst its worst recession since the 1930s,

But the economic fall of Brazil’s host capacity is only a part of the big picture. The other part has to do with cost overruns.

The initial cost of organising the Rio Games was estimated at $2.8 billion. The current budget is closer to $5 billion. The total Olympic budget is far higher. It was initially estimated at $12 billion, whereas the current estimated bill is closer to $20 billion – more than 22 times what Brazil is spending to contain the Zika virus.

Worse, cost overruns have been the rule of summer and winter Olympics since the 1960s.

Rising Costs, Soaring Cost Overruns

When the first Olympic Games were held in Athens in 1896, the final bill was $10 million, in today’s money. The first billion-dollar games ensued in Berlin 1936, when Nazi Germany’s expenditures soared to $1.7 billion. In turn, the postwar austerity ensured that the costs in London in 1948 were around $30 million.

The total Olympic budget is far higher. It was initially estimated at $12 billion, whereas the current estimated bill is closer to $20 billion – more than 22 times what Brazil is spending to contain the Zika virus.

As expenditures began to climb in the 1970s and 1980s, cost overruns have often meant substantial social losses following the games. Montreal’s 1976 Summer Games are case in point. The Canadian city spent the next three decades paying off the multi-billion bill.

In the past 25 years, costs and cost overruns have soared. Olympics in Barcelona 1992 ($9.7 billion cost, 266% cost overrun) and Athens 2004 ($3 billion, 49%) contributed to soaring debt in both Spain and Greece, which fuelled the subsequent European sovereign debt crisis. Moreover, the high costs of London 2012 ($15 billion, 76%) and Sochi ($22 billion, 289%) added to heavy indebtedness in the UK and economic erosion in Russia.

In the past 25 years, when the cost factor has been less than $5-$7 billion and cost overruns have been kept under 25 percent, the final bill has been debated but tolerated. In the case of summer games, only few hosts – Beijing in 2008 – have managed to keep the cost overrun low.

New Hosts Emerge

At the same time, the hosts are changing. Winter Olympics were initiated in France in 1924. For nine long decades the Winter Olympics took place mainly in advanced economies, some of which have hosted the games twice or more (incl. Switzerland, the US, and Japan).

Although summer games were initiated in Greece in 1896, the first Olympics in an emerging economy took place in Mexico City in 1968, followed by Moscow in 1980 and Beijing in 2008. In the past decade, the Olympic torch has begun to shift from advanced economies to emerging nations. The trend will continue, as evidenced by the Winter Games in South Korea (2018) and China (2022).

Olympics should not be the exclusive monopoly of wealthy advanced economies or large emerging economies. However, as economic momentum is shifting from advanced West to emerging Asia and Americas, living standards in the host cities, as measured by GDP per capita will be lower. As a result, challenges will accumulate.

Three Olympic Scenarios

In the future, there are three probable scenarios for Olympic Games. In the Dead-End Scenario, the Olympics will continue as before. In that case, soaring costs and cost overruns will virtually ensure that the games will be held mainly and repeatedly in prosperous economies, or in a few large emerging nations. In weaker economies, the games are vulnerable to further economic erosion and social division.

In the Multipolar Scenario, excessive expenditures will be contained not just through planning and cost-control but cooperation.

In the Cost-Control Scenario, a track-record of successful planning, rigorous cost-control and ability to repurpose the Olympic facilities will play the key role. Nevertheless, the games will stay mainly in those few advanced or emerging economies that are willing and able to foot the bill.

In the Multipolar Scenario, excessive expenditures will be contained not just through planning and cost-control but cooperation. Today, Olympics take place in several cities but one country. In this scenario, they could also take place across multiple cities in one region, say, in Africa, Americas, South and Southeast Asia, the Middle East. In this way, smaller economies and emerging nations could participate along with larger ones in more multipolar and inclusive Olympics.

According to the Olympic Creed: “The most important thing in the Olympic Games is not to win but to take part, just as the most important thing in life is not the triumph but the struggle. The essential thing is to have fought well.”

It is not the size of the stadium that matters but our ability to dream and the quest for excellence.

A slightly shorter version was published by China Daily on August 16, 2016

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About the Author

Dr. Dan Steinbock is Guest Fellow of Shanghai Institutes for International Studies (SIIS). This commentary is based on his project on “China and the multipolar world economy” at SIIS, a leading global think-tank in China. For more about Dr Steinbock, see http://www.differencegroup.net/ For more about SIIS, see http://en.siis.org.cn/

Erdoğan’s Coup: Purging Domestic Critics, Gaining External Allies

August 5, 2016

By James Petras

Faced with enemies and adversaries at home and overseas, Erdoğan decided on a dual strategy of improving his ties abroad, especially his links with Russia and Israel while launching a total war on domestic critics.

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Race and Imperialism

August 5, 2016

From the Editors

The South China Sea, Libya again, Syria, Iraq, Afghanistan and Turkey; terror attacks in Europe, America, Africa and even Australia.

Media headlines offer analyses that often serve to confuse because the issues and locations are usually examined in isolation rather than holistically.

To understand international relations the seasoned observer should remember the great game at play.

Race and Imperialism: the two drivers that underpin virtually all events in current international relations have changed little over the past two hundred years.

The excellent book by James Bradley The China Mirage: The Hidden History of American Disaster in Asia is a must read that serves to underscore any accurate examination of how we as Europeans effectively employed the rhetorical ethic both at home and abroad to undermine the development of those peoples not regarded as Europeans. Our mission: to bring democracy and civilisation and our European values to those we regarded as the “other”.

Today the neo-cons and their acolytes’ vision of the world remains virtually unchanged. There is no alternative world view. No other power, whether it be Russia or China can be allowed to challenge our imperial, and specifically United States hegemony.

Unfortunately for them, your average citizen, and many of our wiser heads in Western intelligence circles have realised: the world has changed.

Photo: Print (reproduction) of the original “I’ll Try Sir,” US Army in Action historical painting, depicting the United States Army during the 14 August 1900 Allied Relief Expedition assault on the outer walls of Peking in China during the Boxer Rebellion. Copyright: US Army PD.

Brexit and London’s Role as an Islamic Banking Hub: Is the Glass Half Empty, or Half Full?

August 2, 2016

By Sohail Jaffer

Regardless of the shocking referendum result, there are reasons for optimism about the UK’s role as a hub for Islamic finance in a post-Brexit environment. Sohail Jaffer explains.

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From the “Tragedy of the Commons” to the Tragedy of Enclosures

August 2, 2016

By Olivier De Schutter and Katharina Pistor

If the enclosures movement that swept through England in the 18^thcentury was the general rehearsal, the play has now been staged for over two centuries, and has penetrated deep into all regions of the world: wherever we look, the privatisation of resources is gaining ground. Resources that used to be treated as “commons” or “common pool resources”, managed by the local communities, are being commodified.

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Understanding the Numbers: The Lives of Syrian Refugees

July 29, 2016

By Jeffrey H. Cohen

The life of a refugee is not easy. At least 6.6 million Syrians had been internally displaced, and nearly 5 million Syrians have fled their homeland. Yet these facts tell us little about what they are doing.

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