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Iraq & the World Crisis by John Smith ---------------------------------------------------------------------------- ----------------------------------------- (the following appears in the current issue of Los Cabros del Club, a magazine produced by the Chilean community in Sheffield) Introduction -------------------------------------------------------- This article stands back from the issues and complexities of the current Iraq crisis, to survey the global and historical context . It is schematic, because the subject is too vast to fit into four pages. In the first sections, war is seen not as aberration or insanity, but as a logical and necessary response by the ruling families of the USA to growing depression conditions in their economy and to sharpening competition with other powers for control over the world's oil supplies. The decades-long deterioration of US hegemony over the Middle East is then summarised, and war is seen as necessary if the Bush administration is to achieve its political objectives: to restore US power in the region and to restructure its relations with increasingly unreliable and fragile Arab regimes. Omitted from this condensed survey is an examination of Israel's war on the Palestinians and the nature of the US-Israel alliance, and how the two crises of the Middle East are intertwined. Suffice it to say that the coming war will be fought on two fronts, Iraq and Palestine, that its outcome will determine the fate not just of Baghdad, but of Al Quds/Jerusalem as well. US economy stalked by deflation ---------------------------------------- In the past twenty-four months, the US Federal Reserve has slashed interest rates from 6½% to 1¼%, in a drastic and desperate attempt to avert an economic recession. Yet the interest rates paid by US companies with medium credit rating have hardly declined. And these companies are more numerous - in the past two years many have lost their blue-chip status and with it their access to cheap credit. What makes the problem immeasurably worse is that US companies are losing their ability to increase prices. From cars to computers to chicken dinners, sale volumes can only be maintained by offering discounts and price cuts. And so, despite the decline in the official interest rate, US corporate debt - similar in size to that owed by all Third World countries - is actually getting more expensive. This is an important sign of the powerful deflationary pressures that have started to assert themselves within the US economy. As well as slashing interest rates, the US government has ordered huge tax cuts and a big increase in military spending, helping to boost profits of the giant industrial corporations from Ford to Boeing who make the weapons. The aim of this electric-shock therapy has been to revive growth. Without these unprecedented measures, the US would already be in the midst of a devastating wave of bankruptcies and an extremely severe recession. The Bush administration senses that the US economy is just one recession away from entering a Japanese-style deflationary spiral. As Japan has discovered and Germany is now discovering, from this there is no escape. Five years ago, there was a joke. "What's the difference between Japan and the US/Europe?" The answer was: "Five Years" This is not just another economic crisis. And neither is the coming war on Iraq just another war against a "rogue state". How are the two connected? We can put this another way: how is the very nature of the war on Iraq determined by the overall context, of a capitalist world economy on the verge of a global depression? Oil, the "privileged commodity" --------------------------------------- Oil behaves completely differently from all other raw material commodities. Contrast oil with sugar or coffee, with base metals, with cotton or even coal. world market prices for many of these commodities are at thirty-year lows and are well below their costs of production. Even this understates the situation: while the Third World's non-oil export prices have plunged, the price of imports from the rich countries have risen uninterruptedly. The combined effect of falling prices for raw material exports and rising import prices for manufactured imports is known as "unequal exchange", a form of exploitation and inequality intrinsic to imperialism that has shaped today's world of extremes of wealth and poverty. Its direct effect is that Third World raw material producers have, over the past three decades, lost up to 80% of their purchasing power. Fidel Castro called oil the "privileged commodity". There are two special characteristics of oil that give it this status. Whereas coffee grows at a certain altitude, and sugar cane is produced in countries with similar tropical climate, oil is found in the land and below the oceans; it may be near the surface or it may be under miles of rock; it may be forty below or forty degrees in the shade. To the extent that the world oil price bears any relation to production costs, what matters with oil is its marginal cost of production. As the oil price rises, higher-cost oilfields become profitable and come on stream, increasing supply and reducing upward price pressure until oil finds its natural price, which therefore reflects production costs in the most marginal field. Those with much lower production costs can reap super profits. This is why oil is a source of profits like no other raw material. Arising in part from the allure of these super profits, the second special feature of oil is that it is not just a commodity, not just a source of fuel. In a way that isn't true of any other important raw material, control over sources and reserves of oil confers political power. Because of this, oil's world market price bears very little relationship to its costs of production. Access to and control over, oil supplies is an economic imperative, a political imperative and a military imperative. Japan discovered the truth of the last of these in 1940, when the US Navy's sixth fleet blockaded oil shipments to Japan from the Middle East, provoking Pearl Harbour and the entry of the US into WW2. Iraq, Iran, Kuwait and Saudi Arabia are not just the site of 70% of the world's proven oil reserves; it is so easy to extract the oil that production costs are often lower than $1 per barrel. With oil prices bouncing around $30 a barrel, profits are astronomical. Oil companies, banks, arms manufacturers and others from the imperialist countries capture the lion's share of oil profits, another slice is taken by local elites and royal families - yet workers and farmers across the Middle East face high and rising unemployment, declining wages and agricultural prices, collapsing public services, and brutal repression of their democratic rights. A prime motive for the US/UK drive to war is to recapture from their rivals the biggest slice of Iraqi - and Iranian - oil profits. They resent the free reign that French, Russian and Chinese and other oil companies enjoy in markets largely closed off to them by their own belligerence. The coming war on Iraq is the sharpest point of friction between the imperialist powers. In going to war on Iraq, the US ruling families are seeking to use military might to advance their economic interests at the expense of their rivals. This is the logic that leads to World War 3. While Pentagon planners are busy choreographing the coming air-war, top US lawyers are hard at work planning legal challenges to Iraq's current contracts with French, Russian and Chinese companies. International law says that contracts survive changes of government, but the US government's disdain for international law is even more pronounced in the economic arena than elsewhere . But what about Britain's motives? Why is Blair so determined to follow Bush? We sometimes forget that two of the top four oil companies in the world are British-owned: British Petroleum (BP) and Shell. Along with its nuclear weapons and permanent seat on the UN Security Council, Britain's ability to punch above its weight on the world stage derives from the huge empire of wealth amassed by its ruling families in other peoples' countries, the Middle East in particular. This is why Blair's alliance with Bush is not slavish, it is the mutual self-interest of two imperialist powers that for different reasons need each other. The coming war on Iraq will test their strategic alliance to breaking point. Despite their alliance with the US, British capitalists still have to fight their corner: Lord Browne, chief executive of BP, recently intervened in secret discussions about how Iraq is to be carved up by publicly calling on the US to grant a "level playing field" to British oil companies. War to restore a failing empire ------------------------------------ Part of popular wisdom, a widely accepted truth that no-one disputes, is that one of the pillars of US power in the world is its control over the world's oil supplies. If this is so, then it is also true that over the past thirty years this pillar has been cracking and has shed large chunks.. The Iranian revolution in 1979 dealt a giant blow to US regional and global power. Iran's important oil industry, and its geographical location stretching from the Middle East to the former Soviet Union, were reasons why Iran under the Shah was the US's biggest military base outside of the US itself. Through Iran and Israel, the US dominated the whole of the Middle East and Persian Gulf. The US would certainly have sent hundreds of thousands of troops to protect the Shah. What stopped them was defeat in Vietnam just 3½ years earlier. Unable to use its own military forces against the Iranian revolution, they pushed the Iraqi Army under Saddam Hussein, its new commander-in-chief, into battle. The hated Shah was toppled on February 12, 1979, following the longest general strike in human history. A few months later in next-door Iraq, Saddam (then Vice-President) seized complete power, conducted a ruthless purge of the government, and then ensconced himself in a series of secret meetings with the CIA. It is reasonable to assume that Iran was one of the subjects discussed. On 22 September 1980, Iraq invaded Iran. But instead of an easy victory, expected in part because the revolution had executed or put to flight the Iranian army's entire officer class, the Iranian people fought back fiercely. So much so that within two years Iraq was on the verge of defeat and only the use of huge quantities of chemical weapons against Iranian front-line troops averted catastrophe. The first Gulf war ended in stalemate in 1988, after the death of 1.5 million people. How ironic, once it was very important to the US and Britain that Saddam did possess weapons of mass destruction, that he should use them against his neighbour, and that he should be rewarded for doing so! Anyhow, instead of winning back Iran, the US lost control over Iraq as well. The US had used up Saddam, he was no longer any more value as an ally. but he still had one more vital task to perform. His invasion of Kuwait in 1990 was exactly the pretext the US needed for a war to reassert its own military power in the region. There is a lot of evidence to suggest that the US set a trap for Saddam and that he walked right into it. But even the 43-day blitz in 1991 known as the "Gulf War" (a strange war it is which has no battles, and where only one side gets to do any killing) did not result in a firmer US grip over the Middle East. In 1991, the US was still hamstrung by Vietnam, and did not attempt to capture Baghdad or establish a permanent military base in Iraq. This time, the hawks running the Bush administration are determined things will be different. Crisis in relations with Iran and Iraq was accompanied by lack of US influence in new areas of critical importance: until September 11 and the ensuing invasion of Afghanistan, the US had no military bases anywhere near the central Asian oilfields. US weakness in this region is still a long way from being overcome. However, where the imperialists have lost most ground is in the hearts and minds of the people. The great masses of ordinary people across the Middle East have learned to see through the imperialists' trick. They recognise the ruthless self-interest hiding behind their proclamations on democracy, peace and human rights. They hate and despise them all the more for being thought of as stupid enough to be taken in by it all. The economic distress of our sisters and brothers in the Middle East is intensifying at the same time as the 50-year struggle between the Zionist state and the Palestinian people is moving towards a climax, and amid universal horror and outrage not just at the threat of US invasion of Iraq, but at the whole century of violence and violation that the peoples of the Middle East have endured at the hands of the US and Britain. The US has paid a heavy price for its political and military alliance with Israel. Throughout this entire period, the irrepressible struggle of the Palestinian people has provided a focus for radicalisation and a source of inspiration to new generations. Why does the US reward Israel's occupation of Palestine but punish Iraq so much for its invasion of Kuwait? This question is helping to radicalise tens of millions of people across the Middle East and beyond. It has turned the Middle East into a different place. The US, Israel and the Arab regimes. ------------------------------------------- Why has the US-Israeli partnership proved so enduring throughout the past fifty years of expansionist wars, uprisings and massacres? Why is GW Bush risking his relations with pro-US Arab regimes by endorsing Sharon's brutal escalation? One reason often cited is the economic and political power wielded by Jewish capitalists within the US government. This is a false and dangerous misreading of US Middle East policy. If alliance with Israel were not also in the interests of the US capitalists who are not Jews, their anti-semitism, which is still rife, would be enough on its own to dissolve the alliance. The idea that powerful sectors of US capital - for instance, the oil corporations - support policies towards the Middle East despite judging them to be against their own interests, out of sympathy for the Jews and their suffering during WW2, is absurd. It also feeds into dangerous "Jewish conspiracy" myths. This misconception about what guides US foreign policy is widespread in the Middle East. It reflects the desire of Arab bourgeoisies and the middle class for a more equal relationship with imperialism. Pro-US Arab regimes are humiliated by US support for Israel's military occupation. It prevents these regimes from obscuring their subservient status and the fiction of national sovereignty. The biggest Egyptian and Lebanese capitalists, the princes of Saudi Arabia and the emirs and sheiks of the Gulf have moved the bulk of their huge personal fortunes out of the Middle East, to New York, London and other imperialist centres. The Saudi royal family alone has removed an estimated $600bn from their country, which is suffering from falling living standards, high unemployment, and a government forced to cut essential services whenever the price of a barrel of oil drifts below $18. Despite the fabulous wealth of the Middle East's Arab ruling families, their countries, all of them, remain oppressed, exploited semicolonies, a status which they share with the rest of the Third World. The US and UK governments do not want partnership with the corrupt super-rich Arab regimes, they want subservience, in return for which the US will grant protection, just like in those old gangster movies. Conclusion --------------- The Bush administration has decided to go to war to restore its failing empire. 'Baghdad first' sums up current US strategy in the Middle East. A successful invasion of Iraq would - so the extremists who dominate the Bush administration Bush believe - deal a demoralising blow to the Palestinians and the oppressed masses of other Arab countries. Bush and friends are well aware of the peoples' outraged hostility to US support for Israel and preparations for war against Iraq. They know that a growing majority despise them and their corrupt and client regimes. They are hardheaded enough to realise that this political radicalisation, coupled with deepening economic crisis, threatens to provoke revolutions, and they need to be ready to intervene. Confidence in the repressive powers of the Arab regimes has drained away, and the Israeli military must be kept as a last resort. They can no longer rely on others to do the job. This is another reason why the Bush administration has concluded that it must go to war. In sum, the US is not trying to impose stability, it is trying to recapture the ground it has lost over the past quarter century. It wants to recover control of Iraq and Iran; it wants to recover from Vietnam. They are trying to use weapons to reverse the course of history. Mission impossible! There are no weapons, which can do this! Their ultimate defeat is certain, what is unknown is how much of the Middle East and the world they will take with them before they are finally forced to retreat. We mustn't be mesmerised by the military might of the US. Understanding the context means recognising that US military strength stands in contrast to its economic weakness and fragility, and that the way that the US has ruled over the Middle East - through its Israeli garrison and through the servile dictatorships which they have put in power - is breaking down, as the radicalisation of their populations forces them to put more and more daylight between themselves and their imperialist masters. Understanding the context also means recognising that US imperialism is forced to go to war because the deflationary slump that stalks the US economy can only be kept at bay by increasing its share of super-profits. In a stagnant world economy, this means cutting into their rivals' share. War is not an aberration, it results from the normal functioning of capitalism and imperialism. "Baghdad or bust" was how one newspaper described US policy. This gormless phrase sums up what's at stake. If the US fails to take and hold Iraq, the world's final empire will receive a terrible blow, one that would threaten to turn its decline into a tail-spin. Because so much is at stake, because it is so important to US imperialism that it wages and wins a war on Iraq, it will require a momentuous struggle to force them to retreat. The coming war will be the first in a series of wars which the US will wage in a doomed attempt to restore its failing empire. We will stop this war when we build a movement strong enough to take the means to wage wars out of their hands. 24 November 2002 _______________________________________________ Sent via the discussion list of the Campaign Against Sanctions on Iraq. To unsubscribe, visit http://lists.casi.org.uk/mailman/listinfo/casi-discuss To contact the list manager, email firstname.lastname@example.org All postings are archived on CASI's website: http://www.casi.org.uk