Tag: economics

Klein: How war was turned into a brand

Naomo Klein on Israel’s military-industrial complex:

Israel’s economy isn’t booming despite the political chaos that devours the headlines but because of it. This phase of development dates back to the mid-90s, when the country was in the vanguard of the information revolution – the most tech-dependent economy in the world. After the dotcom bubble burst in 2000, Israel’s economy was devastated, facing its worst year since 1953. Then came 9/11, and suddenly new profit vistas opened up for any company that claimed it could spot terrorists in crowds, seal borders from attack, and extract confessions from closed-mouthed prisoners.

Within three years, large parts of Israel’s tech economy had been radically repurposed. Put in Friedmanesque terms, Israel went from inventing the networking tools of the “flat world” to selling fences to an apartheid planet. Many of the country’s most successful entrepreneurs are using Israel’s status as a fortressed state, surrounded by furious enemies, as a kind of 24-hour-a-day showroom, a living example of how to enjoy relative safety amid constant war. And the reason Israel is now enjoying supergrowth is that those companies are busily exporting that model to the world.

Discussions of Israel’s military trade usually focus on the flow of weapons into the country – US-made Caterpillar bulldozers used to destroy homes in the West Bank, and British companies supplying parts for F-16s. Overlooked is Israel’s huge and expanding export business. Israel now sends $1.2bn in “defence” products to the United States – up dramatically from $270m in 1999. In 2006, Israel exported $3.4bn in defence products – well over a billion more than it received in American military aid. That makes Israel the fourth largest arms dealer in the world, overtaking Britain.

Much of this growth has been in the so-called homeland security sector. Before 9/11 homeland security barely existed as an industry. By the end of this year, Israeli exports in the sector will reach $1.2bn, an increase of 20%. The key products and services are hi-tech fences, unmanned drones, biometric IDs, video and audio surveillance gear, air passenger profiling and prisoner interrogation systems – precisely the tools and technologies Israel has used to lock in the occupied territories.

And that is why the chaos in Gaza and the rest of the region doesn’t threaten the bottom line in Tel Aviv, and may actually boost it. Israel has learned to turn endless war into a brand asset, pitching its uprooting, occupation and containment of the Palestinian people as a half-century head start in the “global war on terror”.

There is a more sophisticated, highly original version of this thesis in the work of Jonathan Nitzan and Shimshon Bichler, notably in their groundbreaking book The Global Political Economy of Israel.

Iraq’s war economy

Finally, here’s (part of) the story behind the news: The authors Christopher Parker and Pete W. Moore in the latest MERIP issue analyze Iraq’s war economy and see much of the motives behind the insurgency against the US-led occupation in decades-old gray economic structures that are challenged by the new guys in power.

Throughout the 1990s, most of Iraq’s oil was transported in relatively small tanker trucks—to Jordan and Turkey with dispensation from Washington and undercover to Syria and the Gulf. As the pipelines to Turkey and the Gulf were turned back on in 2003, most of these truckers—many of whom had close ties with, and indeed colleagues in, neighboring countries—were out of a job. Hence, it is not surprising to learn that pipeline attacks “are now orchestrated by [insurgents and criminal gangs] to force the government to import and distribute as much fuel as possible using thousands of tanker trucks.

The authors challenge the mainstream view (and thereby also the whole reconstruction ideology) that in pre-invasion Iraq the state still functioned as a regulatory agent and controlled much of the Iraqi economy.

Washing their hands of any responsibility for the violence that plagues Iraq, they present the insurgency as springing from a yearning for lost domination on the part of groups linked to the Saddam-era state. This is the statist narrative—the idea that Saddam’s regime controlled everything worth controlling before it was overthrown.

Highly interesting are the remarks on the links to Iraq’s neighbors, most notably Jordan:

The political and social histories of modern Iraq and Jordan are bound tightly together. The deep ties between families, tribes, political movements and economic actors across the borders of these two countries have a history that, by and large, has yet to be written.

From the article it also becomes clear that the 2003 invasion merely finished off what was left of the prosperous nation that Iraq was in 1980. The US got most of the job done by sponsoring Saddam in the 80s and engineering UN sanctions in the 90s.

Tony Blair, the dictators’ sharmouta

Tony Blair on the recent allegations that Saudi Prince Bandar pocketed a $2 billion commission on an arms deal with BAe:

“This investigation, if it had it gone ahead, would have involved the most serious allegations in investigations being made into the Saudi royal family,” Blair said at a meeting of the Group of Eight nations in Germany.

He added that, “My job is to give advice as to whether that is a sensible thing in circumstances where I don’t believe the investigation incidentally would have led anywhere except to the complete wreckage of a vital strategic relationship for our country. . . . Quite apart from the fact that we would have lost thousands, thousands of British jobs.”

This a week after Tony Blair heaps praise on the regime of Muammar Qadhafi in Libya as a major oil deal is signed with BP.

Corruption, the Arab world’s number one export. In fact when you think about it, between the Arabs’ petrodollars and the Israelis’ various mafias (diamonds, ecstasy, weapons, etc.), this region is probably the world’s nexus of sleaze.

Update: This story has more details on the Bandar-BAe-Blair scandal. And a note: sharmouta is Arabic slang for slut or whore.

Iraqi oil workers on strike

Between some of the most preposterously neo-liberal economic laws anywhere in the world and attempts to give oil companies some of the most generous formulas for production sharing, Iraq has suffered plenty at the hands of US-led efforts to remodel its economy. Now it’s the Maliki government that’s threatening to come down “with an iron fist” on striking oil workers:

WASHINGTON, June 6 (UPI) — On the third day of an oil strike in southern Iraq, the Iraqi military has surrounded oil workers and the prime minister has issued arrest warrants for the union leaders, sparking an outcry from supporters and international unions.

“This will not stop us because we are defending people’s rights,” said Hassan Jumaa Awad, president of IFOU. As of Wednesday morning, when United Press International spoke to Awad via mobile phone in Basra at the site of one of the strikes, no arrests had been made, “but regardless, the arrest warrant is still active.” He said the “Iraqi Security Forces,” who were present at the strike scenes, told him of the warrants and said they would be making any arrests.

The arrest warrant accuses the union leaders of “sabotaging the economy,” according a statement from British-based organization Naftana, and said Maliki warned his “iron fist” would be used against those who stopped the flow of oil.

IFOU called a strike early last month but put it on hold twice after overtures from the government. Awad said that at a May 16 meeting, Maliki agreed to set up a committee to address the unions’ demands.

The demands include union entry to negotiations over the oil law they fear will allow foreign oil companies too much access to Iraq’s oil, as well as a variety of improved working conditions.

“Apparently they promise but they never do anything,” Awad said, confirming reports the Iraqi Oil Ministry would send a delegation to Basra.

“One person from the Ministry of Oil accompanied by an Iraqi military figure came to negotiate the demands. Instead it was all about threats. It was all about trying to shut us up, to marginalize our actions,” Awad said. “The actions we are taking now are continuing with the strike until our demands are taken in concentration.”

While you might say Iraq has bigger problems than labor woes at the moment, and that keep the oil flowing should be a national priority. Fine. But then how about giving oil workers their fair dues and not resorting to the thuggish violence characteristic of the previous regime? Or is this about keeping them off the negotiating table for the already controversial oil law?

The Central Boycott Office

This news is a couple of weeks old, but I found telling what German news magazine Der Spiegel discovered in attorney documents which are part of the file on the Siemens corruption scandal (which also extends to bribery in Saudi Arabia – see this excellent WS Journal article):

The documents suggest that a part of the €72mn which Siemens paid to a certain Mohiedden el Shatta was used to make sure that Siemens remained off the black list of the Central Boycott Office. This office which is Damascus-based but affiliated with the Arab League was founded in the 50s to organize the Arab world’s commercial boycott of Israel. Companies which are on the list face restrictions in doing business with Arab states.

Here is some background on the office from a paper published by MEMRI:

In other words, the Boycott Office has now become an instrument to fight globalization which threatens primarily the Syrian state-run command economy drowning under the weight of stifling regulations, pernicious corruption and a mafia-style political system. Syrian staff are the primary beneficiaries of the salaries advanced by the Arab League. If the CBO were abolished, many of these bureaucrats will be out of work or will be working as civil servants in the Syrian government at a fraction of their current salaries and benefits.

MEMRI has its agenda etc, but to me it looks like this thing still exists only to organize some extra baksheesh for Syria’s state-class, as the Der Spiegel article also claims:

“To be removed from the [boycott] list, Western companies allegedly paid millions.�

Selling Sharm?

With Issandr having said ‘Buy land in Sinai now!’ in the discussion of the Saudi plan to build a bridge to Sinai, I think this interesting article on British property buyers which appeared in Business Monthly in a way supports what he added: ‘if you have a well-placed uncle in the army or mukhabarat’.

Property worth up to $250millions has been snatched up by foreigners over the past three years, the article estimates, but nobody is really sure on which legal basis that has happened.

The vague wording of the decree, combined with the fact that parliament has still not got around to approving it, has left the parties concerned in a considerable state of confusion. No one is really sure whether non-Egyptians can still buy property on a freehold basis. Certainly, resorts such as Delta Sharm in the Hadaba area of the city continue to sell and resell on this basis. “Technically, a decree does not cancel a [previously existing] law, it merely gives another option,� says El Bahrawy. Other observers add that a further unwelcome consequence of the legal confusion is some officials have been demanding unwarranted fees.

LE 200

That’s good news for those business men of Egypt’s parallel economy carrying around millions of pounds (khawaga hit men pay in hard currency, I guess?). The capacity of their black suit cases could now double, as Egypt’s Central Bank is to introduce LE200 notes. (And later on even LE 500 notes).

On the lower end of Egypt’s cash economy (90% of transactions are estimated to be carried out in cash), many people would also welcome an initiative to improve the supply of SMEs with smaller denominations.

Penetration of SMEs with banking services is low, agreed, but why is it that no-one has change? If you’re the first customer at your local grocery in the early morning or the first in a fast-food outlet in the late morning hours, it takes ages for them to scrape up your change together from all employees around.

Anyways, even if banks don’t offer cash-flow services to SMEs, I think many would welcome it if shop owners found a way to keep change in their shop at the end of the day for the next morning (or bring it with them before opening), and I always wondered why they’re not doing so. Cash-flow of groceries and other shops is much higher then what you’d think.

Another consequence of the fact that SMEs/shops and banks have in so far (now many banks consider it as an opportunity for growth) largely ignored each other, is the prevalence of worn-out banknotes. It is one function of the Central Bank (via banks) to separate them out, but that doesn’t work if banks never get to see them…

(Besides that, I also don’t understand the Egyptian mentality here. Instead of fighting over it, you just pass that outworn khamza gineh right on to the next passenger (in case of taxi drivers), and everyone involved is muss less stressed. Iranians, for instance, are not at all obsessed about clean money. They just tear half-torn notes into two proper pieces and then tape them.)

Bridging Sinai and Saudi Arabia

This is an interesting project:

Saudi Arabia’s King Abdullah will next week lay the foundation stone for a $1.5 billion bridge project that will link the Kingdom to neighbouring Egypt.

The bridge will link the Sinai region of Egypt, close to the Sharm el-Sheikh resort town, to the northwest of Saudi Arabia near Ras el-Sheikh Humayd.

Two bridges will be built to span the Gulf of Aqaba and Tiran Strait, with Tiran Island used as a halfway point for the 25 km crossing.

While I generally think that more infrastructure is badly needed to support inner-Arab trade, I actually don’t think this will immediately do much good to South Sinai’s economy, which is relatively well-off thanks to its tourism resorts. (It would be the North around El Arish that needs development.) This giant project is likely to destroy more of its precious coral riffs, and certainly means more trucks shipping goods from the Kingdom to Cairo, polluting the air and further damaging already bad roads.

There are also talks between Yemen and Djibouti, by the way, to connect their countries via a bridge as well. This one is planned to carry a railway connection, which definitely should have been contemplated in case of the Sinai bridge as well. But I guess ENR is too busy with repairing all its switches and electrifying its tracks.

MERIP on Egyptian workers’ strikes

Our friends Joel Beinin and Hossam el-Hamalawy have a MERIP piece on the recent strikes in Egypt, looking at some of the biggest strikes of recent months, the workers’ fight against union bureaucracy, and the historical context of the Egyptian labor movement. It’s a long piece with many interesting subsections, so I will just post the conclusion here:

The regime is especially wary of the Mahalla workers’ challenge to the leadership of the General Federation of Egyptian Trade Unions, because the federation is its primary means of mobilizing support in the street. The “National Democratic Party supporters” bussed to provincial polling places to stuff ballot boxes during the November 2005 parliamentary elections were mainly miserably paid public-sector workers, rounded up by NDP-affiliated union bureaucrats. Labor bosses also turn out the “spontaneous” cheering crowds who greet presidential visits to outlying towns and “mass demonstrations” like the regime-approved protest against the Iraq war in Cairo Stadium in February 2003. In the past, the General Federation (together with the Arab Socialist Union, the NDP’s predecessor) supplied the foot soldiers for the “mass” pro-Nasser gatherings following Egypt’s defeat in the 1967 war, and the “popular” rallies against the January 1977 “bread intifada.”

In public meetings and private interviews, labor activists and strike leaders in the textile and railway sectors frequently mention the phrase “independent parallel national labor union.” Various leftist organizations are talking about building such a thing: the Trotskyist Revolutionary Socialists, the Nasserist Karama Party, the remnants of the Egyptian Communist Party, the People’s Socialist Party, the Center for Trade Union and Workers’ Rights, and the Workers’ Coordination Committee. (Nearly absent from these deliberations is the “legal left” Tagammu‘ Party.) As of yet, however, there are no concrete plans.

The success of such endeavors will depend on whether industrial militancy is sustained, whether political activists can intervene in the strikes and whether workers can establish effective coordination among themselves. It will also depend on whether the Misr Spinning and Weaving workers indeed manage to withdraw from their government-dominated union. If they do score a victory against the union bureaucracy, other workers will be encouraged to emulate them. It is no secret that there is tremendous frustration with union leaders among the rank and file in the railways and other sectors.

Because of the high price of oil and receipts from the sale of public-sector firms, the government has significant cash reserves and can afford to meet workers’ bread-and-butter demands. It has done so in the hopes that workers will return complacent to their jobs. But some workers, and it is not yet clear how many, have begun to connect their thin wallets with broader political and economic circumstances — the entrenchment of autocracy, widespread government incompetence and corruption, the regime’s subservience to the United States and its inability to offer meaningful support for the Palestinian people or meaningful opposition to the war in Iraq, high unemployment and the painfully obvious gap between rich and poor. Many Egyptians have begun to speak openly about the need for real change. Public-sector workers are well-positioned to play a role if they can organize themselves on a national basis.

Read the whole thing.

South Africa moves towards Israel boycott

Great news from a country whose majority suffered greatly from Israeli support for apartheid:

JOHANNESBURG, Jan 26 (IPS) – A call from a South African trade unionist for national supermarket chains to stop importing avocado from Israel could ultimately lead to the banning of all imports from the Jewish state, if unions and human rights activists have their way.

Katishi Masemola, secretary general of the Food and Allied Workers’ Union (FAWU), told South Africa’s supermarket chains earlier this week that Israel produces avocado under “slave-type conditions”. He says the International Labour Organisation (ILO) forbids the use of child labour which, he claims, Israel is employing on avocado farms.

I don’t think the necessity of a worldwide Israeli boycott has ever been as clear as it is today, especially as the parallels with between Israel’s current apartheid regime and the white regime in South Africa become more well-known.