Andean FTAS and the Southward Drift of NAFTA; Militarization in Mecca

The U.S.-Peru Free Trade Agreement was passed by Congress this week. Commerce Secretary Carlos Gutierrez, defending the agreement against critics who say it will harm the U.S. economy, pointed out that the U.S. is running a trade surplus with the Dominican Republic and five Central American countries as a result of CAFTA. He is right to suggest that the U.S.-Peru FTA will extend the results of CAFTA, which has knocked down protective trade barriers between the richest country in the world and some of the poorest in the hemisphere. CAFTA has slashed agricultural tariffs in Central America and the Caribbean without reducing agricultural subsidies in the U.S., allowing multinationals like Cargill to dump artificially cheapened corn and other exports on places like Guatemala, where 40% of the population lives on the land.

The predictable result? Plantations and textile factories producing for export are seeing greater access to the U.S. market due to their “comparative advantage” of dirt-cheap labor, often paid 60 cents an hour or less. Many of these "local" beneficiaries are subsidiaries of U.S. firms like Dole, Del Monte and RL Stowe Mills. (As the Economic Policy Institute calculates, some 50% of all American-owned manufacturing now takes places outside the U.S. This kind of "intra-firm trade" shows up, misleadingly, as GDP growth in the U.S. and in the "host country" on the macroeconomic ledgers.) Meanwhile, small peasant farmers can't compete with subsidized U.S. agribusiness exports. As FTA cheerleader USAID admits in a report on the effects of CAFTA on Honduras, “only a few of Honduras’ sensitive products will be competitive with those from the United States.”

Regarding Peru, an Oxfam report noted in March: “There are 25,000 cotton producers in the US who receive approximately $3.5 billion per year in subsidies. There are 28,000 cotton producers in Peru who receive no subsidies and who have few alternative ways to make a living. At the moment, Peruvian producers are protected from import surges by a tariff of 12% on cotton imports. This would be removed under the FTA, with devastating results.” Overall, we can predict from CAFTA, the new FTA with Peru, and the ones under discussion with Colombia and Panama, will have the same results as NAFTA. A few thousand manufacturing jobs which pay $1 a day or less will be created, and a far larger number of smallholders will be driven off the land due to export dumping from U.S. agribusiness. Some estimate that 2 million Mexican farmers were driven off the land by NAFTA. CAFTA and the Andean FTAs will generate similar waves of economic refugees, who will then appear in decontextualized, quasi-criminal form in U.S. immigration debates.

Saudi Arabia just signed an $8.9 billion deal with the British government for 72 Eurofighter Typhoon jets, manufactured by the British firm BAE Systems. This continues an accelerating arms build-up: in February 2007, the Saudis ordered $50 billion in fighter aircraft, attack helicopters, cruise missiles and tanks at an arms fair in Abu Dhabi.

Al-Jazeera reports that BAE Systems was threatened with a corruption probe by the Serious Fraud Office of the British government in 2006. BAE was alleged to have payed Saudi Prince Bandar Bin Sultan $2 billion in bribes over the last twenty years. This was in connection with the biggest arms deal in British history, in which $86 billion worth of arms were sold to the Saudi regime in 1985. Tony Blair said last year that the corruption probe would harm “national security,” which is true, if by "national" he meant "shareholders of the largest defense contractor in Europe."

So, what is Saudi Arabia doing with this costly arsenal? It is worried about Yemeni tribesmen crossing its border at will, as well as its own Shiite population, which could be stirred up by Iran. It is even more worried about its own majority-Sunni population. Since 2003, anti-government attacks have increased in the kingdom of Saud, whose rulers continue to be (correctly)denounced as corrupt American clients by Muslim fundamentalists and secularists alike. In 2006, Saudi car bombers struck the gates of the Abquaiq oil facility, which processes two-thirds of Saudi oil. Although they were unsuccessful (failing to make it past the second layer or security), this may not be true of future attackers.

Most importantly of all, the Saudis are concerned about an Iranian missile strike on Saudi oil facilities in the event of a U.S. attack on Iran. Turki Al-Faisal, the Saudi ambassador to the U.S., told the press in 2006 that a U.S. attack on Iran would make “the whole Gulf an inferno of exploding fuel tanks and shot-up facilities" and "shoot up the price of oil astronomically."

The U.S. has a massive naval build-up at Saudi Arabia's doorstep for exactly such an event. The 5th fleet is based in Bahrain, and is there to guard the Persian Gulf shipping lanes to maintain the flow of Saudi oil.