Economic News 9/12

While many people were thinking about non-state terror yesterday, the wheels of state terror were being liberally greased with a new round of arms sales. According to the Financial Times, one of the world's biggest arms fairs opened in the Docklands section of London on September 9th, and is scheduled to run through today. 1,300 companies from 30 countries will be present. There will be military delegations from some 36 countries, including Libya, Indonesia, Saudi Arabia and China, taking their pick from a plethora of grenade and rocket launchers, depleted uranium shells, warships, and the like. Who is the organizer? The second-largest arms dealer in the world, the British government. From the FT article:

"The show is a brainchild of the Defence Export Sales Organisation, a part of Britain's defence ministry devoted to promoting arms exports. British defence companies say Deso has played an important role in making sure the UK defence industry has not shrunk along with the rest of the country's manufacturing capacity."

According to a UK government website, Deso was "set up in 1966 to promote UK arms exports overseas." Deso has been dumping more weapons than usual onto the global market in recent years. Between 2001 and 2006, Britain exported £26.5 billion (or $53.8 billion) worth of weapons under the auspices of Deso, "helping to secure tens of thousands of British jobs," the FT says. British arms sales to Africa almost quadrupled between 1999 and 2004, for example, surpassing the £1 billion mark in 2005. But this is not enough. Prime Minister Gordon Brown is reportedly going to shut Deso down, not because he is worried about state violence, but because he wants to increase "institutional alignment across government." He is, the FT says, "moving [Deso's] responsibilities to where the rest of British export promotion lies - within the newly named Department for Business, Enterprise and Regulatory Reform." This is the body that handles promotions for all UK exports--from subsidized beet sugar to, now, depleted uranium tank shells.

In indirectly related news, oil prices reached a record high yesterday at $78.23 a barrel, and OPEC pledged to increase production by 500 barrels a day. According to the New York Times, this will not have much of an effect on oil prices, as "[t]he market consensus was that there would be a big drop in oil supplies in the inventory data to be reported Wednesday by the United States Department of Energy."

The Chinese trade surplus with the United States continues to widen, totalling $103.3 billion for the first eight months of 2007. But the U.S. is not China's biggest trading partner:
"China’s August exports totaled $111.3 billion, while imports were $86.4 billion, according to the customs agency. European nations were the biggest trading partners, with exports to Europe rising 31.3 percent, to $23 billion, and imports from there up 21.8 percent, at $10.2 billion."

It has to be remembered that a huge chunk of these exports are not manufactured by independent Chinese firms, but by Chinese subsidiaries of European, North American, Japanese and Korean multinational corporations using cheap Chinese labor. According to one estimate, no fewer than half of all Chinese exports are "intra-firm" trade, e.g. trade between the branches of a single, usually foreign corporation.

On the other side of the Pacific, low interest rates have stimulated deficit consumer spending on foreign-manufactured goods and real estate in the U.S., leading to a bizarrely lopsided economic situation. The combination of automation and outsourcing continues to reduce U.S. manufacturing employment (which is likely to become as marginal as agricultural employment in the near future), while employment in sectors like construction (fuelled by the housing boom), retail (fuelled by consumer spending) and health care continues to grow. As Thomas Paily puts it at Asia Times, "The overall picture is one of a distorted expansion in which manufacturing continued shriveling while imports and services expanded. This pattern was carried by an unsustainable house-price bubble and rising consumer debt burdens, and that contradiction has surfaced with the implosion of the subprime-mortgage market and deflation of the house-price bubble." Read more!

News Round-Up 9/11/07 II

Every year, a chunk of the Amazon rainforest the size of Connecticut is cut down, releasing a huge quantity of greenhouse gases into the atmosphere. The Amazon still comprises some 300 million hectares of tropical forest, comparable to the Indian subcontinent, and home to an estimated 90% of the species on Earth. At present rates, this hub of fecundity will be a barren moonscape by the end of the century. Deforestation comprises an estimated 70% of greenhouse emissions from Brazil, which has become the fourth-largest emitter in the world. The largest is the United States (and you wonder "why they hate us?"), the second-largest is China, and the third-largest is Indonesia (which is massively cutting down its own rainforests for palm-oil plantations, among other things).

In other news, how do U.S. planners feel about the increasing presence of China in Africa as a raw-materials (especially petroleum) consumer? One word: AFRICOM. Ryan Henry, deputy undersecretary of defense for policy, describes in a Reuters story the conditions under which the U.S. might, Afghanistan/Iraq-style, invade an African country:

"It would depend on a myriad of circumstances. If we thought that someone was going to unleash an attack somewhere in the world that was on the scale of 9/11 or greater, we're obviously going to do something about it," he said.
But "it's obviously best to work with the host country," Henry added.

And what are the potential "host countries"? The U.S. is not only positioning troops in East Africa, where U.S. helicopter gunships reportedly carried out air air strikes in Somalia in January 2007. There, Al-Quaeda links can be found with at least some plausibility, but the U.S. is (with little subtlety) establishing bases in the neighborhood of West African petroleum sources: Mali, Senegal, Niger and Ghana. Bases will also be established in Algeria and Morocco, where an estimated 25% of "foreign fighters" in Iraq are said to originate. But the more important context is the ongoing struggle between Nigerian militants and the extraction of Nigerian oil by Shell, Chevron and other multinationals; the recent discovery of oil in Ghana; and ongoing oil extraction in the Gulf of Guinea and Angola. The U.S. gets over a fifth of its oil from Africa every year, and will soon get over a quarter; those supplies will evidently be ensured at gunpoint.

In July, NATO deployed six warships to orbit the African continent, passing the Niger Delta in what was widely seen as a show of force.

In South, some 2.5 million people have been made homeless by flooding due to heavy rains. An estimated 30 million people in Assam, Bihar, Bangladesh and mountainous Bhutan (due to the flooding of Himalayan streams) have been effected. More than half of Bangladesh is covered in floodwater. Thousands of familes are living in bacteriologically dangerous relief camps along embankments and highways.

Meanwhile, Afghan insurgents contine to attack police and military affiliated with the U.S. occupation forces. 26 Afghans, half of them civilians, were killed in a crowded market in southern Afghanistan on Monday night. There have been 107 suicide bomb attacks in Afghanistan in 2007, a 69% increase over the same period in 2006, according to the New York Times. Read more!

News Round-up 9/11/07

"At least" six oil and natural gas pipelines were attacked on opposite ends of the Mexican state of Veracruz on Monday night. The pipelines were all operated by the Mexican state oil monopoly, Petroeleos Mexicanos, or PEMEX. An unexploded bomb in the town of Antigua was found with the message, "Alive they took them, alive we want them. EPR." This signifies the Ejercito Popular Revolucionario, or Popular Revolutionary Army.

The EPR first attracted attention by targeting military and police in a series of attacks in Mexico's Guerrero state in the 1990s. In 1996, over 100 men and women affiliated with EPR and armed with semi-automatic weapons attacked police stations and army barracks in Aguas Blancas, Guerrero. Guerrero is a poverty-wracked state notorious for drug smuggling (including opium poppy cultivation) and abuses against indigenous Mexicans by the military and police. EPR are also active in Oaxaca and the Mexico City region.

It is extremely difficult to differentiate actions by the EPR from actions by other guerilla groups and by local gangs and criminal elements, as the government usually blames the EPR or other guerillas for all acts of violence by unknown perpetrators. EPR have been blamed, for example, for the incitement of a mob to lynch two police officers in a southern Mexico City neighborhood in November 2004; encouraging violence during the Oaxaca teachers' strike in summer 2006;
and five bombings in Mexico City (in which no one was injured or killed) in November 2006.

Then, on July 5th and July 1oth, 2007, there were eight bombings of three separate pipelines in Guanajuato and Queretero operated by PEMEX, which EPR reportedly took credit for. According to the McClatchy Wire Service, the bombings were done using "sophisticated European-style plastic explosives," leading some to doubt that the EPR were not really responsible. Media reports described flames shooting 100 feet in the air, and the fire burning were 36 hours, although no one was injured. In a subsequent communique, EPR was reported (emphasis on "reported") to have said that they were engaged in a "national campaign of harassment against the interests of the oligarchy and of this illegitimate government that has been put in motion." The phrase "illegitimate" obviously reflects the view many Mexicans have of Felipe Calderon, who, like Bush in 2000, is believed to have stolen a very close election. EPR also "said" that the bombings would continue until the government released two members captured in Oaxaca in 2006. The bombings caused the temporary closure of several plants: auto (Nissan, Honda, and General Motors), and food processing (Hershey's and Kellog's). The result was millions of dollars in lost production time. Meanwhile, the flow of natural gas from Mexico City to Guadelajara was disrupted, as were pipelines serving Veracruz and Guanajuato.

The tactic of bombing pipelines has been practiced hundreds of times by FARC in Columbia, and some have suggested that poverty and oppression in Mexico are producing a Columbia-like situation of endless, low-intensity warfare between the state and non-state actors allied with and against the state. It has also been pointed out that the nature of the attacks suggest substantial knowledge of Mexico's energy infrastructure.

Then, on August 31st, a car laden with explosives was found in the parking garage of Mexico City's highest office tower, and 11,000 employees were evacuated. A few days later, the Mexican web site cedema.org posted a message attributed (again, with unknowable accuracy) to the EPR, which supposedly took credit for the car bomb and called Felipe Calderon a "fawning fascist who insists on destroying Mexico."

And now this. As in Nigeria, Columbia, Ecuador, Indonesia and elsewhere, we see that raw materials cannot be easily extracted from a country while its population is left to rot by the state and multinationals. Read more!