Wednesday, 26 August 2015

Yanis Varoufakis on China: Between the West's Bankruptocracy and the East's fragile strength

In this extract from The Global Minotaur: America, Europe and the Future of the Global Economy, Yanis Varoufakis looks at the underlying weaknesses of the Chinese economy, its deep and complex connections with the rest of the global economy and the policy dilemmas it will face in the future. 

China soars, then plunges into angst 

On 4th December 2010, Wikileaks posted an official cable relating a conversation (circa 28th March 2009) between US Secretary of State Hillary Clinton and Australian Prime Minister Kevin Rudd. In it we read: The Secretary also noted the challenges posed by China's economic rise, asking, "How do you deal toughly with your banker?" The reader may, understandably, protest a startling omission in this book: While promising to speak to the future of the world economy, there has been almost no mention of China. Undoubtedly, the swashbuckling reemergence of what was, historically, one of the world's leading powers is the big story of our times. Its bearing upon the future will be as significant as that of the United States during the 20th century. Of this I have no doubt.

Nevertheless, neither the nature of China's rise nor its future impact can be understood without a good grasp of the world as shaped by the Global Minotaur. For, come to think of it, the Soaring Dragon not only grew up in an environment shaped by the Global Minotaur but must also mature in an unstable world occasioned by the latter's demise. Deng Xiao Ping's new course for China was modelled on Japan and the South East Asian tigers. The organising principle behind the Chinese plan for growth was that of a dual economy in which special economic zones would punctuate China with small Singapores or Hong Kongs, islands of intense capitalist activity in a sea of unlimited labour power. Meanwhile, the centre would direct investment (very much along the lines of the Japanese model) but  would also negotiate technology transfers and foreign direct investment directly with Western and Japanese multinational corporations.

China's global positioning

As for China's global positioning, it would resemble that of South East Asia, in seeking sources of demand for its export-led growth from the United States and Europe. It can be safely suggested that China owes its élan to the Global Minotaur. American, European and Japanese multinationals played a crucial role in setting up shop in China and using its low costs in order to export to the rest of the world, especially to the United States. At the same time, cheap Chinese imports into the United States has helped Wal-Mart style American companies to squeeze prices to unbelievably low levels, helping in the drive to minimise US inflation, a key requirement (as we saw in Chapter 4) for the continuing capital flows into the United States that kept the Minotaur happy and joyous. As China was learning the ropes, becoming one of the Minotaur's favourite feeders, its leaders became keen observers of US policies that had the potential to affect China's growth path. In particular, they learned important lessons from the 1985 Plaza Accord which, as we saw, condemned Japan to an untenable position, and from the 1998 South East Asia crisis that was caused by America's successful bid to rid the tigers of financial regulation and expose their financial markets to the vagaries of Wall Street, the City and the European banks.

A widely accepted current hypothesis is that, because of these experiences, the Chinese are resisting America's asphyxiating pressures to revalue the Chinese currency (the Remnibi, or RMB). Seemingly, following the Crash of 2008, the United States are pushing hard for an RMB re-valuation for the same reasons they pushed the Japanese in the 1980s to sign the Plaza Accord. The conventional view here is that the US government, in its haste to do something about the low level of demand in its domestic market, is trying to do what all governments do in a recessionary climate: To drum up demand from abroad, usually by devaluing their currency (or, equivalently, by enticing foreigners to re-value theirs). Once more, I do not thing that the standard explanation is the whole story. While American firms whose base is predominantly in the United States are pushing for an appreciation of the RMB, for the reasons stated above, it is not at all clear that the heralded currency wars between China and the United States are of the traditional type just put forward.

There are two reasons for remaining sceptical on this issue: First, it is not at all clear that US policy makers have accepted that the Global Minotaur is finished; that the strategy of expanding, or at least not shrinking, the US twin deficits must be abandoned. Secondly, some of the largest, best endowed and most dynamic American corporations would be hit hard if the RMB were to re-value. For they are already producing a great deal of their output within China, before exporting it to the rest of the world. An RMB appreciation would cut into their profit margins. Every iPad, each HP computer, even American cars (many of which use Chinese manufactured parts) will have to increase in price. Indeed, while the American government is lobbying with Beijing to re-value the RMB, countless Western multinationals are threatening China to withdraw (and resettle in India or even Africa) if the RMB is allowed to rise significantly against the US dollar.

China's impact on Latin America

Besides the US-Chinese nexus, China's startling growth made an indelible mark on the rest of the developing nations. Some were devastated by the competition but others were liberated from a relationship of dependence on the West and its multinational corporations. Mexico was among the first group of countries to have suffered from China's rise. Because it had chosen to invest much energy into becoming a low-wage manufacturer on the periphery of the United States (and a member of the US-Canada-Mexico free trade zone known as NAFTA), China's emergence was a nightmare for Mexican manufacturers. However, it was a godsend for countries ranging from Australia (which in effect put its vast mineral resources at the disposal of Chinese firms) to Argentina and from Brazil to Angola (which in 2007 received more funding, as direct investment mainly into its oil industry, than the IMF had leant to the whole world). Latin America is possibly the one continent that was changed forever by China's emergence into the Global Minotaur's major feeder. Argentina and Brazil turned their fields into production units supplying 1.3 billion Chinese consumers with foodstuff, and also dug up their soil in search of minerals that would feed China's hungry factories. Cheap Chinese labour and China's market access to the West (courtesy of World Trade Organisation membership) is allowing Chinese manufacturers to undercut their Mexican and other Latin American competitors in the manufacture of low value-added sectors such as shoes, toys and textiles.

This two-pronged effect causes Latin America to de-industrialise and return to the status of a primary goods producer. These developments have a global reach. For if Brazil and Argentina turn their eyes toward Asia, as they already have started doing, they may abandon their long term struggle to break into the food markets of the United States and Europe, from which they have been barred by severe protectionist measures in favour of American, German and French farmers. Already, Latin America's shifting trade patterns are affecting the orientation of a region which was, until very recently, thought of as the United States' backyard. Latin America's governments choose not to resist their countries' transformation into China's primary goods producers. They may not like deindustrialisation much but it is a far cry from the prospect of another crisis like that of 1998-2002 and another visit from an IMF seeking to exact more pounds of flesh from their people. Returning to Secretary Clinton's remark at this section's beginning, it is clear what she meant by referring to China as America's banker. As we see in the graph below, the United States has, since 2000, shifted its reliance for financing its budget deficit from Europe and Japan to China.

US - China currency wars

But what exactly was Mrs Clinton referring to when she hinted at "dealing toughly" with China? Did she mean, yet again, pressurising Beijing to revalue its currency? And was the reason the stated purpose of limiting the US trade deficit with China? Possibly. However, an even more pressing reason is to preserve the profits of US multinationals which, since the 1980s, had set up production facilities in countries like Mexico and Brazil, and which are now under threat from severe Chinese competition. In a Australian Broadcasting Company (ABC) radio interview, Mexican economist Rogelio de la O stated in 2009: "Even strong companies that are subsidiaries of international firms are very, very 18 America's bankers The graph below looks at four distinct years and decomposes the ownership of US assets (public and private) by non-US government or government controlled financial institutions. It is clear that after 2003 America's old protégés, Europe and Japan, are fading as its financial supporters. The Chinese state is, meanwhile, pushing its contribution through the roof. In this sense, the Minotaur's recent travails have posed a serious threat to the US assets that China already owns. Increase in US assets (in $ billion) owned by foreign state institutions America's conundrum in the face of stupendous Chinese growth is that the Crash of 2008 stopped the Minotaur from quickmarching the Chinese to its tune. Up until then, the Chinese depended upon the Minotaur for their trade surpluses and were, thus, forced to reinvest them in the United States, either by buying US government debt or in the private sector.

Death of the Global Minotaur

With the Minotaur no longer capable of absorbing increasing quantities of Chinese goods, at a rate similar to the pre-2008 period (especially now that China has shifted production to high-tech, big item products like superfast railways), China does not automatically need to send all of its capital to New York. This leaves China with only one reason for investing hugely in US assets: the fact that it has already invested hugely in... US assets and does not want to see its people's accumulated hard labour lose much of its worth were the United States to be hit by a public debt crisis. At the same time, and despite its public proclamations, the United States' government does not have the backing of a large segment of American corporations to pursue a Plazatype agreement that would see the RMB slide against the dollar.

Unable to expand its deficits, like it did when the Minotaur was exploding with youthful energy, and lacking the clout to do to China what it had done to Japan in 1985, the United States is finding it hard to decide how to deal with China. discouraged at the way their volumes have fallen and their margins have been totally squeezed. The China effect is kind of overwhelming."  China too, unable to secure sufficient demand for its industries in the absence of a roaring Minotaur, is in a bind and has ended up responding in surprising ways. For instance, Brazil's Central Bank revealed that, while in 2009 China's foreign direct investment in the Latin American country was only $300 million, in 2010 it rose to $17 billion. Why? What was China up to? As everyone knows, for a while now, Brazil, Argentina etc. were being enriched by the Dragon's purchases of iron ore, soya beans, oil, meat etc.

But, when the Global Minotaur perished in 2008, and these economies continued to grow on the back of their primary exports to China, their currencies shot up in relation to the dollar. Consider three immediate effects of these developments: First, Latin American high growth rates attracted a new carry trade, this time from the United States whose growth rate and interest rates hovered around zero, thus motivating a capital flight away from America. Secondly, new Chinese industrial imports rushed into Brazil and Argentina as their local prices were falling, in view of the local currencies strengthening vis-à-vis the dollar (and, by pegged association, the RMB). Thirdly, to perpetuate this cycle, China increased its investments in Latin America. Now, this third development is of some significance. Up until recently, China would invest in Africa and elsewhere in projects the ultimate purpose of which was to secure raw materials for its domestic industries.

With these new investments into countries like Brazil, China seems to be pursuing a new strategy: That of creating something like its own Global Plan! Of directing part of its outbound capital flows to countries other than the United States in an effort to stimulate, there, in those foreign places, demand for Chinese goods. The broader significance of China's relation to the rest of the emerging nations comes in the form of clues on how China will seek to address the gaping hole left in the overall demand for its exports by the Minotaur's 2008 misfortune. What is clear is that China, the United States and the rest of the emerging nations will, from now on, engage in a triangular game of chicken. With no dominant party in sight, and no clear objectives for any of them, the prospects of a new, efficient (formal or informal) Global Surplus Recycling Mechanism seem slim and distant. Which means that the Minotaur's legacy is a rather bleak one for the world economy.

Epilogue: Between the West's Bankruptocracy and the East's fragile strength

Judging by the mood in the centres of power, that which we used to call the Third World is having a good crisis. The 'emerging economies' are growing at the expense of Europe and the United States, the two loci of long-established capitalism which, regrettably, have spawned a new socio-economic 'system': Bankruptocracy. The Global Minotaur's 2008 moment has raised the prospect of a worldwide realignment. And yet, the Minotaur is still in the room, threatening to wreak havoc. Wounded it may be, perhaps mortally, but its imprint is still all over our world. When it was hurt, and Wall Street's near-collapse sapped its energy, America's abandoned protégés failed to rise to the occasion. 20 Europe entered a crisis of its own device which is endangering sixty years of European integration. South East Asia found itself more dependent than before on a powerful neighbour, even if this time it is not Japan but China. Japan itself, which had its own recession well before the Minotaur's infirmity, seems to have made its peace with stagnation. Of all the major non-US economic powerhouses, only China is dynamic enough to pretend to the Minotaur's sceptre. But China knows it cannot yet perform that illustrious role, unable to create demand even for its own output. Its most recent efforts to create its own Global Plan, in particular in relation to Latin America, stirred up tensions with its potential protégés (e.g. Brazil), reminding us that America's own Global Plan only came to pass with minimal resistance because, at the time of its design and implementation, the rest of the world laid in ruins. Some think that China only needs to bide its time, certain that in its fullness it will prevail.

The Chinese leadership is less sure. They understand intimately the scarcity of total demand in the post-Minotaur world. They know that Germany, Japan and China are all fully reliant for their very survival on maintaining aggressive, expanding surpluses. But this also requires someone to absorb those surpluses as deficits. That someone used to be the Global Minotaur. Now, it is gone and nothing seems likely to replace it. To buy time, the Chinese government is stimulating its growing economy and keeps it shielded from currency revaluations, in the hope that vibrant growth can continue. But they see the omens. And they are not good. On the one hand, China's consumption-toGDP ratio is falling; a sure sign that the domestic market cannot generate enough demand for China's gigantic factories. On the other hand, their fiscal injections are causing real estate bubbles. If these are unchecked, they may burst and thus cause a catastrophic domestic unwinding. But how do you deflate a bubble without choking off growth? That was the multi-trillion dollar question that Alan Greenspan failed to answer. It is not clear that the Chinese leadership have an answer either.

Thursday, 20 August 2015

What Future for Yanis Varoufakis? A Man of the 'System' Rebelling against It

Yanis Varoufakis is in the process of becoming an important figure in Greek political life and beyond. In the break-up process affecting Syriza, which seems now well underway, he will be called to play a major role, together with the former Minister of energy, Panayiotis Lafazanis, and the President of the Parliament, Mrs Zoe Kostantopoulou. But Yanis Varoufakis has also indubitably become a major figure for the Left which is critical of the Euro and someone who will be an important factor in the political reconfigurations which are in the offing. There are good reasons for this.

The new edition of Varoufakis's book, The Global Minotaur: America, Europe and the Future of the Global Economy was published in July with a new foreword by Paul Mason. 

This article orginally appeared on the Global Research website and was translated by Anne-Marie de Grazia.


A man of the “system” rebelling against it

By Jacques Sapir

Yanis Varoufakis is a rare case, without being an oddity. He is an economist who has taken squarely pro-European positions in the past, but who is at present very critical as far as the governance of the European Union is concerned, and in consideration of the behaviour of European leaders. He is also an economist who came out in favor of the Euro, for essentially theoretical reasons, but who is today quietly considering the possibility of an exit of his country from the Eurozone. Evidently, his experience as a Minister, and as a negotiator, has changed the vision he had of the Euro and there is much to learn from his experience for any true Left. The Left which is critical of the Euro, or even anti-Euro, must be sensitive to his trajectory. He comes from inside the “system,” but in the same time he is apprehending it critically, and he declares himself ready to break with it rather than accepting what one is reduced to calling a capitulation, to which Tsipras finally had to give in. This is a most important point. At any rate, Varoufakis is keeping up his criticism, be it against the Diktat of July 13th or against the new memorandum which is to be ratified by August 20th. He recently declared on the BBC: “Ask all those who know the state of Greek finances and they will tell you that this agreement will not work»[2]. His moral authority and his competence as a former Minister of finances are playing in his favour.

For the agreement which Greece and the other countries of the Eurozone are going to achieve will not solve anything and it is “done for” even before it has seen the light of day. The situation in Greece has terribly deteriorated in July and in the beginning of August, as a result of the measures which were taken against Greece by the Central European Bank. Some 86 or 89 billion euros are mentioned for this agreement. But today, it is clear that between 110 and 120 would be needed. Similarly, it is evident that one would have to proceed very quickly to the annulment of part of the Greek debt. Even the IMF has been saying so since early July. Yet, we know that Germany is refusing flatly and that it is dragging its feet to sign this agreement [3]. Under such conditions, it is just as evident that the agreement, which should be concluded by August 20th will not help anything and that it will be overtaken and rendered obsolete by events to come. Moreover, the economic situation in Greece keeps deteriorating. Clearly, an exit from the Eurozone remains more than ever in the cards for the weeks, or months, to come [4].

An image of competence

So that Varoufakis has become the very incarnation of a competent Left (he was a highly esteemed and recognized professor of economics), yet one which does not abandon any of its critical dimensions and who makes use of his competence in order to push ever further his criticism of the « system. » He is incidentally a product of the ruling classes (even if his father was jailed during the Greek civil war for his communist sympathies) but one who is not playing according to the codes of his background.

He is, need we remind of it, a specialist in game theory, a domain which has much thrilled economists [5]. He is recognized by his peers, whether they are economists of the orthodox or the heterodox currents. His book, The Global Minotaur, received a well-earned international success [6]. Moreover, he did not hesitate to conceive a credible alternative plan for Greece, which could have avoided the country the shameful capitulation to which it was compelled to, as well as the looming disaster of a new memorandum, at a time when many people are still maintaining that « there is no alternative. »

A future leader of the anti-Euro Left ?

Yanis Varoufakis was a charismatic Minister of finances, who did not hesitate to voice certain truths within the stuffy setting of European reunions. He clearly has the potential for becoming the herald of an anti-Euro Left. The fact that the decided at first in favor of the Euro, and that he then considered the possibility of an exit from the Euro, lends him an undisputable authority on this point.

Moreover, he has hosted on his blog Stefano Fassina’s appeal for a front of anti-Euro liberation movements [7]. This is an eminently symbolic gesture. For Fassina too is an insider of the « system. » He was vice-minister of finances of the Letta government in Italy. He is an influential member of the center-left party, the Democratic Party, to which belongs the present Prime-Minister, Matteo Renzi. However, today, he has become one of the most virulent opponents to the Euro in Italy and his appeal is nothing less than one of fiercest polemical tracts which have been written against the single currency. Varoufakis and Fassina are representative of the fracture which has occurred inside the « system, » or what one of my Italian friends, Professor Bagnai, calls the PUDE, or Partito Unico Dell’Euro. Their trajectories bringing them to anti-Euro positions carry the more significance for their having earlier been supporters of the Euro. One could say the same of Oskar Lafontaine who, as the leader of the SPD, was one of the founding fathers of the Euro and who, in 2013, made a radical change to becoming a resolute opponent of the single currency. This development is now very important. More and more the camp of anti-Euro, or at the very least Euro-critical economists and politicians, is being joined by people who were even recently still supporters of the Euro, but who have been caught up by the reality of the Euro and who have figured out that there is no future possible in Europe as long as one is holding onto the Euro.

Moreover, Varoufakis has been attacked most viciously, not only in the Greek political spheres, where some would like to sue him for high treason, but also in the Europeist circles of Brussels and elsewhere. He has answered roundly to these criticisms on his blog and in the press. Concentrating upon himself the hatred of the Europhiles and of the supporters of the Euro, he is quite normally attracting the sympathies of those who fight against the Euro.

A figure of protest

It is evident therefore that Yanis Varoufakis is cumulating the characteristics which should make him into an example for a certain left, but not for all the left, and certainly not in the ranks of the French government, a government supposed to belong to the Left. For the personality of Yanis Varoufakis, and especially the discourse of which he is the carrier, are clearly insufferable for this moderate right disguised as a « government Left. » It is clear that nothing in his personality can be attractive to the official socialists, to people like Moscovici, or Martin Schulz and Sigmar Gabriel, Michel Sapin or François Hollande. In short, the so-called “government socialists” who are the heirs to Hebert and Noske of the Germany of 1918.

Quite the opposite; Yanis Varoufakis is the very example of the fact that, contrarily to what these are asserting, there are alternatives and that austerity is not unavoidable. He is the living proof of their compromises, of their cowardice and of their multiple treasons, when other roads were open to them. Which is why he must necessarily be hated by them. But he will certainly attract to himself some of the “trouble-makers” of the French Socialist Party, at any rate those who did not accept the Diktat of July 13th, as well as the partisans of Arnaud Montebourg, and of course, the members of the radical left. Varoufakis is the living proof that other policies are possible in the European Union, even if one is entitled to think that he did not carry out this project fully, and to its full consequences. In any case, he brought it quite far, and it is not his fault if the project could not be carried through.

It remains to be seen if he knows that he has become a symbolic figure and if he will be able to live up to the symbols he is presently incarnating. For, and this is the contradiction which he will have to face up to and solve, he, the man who always wanted to stand for rational government, a legacy of his work on game theory, [8], will have to admit that he has become an actor in a game which no longer obeys rationality but one in which symbols and ideology are occupying a major place. At the same time, in politics, analysis too calls for rational calculations. If he doesn’t want to lose himself, he will have to hold firm onto both poles of this contradiction.


Jacques Sapir is a French economist who currently runs the blog He studies Russian economic policy,  financial crises, economic transitions, economic institutions, and individual behaviour. In 2000, he started investigating the interactions between regime changes, the structuration of financial regimes, and macroeconomic instabilities. Since 2007, Sapir’s research focuses on the current global financial crisis in general, and the Eurozone crisis in particular.

Thursday, 6 August 2015

Do-gooders doing bad, gender in oil-rich states and voices of protest: A reading list for African politics today

This summer, the Washington Post's political research blog The Monkey Cage has been running an "African Politics Summer Reading Spectacular", publishing an ongoing series of posts based on books in their excellent summer reading list. With their informed and intelligent analysis of current affairs, these offer eye-opening insights and critique of African politics today. A number of authors from Zed Book's renowned Africa list are featured, covering issues such as the growth of oil rich Sub-Saharan states to a growth in street protest across the continent. Below is a round-up of some of The Monkey Cage's best blogs - visit the Washington Post to check them out in full. 

Governance, gender and no guarantees in Africa’s oil-rich states

In her interview with journalist Laura Seay, author Celeste Hicks discusses how, in countries rich with natural resources such as Chad, a "resource curse theory" has been developed to explain how poverty still flourishes despite great natural wealth. Hicks suggests a "governance curse" to run alongside this, saying that the problem is management, not oil per se. Part of the problem is a gender gap within the oil industry, she argues, saying that where gender equality has been part of a wider discussion, such as in East Africa, it can lead to many positive developments regarding land rights and resources. Despite this, within the oil industry, like many science, technology and engineering professions, substantive blocks mean women remain locked out.

Celeste Hicks is a journalist, and author of Africa's New Oil: Power, Pipelines and Future Fortunes, available now for £12.99/$18.95.

‘Protest is always hopeful': Examining the third wave of popular protest in Africa

"First, always listen to African voices, and second, don’t assume that these are monolithic" say Zachariah Mampilly and Adam Branch in their interview with Kim Yi Dionne, as they explain current street movements in relation to the anti-colonial struggles of the 1960s, and later struggles for economic justice in the 1980s and 90s. They draw a distinction between voices of the establishment, and what they call the "Political society" of ordinary Africans. Understanding this alternative polity, with its own demands and organisational strategies, is key to understanding the "third wave" of political protest in Africa. This fascinating outline analyses the causes of this divide, and how the resentment and split between civil and political society has caused an enormous upsurge in street protests. In their book "Africa Uprising", the authors examine four "third wave" protests in details: Occupy Nigeria, post-election demonstrations in Ethiopia in 2005, demonstrations in Sudan and Uganda's "Walk to Work" movement. Within this new wave of street-based movements, Mampilly and Branch see, at the core, hope:

It is easy to forget, especially in the post-9/11 United States, that the greatest political victories were rarely won through elections but required large-scale political mobilization. People who took to the streets managed to end wars, helped curtail racial, gender or sexual discrimination, and challenged unfair economic practices. In other words, they found ways to express their democratic rights in far more substantive ways than merely casting a vote every four years. And they do this without the permission of the elites who have fully captured the U.S. electoral process.
In contrast, many African countries are still struggling to define the basic compact between government and society and so there isn’t as much deference to the political leadership, regardless of whether they came to power via elections or not. African scholars have been talking about “choiceless democracies” for three decades now, a concept we increasingly relate to as U.S. citizens. We believe we have much to learn from African protest, in regards to both the challenges it will inevitably confront and how those challenges may be overcome.

"Africa Uprising: Popular Protest and Political Change" by Zachariah Mampilly and Adam Branch is out now from Zed Books for £14.99 / $21.95

Do-gooders, do no harm: What are the best–and worst–ways to help those mired in international conflicts?

Laura Seay begins her interview with Alex de Waal, editor of "Advocacy in Conflict", by asking him timely and pressing questions about the rise of the superstar activist.
"An authentic activism requires making the affected people the protagonist: letting them define the issues, and welcoming their complicated manifold stories. It demands asking difficult questions about the use and misuse of power by western governments and their friends,"
 says de Waal. He goes on to describe the ecology of advocacy and activism across the world, and specifically in Africa, such as #Kony2012, where international activists engaged in a "grossly over-simplified" campaign around the Lord's Resistance Army, or campaigns around rare earth minerals in the DRC. In the end, he suggests, activism must focus on local actors (including within local activism) rather than external, international pressure, and in Africa non-violent organisation and action is the key to long-term social change.

Edited by Alex de Waal, "Advocacy in Conflict: Critical Perspectives on Transnational Activism" is out now for £18.99 / $27.95

Keep your eye on the Monkey Cage reading list this summer for more excellent Africa coverage, including "Africa: Why Economists Get it Wrong" by Morten Jerven, described by the Economist as "a devastating critique of the economics profession".

Friday, 24 July 2015

Richard Falk: Turkey under Erdoğan

The horror of the suspected ISIS bombing of a Turkish young socialist meeting in Suruc has highlighted how Turkey is bound-up with both Europe and the Middle East geographically, politically and culturally. The issues the country confronts are complex and multi-layered.

In this extract from his powerful new book Chaos and Counterrevolution: After the Arab Spring, Richard Falk, a world-renowned scholar of international law and former UN Rapporteur on Palestine, provides a highly informative and clear overview of developments in Turkey. He looks book at the historic developments in Turkey since 2002, and its shifting and complex foreign policy.


My relationship to Turkey is far closer than it is to any of the other countries in the Middle East. My wife is Turkish, we have made long annual visits to Turkey for the past twenty years, and I have had the opportunity to know a wide range of Turkish political personalities quite closely.

I have also been motivated to write about the Turkish government and its leadership because it has so often been misunderstood. Western perceptions of Turkish political life are distorted by several interacting factors: the hostility of Turkey’s secular establishment to the governing AKP (Justice and
Development Party) and its dominant leader, Recep Tayyip Erdoğan; Turkey’s tensions with Israel and the United States; and the global media exhibiting hostility to Turkey due to the influence of these political forces.

While I share some of the criticisms directed at the AKP and Erdoğan, especially since 2011, I am also much more appreciative of their political, economic, and ethical performance than their harsh detractors.

Turkey and the Arab Spring

Turkey’s relationship to the Middle East is particularly layered and complex. It neither belongs to the Arab world nor to the European Christian world, yet is deeply implicated in the history, culture, economic and politics of both. Since 2002, Turkey has had dramatic ups and downs internally, regionally, and internationally. During this entire period it has been governed controversially by the AKP, which has been attacked as both authoritarian and trending toward Islamism. Its supporters emphasize tradition, social justice, and rapid economic development.

After the upheavals of the Arab Spring in early 2011, Turkey was popularly viewed as a model of stability and development throughout the region, a country that had managed to reconcile secularism and religion. Its prime minister (now president), Recep Tayyip Erdoğan, was the most popular leader
in the Middle East; its foreign minister, Ahmet Davutoğlu, became one of the most influential diplomats in the world, admired for his energetic efforts to promote peaceful conflict resolution and compromise and to enlarge Turkey’s political horizons in all directions.

Secular opposition

Yet there were many bumps in the road. At home, the secular opposition has never been willing to accept the legitimacy of the AKP leadership, despite its extraordinary record of economic growth. At the same time this opposition was frustrated by its inability to produce either a credible alternative
program or interesting potential political leaders. As a result, the AKP has won election after election and the opposition became more and more embittered.

Since 2011, Erdoğan has relied on his electoral mandate and grassroots popularity to govern in a more overtly authoritarian style. He has especially agitated the secular ranks of “white Turks” with his rants about such social issues as abortion, alcohol, education, the role of women, and the desirability of population increase. Erdoğan seems increasingly to be abandoning any effort to lead in a manner that is inclusive of opposition concerns. To some extent, this is a reasonable reaction to the inflammatory behavior of the main opposition parties and media.

The Gezi Park uprising

The demonstrations in Gezi Park in 2013 showed the anti-Erdoğan fury that exists in Turkey, with its contradictory interpretations exhibiting the polarization ripping the country apart. There is no doubt that the Turkish police overreacted in a brutal manner and that Erdoğan handled the incident awkwardly, endorsing the use of excessive force. It is also the case that after the initial phase of the protests against turning an historic Istanbul park into a shopping mall, the second phase of the events in Gezi were more confrontational, apparently seeking to imitate the anti-Morsi street politics that created a crisis of governability in Egypt.

In the last year or so, the domestic scene in Turkey has been further roiled by conflict between the government and the Hizmet movement, led by an Islamic scholar and preacher living in Pennsylvania named Fethullah Gülen. The AKP accuses Hizmet of setting up a “parallel state” by deliberately
infiltrating its loyalists into the bureaucracy, especially the police and judiciary. Hizmet accuses Erdoğan of corruption, crony capitalism, and authoritarianism. As with the displaced secular opposition, Hizmet’s defection from the AKP cause has so far not diminished the AKP’s level of popular support.

The Syrian civil war

In recent years, Turkey has experienced a series of setbacks internationally. The AKP’s approach to Syria has been problematic in several ways that have weakened the overall credibility of Turkish relations with the region. Davutoğlu’s signature approach of “zero problems with neighbors” was
launched with fanfare as Turkey embraced al-Assad’s Syria, ending years of tension. When the Arab Spring arrived and Syrians rose up against the authoritarianism of the Assad regime in Damascus, Turkey first tried to urge democratic reforms. When these failed to materialize, Ankara sided with the
rebels and especially the Muslim Brotherhood component of the many-sided Syrian opposition, perceiving the conflict as certain to be quickly resolved in favor of the anti-government side. Damascus accused Turkey of intervening on behalf of the insurgency and promoting Sunni sectarianism.

Relations with Israel

A second vector of difficulty arose when Turkey criticized Israel after the breakdown of Turkey’s effort to mediate a solution to the conflict between Israel and Syria over the Golan Heights. The initial criticisms focused on Israel’s behavior in Gaza, especially the military operations known as Cast Lead that began at the end of 2008. These tensions reached their climax in 2010 when Israeli commandos attacked the Turkish civilian ship Mavi Marmara in international waters, killing nine Turkish passengers. The ship was the lead vessel in a flotilla of small, unarmed ships seeking to challenge Israel’s unlawful blockade of Gaza by delivering humanitarian goods directly
to the beleaguered Gazan population.

The problems with Israel overlapped with and reinforced some tensions with the United States. It seemed that the U.S. government expected Turkey to be as submissive after the Cold War as it had been during it. The AKP clearly sought to maintain its role in NATO as part of the Western alliance.

It also sought continuity in its relationship with the United States, but felt entitled to act as an independent player in the region. This posture came up against Washington’s insistence on having a free hand in the Middle East.

When Turkey, in collaboration with Brazil, sought to defuse nuclear tensions with Iran in 2010, Washington reacted angrily, reminding Turkey not to get out of line, as President Obama called for strengthened sanctions as the centerpiece of its reliance on coercive diplomacy to gain its goals in relation to Iran’s nuclear program. The Turkish initiative, designed to lower tensions, ran directly counter to the belligerently anti-Iranian approach being advocated by Israel.

Eliminating the 'deep state'

What followed was a worldwide campaign to discredit the AKP leadership, portraying Erdoğan as a second Putin. In my view, the AKP deserves a more balanced treatment. Turkey’s achievements since 2002 far outweigh its shortcomings. Erdoğan is skilled in surrounding himself with highly capable
officials and advisors, especially in key positions. Turkey’s economic development has been sustained far more successfully than that of other countries in the region, or in Europe for that matter. Perhaps the greatest of the AKP’s achievements has been eliminating the “deep state” as a force that had lurked below the surface of Turkish politics ever since the republic was established in 1920.

Gaining civilian control over security policies repudiated the Atatürk tradition, which allowed the
armed forces to play a custodial role in relation to the elected government and had seemed a permanent feature of Turkish political life, producing periodic military coups as well as supervision over the behavior of political leaders. Challenging this structure required great political skill and commitment as well as accepting the risk of provoking a coup, which nearly happened in the early years of AKP governance. Turkey also did its utmost to bring greater stability and prosperity to the region, through diplomacy, cultural exchanges, and trade/investment relations.

Beyond this, Davutoğlu and Erdoğan were innovative in encouraging diplomatic and economic
relations with Africa and Latin America, regions Turkey had previously ignored. As with so many countries in this period, Turkey’s fundamental problem has been the polarization of beliefs and affinities within its own population, which has created intense negativity in the political atmosphere.

It is rather remarkable that the AKP has so far been able to ride this unruly horse of polarization without worse mishaps. The Turkish leadership is being daily challenged by a defamatory campaign by its opponents at home and abroad designed to undermine the legitimacy of the state, an undertaking aided by the international media.

The threat of ISIS

The 2014 emergence of ISIS near Turkey’s borders has added yet another destabilizing and daunting challenge, one further complicated by Ankara’s search for a peaceful resolution of its own long, violent conflict with its large Kurdish minority. Turkey finds itself pulled in opposite directions. ISIS is an effective force in the ongoing effort to topple the Assad regime, but is also guilty of massive atrocities and is the target of an American-led intervention.

ISIS poses a difficult dilemma for Turkey—to give priority either to sectarian objectives or to the defeat of extremist challenges to the status quo. These posts seek to explain AKP’s political strength at home and the innovativeness of its foreign policy while taking due account of its mistakes
and setbacks. All political actors, within the region and beyond, made mistakes during this turbulent period; while Turkey made important miscalculations, its intentions were constructive and its record stands up well compared to other main players in the region, including the United States.

Looking ahead

I anticipate two notable challenges for Turkey in 2015. The first is to respond to the worldwide Armenian campaign associated with observing the centennial anniversary of the 1915 massacres. The Erdoğan leadership has been more forthcoming in acknowledging these tragic events than its predecessors, but has not been willing to accede to the Armenian demand that they be acknowledged as “genocide.” One post tries to interpret this open wound and how it might be treated for the benefit of both sides. The second challenge involves the December 2015 UN climate-change conference in Paris, expected to be a make-or-break occasion with respect to heeding scientific warnings about global warming. To date Turkey has been extremely passive about international limits on carbon emissions and gives the impression of being unwilling to burden its economic ambitions by acting in an environmentally responsible manner.

To buy Chaos and Counterrevolution: After the Arab Spring visit Zed Books.

Wednesday, 15 July 2015

Marikana: Judicial inquiry whitewashes circumstances of the massacre of mineworkers in South Africa

The massacre of striking mineworkers in Marikana, South Africa in 2012 by state security forces was the result of the actions of mine unions, the mining corporations and individual police officers, an inquiry has found. The report from the judicial inquiry will do little dampen down anger from the strikers' families, however, who have waited years for its conclusions. Rather than holding to account the powerful figures ( those leading the opposition unions, the mine, the police and the ANC) the report instead, according to Guardian journalist Jack Shenker, "exonerates almost everybody".

"A complex web of political power and economic interests binds these interests together and the massacre wrenched many issues to the surface. To explain how so many unarmed people could be gunned down in broad daylight under South Africa’s post-apartheid democracy, the inquiry needed to probe the privilege and marginalisation of the country’s platinum belt – where grinding poverty and fabulous riches exist in symbiosis.

Instead, the Marikana report, while confirming some of the worst excesses and deceptions practised by the police and Lonmin, exonerates almost everybody. Its most strident conclusion is that there is a need for further inquiries, inquiries that – on the evidence of this one – will presumably end up calling for yet more inquiries, a process that will be repeated until everybody has forgotten that a massacre took place at all. Everyone, that is, except the relatives of the slain and those who continue to exist on the edge of survival in order to remove platinum from the ground."

In the video below Shenker explains the terrible circumstances of the massacre. Jack Shenker is the author of the e-book "Marikana: A Report from South Africa", available now for just 99p from Zed Books.

Tuesday, 14 July 2015

Paul Mason: Explaining Yanis Varoufakis

Since resigning from the Syriza government with the immortal words 'I will wear the creditors loathing with pride' Yanis Varoufakis has spoken out in sensational interviews in the New Statesman and Australian Radio Late Night Live detailing the hostility he faced from the EU creditors and European Central Bank. He also details how his plan to build on the historic OXI! of the referendum and seize control of Greece's banks and currency from Troika / IMF control was rejected by Alexis Tsipras and Syriza's inner cabinet.

In the foreword - reproduced below - to the new edition of Varoufakis' The Global Minotaur: America, Europe and the Future of the Global Economy, Channel 4 News Economics Editor Paul Mason provides a vital overview of the man who shook European politics and the importance of the book to debates about the future of the European and world economy. 

By Paul Mason

On February 20, 2015, Yanis Varoufakis entered the HQ of the European Union alone—both literally and figuratively. He came without advisers, press liaison, or bodyguards—and with the Brussels press corps salivating over what seemed like a certain and abject surrender. Sixteen days before that, the European Central Bank had punctured the euphoria of Syriza's election victory by suddenly withdrawing its regular loan facility to the Greek banks, putting them on life support, and triggering a silent run on bank deposits.

By the time Varoufakis arrived in Brussels, he knew that up to €1 billion [$1.1 billion] a day were draining from the Greek banking system: he would, without a deal, be forced to impose capital controls, limiting ATM withdrawals, and preventing the removal of cash offshore. In the end he signed a deal somewhat short of abject surrender. Greece would get leeway to implement measures to counteract austerity; the high levels of government surplus (4 percent) demanded by the 2011 bailout were waived.
In all other senses, Greece was still a debt colony of the EU. But it had been granted a modicum of home rule, and what we used to call the "comprador bourgeoisie"—the pliant agents of the colonists—were gone.

Most ordinary politicians would have given a terse statement, taken a couple of questions and headed for the steam room in their hotel. Instead Varoufakis conducted a 40-minute Q&A hailing the deal as a minor victory—which, once you understand the eurozone, it was. For Varoufakis had, in those 16 days, vaulted the minotaur.

In the original version of his book, The Global Minotaur:America, Europe and the Future of the Global Economy , he set out an analysis of the 2008 crisis and its aftermath using the Cretan legend of the minotaur as a metaphor: the "Global Minotaur" was US capitalism centered on Wall Street, extracting tribute from the world after 1971. Lacking a Theseus to kill it, the mythical beast was killed by unsustainable economics. But the spirit of the minotaur lives on.

Austerity economics, and the primacy of the banks over households, businesses, and state treasuries, have been the articles of faith guiding the eurozone since the Greek crisis began. As America imposed its one-sided deal on the world after the fall of Bretton Woods, so Germany remained determined to take only the upside of the Euro arrangement.

With the arrival of Syriza in power the Euro Minotaur awakened, looked up, and took aim at the most colorful presence in its labyrinth—Varoufakis.

Though I'd been engaged with his work for years, I only met Yanis Varoufakis three days before the election of January 25, 2015. He lucidly laid out his argument, and his plan: Greece was effectively insolvent; Europe's bailout a €320 billion [$353 billion] handout to the north European banks to protect them from that fact. Unless the eurozone acquired an effective mechanism for recycling fiscal surpluses and deficits—with the mountains of idle savings energized so that they become productive investments, particularly where investment is lagging behind—it was "finished within two years."

But Varoufakis remained convinced, like the majority of Syriza's economic gurus, that a "good euro" was achievable. The auguries were positive: Mario Draghi (President of the European Central Bank) had launched quantitative easing—a €1.6 trillion [$1.75 trillion] monetary stimulus—plus he had called for less austerity. Jean-Claude Juncker (President of the European Commission) had launched a fund aimed at bringing €300 billion [$330 billion] of investment to the stricken eurozone. The politics were lined up in favour of Greece. Between the election and February 20, Varoufakis learned a lesson on behalf of the entire European left: politicians do not control Europe; the Minotaur does.

We don't know whether the reprieve Varoufakis won on February 20 will last, expand, or get closed down. But we do know the power that fresh ideas alone can bring. Varoufakis's straight-talking changed the modus operandi of Euro summits, probably forever. His preparedness to expose the workings of power-summitry and pressure threatened to put out of business a press corps whose working lives had been devoted to accommodating it. In every conversation there were three audiences: Greece, its debtors, and the workers and youth of Europe.

What irked the debtors most was that Varoufakis looked and sounded like one of them. A successful professional economist in the West European tradition, who had moved left at a time when others of his generation were moving right, Varoufakis knows enough of the way the neoliberal world works to make every clash with it look and feel excruciating.

Most politicians cannot be theorists. First, because they are rarely thinkers; second, because the frenetic lifestyle they impose on themselves leaves no time for big ideas. But most of all because to be a theorist you have to admit the possibility of being wrong—the provisionality of knowledge—and you know you cannot spin your way out of a theoretical problem.

In his book, Varoufakis laid bare the central problem of the world economy: the lack of an agent to create new rules, new paradigms of behavior, new reservoirs of popular consent. If China is unready, the European center too unpopular, and America too decayed to do it, he asked the question: who will? Through the sheer incompetence and venality of the political centre in Greece, and the exasperation of its people, the answer was: the radical left.

Whether they win or lose their fight with the Euro institutions, Syriza have demonstrated the power of theory. Varoufakis predicted the catastrophic end of the Greek bonanza, the unsustainability of leveraged finance, and the fragmentation of the eurozone—even while the theories acceptable to the Wall Street Journal and Financial Times said the opposite. He also told his advisers, from the very beginning, that they could expect a deal with Europe only at "one minute past midnight." That is, he theorized the potential accidental outcomes of the crisis too.

That's what gives The Global Minotaur both its power and its poignancy. We don't know how the fight between Syriza and the eurozone will end—but we can be certain it will involve compromise. Politicians live in the world of compromise; theorists do not. But by the end of it, the radical left will know what it means to fight for a new, fairer kind of capitalism, in the teeth of resistance from the old kind.
March 28, 2015

This foreword was originally extracted in VICE.  

Monday, 13 July 2015

Behind the curtain: Yanis Varoufakis lifts the lid on negotiating with the Troika

Yanis Varoufakis, the former Greek Finance Minister who resigned his position last week after winning an historic national referendum on the Greek bailout bid, has spoken out in an exclusive interview with the New Statesman. In it he lays bear the tense and frustrating negotiations between the Eurogroup and Greece's team, claiming he was repeatedly excluded from talks due to his persistent desire to "talk economics...which nobody does.”

"We were set up"

Varoufakis is strikingly clear in his analysis of the talks. "We were set up", he says - something that looks increasingly obvious as Tsipras backed down on almost all substantive points over Sunday night. This was little room to manoeuvre, with German Finance Minister Wolfgang Schäuble, he claims, purposefully scuppering Syriza's attempts at reform.

“His view was ‘I’m not discussing the programme – this was accepted by the previous [Greek] government and we can’t possibly allow an election to change anything. 
“So at that point I said ‘Well perhaps we should simply not hold elections anymore for indebted countries’, and there was no answer. The only interpretation I can give [of their view] is, ‘Yes, that would be a good idea, but it would be difficult. So you either sign on the dotted line or you are out.’”

A coup by banks not tanks

Continuing the theme taken by the NO! campaign during the referendum, Varoufakis makes it clear that what's at stake is not simply the Greek bailouts, but rather than sovereignty of every European nation, and the democratic principle in itself. He was building on earlier comments made last week to Australian ABC's Late Night Live programme, where he said "In the coup d’état the choice of weapon used in order to bring down democracy then was the tanks. Well, this time it was the banks." Referring to the Eurogroup, who issued a memorandum unilaterally and without Greek oversight, he says:

“What we have is a non-existent group that has the greatest power to determine the lives of Europeans. It’s not answerable to anyone, given it doesn’t exist in law; no minutes are kept; and it’s confidential. No citizen ever knows what is said within . . . These are decisions of almost life and death, and no member has to answer to anybody.”

The Varoufakis plan rejected by Tsipras

In order to push Greece into a better negotiating position, Varoufakis developed his own 3 point plan. When the ECB closed Greek banks, the government would respond by issuing Euro-denominated IOUs, applying a haircut to Greek-issued bonds to the ECB and seizing control of the Bank of Greece. His plan was voted down, 4 to 2, by the Cabinet. His resignation was bound to follow:

 “That very night the government decided that the will of the people, this resounding ‘No’, should not be what energised the energetic approach [his plan]. Instead it should lead to major concessions to the other side: the meeting of the council of political leaders, with our Prime Minister accepting the premise that whatever happens, whatever the other side does, we will never respond in any way that challenges them. And essentially that means folding. … You cease to negotiate.”

Visit the New Statesman to read Varoufakis' astonishing interview

"The Global Minotaur: America, Europe and the Future of the Global Economy" by Yanis Varoufakis, with a foreword by Paul Mason, is out now

Wednesday, 24 June 2015

Rogue Reporters gather to discuss The Racket

Waterstones Bookshop in Trafalgar Square saw lively debate this month as journalists Owen Jones, Ellie Mae O'Hagan, Amelia Abraham and Matt Kennard gathered for the launch of The Racket: A Rogue Reporter vs The Masters Of The Universe. Joined by Potent Whisper, who performed to the packed room, they discussed how a media environment owned by a tiny group of incredibly wealthy people shapes political debate and limits political possibilities. Watch the full discussion, and some fantastic extracts, below:
Potent Whisper performs at the launch night
Is capitalism a racket?
Owen Jones: do we have a free press?
Owen Jones takes on the British media
Journalist Ellie Mae O'Hagan

Confessions of a Terrorist: Free e-book

"The point is, even a most basic level of research would reveal that terrorists are not evil, inhuman, animal-like. I would have thought that some courageous novelists would have by now made a real effort to understand their subjects as real human beings – done some real research – and then narrated them in more authentic, more human terms. In my experience, most literary depictions of ‘terrorists’ involve a great deal of stereotyping, and are psychologically shallow and unconvincing." 
     - Richard Jackson

In an empty, abandoned factory, two men face each other across a table. One, "The Professor", a hardened Islamist fighter, ideologically committed and dangerously talented in his role of terrorist organiser. The other, Michael, a British intelligence officer, just as ideologically committed but operating within a perilous ethical and legal labyrinth. The interrogation that follows lays open both men to an examination of their core beliefs and visions of the world; the transcript filed (annotated and redacted) makes up the novel Confessions of a Terrorist, by Richard Jackson, out now in paperback. To celebrate its launch, Zed Books is delighted to present a FREE EBOOK to all our subscribers: Confessions of a Terrorist: The Declassified Document, featuring extracts from the novel. Simply follow the link to begin your free download.

Praise for Confessions of a Terrorist:

"Savage indictment of terror untruths... A book that's too important not to read" -
Morning Star

"It should be required reading" - E-International Relations

"As a scholar, of literature, history, diplomacy and human rights, Confessions of a Terrorist is by far the most insightful book I have read on the subject since the beginning of this Century" - Pambazuka News

Thursday, 28 May 2015

*Book launch* Africa: Why Economists Get it Wrong - Morten Jerven

6pm, Thursday 4th June @ SOAS

Not so long ago, Africa was being described as the ‘Hopeless Continent’. Recently, though, talk has turned to ‘Africa Rising’, with enthusiastic voices exclaiming the potential for economic growth across many of its countries. What, then, is the truth behind Africa’s growth, or lack of it?

In this provocative book, Morten Jerven fundamentally reframes the debate, challenging mainstream accounts of African economic history. Whilst for the past two decades experts have focused on explaining why there has been a ‘chronic failure of growth’ in Africa, Jerven shows that most African economies have been growing at a rapid pace since the mid-90s. In addition, African economies grew rapidly in the 50s, the 1960s, and even into the 1970s. Thus, African states were dismissed as incapable of development based largely on observations made during the 1980s and early 1990s. The result has been misguided analysis, and few practical lessons learned.

An essential account of the real impact economic growth has had on Africa, and what it means for the continent’s future.

Respondent: Tunde Zack-Williams (University of Central Lancashire)
Chair: Christopher Cramer (SOAS)

All welcome. Please rsvp to