Tuesday, 18 June 2019

The Promised Land

Palestine really was the Promised Land. So much so that it was promised to three different groups within a couple of years.[1] The promises were made by British imperialism, a real world power, not by an imaginary deity in a book of very dubious provenance. What made the promises remarkable was that they were about a land which, at the time, the British neither possessed nor controlled. But imperial arrogance was a commodity in ample supply when the promises were made, and it has not become scarce in the years since.

Map of Ottoman Palestine, 1878 (Source: www.passia.org/maps/view/2)

Balfour Declaration

The most famous promise, the one most widely known, almost to the exclusion of the others, was to ‘the Jewish people’. Issued by the British Foreign Secretary, Arthur Balfour, in the Balfour Declaration of November 1917, it read:
“His Majesty's government view with favour the establishment in Palestine of a national home for the Jewish people, and will use their best endeavours to facilitate the achievement of this object, it being clearly understood that nothing shall be done which may prejudice the civil and religious rights of existing non-Jewish communities in Palestine, or the rights and political status enjoyed by Jews in any other country.”
While something short of an outright promise, if a major imperialist power was willing to use its ‘best endeavours’ that was good enough for the Zionist lobbyists, after they had failed to make much ground with the Ottoman Empire or with Germany. In particular, they could ignore the annoying bit about not prejudicing the ‘civil and religious rights of existing non-Jewish communities in Palestine’ and be hopeful that their ethno-religious racism would eventually win the day. Neither were Zionist leaders very concerned about Jewish people being denied rights or status elsewhere as a result, since surely that would only add to the supply of the right kind of immigrant into Palestine.
Furthermore, it looked to them like a step up from British East Africa! After meeting with British Colonial Secretary Joseph Chamberlain in 1903, Theodor Herzl, the founder of modern political Zionism, had been offered an area of land in what was later Kenya as a refuge for those fleeing from pogroms in Eastern Europe. Herzl raised this option at the 1903 Zionist Congress in Basel, but, following protests from Russian Zionists and Herzl’s death in 1904, nothing further came of this so-called ‘Uganda’ Scheme.
Balfour’s brief letter should also be put in context. He already had form as having an ambiguous view on Jewish people. For example, while being opposed to Russian persecution of Jews, he was strongly in favour of the 1905 Aliens Act, Britain’s first immigration controls. The 1905 Act was focused on stopping Jewish refugees coming to Britain, and many British politicians, encouraged by Zionists, also came to see Palestine as a useful place to send the unwanted Jewish immigrants.
There were several other strands in the British political class that led up to the 1917 Declaration.
Some British politicians were Jewish themselves, and were worried that setting up a ‘Jewish homeland’ would raise questions about their British nationality. The final part of the Declaration about ‘Jews in any other country’ comes from this concern. Some were evangelical Christians who, while often also anti-Semitic, saw Jewish settlement in Palestine as part of God’s plan, and a step on the road to salvation, just as the British Empire was in its own divine manner bringing justice and order to the world. Some saw it as useful to have a grateful group of people loyal to Britain settling in what would be a strategic area as the Ottoman Empire was waiting to be carved up.
Many were also influenced by the anti-Semitic ideas of the time, in particular the notion that Jewish financiers had immense power and influence. So the Declaration might be a sensible policy for gaining important friends. Naturally, the Zionist leaders discussing with British politicians talked up this ‘Jewish power’. To complete the factors leading up to the Declaration it is worth noting too that by 1917, with the First World War proving very costly in lives and treasure, British politicians cast an eye on the apparent influence of the Zionist lobby in America. They saw the Balfour Declaration as a way of gaining further American support.

The Hussein option

But before getting carried away with the idea that a ‘national home’ for Jewish people in Palestine was an inescapable outcome, it is worth considering some other plans British imperialism had for the Promised Land. Two stand out and they were made before the much more famous Declaration. The first British proposal was implied by the correspondence in 1915-16 between the British High Commissioner in Cairo, Sir Henry McMahon, and Sharif Hussein, the Emir of Mecca.
It is important to realise that the background to this communication was the British attempt to get support from the Arabs for an attack on the Ottomans in the Middle East. In 1914, Turkey had taken the Central Powers’ side in the war, and the British were aware that there was some political opposition to Turkish rule in Arab areas of the Ottoman Empire that they might exploit.
As an incentive for this opposition, the British offered a kind of Arab independence over a vaguely defined region, with two caveats. One was that, as McMahon stated, ‘it is understood that the Arabs have decided to seek the advice and guidance of Great Britain only’ in the administration of such an area and they would also give Britain economic and commercial privileges over other powers. But perhaps the most important caveat was on the territorial region of Arab ‘independence’: it would exclude certain areas that the British might have to concede to the French, a British ally in the war that also looked forward to greater influence in the Middle East when the Ottoman Empire was carved up.
Quite which territory was excluded from the offer to the Arabs was not entirely clear. Sharif Hussein read in McMahon’s letters that these concerned an area of Syria west of Damascus. He rejected that, but continued the correspondence and the discussion of terms. Nevertheless, he did not think that Palestine or the important religious centre of Jerusalem were excluded. While Palestine was also west of Damascus, it was further south and not considered to be part of Syria.
Historians have long debated how far McMahon deliberately misled Hussein. It is probably best to see McMahon’s letters not just as an example of manipulative diplomacy, but also as contingent on the circumstances. After all, even the more explicit commitments of the McMahon-Hussein correspondence were completely contradicted by the Sykes-Picot Agreement of early 2016!
The latter Agreement was a plan to divide up the Middle East into regions run by the British and the French. The French felt they had been short-changed, but they got Syria – and Lebanon, which they later carved out from Syria. The British would not accept French rule in Palestine, however, since it was a little too close to Britain’s important strategic and trade route at the Suez Canal in Egypt to have a rival power sitting there. In discussing with Fran├žois Georges-Picot, Britain’s Sir Mark Sykes sidelined the issue of Palestine by arguing that it should be managed under an international agreement, one that he was confident would favour British interests. That turned out to be the British Mandate for Palestine, endorsed by the League of Nations in negotiations after 1918, in which the British included the terms of the Balfour Declaration.[2]
It turned out that not even the Sykes-Picot Agreement between two imperialist powers was implemented as agreed. Responding to a more favourable conjuncture after 1918, the British were in a much stronger position than the French and no longer had need to take account of potential Russian incursions into the Middle East region, for which they had favoured a French ‘buffer’ in Syria. The British also decided to shift a portion of the Sykes-Picot ‘line in the sand’ and included Mosul in the newly carved out Iraqi state that they would control. This was seized from the defeated Ottomans and added to the oil reserves available to the British.

A deal with the Ottomans?

Britain’s second pre-Balfour plan for Palestine was discussed indirectly with the Ottoman Empire in July 1917. The British Foreign office sent Aubrey Herbert to Switzerland to discuss with Turkish dissidents the possibility of having a separate peace with Turkey. Herbert was a Conservative MP, the son of an earl and had considerable experience of the Ottoman Empire, which he much favoured over Tsarist Russia. For some time he had been advocating this plan, and the British government was happy to explore it as a means of weakening Germany’s position in the war.
As was typical of the British in these diplomatic discussions, much was implied and little was made explicit. Herbert said he was not authorised to discuss terms of an agreement, but he indicated that Britain would not wish to seize Ottoman territories. Instead it would allow continued Turkish control, with (left unsaid) the British pulling the strings as it had done in Egypt. There is no documentation of these discussions, but if they had reached fruition, they would have allowed Palestine, among other regions, to remain in a reconfigured Ottoman Empire.
In a memorandum to the Foreign Office after the Swiss meetings, Herbert made clear what kind of future he, and the British, had in mind for the Ottoman territories:
“If we get the luggage it does not matter very much if the Turks get the labels. When Lord Kitchener was all-powerful in Egypt his secretary was wearing a fez. Mesopotamia and Palestine are worth a fez.”
Nothing came of this Ottoman initiative, as indeed nothing came of the McMahon correspondence. They are nevertheless useful examples of how one should not take at face value the ‘news’ that does get into the headlines. Very often there is something else going on. Furthermore, as in many other cases, an investigation usually suggests that the term ‘Perfidious Albion’ does not do justice to the full extent of British duplicity.

Tony Norfield, 18 June 2019

[1] Some material for this article is taken from the very informative book by Jonathan Schneer, The Balfour Declaration, Bloomsbury, London, 2011.
[2] In the event, Britain limited the scale of Jewish immigration into Palestine during the Mandate period. It turned back boatloads of Jews escaping the Holocaust in Europe, even though they had nowhere else to go. America, Britain and other countries were reluctant to accept the refugees and the British did not want to damage their relationships with other Arab countries.

Friday, 19 April 2019

Strange Fruit in Palestine

Palestinians observe the aftermath of settler violence (B’Tselem, 6 December 2018)

Recently I listened to Billie Holiday’s rendition of the classic song ‘Strange Fruit’. Written in 1937 by Abel Meeropol, a member of the US Communist Party, it condemned the lynching of blacks in the US by white mobs. I adapted the three verses to highlight a modern set of outrages backed by the US government:

Palestine’s trees bear little fruit
Torn down branches and cut at the root
Land and lives stolen, by Israelis seized
No fruit hanging from the olive trees

Killed in the west, the east, north and south
Destruction, lies with a twisted mouth
Funds from America, sweet and fresh
And the soldiers shoot, maim and arrest

Here are walls, settlers run amok
A death camp in Gaza, human life is blocked
People will not bow, and they will not stop
Here are the racists’ bitter crops

Three verses cannot cover all the key points one needs to know about Israel, so it may be useful for readers if I note some articles on this blog:

Murdering Europeans, 2 October 2018

Jews, Zionism and Israel, 22 August 2018

Tony Norfield, 19 April 2019

Tuesday, 16 April 2019

Racism & Imperial Anxiety: US vs Huawei

US political opinion against China has two solid bases. The first is the longstanding racist and protectionist sentiment in the white working class; the second is a more recent anxiety about China’s economic prowess in America’s ruling elite. This article notes some historical aspects of anti-Chinese racism in the white working class, part of a wider racial prejudice that persists today, and also examines the more contemporary aspects of the worries that China gives America by looking at the example of Huawei, China’s flagship telecommunications and electronics company. Anyone paying attention to President Trump’s tweets to his domestic audience will be aware that there is a close connection between the two issues.

Racism and the American labour movement

The US state was founded upon the dispossession and virtual extermination of indigenous people. Until the end of the Civil War in 1865, enslavement of black Africans on southern plantations was another import element, alongside the seizure of territory from Mexico. Not surprisingly, the characterisation of American Indians, blacks and Mexicans as uncivilised and inferior was common in white American discourse.[1] White European settlers remained the key grouping with political and economic power – and relative economic privileges even in the working class – despite the successive waves of immigration and the diverse cultural mix that came to make up the country. Chinese labourers migrating to the US, principally on the west coast and from the mid-1800s, were another element of this mix, and one that got a particular form of racism from whites.[2]
It was not just anti-Chinese riots and pogroms, with beatings, lynchings and murder, such as in Los Angeles in 1871, Rock Springs (Wyoming) and Tacoma (Washington) in 1885 and Seattle in 1886. The Tacoma riot was followed by a white mob, including the mayor and councillors, forcibly expelling the whole Chinese community, then burning down all property in the area, with the Fire Department doing nothing. This action became known as the ‘Tacoma method’.
Also note the views of Samuel Gompers, a founder of what became the American Federation of Labor in 1886, and its president, almost continuously, until his death in 1924. In 1902, Gompers co-authored an AFL pamphlet entitled Meat vs. Rice: American Manhood against Asiatic Coolieism: Who Shall Survive? This followed from the normal trade union practice of confronting divisions in the working class by enforcing them and isolating ‘outsiders’, including women, but especially those in other ethnic groups. But his opinions on Chinese workers had already been made clear in the AFL Convention of 1901:
“Of course, I realise the desirability of having every establishment possible unionised, and to organise our fellow workers, but you must take under consideration the further fact that the American labour movement has set its face against the Chinese coming to this country, and upon our demands the law has been passed for the exclusion of Chinese from the United States or from any of the territories or possessions of the United States … In other words, the American labour movement stands committed against the Chinese coming to our country or any possession of our country.”
He was referring to the Chinese Exclusion Act of 1882, the first US law to prevent all members of a specific ethnic or national group from immigrating, which was passed with strong support from the white working class. That act was renewed, until slightly amended in 1943 and more substantially changed by a 1965 act that abolished the national origins formula. It is little wonder that the American working class has remained so politically weak and divided.

The ruling perspective

US workers focused on competition from cheap Chinese labour, while US political elites had broader interests. The latter have consistently been interested in a carve up of China, or of forcing treaties on it, along with other powers, at least when their attention was not distracted elsewhere. After the Chinese revolution of 1949, China fell more readily under the heading of ‘Communist threat’, having helped give the US a major setback when the war in Korea was fought to a draw in 1953. As one might expect, this did not go down too well, and gave an anti-Chinese angle to the McCarthy anti-communist witch-hunts in the US during the early 1950s.
By the early 1970s, however, the US decided to take advantage of a political split between China and Russia to make overtures to China and find a way into what was then a closed, but potentially very large, market for US business. This culminated in President Nixon’s week-long visit to China in February 1972. It took some time before economic relationships opened up for the US, but this process was accelerated in 1979 by the US changing its recognition from the ousted nationalist government, based in Taiwan, to the government of the People’s Republic in mainland China.
This is not to say that the US political worries about China stopped, although these narrowed down a bit and for a while were mainly concerned with the potential for Chinese spying. For example, American space researchers are generally prohibited from working with Chinese citizens who are seen as affiliated with the Chinese government in any way, and in 2011 the US Congress banned NASA from hosting Chinese visitors. Wishing to emulate the ‘American way of life’ is fine; competing with America in high tech fields, or in espionage, is not.

US trade and China

Chinese workers are no longer seen as a threat to US workers as ‘coolies’ undercutting them in the domestic labour market. Instead, there has been another challenge from international trade relationships that has come to the fore in the past few decades.
Big US corporations have expanded their overseas operations to take advantage of cheap labour elsewhere, with their facilities in the US moving more to areas of business that are better protected by patents and intellectual property rights. This has been one factor behind a growing US trade deficit in goods production, and also an easy focus for popular anti-China sentiment. By 2010, this sentiment was reflected in the US mid-term Congressional elections. Both Republicans and Democrats accused each other’s candidates of supporting free trade with China. That country had become the latest economic demon in foreign trade, replacing the now stagnant Japanese economy.
Twenty years ago, China accounted for around a fifth of the US trade deficit of $337bn. By 2017, to protectionist shock and horror, China’s share of the $807bn goods deficit had risen to nearly half. This was the backdrop to Trump’s latest trade tariffs on China and the claim in his 2016 election campaign that China is ‘raping’ the US with free trade. There was lots of media coverage of how Apple was getting its iPhones made by Foxconn in China, and how Wal-Mart relied on China-based suppliers for many imports.
These complaints leave aside that China still accounts for only a fifth of US imports of goods. Although this share rose from 8% in 1999, US exports to China have also become more important, growing from 2% to around 8% of the total over the same period. Furthermore, the goods imported from China contain components supplied by other countries, including from the US itself. A 2015 OECD study found that the foreign content of Chinese exports was around 30%, with that proportion rising to more like 50% or so for electrical machinery and electronics goods.[3]
More importantly, the complaints ignore how a country’s trade deficit is commonly a sign that it is consuming more than it produces! Even more relevant to considering the whole picture is America’s dominant position in the global economic and financial system. It benefits from a wide range of payments and financial inflows from the rest of the world, ones that easily finance the US trade deficit.[4] However, these points get no hearing in reactionary US discourse.

China’s tech challenge

This brings me to the issue that really concerns the US business elite: China’s rise in the sphere of technology. China is not overtaking the US in every field, or even in many. But the areas in which it has made gains are striking, and they undermine the view that China’s capabilities are limited to doing bad copies of western technology that it has stolen. Just consider the case of Huawei Technologies, headquartered in Shenzen, China.
Huawei is now the world’s second or third largest supplier of smartphones, behind Korea’s Samsung, but in close competition with Apple. Other Chinese companies, Xiaomi, ZTE and Oppo, are also major suppliers, although, like Huawei, a large chunk of their market is in China itself. But note that Chinese-sourced smartphones are also dependent upon foreign technology, especially from the US, such as Google’s Android software and Qualcomm’s modems and chipsets, so one should not exaggerate China’s prominence in this area.
For example, one study noted that Huawei paid western companies $222m in licensing fees for technology in 2010 alone, with $175m of that paid to American firms.[5] Qualcomm was a recipient of some $600m in intellectual property fees from Huawei over a number of years, helped by its charges of around 2.5% of the smartphone’s retail price!
In recent years Huawei has made a big effort to produce its own components or at least to avoid those supplied by US companies. This is a very sensible move, and Huawei now produces its own chipsets. Nevertheless, it remains vulnerable, as does China more generally, to the US government using technology as a factor in its political and economic influence in markets. Huawei is currently under fire from the US for allegedly breaking its sanctions on Iran, by using US banks to transact with an Iranian company and by selling Iran telecom equipment that included US components.
The US legal case against Huawei has so far meant the house arrest of the company’s Chief Financial Officer in Canada, and is still being played out. Nevertheless, in the meantime the US has stepped up its actions against Huawei on a different front, one that from a technology perspective is more critical. This is in the supply of the latest generation 5G mobile network equipment.

5G innovation

Much to US concern, Huawei is the leading supplier of 5G equipment worldwide. Last November, BT’s chief network architect told a conference in London that there is ‘only one true 5G supplier, and that is Huawei’, adding that the others ‘need to catch up’. A Financial Times survey of the global mobile infrastructure market showed that in 2017 Huawei had a market share of 28%, Ericsson 27%, Nokia 23%, ZTE (another Chinese firm) 13% and Samsung had 3%. All the others, including the US company Cisco, had only 6% between them. The 5G network market is even more monopolised by a very few suppliers, with Huawei much further in the lead, as the BT executive indicated.
The hype around 5G and what it can potentially do is avidly promoted by the major tech companies. They would love consumers to ditch their ‘old’ equipment and move onto new, more expensive devices, with the ever-so-exciting connections available on a 5G system. Just imagine that amazing new 5G-enabled world of the Internet-of-Things, where, for example, your driverless car runs over people you do not like and updates the tally on your Facebook and Twitter pages!
5G would, nevertheless, appear to offer – eventually – a much faster downloading speed, faster connections between related devices and a greater capacity for handling many more devices at the same time. All this sounds great until you remember that even 4G is not universally available in the richer countries and that mobile network coverage can be very patchy. The US barely makes it into the top 10 countries worldwide for average Internet speed, and the UK is in a much worse position. It is even less great when you are informed that 5G will require many more ‘base stations’ to build network coverage than 4G, because the 5G signals do not travel as far as with 4G. That is the reality, together with the other very mixed blessings in our present social system when we have 5G-enabled robotics, drones and so forth.
How did Huawei get so prominent in 5G technology? The standard western argument that Chinese companies make technical gains by copying from established western corporations falls flat. How does ‘copying’ put you in the lead in a new field? The simpler, more accurate answer is that Huawei has for a long time invested a huge amount in innovation. In 2017, for example, roughly 80,000 people, 45% of its 180,000 worldwide staff, were involved in research and development. Some are also employed in more than a dozen European R&D centres. Total company R&D expenditure in 2018 was CNY101.5bn, roughly $14.8bn and 14% of annual revenue.
It was more than a decade ago that Huawei moved from low-tech operations, which sometimes involved it reverse-engineering others’ existing products. Now, it plays a big role in proposing new global standards for the latest mobile systems, and in 2018 its scale of technical development was shown by how it applied for the largest volume of patents ever – 5,405 – at the World Intellectual Property Organisation. It is likely that in 2019 or 2020, China as a whole will for the first time exceed the US in such patent applications.
Although patents are a form of exercising monopoly power, and so are far from being a true measure of invention or innovation, it is nevertheless striking that, back in 1993, China filed for a grand total of just one patent with the WIPO. As another sign of change, note the rankings of universities applying for patents. In 2018, the University of California and Massachusetts Institute of Technology were first and second, respectively, but Shenzhen University and South China University of Technology came in at third and fourth.

… and Five Eyes politics

That China outcompetes with its own technology is a little difficult for the US government to stomach, so it turns to a tried and trusted ploy of citing ‘security’ concerns about Huawei. The company is meant to be indistinguishable from the Chinese (communist?) government, and using its 5G technology will doubtless enable Beijing to turn off your fridge, cancel your order for beer and burgers and cackle like Fu Manchu as it listens to your cries of despair.
One of the main political weapons the US has in this respect is the ‘Five Eyes’ alliance. This is led by the US, but includes the other stalwarts of the Anglo-American political-economic system – the UK, Canada, Australia and New Zealand – who cooperate with each other in signals intelligence, otherwise known as spying. Set up at the start of the Cold War, the original focus was on the Soviet Union. But it soon expanded much further into official and private communications worldwide, as detailed by Edward Snowden, a former CIA employee, in 2013.
The US has demanded that its Five Eyes partners bar Huawei from participating in 5G networks in their countries, due to security concerns. This follows from earlier moves by the US to more or less exclude Huawei from the US market in the supply of other technology, or in an ability to buy US companies. It has had some success. Back in 2012, Australia had already banned Huawei from supplying equipment for its national broadband network and it will continue with a 5G ban. New Zealand has stopped Huawei from supplying equipment to a local telecom company, and Canada may also do the same for its 5G network.
The UK is in a more mixed position. BT has banned Huawei’s equipment from the core parts of its 5G network, but other industry reports have suggested that security concerns can be sorted out, with its equipment being used only in ‘benign’ parts of the network that cannot be remotely accessed or which could not lead to the whole system being taken down.
There are a number of problems for each of the Five Eyes in going through with all this. Huawei is the cheapest supplier, and is already entrenched in many 4G networks, so uprooting its equipment is going to be very costly. Furthermore, they will all risk retaliation from China in trade matters, something that may weigh upon the Brexit-burdened UK more than the others. Finally, they have a problem when there has been no evidence provided that there is any real security risk – or at least none that is not already being addressed by the company – and that this is anything more than a US-driven political ploy against an embarrassingly successful Chinese company. This is why Germany and Japan do not seem to be following the US ‘lead’ here.
It is true that Huawei’s founder, Ren Zhengfei, was formerly a military technologist in China’s People’s Liberation Army and that Huawei has received indirect support from the Chinese state. But he left the PLA in 1982, five years before setting up Huawei. In any case, if corporate-military-state links are such a problem, then why not look at those between the US government, the military and security services and companies such as Microsoft, Google, Amazon and others, both in terms of lucrative contracts and intelligence sharing?
Or why not risk drowning in a well of hypocrisy and note two other issues? First, a report by the New York Times detailed how the US National Security Agency (NSA) hacked into Huawei’s systems from 2007:
“One of the goals of the operation, code-named ‘Shotgiant’, was to find any links between Huawei and the People’s Liberation Army, one 2010 document made clear. But the plans went further: to exploit Huawei’s technology so that when the company sold equipment to other countries – including both allies and nations that avoid buying American products – the NSA could roam through their computer and telephone networks to conduct surveillance and, if ordered by the president, offensive cyberoperations.” (22 March 2014)
Second, as reported by Der Spiegel, the NSA has made its own ‘backdoors’ in many makes of computer and telecom software and hardware: “A document viewed by SPIEGEL resembling a product catalog reveals that an NSA division called ANT has burrowed its way into nearly all the security architecture made by the major players in the industry – including American global market leader Cisco and its Chinese competitor Huawei, but also producers of mass-market goods, such as US computer-maker Dell” (29 December 2013).
With all communications technology, there is a potential problem of access or interference by outsiders, whether they be state spies or private players. But in the case of Huawei, the US has not given any evidence that the company has given special access for the Chinese state to its technology and, of course, it ignores its own infiltration into communication systems used worldwide.

How vulnerable is Huawei to US-inspired sanctions?

The US is a very big market, so it is not good news for any company to be excluded from it, and it is even worse when the US government can exert political influence on a company’s access to markets elsewhere. Huawei is vulnerable in these respects to US-inspired sanctions, but it is worth noting some unusual features of the company that limit its vulnerability.
First, Huawei is owned by its employees, who hold all the shares in the company.[6] It is not quoted on any stock exchange, which prevents a market crash in the share price from destabilising it, and this also helps protect it from being taken over. Second, Huawei does not have much reliance on outside financing. In 2018, its outstanding long-term borrowings amounted to $9.7bn against a net profit for that year alone of $8.7bn. This looks pretty good compared to Apple’s long-term debt of $93.7bn versus a net income of $59.5bn for its 2018 fiscal year.
Huawei’s 2018 annual report showed a solid near-20% growth in revenues, and that just over half its business came from China. Europe, the Middle East and Africa (EMEA) was the most important foreign market region, with 28% of the total, while the Asia Pacific region was at 11%. The Americas – both North and South – accounted for less than 7% of Huawei’s total business revenues. 

Huawei’s global sales revenues

(Divide the 2018 data by 6.856 to get the equivalent US dollar number)

Ironically, the longstanding anti-Huawei prejudice of the US government prevents it from doing much more damage to the company, unless it can force its European allies to follow suit. I have found no data for the split of Huawei’s EMEA region revenues between western Europe and Africa, but the company’s record of providing low cost technology to many African countries, together with it doing far more training of locals than any other western company, will no doubt make it difficult for the US to dislodge Huawei in those locations.


China presents the most significant challenge to America’s domination of the world economy. A very big, very poor country that was making cheap goods for the US domestic market was fine for the American ruling class for a while. Now China presents a more formidable problem of making gains in the field of technology, one that has been an important area monopolised by American businesses. This is shown by how the top four companies in the world by stock market capitalisation are US tech giants: Apple, Microsoft, Amazon and Google. The only non-US companies in the world top 10 are Chinese: Alibaba and Tencent Holdings. Huawei does not figure on that particular list, but is nevertheless making dramatic gains in its chosen fields. Other big Chinese tech companies include Baidu, ZTE, Xiaomi and Oppo.
The US is big on widely used software, Internet search, social media, e-commerce and cloud computing (Microsoft, Google, Facebook, Amazon) and on selected areas of critical tech products (Intel chips, Qualcomm modems, etc). But it is relatively weak in others – especially network infrastructure, as reflected in the poor Wi-Fi coverage in much of the US. It has also earned a lot of revenue from licensing its intellectual property to foreign companies: in 2017, US net revenues on this item amounted to a not insignificant $77bn, although that was down from $89bn four years earlier.[7] Prospects for the US do not look good here, given not only the rise of China, but also the growing prominence of companies like Samsung of Korea and SoftBank of Japan who are joining the innovation-via-takeover race that has up to now been dominated by the US tech giants. These trends will only add to America’s anti-China protectionism.
Europe’s response to China has been a little different, as noted earlier in the mixed reaction to the US call to ban Huawei from 5G installations. It was not only an ability to see through US hypocrisy, helped by the knowledge that the NSA had tapped German Chancellor Merkel’s phone for years. More fundamentally, there is an ambivalent stance, both because Europe is way behind in the Big Tech stakes and does not want to depend only upon US companies, and because China is a major trading partner for the EU – the third biggest market for EU exports, after the US and Switzerland, and the biggest source of imports.
But perhaps one guide to Europe’s response to the tech challenge from China is seen in what the EU Trade Commission did in 2012-13. It launched an anti-dumping investigation into Huawei and ZTE, alleging that the Chinese companies were being subsidised by the government, which enabled them to undercut European tech company prices. It demanded that Huawei and ZTE had to increase their products’ prices by 29% and urged the Chinese government to guarantee a 30% market share for European companies in the Chinese market. In the end, this failed to get enough support, even from other European governments, and the anti-dumping action was later dropped.
There is much more to come in the US-China story, and in the role of China in the world economy. President Trump will no doubt declare victory in any trade negotiations, but America will remain anxious about a growing threat to its rule.

Tony Norfield, 16 April 2019

[1] My focus here is on the US, but one should not ignore the prevalent European racism from which this outlook largely derived, but which was adapted to circumstances different from European colonialism.
[2] A useful book summarising the racist history of the US, and giving documentary accounts of and responses to events, is To Serve the Devil, by Paul Jacobs and Saul Landau, with Eve Pell, Vintage Books, 1971, in two volumes. They cover the American Indians, blacks, Chicanos (Mexicans), Hawaiians, Chinese, Japanese and Puerto Ricans, all recipients of aggressive racism in the US, from the state and from the white American public. The Gompers quotation later is from this book.
[3] OECD-WTO, Trade in Value Added: China, October 2015. A proportion of ‘foreign content’ is common to all countries’ exports, given the extensive supply-chain links in international trade. Note that in the past 20 years, the foreign share of China’s exports has been falling for most sectors, including the more technically advanced products, as the country has developed its own domestic sources of supply.
[4] Helping offset the large deficit in goods trade, these include net current account receipts for financial services ($81bn in 2017), royalties and intellectual property ($77bn). The relatively easy financing of growing US liabilities reflected in the persistent current account deficit comes via the mechanism of the US dollar. For further details on the latter, see my blog article Dimensions of Dollar Imperialism and the more developed, comprehensive analysis in my book The City, especially Chapter 7 ‘The imperial web’.
[5] See the very informative PhD thesis by Yun Wen, of Simon Fraser University, ‘The Rise Of Chinese Transnational ICT Corporations: The Case of Huawei’, 2017, available here.
[6] The company’s Chinese workforce owns all the shares through an Employee Shareholding Scheme – applying to roughly 60% of the workforce - through which they get a bonus from the company’s profits. The founder, Ren Zhengfei, owns less than 2% of the shares, but he has a decisive role in company decisions. The ESS has been criticised for favouring established employees, and for being a method by which the company enforces labour discipline. Huawei’s labour discipline regime has a lot of old style Maoist verbiage and company songs, but its workers’ pay, including bonuses, is reported to be well above the market level.
[7] These figures may underestimate US intellectual property revenues, since they record only the net revenue flows into the US. It may the case that some IP payments to US companies are diverted to non-US locations, like Ireland and other centres with low taxes.

Monday, 8 April 2019

Politics & the Imperialist Grinding Machine

On 5 April in London, I gave a talk for the ‘Great Moving Left Show’ on the world economy and political responses to how it works. The projector was not working, so I had to conjure up some images verbally. One was of an imperialist grinding machine. Readers will have to excuse my less than expert ability to create exciting graphics, but this is shown below in the first image. It highlights how dominant global economic and political structures – the grinding machine – stop the world’s resources from benefiting humanity. Below that are copies of several slides giving the background to key features of contemporary politics.
The British Labour Party was one topic in this talk.[1] Like many other parties that (sometimes) give the impression of wanting to change things, Labour just ends up oiling the imperial machine or tinkering with it. But if you don’t want to end up in the machine’s output tube, you have to get rid of it. Destroy the power of the machine and you are more likely to get closer to achieving the output society needs from the inputs that are available.
It is difficult to capture the principal aspects of imperialism today in one simple image, or even in several. Among other things to include are the hierarchy of power, the economic and political forms of that power, and the social and political structures that legitimise the system and keep it ticking over.
The image I most often use is my own Index of Power chart, derived from data for around 200 countries and usually given showing the top 20 or so. However, although it is implicit that the big guys will have a much bigger say in running the system as a whole, it does little to map out the connections between countries.
As one way of showing connections, I made a separate table of international trade relationships for the top 20 countries. But this does not directly indicate which ones write the rules for those relationships.
Political dimensions are even trickier to summarise. It is not only that political influence reaches beyond an individual country. Also within a country there must be an allowance for the political deal between the ruling elite and the mass of people. Unless there is sustained state repression, something like a ‘deal’ has to exist in order to make the economic and social structure legitimate, or at least tolerable and able to work without continued political turmoil.
All such things change over time, but the stains of history can remain evident in contemporary life even when the circumstances that brought them about might have disappeared. For this reason, assessing the historical backdrop is critical. This is particularly so in a time when people in the richer countries react to unwelcome changes. They are informed by their political heritage. When this rests on what they think is a deserved privilege in dealing with the rest of the world, they react by demanding that their state restores the status quo ante, rather than seeing that the game is up and putting the legitimacy of the capitalist/imperialist system in question.

The imperialist grinding machine


Politics today

Tony Norfield, 8 April 2019

[1] I have published a number of articles on this blog about British Labour Party politics, for example here. Use the search option on the right hand side of the page and look for Labour Party, Corbyn, welfare state, colonialism, Zionism, immigration, etc.

Monday, 1 April 2019

Economic Analysis & Imperialism Today

Last Saturday, 30 March, I gave a presentation at a Rethinking Economics conference, Greenwich University, London, on the topic of 'Economic Analysis & Imperialism Today'. The slides for this are reproduced here. Note that it was only a brief 20 minute introduction, so a number of issues could not be dealt with in any detail.

Interesting questions were raised in the Q&A and later discussion. One misunderstood what I meant when I said 'The state is your enemy', and took it to imply I was against any welfare spending by the state. The context of my comment was instead to oppose the usual stance of radical economists who argue for alternative policies that the capitalist state should implement. I will write more on this topic another time.

For further elaboration of some other economics-related points in the presentation, I will of course promote my book, The City: London and the Global Power of Finance. However, I have written blog articles that explain more fully my views on financialisation and on neoliberalism. My coverage of other topics can be found using the search option on the right-hand side of this blog page.

The presentation slides follow ...

Tony Norfield, 1 April 2019

Thursday, 21 March 2019

No Empty Seats: Brexit & World Trade

Just in case you were still thinking that there was some economic logic to the madness of Brexit, let me enlighten those of you who might give some credence to an open vista of exciting trade opportunities outside the EU. After all, there are many things most British politicians (and journalists), even those who are against Brexit, do not generally understand.
One is that a so-called ‘customs union’ deal with the EU would not involve services – not simply financial services, but also legal, accounting, software, design and general business services. Just ask Turkey, which has such a customs union deal.
Another major point is that the great world outside the stagnating, troublesome EU is already, how shall I put it, divided up. This is something that Liam Fox, the airmile-hogging chancer who is currently the UK’s Secretary of State for International Trade, has been finding out. After two years or so, he has done post-Brexit trade deals with … Switzerland, Chile, the Faroe Islands, Papua New Guinea and Fiji.
The following table highlights this latter point. It shows the top 20 countries by nominal GDP in 2018, on IMF data measured in terms of how many billions of US dollars, and also the major trade deals that each one has with other countries. (Also note that the EU bloc of 28 countries is the second largest economic area, having a single market among members and trade agreements with 36 non-member countries.) The focus here is on economic deals relating to trade, rather than other more purely political or military cooperation agreements.

In the table, the following abbreviations apply:

APEC: Asia Pacific Economic Cooperation group of 21 Pacific Rim economies
ASEAN: Association of South East Asian Nations, including 10 countries in South East Asia
CPTPP: Comprehensive and Progressive Agreement for Trans-Pacific Partnership of 11 countries, including Mexico, Canada and Japan. This is something the UK could join post-Brexit, but there has been no news on any such developments. The US pulled out of the previous TPP, but the remaining members went ahead with this CPTPP excluding the US, after suspending 22 provisions the US favoured that the others opposed.
Gulf Cooperation Council: a grouping of six Arab states, the main members being Saudi Arabia and the UAE (with Qatar now under an embargo).
Mercosur: a changing membership of around six countries, due to political disagreements. Principal members are Argentina and Brazil.
NAFTA/USMCA: The US pulled out of the North American Free Trade Agreement with Canada and Mexico under Trump, but will replace it with the US-Mexico-Canada Agreement (USMCA).
SCO: Shanghai Cooperation Organisation, key members of which are China, Russia, India and Pakistan, plus four East European ex-Soviet states and many observer and ‘dialogue’ states.
For other details, of which there are many, look up Wikipedia!

Tony Norfield, 21 March 2019

Wednesday, 19 December 2018

Liberals, the Populist Right & the Politics of Imperialism

Roger Eatwell and Matthew Goodwin, National Populism: The Revolt Against Liberal Democracy, Pelican Books, October 2018

How to respond to the rise of national populism? The phenomenon is evident not only in Trump’s US but throughout Europe, as shown in this book’s comprehensive review of changes in mass opinion. The book also attempts to provide a solution to the problem, one that will defend democracy, but in doing so it inadvertently highlights the bankruptcy of the liberal outlook. They detail how, over the past two decades and more, new political forces have undermined support for the traditional political parties in the West, and especially for the social democratic parties of western Europe. Yet their ‘solution’ is to make concessions to reactionary views in order to ‘engage with’ the concerns people express in opinion polls. Like many liberal commentators, on the face of it they will have no truck with racism. But they seem to be fine with the nationalist mentality and an anti-immigration stance, and they persistently raise the question of ethnicity in national politics.
The book’s real value is in documenting how pervasive are reactionary opinions in the West. They show how the success of Trump, et al, cannot be put down to ‘angry old white men’, who will all die soon anyway, or simply to those who have lost out economically with ‘globalisation’, and who may then be attracted to a left-wing party’s plans for economic reform. The political problem in the West is far deeper, and more depressing. As they put it: ‘people who support national populism are not merely protesting: they are choosing to endorse views that appeal to them’ (p 39).

Four D national populism

Eatwell and Goodwin organise their work along the lines of what they call the Four Ds. This is how the ‘elitist nature of liberal democracy has promoted distrust of politicians and institutions’, how ‘immigration and hyper ethnic change are cultivating strong fears about the possible destruction of the national group’s historic identity and established ways of life’, how ‘neoliberal globalised economics has stoked strong feelings of what psychologists call relative deprivation as a result of rising inequalities of income and wealth in the west and a loss of faith in a better future’, and finally, the ‘weakening bonds between the traditional mainstream parties and the people, or what we refer to as de-alignment’ (pp xxi-xxiii).
If you are already finding your blood beginning to boil with a phrase like ‘immigration and hyper ethnic change’, then I recommend taking a few deep breaths because things get worse. Worse because of the reality they describe, not because the authors are closet racists hiding behind academic language – although in some of the things they write, they will come close to readers interpreting them that way. Towards the end of the book, they sum up the argument as follows:
“The ‘Four Ds’ have left large numbers of people in the West instinctively receptive to the claims being made by national populism: that politicians do not listen to them, even treat them with contempt, that immigrants and ethnic minorities benefit at the expense of ‘natives’, and that hyper ethnic change and in particular Islam pose a new and major threat to the national group, its culture and way of life.” (p 272)
I will deal with these D issues a little later, but first it is worth covering some of the characteristics of voters that the authors set out. In the end, these are the decisive people in a democracy.
Having paid a lot of attention to the social dimensions of voting, they note that the unemployed and those very dependent on welfare payments tend to vote less than average, that the youth vote also tends to be below par and that, at least in the past, white workers without degrees were under-represented in samples taken of popular opinion, which helped lead to the poll surprises of Trump and Brexit. In their view, it is the ‘middle educated’ who are most open to national populism – those who are not uneducated, but who do not have university degrees.
This middle group also tends to feel more vulnerable than others, being above the unemployed but below the middle class economically. In the UK, it was the group focused upon in the Conservative Party’s term ‘just-about-managing families’. However, this is not to say that better off workers did not vote for Trump or Brexit, or for populist causes in general, or that support only came from white (male) workers. They show that national populism also gets significant, if usually minority support from younger people, women and ethnic minorities.
One reason is that the national populists also address welfare issues. This helps undercut the traditional capitalist state-dependent approaches to national politics of more left-wing parties and groups. For example, the leader of the conservative, populist Sweden Democrats argued that ‘The election is a choice between mass immigration and welfare. You choose’ (p71).

Immigration, racism and nationalism

The authors are clear about their perspectives, which should help readers also to clarify what they think about these issues. Take the question of racism. I raise this question, because, when the authors do talk about racism, they appear to cross the line into endorsing what a United Nations Convention would call ‘racial discrimination’.[1] The UN defines such discrimination as being on the basis of ‘race, colour, descent, or national or ethnic origin’ and, in discussing popular political views, the authors write:
“We do not think that the term ‘racism’ should be applied solely because people seek to retain the broad parameters of the ethnic base of a country and its national identity, even though this can involve discriminating against outside groups” (p 75).
Unless the word ‘broad’ somehow lets them off, ‘retaining the broad parameters of the ethnic base of a country’ would indeed be racial discrimination according to the UN!
Are they only describing how such views exist, rather than endorsing or advocating them? I found the focus on ethnicity to be a strange one for these UK academics to spend much time on since, in the Brexit debate, for example, it was clear that race and ethnicity had little or nothing to do with the anti-EU case. Instead, popular views were much more concerned about competition in the jobs market from low wage, white East European workers – the ‘Polish plumber’. Of course, the coverage in this book is not just of the UK, and not just of Brexit. But the authors are not just describing how there is opposition to other ethnic groups. While they do not explicitly share these concerns themselves, they go out of their way to say that these are valid. For example:
“Too often the left view this immigration angst solely as a byproduct of objective economic grievances when it is in fact a legitimate concern in its own right and … is rooted in broader subjective worries about loss and relative deprivation.” (p 222)
and, on popular anxiety about immigration and ethnic change:
“While many of these fears are exaggerated – especially in the case of Muslims, who as a group are often damned for the sins of a very small minority of Islamists – we need to appreciate how people feel. Given ongoing immigration and rapidly rising rates of ethnic, cultural and religious change, it seems to us unlikely that these anxieties will fade.”
“It is important to try to engage with their concerns, particularly for those on the centre-left who, to avoid further losses, will need to make short-term concessions. Meeting the demand for tighter borders or modifying the type of immigration … is compatible with progressive politics.” (pp 281-2)
Basing their stand on the evidence from numerous opinion polls, they can correctly dismiss as mistaken the views of the established political parties and of the left that if workers can be given ‘more jobs, more growth and less austerity, then their support will return’. Yet that leads them to argue that policies should be adopted to address and deal with ‘people’s concerns about immigration and rapid ethnic change’ (p 261).
If the authors escape the charge of endorsing racism, they still remain guilty of accepting and working within a framework of nationalistic politics. The irony running throughout this book is that they have set up national populism as a political challenge to liberal democracy and then have taken on board the concerns of the national populists.

Imperial politics

The authors do not ignore capitalism in their analysis, or the wider political trends. They cover quite a lot of ground in a summary historical review of how capitalism has developed, the different forms of politics that emerged in the West that helped to endorse the system in the eyes of the population, and of earlier forms of populism. They also note the different phases of immigration into the US and the UK over the past hundred years or so, and the more recent trends in a wide range of European countries.
I was pleasantly surprised to find some brief mentions of the term ‘social imperialism’, describing how capitalist parties and governments in the late 19th and early 20th century countered the appeal of socialism and attracted support from workers by ‘a combination of welfare measures to help poorer people, such as the introduction of old-age pensions, and the celebration of national greatness and expanding Empire’ (p 228). But this remained only part of their historical review and did not seem to have much implication for their discussion of more contemporary trends.
It would have been more consistent for them to spell out how masses of people in the richer countries remain wedded to the social imperialist outlook. Welfare provision by governments in rich countries has grown far beyond what it was in the early 20th century, and it has been a key pillar of what is effectively a ‘social contract’ between the national working class and the capitalist state. In other words, workers will remain loyal to the capitalist system and the national state, including support in wars, as long as the state provides some basic economic security.
That deal has now been undermined by two important developments. Firstly, the growth of the global market, aside from its dysfunction and destructive tendencies, has also shown for capitalist business that there are cheaper ways to get things produced than depending upon welfare-supported workers in the richer countries. Employment conditions have been undermined by outsourcing, supply chains and worse labour contracts, with only some privileged areas remaining relatively unscathed, in high level engineering, technology and some other monopolistic sectors. Secondly, more stagnant economies over the past decade or so have thrown into sharper relief the accumulation of debts, and state spending deficits in particular. Accentuated by problems of an ageing population in many countries and capitalist pandemics like obesity, welfare provision is under pressure.
But these developments have not led the mass of people in richer countries to realise that the game is up and capitalism no longer works for them. Instead, they have turned towards reactionary politics. This can hardly be much of a surprise, since, as the authors themselves note, there have been longstanding racist and nationalist opinions. Liberal views were often more supported by the social strata that were made comfortable by the system, while the remainder kept relatively quiet as long as things were ticking over for them. Now that the capitalist markets supported by the working class have come back to bite them, they have spoken out.
This is the relevant background to the authors’ focus on ‘hyper ethnic change’. The popular reaction to a rapid influx of immigrants seen over the past few decades, and especially in the past 10-20 years (after 2004 in the case of the EU, following the accession of several new Eastern European members), reflects the worry of the ‘native’ masses about their social and economic welfare. They don’t stop for a moment to consider the many fires that their governments have started in and the destruction they have brought upon countries in the Middle East, Africa and Latin America, nor of the collapse of living standards in many East European countries when they were incorporated into the western capitalist markets.

Culture and privilege

Privileges enjoyed by the mass of people in the rich countries are being taken away, so they blame Mexican or East European workers, Chinese and Asian goods, and they wrap that up in moans about the threat to their ‘way of life’ and culture, especially from the Muslim community. As the authors put it, using apologetic brackets to distance themselves: ‘most national populists see the quest for lower immigration and slower ethnic change as an attempt to stem the dwindling size of their group, to advance its interests and (in their eyes) avoid the destruction of their culture and identity’ (p 162). Let us consider this culture question for a moment.
I do not know whether any of the myriad of opinion polls cited by the authors have ever asked the question of whether Muslims, or other groups considered unwelcome in these polls, are believed to have a stronger sense of community than the anti-immigration respondent. The ‘native’ reaction is to a different group, whether that distinction is made visible by them using a different language, religion or something else. But it raises the question of what they are really protesting about.
‘Native’ working class culture has been disintegrating for the past 40 years or more in many western countries. Even before, it was nothing to brag about, and the latest decline has nothing to do with immigration, ‘hyper’ or otherwise. The protracted crises of the 1970s and 1980s dealt a blow to many traditional industries and forms of employment that were the centre of settled working class communities, from mining to manufacturing, from steel making to shipyards and transport, and the hollowing out of jobs in many areas. There have also been changes in technology and work practices, a reduction of trade union membership and the creation of many new service sector jobs less covered by trade unions. These and other, more recent developments, sometimes labelled the ‘gig economy’, did not come from immigration. Popular sentiment has nevertheless found immigration as something to focus on, since it was never far from a nationalistic and sometimes racist mindset in any case.
What is it about ‘culture and identity’ that popular sentiment wishes to save from ‘destruction’? The population has done little or nothing done to combat the capitalist market trends that have undermined them, and instead it has been absorbed by mass consumer culture. It is only now, when the economic foundations of an acceptable life are being taken away, that the pro-imperialist working class protests. It fights back by demanding that the capitalist state cuts or stops immigration. The authors say that even if more ‘jobs and growth’ were created then ‘tensions over perceived differences in culture and values will remain’ (p 152). But that is because a large section of the working class has chosen to try and defend itself by relying on ‘their’ state to take action against foreigners. The truth is that it is in no position to hold up anything in its own culture worthy of respect.

Political climate

This book gives a systematic overview of contemporary political opinion, especially that underlying the support for national populism. It helps to clarify the depth of the political problems faced by those who do not like what is going on, but the solutions offered by the authors end up endorsing the concerns of the reactionary populists! When the capitalist system is pissing down on everyone from a great height, they join in the argument about the distribution of umbrellas and raincoats, and wonder if immigrants should be given any if that risks the ‘native’ workers going without.

Tony Norfield, 19 December 2018

[1] The United Nations International Convention on the Elimination of All Forms of Racial Discrimination in 1966, of which Article 1 of the Convention defines racial discrimination as: ‘... any distinction, exclusion, restriction or preference based on race, colour, descent, or national or ethnic origin which has the purpose or effect of nullifying or impairing the recognition, enjoyment or exercise, on an equal footing, of human rights and fundamental freedoms in the political, economic, social, cultural or any other field of public life’.