Saudi vs Syria: Imperial Policy Crisis

US president Obama has today assured the word of his intention to launch missiles at Syria for its alleged use of chemical weapons, but he has also decided to make the action dependent on the decision of the US Congress to vote for blood. Such is the nature of imperialist democracy. This could delay the attack for a week or so, something that the warmongering news media are mightily frustrated with. It may also not be a foregone conclusion that Congress votes for its additional war, even though Obama, like UK prime minister Cameron, promised to constrain its scope to a 'one off' punishment. Cameron's defeat by a parliament sceptical of what value lay in another war (ie an overt military action, rather than just supporting the so-called rebels) and worried about potential blowback could find an echo in the US.

That is problematic enough for Obama and for US policy. However, what if no evidence emerges that the Syrian regime was responsible? The danger of a debate (even in Congress) is that you have to present some evidence. Even worse, what if there is some evidence that the Saudi-supported opposition to Assad were responsible?!

One report explicitly claimed this yesterday, but has (so far) received no widespread coverage - partly because it embarrasses the stance of the western media, partly because it will cause a major crisis in imperialist policy. However, the report is co-authored by an AP journalist with good credentials, rather than being the ramblings of a dissident blogger. The story is entitled: 'Syrians in Ghouta Claim Saudi-Supplied Rebels behind Chemical Attack'. This is the link to it.

Let's see how this plays out.

Tony Norfield, 31 August 2013

The Australia-Hong Kong War of 1994

Life imitates art, as shown by the following link to an excellent satire on TV news, The Day Today, first shown on British TV in 1994.

The scene is all too appropriate for the Anglo-American news media's warmongering today.

The link to the YouTube video, roughly 4 minutes, is here.

Understanding the Syrian Situation

(Here is a guest article on a key issue for imperialism today)

Most radical thinking on Syrian is convinced that the West, and particularly the US, Britain and France, are keen to create a situation in Syria that will justify Western intervention so that the major powers can take over the country - as in Iraq and Afghanistan - isolate Iran, and help Israel’s ailing position in the Middle East.

This is a serious misreading of the situation. The dominant Western powers are forced to adopt a policy position on anything that happens in the world because they must constantly remind the international community who is in charge. That does not mean, drawing out the purely logical conclusion of these public policy positions, that they necessarily have any real intention of getting involved or of intervening in any particular conflict. It is important, when judging world events, to avoid the simplistic radical counter-propaganda model and to examine what is really going on.

The conflict in Syria is being driven by Saudi Arabia and the Gulf States. These countries all have either large Shia communities or majority Shia populations. In addition, the ruling elites in these countries are a tiny minority within the minority Sunni population. It is only a matter of time before democratic and demographic realities impose themselves. Iran has made it clear that it does not want to use its Shia influence in the region to destabilise these regimes. Indeed, Iran has made it clear that what it wants is a strategic but respectful relationship with these Sunni states - particularly as Western sanctions bite more and more. Iranian commercial elites need these Sunni states to prosper.

Nevertheless, these Sunni states, and particularly Saudi Arabia, are not comforted by such Iranian assurances. In a way, they are right. What they fear is not Iranian backed subversion, of which there is very little evidence, but that the struggles of their own Shia communities will inevitably drag Iran in, whether it wants to or not. This is sound reasoning. Iran cannot ultimately remain aloof from Shia struggles that flare up despite its conservative foreign policy.

So, the Saudis and the Gulf States are extremely anxious to deal Iran a knock out blow. Fostering regime change in Iran has shown itself to be a total failure. Iran is a relatively compact and orderly society and any attempts to undermine its internal cohesion do not prosper. A large part of the population hates the rule of the mullahs, but, if the country is attacked, all Iranians close ranks.

In any case, the policy of the Saudis and the Gulf States is too primitive to run the kind of sophisticated strategy needed to undermine Iran internally. The only international politics they know is to offer huge bribes, which is not enough in this case. That’s what happens when you have too much money and you do not have to work or think for a living. Your brain goes to mush. When the Saudis or the Gulf States need to play a more intelligent game, they always get the Israelis to do it for them.

The eruption of the Syrian civil war has created the illusion in the minds of the Saudi and Sunni elites that by financing regime change they can deal Iran a severe blow by isolating it in the region. This is more wishful thinking born of desperation than geopolitical understanding. It is what really fuels the fighting in Syria and why the West does not want to get involved. The Saudis and Qataris are pouring in billions of dollars – but all their money is able to buy is an undisciplined rabble of jihadist head-bangers who could never form an alternative political leadership and which the West does not want to touch with a barge pole.

So, why is the West making ominous war-like noises that sometimes sound very much like the run up to the Iraq war? Actually, carefully analysis shows that, despite surface similarities, there is a marked difference between Iraq and Syria. Every statement that the US, the UK and France has made in the last two years has indeed been full of hype and hot air – but has also been self-limiting and vague on detail and timetable. There is no build up, no momentum, no traction to this phoney war effort. Now, General Martin Dempsey, chairman of the US Joint Chiefs of Staff and Barack Obama's chief military adviser, has made it clear the US is not going to get involved.[1]

If the West continues with this phoney war it is only because its close allies, the Saudis and the Gulf States, have got themselves into a huge jam and need to be shored up diplomatically. If the Syrian regime manages to hang on, and all indications are that it will, it will be a strategic disaster for the Saudis and their allies and, for them, a disastrous victory for the Iranians who will tell the world: 'You see, these dumb Saudis, they have all the money, they can buy anything they want, they have all the power of the United States and the West behind them, and yet they are useless. They are not fit to be leaders of the Islamic world.'

Western politicians must be hugely relieved to have the excuse of Putin ostensibly stopping them from intervening!

David Isbert, 22 August 2013

---

[1] 'US "will not intervene in Syria as rebels don't support interests", says top general', Daily Telegraph, 21 August 2013.

The Economics of Spying

The UK's Guardian newspaper has had a good run of scoops based on US-fugitive Edward Snowden's revelations about the scale of spying activity by the American government, and its connections with British and other government spy agencies. Until Monday evening, 20 August, however, it had denied itself another scoop - that UK government officials came to its London offices in July to demand the leaked US National Security Agency files. In the event, they agreed with these officials to destroy the copy the Guardian had in London, and yesterday published pictures of the relevant dismembered hard drive. It is not clear why there was such a delay in reporting the July visit, but one suspects that it might have been due to the 9-hour detention of David Miranda, partner of the main story reporter, Glenn Greenwald, by the Brits. The latter is likely to provoke Greenwald into more embarrassing revelations and this would make the Guardian's continued silence on its own treatment by the UK government also a little embarrassing.

Much of the coverage of official spying activity has been in terms of the potential loss of personal privacy on the Internet, in phone calls and emails. By contrast, the state response has been to stress the need for such actions in the fight against 'terrorism'. When officials sense that might not be enough to assuage liberal concerns, they sometimes also mention how it is needed to combat 'serious organised crime'. The much more plausible rationale for the huge extent and cost of this surveillance, however, is that it makes good business sense!

Far from trawling through zillions of gigabytes of data to uncover the latest plot, the intelligence agencies are much more likely to be monitoring a select subset of the communications, the ones that really interest them. As the Guardian itself reported two months ago, the UK's GCHQ has intercepted communications at G20 summits. Less politically charged, more mundane, but much more profitable surveillance of key corporate communications about business deals, strategy and innovations will also take place on a regular basis. Any problem they might have with continuing this activity is the main 'threat to national security'.

I'm just a little surprised that the UK government has not had the sense to explain this to the public. I am sure they would understand, given the consensus that exists on doing what is good for the country.

Tony Norfield, 21 August 2013

Monopoly #2

Why waste words when the numbers speak for themselves? However, a little explanation may be useful in this case. *

The numbers in the table below are taken from a study of some 43,000 international companies in 2007. That means some of the information is now a little dated, with the demise of Lehman Brothers being one example. However, the broad picture remains and it is one showing that the top 50 companies 'controlled' (ie had ownership of 50% or more of the equity in) some 40% of the network of 43,000. US monopolists account for nearly half of the entries in the table, but the UK is second in line.

Analysing these relationships is complicated since it must take into account the common fact that company A owns a share of company B; B also owns a share of company C, and C may also own a share of the equity in A and B. Such relationships are open to network analysis, however, and the results show the concentration of power in a core group of companies, of which these are the top 50.

Most of the corporations listed are in the financial sector, a fact that illustrates both how equity markets enable the centralisation of ownership through cross-shareholdings, mergers and takeovers, and how financial companies are at the centre of this relationship nexus. I have some qualms with the view that this means actual control, however. There may be an accumulation of relatively small shareholdings by a wide range of subsidiaries and loosely linked companies, so that implementing control may prove to be difficult, even if it were attempted. Furthermore, if 20 separate financial institutions owned 60% of a particular company's equity, they will not necessarily act as a group. Nevertheless, this does not change the picture of monopolistic ownership of the world's companies.

A different issue that could upset the calculation either way, and I do not think this was (or could have been) allowed for in the study, is that owning 1% of the equity does not necessarily give 1% of the voting rights. It may give more, or even zero, voting power, depending on the type of equity. Take Facebook's Zuckerberg as an example: he is reported to own 18% of the company's shares but has more than 50% of the voting rights.

The original study giving the method behind the analysis and some more information on the work done is found here.

For those who may frustrated with the way that mathematics is often used to obscure economic relationships, let this stand as one of the rare examples where it elucidates them!

Rank	Company name	Country	Cumulative % network control
1	Barclays Plc	GB	4.1
2	Capital Group Companies, Inc	US	6.7
3	FMR Corp	US	8.9
4	Axa	FR	11.2
5	State Street Corp	US	13.0
6	JP Morgan Chase & Co	US	14.6
7	Legal & General Group Plc	GB	16.0
8	Vanguard Group Inc	US	17.3
9	UBS AG	CH	18.5
10	Merrill Lynch & Co	US	19.5
11	Wellington Management Co LLP	US	20.3
12	Deutsche Bank AG	DE	21.2
13	Franklin Resources Inc	US	22.0
14	Credit Suisse Group	CH	22.8
15	Walton Enterprises LLC	US	23.6
16	Bank Of New York Mellon  Corp	US	24.3
17	Natixis	FR	25.0
18	Goldman Sachs Group Inc	US	25.6
19	T Rowe Price Group Inc	US	26.3
20	Legg Mason Inc	US	26.9
21	Morgan Stanley	US	27.6
22	Mitsubishi UFJ Financial Group Inc	JP	28.2
23	Northern Trust Corp	US	28.7
24	Société Générale	FR	29.3
25	Bank Of America Corp	US	29.8
26	Lloyds TSB Group Plc	GB	30.3
27	Invesco Plc	GB	30.8
28	Allianz Se	DE	31.3
29	TIAA	US	32.2
30	Old Mutual Plc	GB	32.7
31	Aviva Plc	GB	33.1
32	Schroders Plc	GB	33.6
33	Dodge & Cox	US	34.0
34	Lehman Brothers Holdings Inc	US	34.4
35	Sun Life Financial Inc	CA	34.8
36	Standard Life Plc	GB	35.2
37	CNCE	FR	35.6
38	Nomura Holdings Inc	JP	35.9
39	The Depository Trust Company	US	36.3
40	Massachusetts Mutual Life Insurance	US	36.6
41	ING Groep NV	NL	37.0
42	Brandes Investment Partners LP	US	37.3

43	Unicredito Italiano Spa	IT	37.6
44	Deposit Insurance Corporation Of Japan	JP	37.9
45	Vereniging Aegon	NL	38.3
46	BNP Paribas	FR	38.6
47	Affiliated Managers Group Inc	US	38.9
48	Resona Holdings Inc	JP	39.2
49	Capital Group International Inc	US	39.5
50	China Petrochemical Group Co	CN	39.8

Source: Vitali S, Glattfelder J B, Battiston S 2011, ‘The Network of Global Corporate Control’, PLoS ONE 6(10): e25995. doi:10.1371/journal.pone.0025995

Notes: 'Home countries' of the corporations are shown by their 2-letter ISO code. Note that CA is Canada, CH is Switzerland and CN is China.


Tony Norfield, 19 August 2013

* Clarification note, 20 August 2013: Vitali et al's document makes a clear distinction between ownership and control. To clarify, the table above gives figures for control, not ownership. The control estimate is based on owning 50% or more of the equity and thus having control over a company's decisions. In an extreme case, owning 50.1% of equity would give 100% control. Hence, the measure of control will overstate the actual figure of ownership. So these top 50 companies do not own nearly 40% of the network of corporations, although, by their measure they control nearly 40% of them.